Spend to Grow

To figure out how many new buyers you need to generate a year, know your housefile attrition rate and desired growth factor as determined by management. For example, for the Acme Catalog Co., assume its housefile (buyers only) totals 164,286. Also assume that 60 percent of this file will make a repeat purchase during the next 12 months. This means that 64,714, or 40 percent of this file, need to be replaced simply to maintain the same file size (before any growth factor). Take a look at the second chart (below).