Very true. Fine lines huh?

My personal feeling is: As a rule of thumb, paying for a customer is ok. You won’t go wrong there. Paying for volume. paying for market share, etc. is where the trouble is.

This is really a technical issue & I think these discussions are better kept at the ‘high level’. But if we had smart analytics (Google Analytics is not smart) we’d know where our online customers came from. Small businesses like yours probably have 10 20 customer that make the business. Another 50 pull a bit of weight.

If analytics & CRM played nice, we could look back at a customers interactions & see how the relationship was built. First sale via Amazon, second via email coupon. Visited a few more times. Bought at a sale. Spoke on the phone. etc. etc. etc.

It’d still be a challenge to work out how all your campaigns work together. But that’s be valuable info.

You’re right about the semantics – I was referring to profit margin (rev – COGS).

“Especially in ecommerce, a customer can be worth more then a sale.” I think we’ve talked about this a bit before, but I obviously agree with you 100%. The interesting thing is how much more are they worth…because I do think a lot of companies take this philosophy too far and blindly spend to acquire customers. You still need to have positive cash flow to survive.

I think arguments against your previous decision were all wrong for one reason or another:

– What potential investors would think-
1, that only means something if you’re looking for them. 2, I disagree with the assumption that it hurts your valuation. Companies are valued largely based on their size.

– Semantics –
You said ‘profitability,’ I think you meant margins or grosss profit margin (Revenue – COGS). I never heard you say you took on staff to pay for this, got a bigger warehouse etc. Your fixed expenses stayed the same, your marginal expenses went up. Did your net ‘profitability’ really go down?

– Reliance on Amazon -
You were warned to not be dependant on amazon or ebay or anything else that could sour. Good advice. But not something to keep you from adding a channel. The opposite, what you did was diversify.

Finally, I think that they ignore the most important part of the scheme: It’s essentially marketing scheme. One that generate cash instead of sucking it up.

Especially in ecommerce, a customer can be worth more then a sale. If your marketing process only starts to heat up after the sale, you can lose money on a sale & make it up later. That’s a powerful position. You can outbid anyone. The usual problem, is that a client acquired with a loss leader sale, isn’t worth as much so you can’t win sales by being cheaper & still get this effect. But you can spend more on marketing.

How many stores never changed the default thank you page? It could be an important page. A very important one. One that you pay to get customer to.