The Mathematics of Circulation Analysis
Let’s consider a few examples of expected contribution to profit and overhead, from a typical customer, over a given period of time. Shown at left are three examples that lists the contribution value over a 12-month period.
As you can see in Example A, this cataloger spent $6.78 (based on incremental cost) per new buyer. A total of 1,500 new buyers were generated from this mailing to 100,000 prospects. Over the next 12 months, these 1,500 new buyers received 10 additional mailings as shown in Example B. These mailings, in turn, produced a positive contribution of $13.16 per customer to profit and overhead. If we combine the results of Example A with the results of Example B, the contribution per customer at the end of a 12-month period is a positive $6.38 for the full year, as seen in Example C.
- Companies:
- Lett Direct Inc.
Steve Lett graduated from Indiana University in 1970 and immediately began his 50-year career in Direct Marketing; mainly catalogs.
Steve spent the first 25 years of his career in executive level positions at both consumer and business-to-business companies. The next 25 years have been with Lett Direct, Inc., the company Steve founded in early 1995. Lett Direct, Inc., is a catalog and internet consulting firm specializing in circulation planning, plan execution, analysis and digital marketing (Google Premier Partner).
Steve has served on the Ethics Committee of the Direct Marketing Association (DMA) and on a number of company boards, both public and private. He served on the Board of the ACMA.  He has been the subject of two Harvard Business School case studies. He is the author of a book, Strategic Catalog Marketing. Steve is a past Chairman of both the Catalog Council and Business Mail Council of the DMA. He spent a few years teaching Direct Marketing at Indiana University in Bloomington, Indiana.
You can contact Steve at stevelett@lettdirect.com.
