New Book Addresses The Fatal Mistake 80% of Retailers Are Making & How to Correct It

Mountain Home, AR (PRWEB) August 23, 2006

Eight out of 10 businesses fail in the first five years, but that’s not the worst of the story. Four out of five fail in the next five years.

What happened?

Market has been determined, stock ordered, doors open. Advertising has been budgeted, tested, re-tested and approved. Customers have been drawn in. Conversion ratios have been compiled, tested, adjusted for, improved. Things are going along swimmingly. So you think. “At the rate that we’re adding new customers, we’ll be on easy street very soon.”

But what is happening as you see your cash flow shriveling, your savings being called on to try and slow the flood of overdue invoices that should have been paid for from an abundance of profits?

Author Jay Stuart says, “This is the oldest trap in the book. How much does a one time customer cost a retailer as compared to a regular customer? A one time customer comes with a sticker price which includes the advertising campaign or promotion that drew them in to your store. A $600 newspaper ad that draws in 30 new “customers”? $20 each. They came in out of curiosity, spent $8 and never returned? Your COGS (Cost of Goods Sold) is 50 percent, so you made $4 on the sale (less overhead). $20 to get them in the door and you’ve made a $4 return. How long can your business, or any business for that matter, keep their doors open with these numbers? Your break even on each of 30 new “customers” (assuming a 50 percent COGS) is a $40 purchase. Just think of it, you’ve sold $1,200 worth of goods and just broke even on a $600 ad. If each customer spent less than this threshold, you’ve lost money. ”

“The profit in advertising or promotion doesn’t come from a one time customer, but from a loyal, repeat customer,” says Stuart. One who’s “cost of acquisition” is already paid.

“My new e-book, 'Marketing Secrets of Gift & Loyalty Cards' was written with situations just such as these in mind,” added Stuart. “How to get new customers and how to keep them coming back, time after time, year after year. Bottom line profit lies in repeat business. My book shows how to develop a loyal customer base and add to it, consistently.”

The only book written that specifically addresses the marketing of Gift & Loyalty Cards, it is quick to point out the changing nature of American retailing. For instance, few merchants are aware that if they are running a 50 percent COGS, they will make a $16 profit for each $25 Gift Card sold.”

More information on the e-book can be found at http://www.giftcardmarketingnet.com.

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