Print-Plus: Focus on an Incremental Break-Even Point
Online marketing often leads to a positive profit contribution and overhead on initial purchases if you don't overspend on keywords. But it's tough to gain enough new buyers online to grow housefiles. The lifetime value of a web buyer often isn't as great as a print buyer.
There's a certain attrition rate on any housefile. Print and online customers stop buying due to the economy, poor service, "older" customers passing on, etc. If nothing else, replace those customers with fresh buyers so your 12-month file doesn't decline. To grow, print and online prospecting must exceed that attrition rate.
Assume that 50 percent of a typical customer file will purchase again next year. This means, at a minimum, you need to replace the 50 percent that won't so the active housefile doesn't decline. This includes a combination of adding new buyers and bringing older buyers on the housefile into the 12-month category.
If you want to grow, the percent of "new to files" has to be even higher than your attrition rate. You'll need to mail below the incremental break-even point to find them. New buyers are the lifeblood of any catalog company, and you need to be willing to invest initially to acquire them. But invest wisely.
Stephen R. Lett is president of the catalog consulting firm Lett Direct (email@example.com).