The Trap

Fifteen years ago it was common to hear legacy leaders lament about trading analog dollars for digital dimes or digital pennies. Especially in media.

This is a common tradition. Big book catalogers lamented that their twice-per-year five-hundred page catalogs were being obliterated by 128 page catalogs with a more-productive assortment. The 128 page catalogers complained that the customers they acquired via e-commerce were worse than those acquired via analog channels. Post-COVID, you heard e-commerce leaders lament new customers acquired via marketplaces were so much worse than those cultivated via their own e-commerce platform.

When I score new customers, it's not uncommon to observe the following situation:

• Acquired via Email Subscriber List: Rebuy = 30%. Spend = $150. Value = $45.00.
• Acquired via Google PLA:  Rebuy = 20%. Spend = $150. Value = $30.00.

Of course you could lament that the Google Product Listing Ad customer is worth 2/3rd what the new customer via Email Marketing is worth. You could even spend less on PLA customers, thinking you don't want customers with low long-term value.

Or, you simply become more "frugal" with the newly acquired Google PLA buyer. Work hard for ninety days to convert the customer to a second purchase, then relent and let the unresponsive customer respond to your "free" channels ... email/sms, free variable cost channels like YouTube, essentially free channels like Instagram etc.

When I score your new customers, you have to fight your instincts ... you don't want to fall into the trap of de-emphasizing customers just because they have lower long-term value. Instead, fight like heck to convert the customer to a second purchase within ninety days ... then relent.

All this gets worse/harder when AI is in control of your new customers ... and that day isn't far off in the future anymore.