Business Principle #7

Business Principle #6

Gliebers Dresses: The Oral History of the Nashua Pop Up Store

If this stuff isn't your cup of tea, go ahead and read about the e-commerce and retail marketplace for mattresses (click here).

The "oral history" reflects actual comments and quotes from Gliebers Dresses Management as they discuss a recent "Pop Up" store endeavor in Nashua, NH.

Pepper Morgan Pressley (Chief Marketing Officer):  You'd think the CMO would be aware of any marketing tactics being employed at Gliebers Dresses. You'd think, right?

Lois Gladstone (Chief Financial Officer):  Roger Morgan has a big budget. A really big budget. Enough money to buy all the Woodside Research reports he want, or heck, he could start his own company if he wanted to. In fact, I can recall two or three times when he's done just that.

Roger Morgan (Chief Operations Officer):  This was back in May. I just finished reading a satisfying $1,495 research report from Woodside Research, titled "Eight Reasons Why Pop-Up Stores Are A Key Trend For 2018". The report inspired me to do something. I mean, wasn't that a theme from a recent conference ... "Do Something"?

Meredith Thompson (Chief Merchandising Officer):  Roger's team touches every product we sell. If he doesn't ship it, the customer doesn't get it. And Roger's team implemented our new inventory system in 2016. He knows what sells and what doesn't sell. In retrospect, it shouldn't have been a surprise that he'd eventually come up with some crazy scheme to do something with my merchandise.

Roger Morgan: So I did something. I was buying one of those "chair-and-a-halves" from Bernie & Phyl's furniture in Nashua, and the store manager was explaining to me how the leather section of the store just didn't have any traffic. Then she asked me why I was carrying a thick document in my left hand, so I showed her the report about pop-up stores from Woodside Research. That's the origin story for our pop-up store.

Meredith Thompson:  June is such a tough month. We're selling everything at 40% off, trying to improve our "open to buy" position. We've got a ton of winners, really good-selling stuff, but we bought too much of it. I hate having to give it away at 40% off.

Roger Morgan: So the store manager and I agree that for two weeks at the end of June I can run a pop-up store over by the over-sized leather couches and love seats. I got on my phone and opened the Gliebers Dresses Inventory App that my team programmed but Meredith never uses. We call it GDIA. And GDIA tells me that there are twenty styles that we're in a terrible inventory position in but the style are top sellers. My team set aside a thousand units and we were off to the races.

Meredith Thompson:  A week later I'm looking at our inventory reporting and I noticed that our positions in several winners seemed to improve a lot. I'm thinking, "that's good, but something doesn't smell right here." I was missing something like $30,000 of merchandise. So I started digging through our catalog reporting, trying to get to the bottom of the issue.

Pepper Morgan Pressley:  Meredith starts asking me all sorts of questions about the June Sale catalog. Like I have time to figure out why the June Sale catalog is trending above plan when website customers are performing below average in early June.

Lois Gladstone:  Meredith asked me what our forecast for June looked like? I could answer that in a nano-second ... too few sales and too much merchandise in the warehouse.

Roger Morgan: Once I had the merchandise it was just a matter of getting the stuff down to Nashua. And I needed signage. And a marketing plan. And employees. And a Point of Sale System.

Lois Gladstone:  The thing that confused me was when our Distribution Center Manager said that she was going to spend a few weeks in Nashua. I said "Who in New England vacations in Nashua in June" and she just looked at me like I swallowed a live kitten.

Pepper Morgan Pressley:  I got a call from the ad rep at Oldies Radio WGHM. He offered us a 30% discount if we ran at least $10,000 of ads from June 15 to June 30. Wut? I told him we had no interest in running ads in the second half of June. The phone went dead, almost like he thought I swallowed a live kitten or something.

Roger Morgan: I've got enough budget to pay for $10,000 of ads without anybody knowing anything. So I hired Mandy Moore of "This Is Us" fame to be our Influencer. She read the scripts for the radio ads, which began airing on June 15. Ms. Moore was born in New Hampshire, and was more than happy to read six lines of text I wrote for her for $35,000 in compensation and some free merch that she featured on Instagram.

