November 26, 2018

Merchandise Lifetime Value (MLV) - Incremental Improvement

Ok, I used my simulation model to illustrate what would happen to five-year merchandise lifetime value (MLV) if I was able to increase the number of new items in the top 55% by 10% (take items out of the bottom 45% and move them to the top 55%).
  • Base 5-Year MLV = $1,824,039 per 1,000 new items.
  • Improved 5-Year MLV = $1,971,593 per 1,000 new items.
  • Improvement = 8.1%.
If the marketer just makes a concerted effort - featuring new items in low-cost areas (email, Instagram, home page, key landing pages) ... and follows through on delivering a 10% increase in good new items ... then Merchandise Lifetime Value (MLV) increases by 8%.

The best part of this? When merchandise productivity improves, marketing gets to spend more on fun activities because those activities have a better return on investment because the merchandise the customers will purchase becomes more productive.

This isn't rocket science.

And it is so darn easy to do.

Go do it!!!!

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