I see Jeff Bezos, even after his divorce, is again richer than anyone else.
Quite a few years ago, I wrote a piece about him.
Why didn’t he go broke when everyone thought he would?
He seemed to be losing money hand over fist.
But he succeeded because he knew the answer to one of the most important questions you can ever ask.
How much is a customer worth to you?
You only know this when you know how long a customer will stay with you.
This will vary depending on your business.
It could be five minutes when they buy once but never again.
Or it could be half a lifetime, when you stay with the same bank.
Jeff Bezos knew his customers were staying with him for a long time, so he knew eventually he could succeed.
These principles are not new. They date back to the old mail-order business.
In 1930 Max Sackheim and Harry Sherman started something called the “Book of the Month Club”
It was the first “continuity series”, something people subscribed to.
Once you know how long people will keep buying you know how much you can afford to spend getting a customer.
How long depends partly on what you’re selling and partly on how good it is.
For example, the average length of time that people stay in my little club – Ask Drayton – is 10 months.
I don’t see how it could be longer.
I once read the the average for similar programs is only 4 months, but again, it depends on the quality you get.
So the question is, of course, is Ask Drayton worth it?
Only you can figure that out – by giving it a try.
It’s only $1, so not the riskiest of investments.
Best,
Drayton
