User Profile - Price Sensitivity

The User Profile - Price Sensitivity metric helps businesses understand how much customers are saving through discounts compared to their total spending. This insight allows marketers to tailor discount strategies for different users, ensuring they offer the right amount of discount to encourage future purchases.

What is the User Profile - Price Sensitivity Metric?

The User Profile - Price Sensitivity metric represents the percentage of money saved through discounts versus the total amount spent by a customer. This value can help determine how sensitive a user is to discounts and inform your marketing strategies for targeted offers.

The metric is calculated using the following formula:

• User Profile - Discount Value: The total value of discounts applied to a customer’s orders.

• User Profile - Order Value: The total value of all orders, whether purchased at full price or with a discount.

For example, if a customer has saved €25 on purchases totaling €100, their User Profile - Price Sensitivity would be 25%. This metric gives you a clear picture of how much a customer has benefitted from discounts relative to their overall spending.

How to Use the Price Sensitivity Metric

The User Profile - Price Sensitivity metric can be leveraged to:

• Segment Users by Discount Behavior: Identify which customers are more sensitive to discounts and which are less influenced by them.
  For example:

  • High Sensitivity: Users who have saved a significant percentage of their total spend using discounts. Offering further discounts to these users can drive repeat purchases.

  • Low Sensitivity: Users who save little or no money through discounts. These customers may not need discounts to convert, and marketing efforts can focus on other value propositions.
    

• Optimize Discount Strategies: Based on the User Profile - Price Sensitivity percentage, you can determine how much of a discount might be needed to motivate a customer to complete a purchase. For highly sensitive users, a larger discount may be more effective, while a smaller discount may work for those with lower sensitivity.

Benefits of the Price Sensitivity Metric

• Targeted Discounts: By understanding how much a user has saved in the past relative to their total spending, you can offer more personalized discounts. Customers with high price sensitivity may respond better to larger discounts, while those with low sensitivity may require minimal or no discounts.

• Increased Conversion Rates: Tailoring your discount strategy based on user price sensitivity can lead to higher conversion rates. Offering the right amount of discount to the right users maximizes the chances of converting them into loyal customers.

Revenue Optimization: Offering discounts strategically, based on user sensitivity, ensures you’re not unnecessarily cutting into your margins. For users who do not require discounts to make a purchase, you can focus on other incentives, such as free shipping or loyalty programs.