## January 31, 2023

### Remember Last Week?

Last week I shared information about a larger-sized brand that many of you shop from, illustrating the subject lines used in their email marketing campaigns over a multi-week period (click here).

In my Category Development projects (click here for pricing), I run models based on the percentage of sales generated by a customer on items selling below their historical average price point. The equation might look something like this:

• Future Gross Margin Dollars = \$10.00 + 0.25*(Dollars Spent on Items At/Above Their Historical Average Price Point) + 0.20*(Dollars Spent on Items Below Their Historical Average Price Point).
Pretend you have a customer who spent \$100 last year on items at/above their historical average price point:  Future Gross Margin Dollars = \$10.00 + 0.25*(100) = \$35.

Pretend you have a customer who spent \$100 last year on items below their historical average price point:  Future Gross Margin Dollars = \$10.00 + 0.20*(\$100) = \$30.

Discount a lot this year, cost yourself \$5 profit next year.

This is the reason why I used the "above" / "below" designation. Some brands discount everything. Well, this still means that a \$49.99 item which usually sells at 30% off (\$34.99) can be sold at 60% off (\$19.99) meaning the \$19.99 item is sold below the historical average price point.

I realize there are business situations that require significant discounting. I'm trying to help you avoid problems where customers become trained to expect the discount, costing you profit. I want you to be more profitable.

### Target Specific Reactivation Customers

Not all reactivation customers are created equally. This week, we'll look at 18 month 1x reactivation customers ... they bought for the ...