Expanding Customer Purchases
A major Supermarket sent a $10 coupon to 900 customers that had been inactive for 90 days or more. Over 300 past customers took
advantage of the offer. Of those, over 150 became regular customers once again. Now they certainly would not have made such an offer to
active customers because it would have cost them a fortune and provided no real benefit for them – does that make sense?
Of the 900 people they sent an offer to, the Supermarket had 300 customers take advantage of their offer and 150 return as regular
customers. Since the average family spends $400 or so per month at the grocery store, these 150 revived customers will generate $720,000
per year and $3,600,000 over the next five years! Now gross profit margins at a grocery store are perhaps 20%. Therefore, the Lifetime Value
of these 150 customers is three-quarters of a million dollars! The promotion cost them only $2,250 in free groceries and about $600 in
mailings - Not a bad return.
Supermarket