Here's actual data ... customer spend is broken down into low / average / high price bands. Then I regress next year's spend in each price band based on last year's spend levels.
Here's what the outcome looks like for customers who spent $100 exclusively in the low price point band last year.
- Will spend $29.15 next year in low price point bands.
- Will spend $14.34 next year in average price point bands.
- Will spend $8.53 next year in high price point bands.
Had the three predictions been nearly "equal" this brand could have had confidence in increasing prices.
But that's not the case ... customers will spend more next year in lower price point bands than in the other bands summed together.
Tomorrow we'll look at the outcome for $100 spend in the average price point band.
Run these analytics for your business, ok? You need to teach your co-workers how customers behave.