CI - Session 1 Flashcards
(24 cards)
Commercial Intelligence (CI)
Commerical Intelligence (CI) is the mixture of market research, data analytics, and business strategy
Pillars of Commercial Intelligence
3 pillars of CI are:
- Data Collection and Analysis.
- Predictive Analytics
- Market Trends and Insights
Benefits of Commercial Intelligence
Benefits of CI are:
- Enhanced Decision Making: no more gut feeling. Informed, calculated, strategic
- Competitive Advantage: Unique perspectives
- Risk Mitigation: identify threats, protect business
Challenges of Commercial Intelligence
Challenges of CI are
* Need good data
* Over reliance on tech
* Data privacy concerns
Predictive Analytics
the process of using data to forecast future outcomes.
Data Mining: process of understanding data through cleaning raw data, finding patterns, and testing
Machine learning: Algorithms learn from existing data and predict future. “
Revenue
Revenue is the total income generated from the sale of goods or services before any expenses are deducted.
Revenue = quantity sold x selling price
Profit
Profit is the financial gain remaining after all expenses and cost/taxes are subtracted from revenue.
Profit = Revenue - Total expenses
Gross Profit
Gross profit is the revenue from sales minus the cost of goods sold (COGS)
Gross Profit=Revenue−COGS
Operating Profit
Effectively the profit from sales before interest + tax. Include operating expenses
Operating profit = Gross profit - operating expenses
Net Profit
Net profit is what is left when total cost (including taxes) are subtracted from total revenue
Net profit = Total Revenue - All expenses, tax, interest
Financial Statement line by line order
Sales/Revenue
COGS
Gross profit
operating expenses
operating profit
interest
net profit before tax
tax
net profit
Margin
Margin represents profitability expressed as a % of revenue. It indicates how much of 1 GBP earned contributes to profit.
Net Margin(%) = (Net Profit/Revenue) x 100”
ROI
ROI measures the gain or loss generated relative to the initial cost of the investment
ROI = (Amount gained - Amount Spent /Amount Spent) x 100
Conversion Rate
Conversion rate measures the % of visitors who take a desired action out of total number of visitors.
Conversion rate - (Number of conversions/total number of visitors) x 100
Break Even Point (BEP)
The Break Even Point (BEP) is the level of sales at which total revenue = total cost
Unit BEP = Fixed costs/(Selling Price - Variable costs)
Revenue BEP = Fixed Costs/Contribution Margin Ratio
Contribution Margin Ratio = (Selling Price - Variable Price)/Selling Price
Customer Acquisition Cost (CAC)
Customer Acquistion Cost is the total cost associated with acquiring a new customer. The metric helps determine how efficiently a company is spending its resources to gain customers.
Formula for CAC = Total Marketing & Sales spend/Number of new customers acquired
Customer Lifetime Value (CLV)
Customer Lifetime Value is the monetary value of a customer relationship based on the present value of projected future cashflows from the customer relationship
(Average Purchase Value × Average Purchase Frequency) × Average Customer Lifespan
use customers who were acquired at same time when averaging
Advanced Customer Lifetime Value (CLV)
Advanced CLV = CLV + Metrics
Gross Margin is the percentage of revenue retained after accounting for the cost of goods sold.
Retention Rate is the proportion of customers who continue to purchase over a period.
Discount Rate accounts for the time value of money.
Cost Per Lead
Cost per lead is a key metric that calculates the average expense incurred to acquire a new lead.
Cost per lead = Total marketing spend / number of new lead
Retention rate
Retention rate = the % of the organizations customers that it retains over a given time
Attrition/ Churn rate
Attrition/Churn rate is the the rate at which a company loses customers.
Churn rate = (Number of customers lost during a period/customers at the start of the period) x 100”
Cost-Benefit Analysis (CBA)
Cost Benefit Analysis is a decision-making tool used to compare the costs and benefits of a project, investment, or decision
Cost Benefit Analysis (CBA) = Total Benefits - Total Costs
Cost-Benefit Ratio (CBR)
Cost Benefit Ratio is an additional metric which expres the relationship between cost + benefit
If CBR ≥ 1 benefits outweigh costs and the project is favorable
If CBR ≤ 1 costs outweigh benefits and the project is unfavorable
CBR = Total Benefits / Total Costs
Marketing contribution
Metric that measures the revenue or profit directly attributable to marketing efforts after accounting for the variable costs
Marketing contribution = Revenue from marketing - Variable costs of Marketing
