February 27, 2020

Here's A Huge Advantage

Your annual repurchase rate tells you an awful lot about File Power.

Say only 20% of last year's customer base will buy this year. Unless those customers are spending $3,000 a year, you are going to have a File Power problem, one that is unavoidable. Your entire business model surrounds finding new customers at low-cost or no-cost. I can't tell you how often it is that real Business Leaders with credible skills have no idea this is how their business operates.

Meanwhile if you retain 50% of last year's customer base, a different dynamic happens. You have File Power. In other words, a customer who buys today will generate enough incremental purchases in the future to cause you to be willing to invest in the customer today. You have a different dynamic, and it is your job to capitalize on that dynamic.

A 50% rebuy rate is a huge advantage over a 20% rebuy rate. Either business model can be very profitable, but the business model with a high rebuy rate acts like a 401k earning interest over time.

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