Lois Gladstone:  We had no idea Mandy Moore was doing radio ads.

Meredith Thompson:  Nobody listens to radio anymore, so we had no idea that Mandy Moore was doing radio ads.

Pepper Morgan Pressley:  My Mom was listening to WGHM and she recorded a clip on her cassette tape boom box of the ad that aired on June 15. Sure enough, right after Bobby Darin's "Beyond The Sea" there was Mandy Moore telling all of Nashua to visit the Gliebers Dresses pop up store inside Bernie & Phyl's furniture store, June 15 - 30 only.

Lois Gladstone: When Pepper shared the audio clip with me, I thought to myself, "Who still owns a cassette boom box?"

Pepper Morgan Pressley:  Mandy Moore was telling the residents of Nashua to visit a Gliebers Dresses pop up store inside the Bernie & Phyl's furniture store. How do you wrap your brain around that?

Meredith Thompson:  The first thing I thought when Pepper played the tape at an Executive Meeting was "Why doesn't Pepper ever have any crazy ideas like this?" The second thing I thought was "I'm gonna punch Roger Morgan in the brain for stealing my merchandise."

Lois Gladstone:  That's when the customers started coming ... in droves.

Meredith Thompson:  Here's an interesting fact. Did you know that there isn't a dressing room at Bernie & Phyl's?

Lois Gladstone:  Roger is working the cash register and Dana from the warehouse is the customer service rep. And Dana's freaking out because people want to try stuff on and there's no dressing room. 

Meredith Thompson:  Roger didn't seem to care. He just kept telling Dana to collect email addresses or phone numbers as customers took the merchandise out to their cars to try it on, mumbling something about "omnichannel customer management".

Lois Gladstone:  I consider it a blessing that only 1 in 4 items were stolen.

Pepper Morgan Pressley:  To this day, I still have no idea where Roger obtained all those mannequins. And I have no idea how he was able to get the mannequins to sit on those leather love seats that nobody wanted to buy.

Lois Gladstone:  Apparently Roger signed a fifteen day lease, and paid $10,000 out of his own budget.  Which reminds me, I'm responsible for signing off on his budget each year. We're gonna have a talk about what he has in store for 2019.

Meredith Thompson:  So Roger sells out of everything within two days. Everything that wasn't stolen, of course. He calls me from Nashua and wants a couple hundred thousand dollars of merch shipped to him. He's tired of hearing about how customers wanted to meet Mandy Moore so they could ask her why she married Jack's BFF Miguel on "This Is Us", and just wants to put dresses in their hands to shut them up. I didn't give him a unit. Not one. Idiot.

Pepper Morgan Pressley:  Roger calls and asks me to capitalize on the Mandy Moore thing online, he's thinking that we need content on the website and in email and on Instagram about how Mandy Moore loves Gliebers Dresses. And I said no. Nothing. He doesn't get any help from me. Not when you act like a cowboy.

Lois Gladstone:  Roger calls me and asks for twenty thousand dollars so that he can do some TV ads in Boston to promote the website. He thinks that Mandy Moore should integrate "This Is Us" and Gliebers Dresses and that we could partner to come up with a storyline that links into Season 3. He thinks the whole thing will act a lot like free marketing.

Glenn Glieber (Owner, CEO, Gliebers Dresses):  I love free marketing!

Lois Gladstone:  I told him "No". No more. He always talks about how we need to be an omnichannel brand. But he doesn't want to collaborate with us in an omnichannel manner.

Meredith Thompson:  I had to ask our IT Director, who reports to Roger no less, to shut down that stupid inventory app that nobody uses so that Roger couldn't get access to any more of my merchandise.

Lois Gladstone:  As a team, we shut down Cowboy Roger and Diablo Dana.

