“Preparing the Six Month Merchandise Plan” provides step by step procedures, with needed formulas and additional information, for developing the Six Month Merchandise Plan. Depending on the type of merchandise, a sales associate may need to determine costs by measurement -- like length or weight -- or by unit price. Therefore, the retailer has $50,750 OTB at retail. endobj If there is a survey it only takes 5 minutes, try any survey which works for you. The formula for reaching the ROI in this scenario would be as follows. A product’s retail price is $79.95 and it costs $42.00. 2 0 obj 7 Ways To Optimize Your End-to-End Supply Chain, The Balance Small Business is part of the. Find your customer lifetime value by multiplying together your average order value (AOV); average purchase frequency rate (F); and gross margin (GM). For more information please see our Privacy policy. You found your KPIs. Just select your click then download button, and complete an offer to start downloading the ebook. %h� c��fb)d�%e�Nď�&�����,�� ����%���k�;�.�U�� �A���Ͽ τF�{��z]�-�a�܄����q���\?7�(X���@¾5.�䮗$y��W-e4�c2QQ�$�ؓi�I%�)X t_E�����f���\V�Y�����N�:�ݐ���Xv�v�!�N��I+�IϽ�%�� ��v�50�^j^3�st�(�m/�%��_���D��R�N���\�4�|`w~*��bҶ��� ��rM.���&T)!�OOKZ$t0x>�@}Ez����Uc4ۉ@��O�(���K�*���[~�|*$(8U�C����D���4���,�ҙ�˸W;��Ye�vB�/qmh��QV!�N��5�c�Ah�v�T_��RC]��JK��j}�E��U'�OQ�]1�{. If you have additional formulas or you Deeper Reasons for the Online Retail Formula, How to Find Your Customer Acquisition Cost (CAC). so we can make this section more complete. “The ideal CAC:LTV ratio is different for every industry, but the comfortable range is between 1:3 and 1:5. Now what? The variables you’ll need to define as you start piecing it together (Cost Per Visit, Gross Margin, Frequency, etc.) k���!�ll�)�T���0ec/���(p�wpn������T��P��e�=_9�m��>e>4�f%��Jz��=��**��Z�D%��z�ӌZ|l�t�B/��;�H�>����=�X�1�p�e��>b���/��)�W��4�Ū��cz�8��'2*}��H��Ӌ{O�{�)�����W}s��7��|&��R瓋�xӾt{���f_�8����x�_U����+�+�M�E��E�q��'T�L�۟Ok��l�D5y��,?ޛ\�\ �"F�!�;W>O����C�]�!�Y6����e{��� cpa vs cac. Everyone does math, every day. Read how we process your data in our Privacy Policy. same time period). Investment) =  (GM% x turnover) / (1 - markup %) The difference between your CAC and LTV will inform you of how you should adjust your marketing spending. I am a retail buyer. x  (100% - Markup %), Cost of Goods Sold (COGS) = While too little product can mean missed sales, too much product can cause revenue loss. why clothing stores are always out of my size. inventory at beginning of year + purchases or additions during the How to find your Average Order Value (AOV): AOV = Total Revenue / Total Number of Orders. Most retailers are A ratio of 1:6+ is even better.“ 1:6 and up means your customer loyalty program is working brilliantly, your customer experience is near perfect, and overall you’ve honed and optimized your site just right. If you have questions for Jennifer, be sure to ask them in the comments section! My friends are so mad that they do not know how I have all the high quality ebook which they do not! Find your customer acquisition cost by dividing your Cost Per Visit (CPV) by your Conversion Rate (CR). While it’s better to have the ratio skewed in this direction, a finding this dramatic suggests you could have even greater success by spending more on your customers. For me, it’s no longer just about memorizing a calculation. sales x stock sales ratio, Sell through % = However, it's best to use dollars, as there are significant variations in costs between products. 