Dear B2B Catalog CEOs:
There's a significant difference between you and your B2C cousins.
In B2C marketing, you're acquiring a customer that has a 40% chance of buying again, and if the customer buys again, the customer might purchase 3 times at $100 each over the next three years. This nets the B2C marketer $120 demand over three years. After backing out expenses, you're lucky to take home $25 profit. This means that the B2C marketer cannot afford to lose a ton of money acquiring customers.
In B2B marketing, you're acquiring a customer that has a 30% chance of buying again, and if the customer buys again, the customer might purchase 3 times at $400 each over the next three years. This nets the B2B marketer $360 demand over three years. After backing out expenses, you're blessed to take home $70 profit.
If the B2C marketer is taking home $25 profit over three years, and the B2B marketer is taking home $70 profit over three years, then the B2B marketer has a major advantage - the advantage of a stronger/longer payback period.
The B2B marketer can invest - almost over-invest - in new customers.
Your mileage will vary, of course.
But it's worth pointing out that if your AOV is north of $300, you have an opportunity to greatly ramp up your customer acquisition activities - investing today to protect the future of your business.
When you work with the folks at Merit Direct or your preferred vendor - focus less on all the technical stuff - focus on how much you can truly invest. Or email me (firstname.lastname@example.org) and we'll figure out just how deep you can invest.
Helping CEOs Understand How Customers Interact With Advertising, Products, Brands, and Channels
October 13, 2013
Dear B2B Catalog CEOs: Payback Period
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