Glenn Glieber:  Even after you account for the fact that 25% of the merchandise was stolen, Roger sold $26,000 of merchandise in two days. If he was running his own store he'd have sold $4.7 million on an annual basis. What does a typical 6,000 square foot retail store do these days, a million? Think about what Roger accomplished.

Lois Gladstone:  Roger's gimmick cost us $50,000 of profit. Fifty-thousand dollars. And how does he respond? He says he won't buy any content from Woodside Research for two months. He's kept his word so far, and if he keeps his word, we'll break-even on the whole debacle.

Pepper Morgan Pressley: What's interesting, of course, is that for the final two weeks of June our website ran 40% over plan. All those radio ads and Instagram posts seemed to help.

Meredith Thompson:  How in the name of all that is good did Roger Morgan get Mandy Moore to do work for Gliebers Dresses? I keep coming back to that. How did he do that? And why in the heck doesn't Pepper come up with ideas like that?

Pepper Morgan Pressley:  If I told the Executive Team in May that I was going to hire Mandy Moore as an Influencer for a pop-up store I was going to run inside of a furniture store in Nashua, the room would have crucified me, then mocked me, then fired me.

Roger Morgan:  The last thing you do in business is ask for permission. Everybody knows that.

Lois Gladstone:  June turned out to be one of the best months we've had in a long time.

Business Principle #5

Business Principle #3

Business Principle #4

Catalog Craig Paperman on Adopting Ideas

I know, if you don't like this stuff, skip it and instead read about how Dick's Sporting Goods is taking media planning in-house (click here). Or learn about your favorite Shark Week content available without having cable (click here).

Kevin:  Craig, you look like you just ate a large piece of pickled ginger without anything to wash it down.

Craig:  I'm tired.

Kevin:  Tired?

Craig:  Yeah, I read through your Sixteen Business Principles (click here). What a vapid waste of Powerpoint resources.

Kevin:  Seriously?

Craig:  Oh, I'm serious. Look at my face.

Kevin:  What don't you like about it?

Craig:  There aren't any tactics in there that can help me grow my business.

Kevin:  Do you disagree with the thesis that you should have a Marketing Management System?

Craig:  You are discussing theory. I need tactics that work, right now.

Kevin:  Let's talk tactics then.

Craig:  Gimme one.

Kevin:  Duluth Trading Company. They spent close to a decade honing an advertising strategy that helped them quadruple sales in the past ten years ... and they're selling a dying product (Women's Apparel) in a dying channel (Catalogs). Think about that. Why not copy what they're doing.

Craig:  Their advertising is stupid.

Kevin:  Their advertising works.

Craig:  I'm not doing that. See, I don't think you have any useful ideas or strategies.

Kevin:  Couldn't you open up stores like Bass Pro Shops, giant cathedrals that turn retail into an entertainment enterprise?

Craig:  I'm not doing that, that's stupid. Fixed costs will kill ya. I'm still waiting for a useful idea.

Kevin:  You could start a subscription-based service and ship products that the customer didn't ask for on a monthly basis like Stitch Fix does. You could hire a bunch of data scientists who figure out what to send.

Craig:  I'm not doing that. Everybody knows that returns will kill ya. I'm still waiting for a useful idea.

Kevin:  You could open a store like Nordstrom and not sell any products at all.

Craig:  Like that's going to work. You have expenses and no sales. Moron. I'm still waiting for a useful idea.

Kevin:  You could have an annual event like Amazon Prime Day and market the living daylights out of it and turn it into the biggest shopping day of the year.

Craig:  Right. Amazon's site was down. The pundits are calling it "Fail Day" instead of "Prime Day". Again, I'm still waiting for a useful idea.

Kevin:  You could run a campaign like Domino's runs ... they're filling potholes as a way to generate awareness of their pizza.

Craig:  I have no idea what potholes have to do with pizza. Stupid. Next idea, please.

Kevin:  You could hire an influencer and run a series of campaigns on Instagram to create awareness.

Craig:  I don't have time to vet an influencer to see if they can promote my catalog on their Instagram feed. And I don't want to pay an influencer $20,000 to promote my catalog. Bad idea. Next!

