Is Your Direct Marketing Business Growing?

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Is your direct marketing business growing? It’s a simple question but the answer isn’t so easy. The core, the essence, the kernel of whether your business is growing, shrinking or static is hidden in two metrics. Smart marketers track the number of last 12 month buyers and the number of Last 12 month new-to-file buyers. The number of last twelve month buyers tells if your business is growing. The number of last 12 month new-to-file buyers tells if you are continuing to acquire new buyers economically. These two metrics address a number of key issues:

1. Is the number of house file buyers static, shrinking or growing? If the house file was growing and is now static, your business may soon plateau. How is the size of the L12m buyer file trending year-over-year?

2. Is the business churning an eroding buyer file? A shrinking last twelve month buyer files almost always translates into slowing sales or shrinking margins.

3. If the buyer file is static, growth can usually only come from mailing the buyer file more frequently.

4. If the business has just become mature, don’t promise increased sales or increased profit just because you’ve always enjoyed increases.

5. Can you still acquire new buyers above breakeven? What is the proven prospecting universe? How is the number of new buyers trending year-over-year? Your company’s future depends on the ability to add new customers as economically as you’ve added them in the past.

6. Is the cost to acquiring new buyers increasing?

7. The number of last twelve month web buyers compared to traditional call center buyers and the number of new buyers by channel defines how your channels are changing.

Chart both these metrics on a graph and you’ll see clearly where your business is heading. Keep a month by month chart of the number of last 12 month buyers and the number of new-to-file last twelve months buyers and you’ll know where your business is heading.