Affinity Analysis: What you can learn from top seller analysis

Part 3 of a 4-part series

Continuing on with our series on affinity analysis, I want to take a quick look at how analyzing top selling products can help you drive more sales.

At first blush, top-seller analysis might seem fairly straightforward: just find out what your top sellers are and provide more for your customers, right? According to Shantanu Goswami at SAP – my affinity analysis guru – it’s a bit more involved.

Let’s say that you run a DIY (do-it-yourself) store that sells power drills. You do some analysis and you find that your two top sellers are ABC drills and XYZ drills. You also notice that your margin on the ABC drills is 15% higher than the XYZ drills – and that you sell more of them. Hmmm, must be doing something right.

But since we’re talking about drills, let’s drill a little deeper. For example, let’s say you do a full market basket analysis of each drill that yields an interesting insight: turns out you actually make a higher margin per market basket for customers buying the XYZ drill. Why? Because those customers buy more drag-along products at higher margins than the products associated with the market baskets of customers buying the ABC drill.

What do you do with this information? You might want to place higher-end nails, gloves and goggles in close proximity to the XYZ drills based on your new insight that customers who buy these drills tend to shop for higher end products. Or perhaps you’ll want to more aggressively promote the XYZ drill to sell more – and then monitor if this maneuver has an impact in either direction on market basket margin. Alternatively, you may want to leave well enough alone – happy with the high product margin for the ABC drills and the high market basket margin for XYZ drills. There are many possibilities. Too many to walk through here, but you get the point.

By analyzing your top sellers, you may uncover some interesting things about your products and the shopping behavior of your customers. My expert, Shantanu, can provide further comment on the types of insights that can be had with this kind of analysis.

What other kinds of top seller scenarios have you identified that have helped you boost your market basket margin?

View other blogs in this series:

Blog 1 – Affinity analysis and the “man aisle”

Blog 2 – Affinity analysis: What’s up with the drag-along effect?

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