March 16, 2022

Oh Boy

Here's some data I analyzed recently ... tell me what you observe when it comes to gross margin percentage:

  • Grade "A" Customers = 44.3%.
  • Grade "B" Customers = 46.9%.
  • Grade "C" Customers = 48.4%.
  • Grade "D" Customers = 49.7%.
  • Grade "F" Customers = 50.9%.
  • New Buyers = 53.7%.
Customer quality goes from "A" (best) to "F" (worst).

What do you observe?

Yeah, somebody in the marketing department decided to feature low-margin items or discounted the heck out of items to better/best customers to "tickle the customer's buying bone". 

Oh boy.

I know, I know ... here it comes.
  • "But Kevin, if we discount then we get more orders and we get more gross margin dollars and the total sum of gross margin dollars is higher than if we don't discount then our marketing efforts were successful."
Sure.

If that statement is true.

Almost none of you ever do the work to determine if the statement is true. You just issue the statement assuming it is true.

Do the work.

Prove that your thesis is correct.

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