February 08, 2022

Better Merchandise - More New Customers

I shared this relationship with you a few days ago.

On the x-axis you have Merchandise Productivity. If it were 10% better than it is today, customer acquisition efforts would be executed at a break-even level.

The graph shows that, instead, the company is losing $4.00 profit for every customer the company acquires.

And if Merchandise Productivity slumps another 10%, profit per new customer slumps to about a loss of $7.50 per new customer.

If your company loses $4.00 for every one of 100,000 new customers, you're out $400,000. If Merchandise Productivity improves, you pocket $400,000 additional dollars of profit ... which you can invest in more new customers (or you can pocket it), which then fuels more growth and profit in the future.

When your merchandising team succeeds, marketing succeeds, you have more new customers, and the whole machine runs more efficiently.

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