I call it "below average" ... you calculate the average price an item sold at over the lifetime of the product. If an item sold for $30 and then you offer the item at $20 then times when the item sold below the overall item average are considered "below average".
Why is this metric my favorite?
This business is struggling, and you can visibly see when Management pushed the "panic button".
Here are some of the findings I enjoyed this year when viewing this metric:
- You get to see when management gets frustrated with business performance.
- Customers who buy items "below average" tend to like this fact, skewing away from full-priced items in the future.
- Full-Priced item buyers can become "tainted" when they're offered items sold at prices below their historical average. They switch their loyalty toward future items that sell below the historical average for the item.
- Email marketers are notorious "cheaters" ... in my work, they purposely select or promote items selling below their historical average in an effort to boost email performance metrics.
Calculate this metric and store it in your database. Segment customers based on this information. Understand the moment when your Management team lost faith in the business. The metric is so darn useful!!