Spend to Grow

It’s not unrealistic to expect to prospect in total (on a cumulative basis) at or above the break-even point, but it’s reasonable to attempt to pay back that investment within one year. How much you can afford to spend for a new buyer, assuming a one-year payback, is calculated in the first chart.

Be Ready to Lose
You want to break even (or better) within one year. Accept the fact that you’ll lose money on the initial order. In the example, based on a mailing to 100,000 prospects, the company in the first chart lost $18,214. It cost $12.14 to acquire a new buyer. At a 1.5 percent response, 1,500 new buyers were acquired. If these 1,500 buyers are mailed 10 times during the next 12 months, they’ll generate an estimated contribution to profit and overhead equal to the contribution loss from their initial purchase.