November 09, 2022

Which Cell Generates The Most Gross Margin Dollars?

We've learned several things in our case study this week, haven't we?

  • Customers trained to enjoy discounts continue to enjoy discounts.
  • Customers trained to pay full price continue to buy via full price.
  • The customers who spend the most in the future pay mostly full price with "some" discounting.

So, which cell generates the most gross margin dollars on an annual basis?


The results are similar to the future demand/sales table.
  • 1x Buyers?  51% to 75% on first order.
  • 2x Buyers?  76% to 99% historically spent on items at/above their average price point.
  • 3x Buyers?  76% to 99% historically spent on items at/above their average price point.
  • 4x Buyers?  76% to 99% historically spent on items at/above their average price point.
  • 5x Buyers?  76% to 99% historically spent on items at/above their average price point.
  • 6x+ Buyers?  51% to 75% historically spent on items at/above their average price point.

In this case, you don't want customers who only pay full price. You want a mix ... but the mix needs to be heavily skewed toward items selling at/above their historical average.

Look at 1x buyers ... first-time buyers in the past year.  If they only bought discounted items, they generated $14.96 in gross margin in the next year.  If they spent 51% - 76% of their wallet on items selling at/above their historical price point, they generated $20.65 of gross margin dollars in the next year. 

Which customer would you prefer to acquire?

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