Kevin:  I don't think you want to listen to anybody. I think you just like to grumble.

Craig:  Wrong!

Kevin:  Share with me an idea you heard that you implemented.

Craig:  My business is really challenging. We're unique. We're special. You can't just take any idea off the street and apply it to our business.

Kevin:  And how has business been in the past few years?

Craig:  That's beside the point.

Kevin:  How has business been in the past few years?

Craig:  If people had good ideas that were worth using and didn't just suggest that I should innovate or die I'd leverage the ideas.

Kevin:  What do you stand for?

Craig:  What do I stand for?

Kevin:  Yeah. What is your Marketing Management System?

Craig:  My system?

Kevin:  Without a system, every idea is guaranteed to fail. Or worse, you try every single idea hoping to hit the lottery. Maybe you don't have a system.

Craig:  Is there a way I can unsubscribe to this conversation? I'm busy keeping the wheels on the bus and I sure don't need to hear that I don't have a Marketing Management System. I try stuff. I innovate. We send emails personalized with "Dear Martha" in the subject line.

Kevin:  Ok, I'm wrong. You have a Marketing Management System.

Craig:  Good, thank you.

Kevin:  You are welcome.

Craig:  Wait. What? I haven't purchased a system from any of the beloved vendors I work with.

Kevin:  The reason you don't accept any ideas or tactics is because you are running a vendor-based marketing system.

Craig:  Hey ... you're DARN RIGHT that's the system I am running.

Kevin:  You look for ideas sold by vendors. Plug and play. Let somebody else do the work.

Craig:  I love it when I do nothing and our paid search vendor optimizes our ad spend and I don't have the slightest idea what they are actually doing with my money.

Kevin:  So when somebody asks you to be creative, you reject the idea, because you are running a Marketing Management System that leverages plug-and-play vendor solutions.

Craig:  I do love Google Analytics.

Kevin:  Ever notice that GA is designed to reward those who run a vendor-based marketing system? Search, social, mobile, referring URLs, demographics, retargeting, attribution modeling, and now you can merge your data with their data. The whole thing is designed for you to just sit in your chair and outsource your whole life to vendors.

Craig:  And don't forget paper.

Kevin:  Oh no, we don't want to forget that. Twenty-five percent of your annual net sales pays for paper, postage, and printing.

Craig:  Look what I get for the investment!

Kevin:  So how could you possibly accept any ideas to grow your business outside of a vendor-based marketing system?

Craig:  I couldn't!

Kevin:  You've outsourced everything you do to digital vendors or print vendors. You don't have resources left to do anything unique or interesting. All you do is manage vendors and issue instructions. How could you possibly have a creative idea that led to increased awareness of your brand? And the staff you have left are adept at managing vendors and issuing instructions. The ideas that folks have to grow your business have no place in a Marketing Management System of that nature.

Craig:  You finally understand me!

Kevin:  Oh I've understood you for a long time.

Business Principle #2

Business Principle #1

16 Business Principles: Hillstrom's Marketing Management

Over the next few weeks, I'm going to share the Sixteen Business Principles that make up what I'd call my "Marketing Management System".

Here's what I see happening. There's a decent amount of turnover happening at the Director / VP level. Lots of new Professionals getting their first chance to run something. I was there at one time (1998). It's a daunting opportunity. Nobody gets you ready for your opportunity, it's all up to you. And then you mess up, all over the place, learning on the fly. By the time you figure things out, there's a good chance you've made enough mistakes to lower the odds of long-term success.

As a consultant, the questions I'm getting in 2018 are different. They're not "How do I make Facebook work?" or "How do I leverage Machine Learning?". Instead, the questions are of the "How do I go about running my business given all of the static all around me?" nature.

That's a very different question ... a much smarter question.

In sports, it is common for teams / coaches to run a "System" ... an offensive or defensive way of doing things. About four weeks ago, I finished this wonderful book.

