Basket analysis

Basket analysis will help identify products for you to cross-sell to your customers

Looking for a relationship between buyers and their purchases?

Basket analysis is a sales method which can greatly increase your potential revenue by studying the purchase patterns of customers at a product level and then recommending related products to them before they get to the checkout, providing you with the best opportunity to discover your true revenue potential. Basket analysis attempts to provide this by identifying products that are likely to be purchased together from large inventories, normally for the purposes of cross-selling.

Basket analysis is heavily used in retail to drive promotion strategies and in store planning, it is now used increasingly in direct response businesses, especially on-line, since it can be run as a real-time algorithm that recommends complimentary products as individual items are added to the shopping basket.

Differential basket analysis is more complex still, looking at the relationships between groups of buyers and their purchases at different locations, times of year and demographic groups.

Analyse the relationship between purchases

Large volumes of transaction data at the order line level are processed to determine basket analysis, although the items need not have been purchased at the same time - basket analysis is just as effective at looking at the relationship at a product level between the first and subsequent purchases. Such 'predictive' basket analysis is of great value to direct marketers.

Keep it simple

If it is not possible to gather the large amounts of data necessary for formal basket analysis, Qbase can show you how to identify some basic product relationships by reviewing a small amount of transaction data, often at the product group level.

Qbase recently built the websites for Daytimers in Europe and Australasia and included a simple basket analysis in the check-out page which has had a positive impact on the average number of order lines for web orders www.daytimer.co.uk

Looks at the impact on demand of one product by price changes in another product. This is another useful statistical tool in working out ways of increasing total sales revenue by analysing and then exploiting the relationship between different products.

Qbase can show you how to measure cross price elasticity.