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Increase your profitability by up to 48.5% by shifting the attention to the right products

Increase your profitability by up to 48.5% by shifting the attention to the right products

Increase your profitability by up to 48.5% by shifting the attention to the right products

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In this small case study, we will look at how we can increase our profitability by simply changing the marketing exposure of specific products across all marketing channels.

We are working with actual, anonymized customer data in this case study.

How we analyze Product Performance

At its simplest, analyzing the performance of your products is as simple as sorting all your products in a table by their total number of units sold or revenue.

Let’s say you want to analyze Month-To-Date shorts performance based on the revenue. You may be looking at the table similar to this one:

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The biggest shortcoming of this analysis is that we analyze only output (meaning how many units of specific products we sold), but we don't see what input was required to get these results.

If we add Product Views (meaning how many times product was viewed on the website) into the picture, we suddenly have an excellent approximation of your total marketing effort across all marketing channels for the specific product.

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We can see that “Shorts 2” and “Shorts 3” had way less exposure compared to “Shorts 1”. We can see that “Shorts 2” and “Shorts 3” have way better “Product CR%” metric, which is simply the ratio between “Unique views” & “Units Sold”.

Now the question is, how much more money we would make if “Shorts 2” and “Shorts 3” had higher exposure, and “Shorts 1” had less exposure?

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If we know how much profit we make when we sell one unit of a particular product, we can calculate a metric called PPV (short for Profit per View).

Now let’s do the math here. Let’s say that instead of promoting “Shorts 1” & “Shorts 4” across all marketing channels (Email, better exposure on the Website, Paid Facebook, Organic Facebook,…) we would promote “Shorts 2” & “Shorts 3” instead.

Let’s say “Short 1” would receive 8,000 fewer Unique Views, “Shorts 4” 5,000 fewer Unique Views, and “Shorts 2” and “Shorts 3” would receive 6,500 more Unique Views. What would that mean for our bottom line?

Product
Change in Unique Views
Change in Profit
Old Profit
New Profit
Shorts 1
-8,000
-$3,920
$6,037
$2,117
Shorts 2
+6,500
+$9,295
$5,578
$14,873
Shorts 3
+6,500
+$6,110
$4,003
$10,113
Shorts 4
-5,000
-$2,250
$3,427
$1,177
Total
0
+$9,235
$19,045
$28,285
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If we drove more traffic towards “Shorts 2” and “Shorts 3”, instead of “Shorts 1” and “Shorts 4”, in the best-case scenario, we would increase our profitability by 48.5%!
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We understand that with higher exposure of “Shorts 2” and “Shorts 3,” their PPV (Profit Per View) metric will probably decrease. It is implausible thought that it would drop to the levels “Shorts 1” and “Shorts 4” PPV values. Even if the PPV of “Shorts 2” would decrease by 50%, we would still make more money in this example.

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Additionally, we provide a free 45-minute consultation where we can discuss the technical, data collection, and human resource requirements needed to implement product performance analysis similar to the one described in this post. To schedule a consultation, please visit this link.

Thank you for your time, and we genuinely hope that the information shared in this brief post proves beneficial to you!