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How to determine your most profitable products

 

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Analytics tools are integral to being a successful retailer in 2018, regardless of the size of the business.

They calculate complex customer analytics like the lifetime value of each customer, when a customer is at risk of being lost and, more importantly, what it will take to get them back. They also determine which marketing channels and campaigns are generating the highest customer lifetime value and have the lowest customer acquisition cost.

Using pre-built customer segments, or defining their own, retailers can personalise campaigns based on unique customer attributes and behaviours. Advanced analytics simplify these customised marketing campaigns and can easily plug into external solutions such as MailChimp. The result is retailers can set up automated processes that identify a specific customer segment, upload data to marketing platforms and send out dedicated campaigns—all without lifting a finger.

Which products are your most profitable? 

Understanding product performance at a category and SKU level means retailers can better manage inventory, make more informed pricing decisions and easily adapt for seasonal trends. Retailers also know immediately which products are generating the most profit versus those that are hurting their bottom line.

Most advanced analytics tools will offer product bundling recommendations, so retailers can increase the average order size by targeting specific customers based on behaviours. By taking the guesswork out of inventory, sales tracking and using ‘cost of goods’ data, retailers understand how the cost and sales volume of each product impacts cash flow and budget for future marketing activities.

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Vanity metrics add no value

With so many marketing avenues available to retailers, tracking the success of each can be cumbersome. Because the cost of each is relatively low (in pure dollar terms), many business owners will just set-and-forget or focus on vanity metrics such as likes and follows, which don’t immediately add to the bottom line.

Understanding at a glance which marketing channels are driving actual revenue—and being able to easily compare within one dashboard view—allows you to develop tailored campaigns that are more likely to succeed, as well as giving clarity on where marketing dollars are best spent.

Customised reporting delivers actionable insights

Retailers can have all the information in the world, but if it’s difficult to access or presented in an unintelligible format, they may as well not have it all. Gone are the days of exporting and compiling, cleaning data and manipulating it into a usable format, with data analytics tools eliminating the need for manual intervention. By bringing together information from a range sources, business owners are able to access everything they need to know about business performance, instantly.

Standard analytics reports include: comprehensive product and customer analysis, cost of goods sold reporting, store performance management, daily performance snapshots, weekly updates and monthly e-commerce reports.

Beyond standard reporting functionality, a good analytics tool will allow users to build their own reports, based on information that is relevant to their specific business, and to schedule them to run automatically. This provides an important business management tool and improves internal communication.

If access to accurate customer, product and marketing information is important to your business, it might be time to put down that crystal ball and consider how a robust data analytics solution can help.

Ryan Murtagh is the founder and CEO of retail management platform Neto.

 

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