As mentioned yesterday, MRV (Merchandise Residual Value) is a function of two independent variables and one dependent variable (yes, I'm about to tell you how to calculate the metric yourself ... something your favorite agency absolutely will not do).
Analysis Period: All items sold in the past year.
First Independent Variable: Time ... the average amount of time that has passed (months) since the average customer bought that item. A value of 1.4 means the average customer purchased that item 1.4 months ago.
Second Independent Variable: Order ... the average order frequency for the customer buying the item. If the customer places her fifth life-to-date order buying that item, the value is five (5). A secondary benefit to calculating this metric is that not only do you get to derive MRV, you also get to know if your best customers buy an item or if new customers buy a specific item. You'd want to know the items that attract new customers, right?
Dependent Variable: Rebuy ... do customers repurchase after buying the item being analyzed?
Select all items generating at least "$x" in the past year ... in the example I'm using, it's at least $10,000 sold in the past year.
Regression: Time and Order variables used to predict Rebuy.
MRV: Rebuy / Predicted Rebuy. You could also use Rebuy - Predicted Rebuy, the outcome is the same, I now find the ratio to be more important.
So, there. Go have your analyst run the analysis for you, Go have your analytics agency run the analysis for you. Seriously, what stops you from doing this right now?
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