Spend to Grow

Rule: The percentage of revenue growth will approximate the percentage increase in your 12-month buyer file.

In the first chart (on pg. 39), I look at how much you can afford to spend for a new buyer based on what you expect in return. Consider a payback of one year (or less) a reasonable investment payback period. Some catalogers might say you want to base the cost to acquire a new buyer on expected lifetime value. This isn’t an unreasonable approach, but most prefer to take a shorter term view.