Guide: PPCR

Often the simplest way to make an improvement in your business performance is to stop doing something.

The product, package and customer rationalisation (PPCR) process is a top-down analysis to identify those components of the offer that are no longer delivering value.

In this example, 90% of demand is driven by the top three products.

  • do we need to keep the additional products?
  • do they create complexity or are they critical to keep the top three customers?

Also, the top three customers represent 63% of demand. Then there is a long tail of online customers generating 24.3% of demand. It raises questions….

  • are there other customers in the market like the top three that you could approach and secure?
  • do you need the Auckland & Wellington offices or should you just stick to the online and direct selling models?
  • is the bottom 12.7% value adding or does it drive up “cost to serve” and “customer acquisition costs”?

Customer Sales Analysis

1. Best Customers Today
Which types of customers are generating your biggest profits? How can you get more of them?
Remember to think about all of the variable types e.g. geographic (where they are), demographic (what they look like), behavioural (how they act, including channel behaviour), psychographic (how they think).

2. Worst Customers Today
Which customers are causing you losses and stress? Why is this? Should you drop them?

3. Best Customers Tomorrow
Who will be the best customers of tomorrow and why?

4. 80:20 rule
Do you have a 90:10, 80:20, 70:30 or 60:40 sales rule for customers? How can you improve this?
(You are unlikely to ever have a 50:50 spread as that would mean every customer is spending the exact same amount with you).

5. Key account risk
Which individual customers would hurt you most to lose? What can you do to lock them in?

6. Win-backs
Which lost customers had great sales in previous years? How can you win them back?

7. AAS (Average Account Size)
What is it? Has it increased? What would you like it to be?
This is a critical KPI for many businesses.

8. Customer rationalisation
Should you stop serving your smaller customers? Consider a) the cost to service them and b) the profit you make from them.

9. Drivers of demand
Write a top 10 list of the customer variables that most impact demand. In other words, what are the best predictors of how good a customer they will be?
Again think about geographic, demographic, behavioural and psychographic variables.

10. Customer segmentation
Use all of these insights gained to create or improve your customer segmentation model.

Product Sales Analysis

1. Best Products Today
Which types of products are generating your biggest profits and why? How can you create more of them?

2. Worst Products Today
Which products are causing you losses and stress? Why is this? Should you drop them?

3. Best Products Tomorrow
What do you think will be the best products of tomorrow and why?

4. 80:20 rule
Do you have a 90:10, 80:20, 70:30 or 60:40 sales rule for products? How can you improve this?
You are unlikely to ever have a 50:50 spread as that would mean every product is selling the exact same amount for you.

5. Key product risk
Which individual products would hurt you most to lose? What can you do to ensure that doesn’t happen?

6. Win-backs
Which dropped products made great sales in previous years? Should you bring them back?

7. Average sales per product
What is it? Has it increased? What would you like it to be?

8. Product rationalisation
Should you stop offering your poorer selling products? Consider a) the cost to maintain them and b) the profit you make from them.

9. Drivers of demand
Write a top 10 (or hot and not) list of the product variables that most impact demand. In other words, what are the best predictors of how well a product will perform?

10. Pains and gains
For each of those drivers, also work out whether they are solving frustrations/pains e.g. a multi-tasking dress, or creating enjoyment/gains e.g. customised fabric.

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