Lifetime value of a new customer
Prior to any campaign I like to ask my clients about the level of response required to break even. Some find it easier than others however it's important to work this out prior to committing your energy and resources.
In addition to breakeven point, lifetime value of a new customer is another important consideration. Many campaigns fail to break even right away but once they do, the pay-off comes in the form of the ongoing business of those newly acquired customers.
Consider the average length of a customer relationship, referral opportunities, average spend and profit margin. It soon becomes apparent why it's important to keep testing lists, offers, design elements and target markets to find the right mix for your business.
We've heard the clichés many times, 'you need to spend money to make money' and 'it costs a lot more to acquire a new customer than retain an existing one' but they are dead right.