When journalists call me to evaluate sales numbers during a specific cycle, they usually want to talk about simple year-over-year comparisons. But those are the wrong conversations to be having.
Customer Centricity

Instead of measuring the year-over-year sales change of a product or a sales campaign, we need to be adopting a more customer-centric line of thinking when evaluating product sales; we need to change the question from “How many did we sell” to “Here are the customers who bought this stuff. What else have those customers done?”

By turning this question on its side, we can get a much better window into any particular campaign.

It’s fine, for example, to know how many Xbox Ones Microsoft sold over the holiday season and if they sold more Xbox Ones than Nintendo sold Wiis or Sony sold PlayStations. But these devices aren’t one-time purchases that do little to move the needle; consumers buy gaming systems as a platform for lots of other activities, which creates for the manufacturer an on-going relationship with a customer. So, let’s judge the goodness of those devices on their overall economic impact, not just by themselves.

The danger with not doing this is that you’re taking a product-centric view, which still says, “We’re just selling stuff, but we’re doing so in a vacuum and we’re giving very little consideration to the nature of the people who are buying that stuff.” And that can lead you to produce isolated sales numbers that are kind of misleading.

You can take this logic and spread it to cars for an illustration of what I mean.

Whenever you see a report on car sales, it’s always how many cars were sold and whether that number is up or down. These days, though, car dealers recognize that they make more money on the after-sales service than they make on the cars themselves. That’s wise on their part, because they’re now surrounding customers with products and services that could make them as much money, or more money, than the original sale of the car.

Why aren’t we judging that? Why aren’t we asking, “How much overall lifetime value with those customers was created as a result of those car sales?”

And it’s getting to the point where almost every product is either a platform or is a part of a bundle. So even if we’re talking about grocery products, you can begin asking, “Among the people who bought soup, how much other stuff did they buy? Are they more valuable customers than the people who bought something else?”

That kind of customer-centric thinking needs to be the norm for how we evaluate product sales or promotional campaigns.

Highlighting individual image courtesy of Shutterstock.

Peter Fader is the Frances and Pei-Yuan Chia Professor of Marketing at the Wharton School of the University of Pennsylvania and the co-director of the Wharton Customer Analytics Initiative. His expertise centers around the analysis of behavioral data to understand and forecast customer shopping/purchasing activities.