- A twelve-month buyer file that is growing.
- Annual retention rates that are not necessarily increasing or decreasing.
- New customer counts that increase at healthy rates, year-over-year.
- A diversity of sources for new customers, no one source accounts for a disproportionate number of new customers.
- Profit per New Customer, on average, tends to improve over time, enabling the business to expand new customer acquisition activities.
- Catalog Marketers offer Prospect Catalogs, smaller page counts with best-selling merchandise, enabling the business to significantly improve productivity and increase profit per new customer.
- Focus is on customers, not channels. The goal is to find inexpensive ways to acquire new customers. If newspaper ads work best, the business doesn't care, it simply expands into newspaper ads. Magazines, radio, television, billboards, search, whatever the channel, the business doesn't care, it simply seeks to find new customers.
- A "variable budget". In other words, the Finance Department allows the marketing team to spend infinite dollars, as long as profit per new customer meets a pre-established threshold.
- Twelve Month Payback: Most successful businesses are willing to lose money on customer acquisition, at an incremental level, as long as the customer pays back over a twelve-month period of time.
- Customer Age: Successful businesses tend to acquire younger customers, so that the average age of the customer does not age near the rate of time (i.e. each year that passes is matched with a customer file that is one year older).
- Full Price Purchases: Successful businesses, unless discounts/promotions/pricing are part of the company ethos, tend to acquire customers who purchase at full price. Purchases at full price guarantee that profit will be generated on the transaction.
November 01, 2011
The Life Spiral: Low Cost Customer Acquisition
When I look at the most successful companies I work with, I notice similar trends.
I'm full of praise for the marketing strategies used by Duluth Trading Company. But you already knew that. Now go read their Annual...
Look at the first four rows of our life table (values of 0/1/2/3). These are the first 12-15 weeks after a customer buys for the firs...
We spent the past two weeks talking about the events and influences that shaped what I call "The Great Eight". My Influence...
If you don't like geeky math, please skip this post, because I am about to show you how the sausage is made! I have eight variables in...