June 21, 2021

Customer Development: Price Increases and Items per Order

Recall the first two quantified relationships.

What does the relationship look like for Price vs. Items per Order.

As prices increase, customers purchase fewer items per order (#duh).

In this example (using actual data), we see three trends associated with increased prices.
  1. Customers Are Less Likely To Repurchase Again.
  2. Customers Purchase Fewer Times Per Year.
  3. Customers Purchase Fewer Items Per Order.
Is this bad?

Not necessarily.

The key is to multiply the relationship out across metrics ... if the net result is an increase in gross margin dollars, the short-term is protected.

The long-term, however, is undoubtedly hurt. You'll have fewer customers long-term, and that means you'll most likely have a smaller business than you otherwise would have.

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