It's common for somebody to increase discounts, especially in November and December. You've got to get market share, right? (or do you?).
This year, you sold at 40% off (on average). Last year you sold at 30% off (on average).
So you'll look at your twelve-month buyer file (as of 10/31), and you'll measure a handful of repurchase metrics.
- Rebuy Rate = 22%.
- Spend per Repurchaser = $135.
- Customer Value (rebuy * spend) = $29.70.
Then you'll look at last year.
- Rebuy Rate = 21%.
- Spend per Repurchaser = $132.
- Customer Value (rebuy * spend) = $27.72.
The analytics guru will say that spend increased by 7% (29.70 vs 27.72) and will say that "all is good" and the marketing team will pat themselves on their backs and everybody but the CFO will move on and celebrate a successful season.
Why is the CFO choosing not to celebrate?
- 2018 Gross Margin Dollars = ($29.70*0.60 - $29.70*0.35) = $7.43.
- 2017 Gross Margin Dollars = ($27.72*0.70 - $27.72*0.35) = $9.70.
- Change = -23%.
When measuring response, please check the stats ... don't just look at the stuff Google tells you to analyze ... and don't trust your classic rebuy / spend / value metrics.
Look at Gross Margin Dollars.