Will the pricing AI decrease the number of sales/conversions?
“I measure my success on sales. Its really important to me that the pricing AI doesn’t reduce sales. I’m seeing a revenue lift of 17.5% lift. Awesome! Where is that coming from? How much is conversion and how much is lifetime value (LTV)? How is it affecting my sales?”
As you pointed out the revenue lift can come from two sources: better conversions and higher lifetime value (LTV).
In this case the bigger lift is coming from more sales. Your conversion ratio with the Vendo’s AI Pricing went from 1 in 358 to 1 in 326 (or 0.279% v. 0.307%) during the period. That’s a 10% improvement. 10% more sales. Huzzah!
The rest of the lift in revenue came from your customers spending more...a higher lifetime value. During the same time period that went from $46.36 up to $49.85. That is a lift of 7.5%. Woohoo!
So, most of the lift is coming from more sales and the rest of the lift is coming from customers spending more. You can see the split in this graph.