December 04, 2019

Gifts

Certain items are sold with the purpose of being offered as gifts. In your database, you can easily discern this fact by looking at the winning items during 11/15 - 12/15 ... items that then quickly die off.

If you want to see how effective those items are at creating loyal customers, measure the 12-month repurchase rate of customers who bought gift-centric items. Say a customer bought the item on November 20. Measure the probability of the customer buying that item again from November 21 to the following November 20. Repeat this process for every customer who bought that item, and you have an "item-rebuy" metric for each item.

The metric is useful because it helps you understand which items generate loyal buyers, and helps you figure out which items generate short-term profit (both of which are important).

Every item in your assortment has a purpose.

Every price point in your assortment has a purpose.

Your merchandising team has a purpose for each item.

Your customers have a purpose for buying each item.

Your job is to understand the real purpose of each item.

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