This is the story of how Hal Mumme borrowed aspects of an offense from Brigham Young in the 1980s, from Bill Walsh (San Francisco 49ers), and then created his own offense. His offense put up monster numbers. Nobody wanted to copy it. Nobody cared. Then he went to Kentucky and he beat Alabama in the late 1990s and folks started to take notice. By the time his protege (Mike Leach) took the offense to new levels at Texas Tech in the 2000s, elements of the offense were being copied by everybody. Today, a spread-passing attack is common, though Mumme's pure system is still truly leveraged by a half-dozen coaches. 

I also own an autographed copy of a book from Bill Walsh - where he outlines everything about the West Coast Offense that he created.

In sports, you have to have a solid system, a way that you do things that works for you and your team.

In modern Marketing? Vendors drive the "system" ... pure and simple. They want you to use their tools to pay for customers. Google and Facebook and Amazon are the primary beneficiaries of this system. Each created an ecosystem of experts who tell you how to use their platform for success. Of course, you have to use their platform for success, funny how that works!

What is needed is a Marketing Management System (MMS) whereby the new Director or VP or CEO has a set of Principles that drive how they approach everything they do.

Twenty years ago, Don Libey published his version of a Marketing Management System.

He traveled the country, using flip-charts and hand drawings to tell 1990s data-driven marketers how to maximize profit.

It's been my experience that modern marketers & analytics experts do not want to be told how to do anything. They don't want to be told what metrics to use or tables to create or channels to use ... they're the experts, thank you very much! What they do want to be told to do is this ... they want to be told how to be successful. They want to know how other people were able to change the culture within a company. They want to know how individuals were successful even though they were doing the same things that another individual did and didn't have success. In other words, folks want to know the secret sauce of success.

So I am in the process of documenting my own Marketing Management System (MMS). As part of this process, I have outlined 16 Business Principles. It's been my experience that the CEO / CMO / VP / Director who implements a comparable system has success.

And over the next few weeks, I will share each slide with you ... one slide for each of the 16 Business Principles that make up Hillstrom's Marketing Management system.

Click on the image each day, read the content, and tell me what you think. You're gonna disagree with some of it, you're gonna agree with some of it. Use what you agree with to form your own Marketing Management System.

If I were your new CEO or CMO, this is the system I'd install at your company.

Ready for fun?

Catalog Craig Paperman on the Amazon Toy Catalog

Yes, this is business fiction. If this isn't your thing, take a break and read this article about Build-A-Bear and their promotion that generated so much demand that they ran out of product and became the punching back of the trade journal fraternity for being so successful.

Kevin:  Craig, you look like you just found out that your adjustable rate mortgage is about to adjust to 10%. What's wrong?

Catalog Craig Paperman:  I'm just stunned.

Kevin:  Stunned?

Craig:  I can't believe that Amazon is going to put out a toy catalog. It's proof that the omnichannel thesis was right all along. 

Kevin:  Oh stop it.

Craig:  The catalog will be handed out at Whole Foods. It's pure omnichannel strategy played out on the World's Largest Stage.

Kevin:  You look like you are about to pass out.

Craig:  Can you imagine what happens when that thing drops? They'll need help. They'll need somebody like me to make sense of the catalog. Delivery stats. Do you think they'll be able to forecast what percentage of the book has been delivered by noon of Tuesday of the in-home week?

Kevin:  Do you think they'll care?

Craig:  Key codes. Who is guiding them on their key code strategy?

Kevin:  What is this, 1998?

Craig:  How will they track how successful the catalog is? Do you think they know that they need a credible matchback strategy? And how will they acquire new names? Do you think they'll take names from the co-ops? Will they contribute their names to the co-ops? Will we finally get access to Amazon names? Oh my God, I'm getting dizzy thinking about the possibilities.

Kevin:  I'm sure they'll have sophisticated mail/holdout tests to read the results.

Craig:  No, I mean matchbacks. They need matchbacks. Mail/Holdout test results are for geeks. You lose demand when you hold out names. Everybody knows that.

