Fundamentals of Prospecting at Breakeven, Part 1 of 2
In the first of a two-part series, this week I’ll look at how catalogers should calculate breakeven when prospecting for new customers.
The basic circulation model for catalog businesses is to prospect for new customers at or above breakeven. You profit from mailing your buyers, but if you prospect below breakeven, you can bleed that profit right away — and it’s difficult to recapture in later years. If you set the bar too high above breakeven for new customer prospecting, you effectively diminish the influx and growth of new buyers while negatively impacting your profitability. You limit the potential universe of catalog buyers.