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Kerin Foster

Data-Driven Decisions & Their Constructive Outcomes

Kerin Foster
Data-Driven Decisions & Their Constructive Outcomes

Decisions that are ultimately data-driven are essential in receiving results that are beneficial to a business. In order to make these appropriate and insightful conclusions, it is always best that the decision is founded primarily on data. To evaluate the positive influence of making decisions based on facts and figures, we are going to presume, hypothetically of course, that we are the owner of an online business that sells body jewelry.

As the store vendor, you are aware of one competitor in particular who operates a comparable business, but they have recently enhanced their supply with piercing tools in addition to the body jewelry itself. On account of your competitor’s amendment to their products, you have considered adding similar piercing tools to your stock but are uncertain if such a business decision is a sound one for your particular market. This is where SEMrush comes in.

Below is our theoretical competitor’s website, http://hollywoodbodyjewelry.com/category/450/, who has noticeably initiated the promotion of piercing tools.

Let’s suppose that the table below represents budget distribution for piercing tools for a time period of 3 months:

Monthly Budget Allocation to Piercing Tools ONLY:
Month 1 7%
Month 2 15%
Month 3 20%

Based on the percentage of advertising funds that are being expended only to piercing tools, it is made apparent that our competitor is receiving a positive result from this tactic. But what can SEMrush do?

Essentially, SEMrush is capable of exposing precisely what the competitor’s marketing strategy consists of so that you can follow suit and in turn make informed, data-driven decisions to boost your advertising campaign. Following the review of our data, a conclusion can be made as to whether or not the addition of piercing tools to your store would be an advantageous, business-savvy move.

To continue, we are going to envision that we are Hollywood Body Jewelry, the company who was productive and successful in the sale of piercing tools in the aforementioned section. As an attempt to expand our horizons, we have recently determined that we are going to enter into the realm of temporary tattoos.

As the graphic expresses, the sale of the temporary tattoos has already begun, and they are extremely inexpensive overall. However, there is still uncertainty as to if the product is going to prove to be profitable for the company in the long term.

So how do we decide if the retail of temporary tattoos is a profitable one? The table below can aid in the decision-making process for the sale of temporary tattoos or any other product:

Investment Revenue Decision
Piercing Tools $25,000 Unknown* TBD
Temporary Tattoos $25,000 Unknown* TBD

Our key question: Is revenue greater than $25,000?

Due to the fact that the business already sells piercing tools, we are cognizant that the initial investment is $25,000. Nonetheless, we cannot predict the profit and don’t need to know HOW successful the return on investment will be, just that there will be one. To make an accurate decision regarding temporary tattoos, we would need to take into account the $25,000 initial investment that is required, and although we won’t know the exact profit, evaluate if it would potentially be greater than the investment. By observing the new product budget changes of the competitor, it can be projected whether or not there is a profit to be made. Similar to pulling a ‘YES or NO trigger’ so to speak, a definitive decision can then be made as to the investment.

As the graph below shows, trends in the competition’s advertising budgets are able to indicate precisely where the profit exists:

The blue line represents how budgets are allocated to piercing tools while the red line represents the budget allotment for the new product, the temporary tattoos.

Conclusion

All things considered, the addition of temporary tattoos to the product line is not a fruitful business decision. The graph illustrates that during the first month, the same amount of budget funds were allocated to both the piercing tools and the tattoos, but progressively over the course of three months the competitor began to allocate less money to the temporary tattoos, and as a result the budget is steadily increased for the piercing tools.

Therefore, the budget allocation must be changing for a reason. We can presume that the new product, the temporary tattoos, were not a prosperous product due to the gradual decrease in budget, and therefore that the return was not greater than the investment.

So, we are now positive that the tattoos are not a product that we would want to invest in. With the application of SEMrush, it can be revealed exactly what your competitor is doing with regards to their marketing campaign so that vital decisions such as these can be made based on the foundation of informative data.

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