Kevin:  If they mail the entire housefile then the matchback strategy will say that all orders in the United States are due to the catalog.

Craig:  Yes. YES!! Omnichannel strategy truly does work. Finally, finally we have validation for a decade of shouting into the wind.

Kevin:  And to think this may never have happened had Private Equity folks not employed an omnichannel strategy coupled with a debt load that allowed Amazon to take just enough share to plow Toys 'R Us into the ground.

Craig:  It's beautiful.

Kevin:  Is it?

Craig:  Yes.

Kevin:  Can you think three steps ahead and see what happens to a traditional catalog brand in 2021 when Amazon gets all the paper and the cataloger is priced out, or are you locked into an omnichannel gaze?

Craig is not responsive.

Kevin:  Craig?

Craig:  Do you think Amazon will offer me stock options if I consult with them?

Kevin:  Your vendors are killing you off while they boost up Amazon, can't you see that?

Craig:  $300,000 a year plus five million dollars of stock options paid out in 25% annual installments. Ohhhhhhhh.

Kevin:  Your printers constrain demand so that they can squeeze more money out of you and then Amazon enters the market and that will only cause paper prices to increase. How does that help you?

Craig:  Do you think Amazon has a credible square inch analysis strategy? In house? Would anybody there be smart enough to know they need one?

Kevin:  The USPS really seems to see that their future aligns with Amazon, don't you think?

Craig:  I could bring RFM to Amazon. They don't need AI or Big Data or Machine Learning. They just need RFM.

Kevin:  Alright.

Craig:  Do you think Amazon knows all the postal discounts they get if the ramp-up the page counts? Somebody has to tell them. That somebody could be me. Me!!

Kevin:  Can you imagine how quickly the Seattle-based paper rep will lobby to move into their offices on Pill Hill? 

Craig:  Do you think Amazon knows that they need to stuff the first twenty pages of the catalog with winners? Will they leverage URL callouts on the bottom of each page, driving customers to their website? Will an Amazon Go store know I've received the catalog when I enter the store? Ohhhhhhhhh!!!!

Kevin:  You aren't listening to a word I'm saying, are you?

Craig:  Maybe they'll ink-jet a message on the back cover to take the catalog in to your closest Whole Foods store to get a discount on organic orzo. Think of the omnichannel possibilities. Dot-whacks. They could employ snipes and dot-whacks. Targeted inserts. 

Kevin:  That's what you are thinking about?

Craig:  They could push a digital version of the catalog to my Kindle Fire. My knees just buckled.

Kevin:  Didn't you always hate Amazon?

Craig:  Who is going to manage their catalog request program?

Kevin:  You said that Amazon was the "Evil Empire".

Craig:  They'll keynote a session at Cohere One's event next year, titled "Catalogs, The Final Piece Of The World Domination Puzzle, Sponsored By Quad Graphics and Epsilon and Belardi-Wong and Forty Other Industry Vendors Who Want A Small Piece Of The World Domination Puzzle".  

Kevin:  That sounds about right.

Craig:  And you couldn't blame the vendors because they need to survive and Amazon could be their meal ticket to success.

Kevin:  That's how capitalism works.

Craig:  And then NEMOA, they'll be at Spring NEMOA 2019 and we'll give a 24 year old at Amazon an up-and-coming catalog professional award and the record-attending crowd of 1,740 will give Amazon a standing ovation. The industry will bathe Amazon with love.

Kevin:  They'll give a standing ovation to the company who just two months ago the industry agreed was running them out of business?

Craig:  Yes, because Amazon will be part of the family.

Kevin:  What family?

Craig:  The Catalog Family.

Kevin:  That's what this is about?

Craig:  They're executing like we want them to execute. That's all that matters. That's why we've loved L.L. Bean and all of the other New England based catalogers all these years. 

Kevin:  #ohboy

Craig:  Catalog Craig Paperman ... Managing Editor ... Amazon Catalog Division.

And with that, Catalog Craig Paperman loses consciousness ... 

What Is Your Version Of The $1.50 Costco Hot Dog?