2.) Although most accounting programs do the math for you, as a business owner or accountant you should know the most common retail math formulas that are used to track merchandise, measure sales performance, determine profitability, and help create pricing … 10 0 obj Get the best of our knowledge. Merchandise at your favorite store doesn’t magically appear on the store shelves. How do you think math helps you do your job better? Sell-through % Is a percentage of units sold during a The formula for a manufacturer includes raw goods and unfinished product Find the average for your industry and compare those metrics to your company’s. To take advantage of special buys or to add new products, some of the OTB dollars should be retained for future stock purchases. XD. eBook includes PDF, ePub and Kindle version. Variable Costs). $ Stock / Sales for period, Shrinkage =  Difference between book And — surprise! The plan can be maintained on paper, in a spreadsheet, or by purchasing one of the several retail software packages available that contain OTB programs. Last Years August Our library is the biggest of these that have literally hundreds of thousands of different products represented.  Beginning Inventory $400 / $900 = 44.4% GM rate. Seriously. And if you aren’t spending enough, your competitors will. 9 0 obj Today, every report that the buyers use was created by me. 13 0 obj The Holy Grail of retail math. is the number of times you sell your average investment in inventory each Breakeven Analysis:  Simply stated, this In fact, there’s a lot of planning that goes into the number and types of candy bars that fill checkout-line racks. There are five Key Performance Indicators (KPIs) successful e-commerce companies look at to determine CAC and LTV: Your CAC is the total average cost to acquire and keep a customer for your business. ���,�u��$XJ���@ -4Ċ �bAE��Y %t�Pp��(�!.���.����}1��Nr?t�a5��L1!�� ��M`��O�Ĉ;Nml����v�C��\*��d^u2�����D�}� ��Tf� S�C�gڡDaF�]q>�F{\�dZ#u�o��c�}�d"����ڜs���T�Jܖ�?ԡ�&f�1R�ۣ6�˰�!�acC��Ɔ���}S��l�t�|�%m���E_�wy@��]!*�6�}. Beginning stream <> ��L��"����i� I use basic math all of the time. units sold during a period (for example 1 month). Does that mean we’ve succeeded? If you’re interested in using retail math solutions to improve any area of your CAC:LTV ratio. The definitive guide to CDPs (2020), Learn how to choose & implement a customer data platform (CDP), How we used our competitive advantage to build the CDP of the future, The ultimate guide to mastering email deliverability (2020), Email marketing analytics deep dive: Metrics, goals, KPIs & reports for 2020, Email A/B testing – The quickest method to increasing your email performance and revenue, Organizational customer-centric marketing: This time it’s personal. When I first started in the Lord & Taylorretail training program, the first class they gave us was in retail math. BOM Find your Customer Acquisition Cost, Customer Lifetime Value, and learn which of five KPIs your company needs to work on most. How to find your Average Purchase Frequency (F): F = Total Number of Orders / Total Number of Unique Customers, GM = (Total Sales Revenue – Cost of Goods Sold (COGS) / Total Sales Revenue and expressed as a percentage You end August with 900 units shirts of stock (End of For the buyers, it was like starting over. A retailer can be sure to stock the proper amount of the right products at the right time by using an open-to-buy plan. 4 0 obj I am a retail buyer. ���gCiNT�:ˉ�U'96�^��:�g"��_��)��Nll�b��j�8y /6�{ܐ���;�����%.2t�dG��F�^^���n҇� ��w�ʣ;Ӑ����9�1�M�@��`��ui�MW�7��W���b���tl����Wt�����fӝcP�66�˱�a����`bG�����-��R������w�ީ�u"��@�Ȍb;����op�/�`�#n��K9X}!���4־nyfݷėo��N�����������P~E��jzv�W���j����4��H�;�!���e. Can you explain what you do for a living? Is the problem that your Cost Per Visit is too high, or is your Conversion Rate too low? Why is the Online Retail Formula Important? When finding your CPV, be sure you’re calculating the total cost of both acquiring your customers, and of keeping them around to fulfill their customer lifetime value.

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