Read this.

Now discuss what your version of the $1.50 hot dog is at the company you work for. 

Merchandise can be a low-cost / no-cost customer acquisition or customer awareness tool.

The Secret To Success In Business Is Doing Something That Nobody Wants To Copy

Read This.

Watch This.

Time will tell if this yields sales/profit.

But it gets the job done in terms of low-cost / no-cost awareness.

And it's not something you are likely to copy, right?

Sales Tax

You've been told that having to collect sales tax will kill your business.

Think about it this way. You buy from Amazon ... you pre-pay for shipping, more than a hundred dollars a year ... then you pay sales tax in most states on many products, and you're not getting 40% off, are you? Has it stopped you from buying from Amazon? Has it stopped Amazon from becoming "Amazon"?

I've spent more than twenty years studying what happens when a retail brand opens a store in a new market and has to collect sales tax in that market (on online transactions). There's a modest, short-term hit to online business (mostly because customers shift behavior from online to the new store) followed by normal sales trajectory online.

When we sell something the customer wants to buy, sales tax is largely irrelevant. 

Don't let third parties freak you out. Their narrative/agenda is designed to improve their business. Your job is to improve your business. Find some merch that your customers love and try harder to sell it, ok?

Podcast About Low-Cost / No-Cost Customer Acquisition

You can read the transcript here or listen to it as well.

If they talk about it in Silicon Valley, it has to be important, right?

What Is The "Right" Investment Window?

There are six sub-tables in the table displayed here.

The first sub-table shows you how much profit you generate per year by acquiring customers at a PPNC (profit per new customer) of +$10. This is a no-brainer, isn't it?

The second sub-table shows you how much profit you generate per year by acquiring customers at a PPNC of $0. This is a no-brainer, isn't it?

The third sub-table shows you how much profit you generate per year by acquiring customers at a PPNC of -$10. You lose money acquiring the customer, then you generate profit thereafter. This is also a no-brainer, you generate enough money within a year to offset the loss and still make money. Most of my client base is willing to do this.

The fourth sub-table shows you how much profit you generate per year by acquiring customers at a PPNC of -$20. You lose money acquiring the customer, you break-even after a year, and then you make money in subsequent years. Most of my client base is willing to do this.

The fifth sub-table shows you how much profit you generate per year by acquiring customers at a PPNC of -$30. You lose money acquiring the customer, you do not make up the loss within a year, and then you make money in following years. Most of my client base is UNWILLING to do this.

Look at the sixth sub-table, at the bottom of the image.

When you sum all profit, you learn that the best thing for long-term health is to lose a ton of money acquiring customers. After five years, you make an additional $5.5 million by acquiring customers at a loss of $30. In order to do this, you have to sub-optimize your business today ... you'll lose more money this year in order to make a ton of money long-term.

This is the "Amazon" strategy ... losing money forever or breaking-even forever and then all of a sudden you own the world and everybody is stunned into silence.

You run these scenarios with your business, right?

RIGHT?

You have no choice but to run these scenarios for your business.

When you come back from the July 4 holiday, be sure to run the scenarios and find out what the best strategy is for your business, ok?

Investment Window

Let's run a little simulation, ok?

Let's say that you can acquire customers in 100,000 customer chunks. Your profit per new customer is as follows:

• Best Sources = $10 profit per new customer.
• Good Sources = $0 profit per new customer.
• Average Sources = -$10 profit per new customer.
• Below-Average Sources = -$20 profit per new customer.
• Poor Sources = -$30 profit per new customer.

Let's also say that each new customer pays you back a specific amount of profit per year.

• 1st Year after 1st Purchase = $20 profit.
• 2nd Year after 1st Purchase = $14 profit.
• 3rd Year after 1st Purchase = $10 profit.
• 4th Year after 1st Purchase = $7 profit.
• 5th Year after 1st Purchase = $5 profit.

What is the "right" new customer acquisition strategy to maximize the potential of your business?

Do your homework, and we'll look at possible results tomorrow.