The Gain Loss manual

A gain loss analysis aims to explain the dynamics between different segments by looking at the behavior of the customers. Does a segment attract new customers, or do they churn? Are customers switching to other segments? A gain loss analysis is especially designed to answer questions like:

  • A certain segment is losing volume, are the customers switched to another segment or did they leave the entire category?
  • We introduced a new brand, do we attract new customers or do they switch from existing brands? 

How do I get started?

Before the analysis is started, we look at the scope of the research: what are the products and segments for which we want to see the switching behavior. It is important to only include substitute segments and not complementary or unrelated segments. In addition, we also determine together for which period you want the results.

Then the study is created and set up in the report. From then on, you can consult it by opening the report and clicking on the analysis on the first page.

How do I customize the report?

In the filter at the top of the report, you can adjust the reference month, the length of the period (MAT, LxM,…) and the KPIs.

What data is in the report?

We calculate for every customer the evolution of the volume and revenue generated for every segment. Based on these numbers we then estimate the switching behaviour between the chosen segments.

To get a clear overview of the category dynamics, we divide the volume of every segment in 3 main groups:

  • Gained / Lost @ Category Level:
    • Volume gained by customers that did not buy in the category in pre period
    • Volume lost by customes that didn’t buy in the category in post period
  • Increased / Decreased Category Buying
    • Extra volume due to an increase in category spending
    • Loss of volume due to decrease in category spending
  • Switching
    • Volume gained due to switching from other category segments
    • Volume lost due to switching to other category segments

The Category Overview gives an overview of the entire category. The graphpanel shows the total evolution of the category and splits this evolution in the three groups (Lost&New, Increased/Decreased Category Spending, Switching).

The Segment Overview displays a detailed view of each segment. When more than 3 segments, you can select the pages just below the graph. The bottom panel shows how much the selected segment gains from the other segments, and how much it loses to those segments.

When the bar is negative, the segment is losing turnover or volume, when it’s positive, it gains. The colors indicate to what other segments, the value or volume goes to or comes from.

In the example, the first segment is gaining turnover from all other segment, but mostly from segment 5, almost €100.000.

For all product segments and for the three groups (new-lost, increased-decreased spending, and switching), you can determine which household type or region is responsible for this change. If you notice an increase caused by new customers in the category, you can immediately identify what type of customers these are.

On the right: Here you specifically analyze the switching behavior to determine which groups switch the most and from which product to which other product they are switching.

Some examples to better understand the 3 groups

To better understand the sales dynamics, we have provided some examples that show where the increased or decreased sales of specific customers end up. In the fictional analysis, we analyze non-alcoholic beverages and want to see the effects on Cola, Lemonade, Iced Tea, and Water.

Example 1: new and lost sales

In this example, we have 2 customers. Customer 1 did not buy soft drinks before, but has started buying them this year. Customer 2 does the opposite. The volumes of these customers will appear or disappear in the category. They will be added to the tables under ‘Lost&New’.

                                              MAT-1                          MAT                         Dif

Customer 1

  • Cola                            0L                                   5L                           +5L
  • Limonade                0L                                   3L                           +3L
  • Total                           0L                                   8L                           +8L

Customer 2

  • Cola                            4L                                   0L                           -4L

LOST & NEW calculation:

  • For customer 1, Cola will increase by +5L and Lemonade by +3L. In the total category, there will be an increase of 8L. 
  • For customer 2, Cola will decrease by -4L. In total, Cola will count +1L and Lemonade +3L. 
  • In total, there is an increase of 4L.

Example 2: Customer bought drinks in both periods

In this example, we take the same customer 1, but in this example, the customer bought iced tea last year and no longer buys it now.

                                              MAT-1                          MAT                         Diff                 in-/decreased spending        Switching

  • Cola                            0L                                   5L                           +5L                           +1,9L                                     +3.1L
  • Limonade                0L                                   3L                           +3L                           +1,1L                                     +1.9L
  • Iced tea                    5L                                   0L                            -5L                                                                                  - 5L
  • Total                           5L                                   8L                           +3L                                +3L                                            0L

Since the customer has been buying non alcoholic beverages in either year, the volumes will not be considered for Lost&New.

  • The customer has bought 3L more compared to last year. The 3L is weighted and distributed over the 2 increasing groups, so in this case, it means that Cola accounts for 5/8 (or 1.9L) and Lemonade for 3/8 (or 1.1L) of the increase through an increase in ‘increased and decreased spending’. 
  • The customer has not only bought more but has also switched from iced tea to Cola and Lemonade. The remaining volumes are assigned to the switching, which concretely means that Cola increases by 3.1L, Lemonade by 1.9L, and iced tea decreases by 5L. On the total category, there is no effect because the total increase in the customer’s purchases is attributed to ‘increased and decreased spending’.

Example 3: Higher and Lower Expenditures and Switching (Increase)

We start with the same customer, but this time the customer also bought water.

                                              MAT-1                          MAT                         Diff                 in-/decreased spending        Switching

  • Cola                            0L                                   5L                           +5L                           +1,25L                                     +3.75L
  • Limonade                0L                                   3L                           +3L                           +0,75L                                     +2,25L
  • Iced tea                    5L                                   0L                            -5L                                                                                  - 5L
  • Water                        6L                                   5L                            -1L                                                                                  - 1L
  • Total                         11L                                 13L                         +2L                                +2L                                            0L

Again, the customer has been buying non alcoholic beverages in either period, and the volumes are not eligible for Lost&New.

  • First, we check again whether the customer bought more or less compared to last year. In total, he bought 2L extra. We proportionally allocate those 2L to the references with an increased volume, in this case, Cola (for 5/8 or 1.25L) and Lemonade (for 3/8 or 0.75L). 
  • Then we allocate the remaining volumes to the switching (In/decresed spending + Switching = Diff).

Example 4: Higher and Lower Expenditures and Switching (Decrease).

We start the same customer, but this time the customer bought much less water this year.

                                              MAT-1                          MAT                         Diff                 in-/decreased spending        Switching

  • Cola                            0L                                   5L                           +5L                                                                                 +5L
  • Limonade                0L                                   3L                           +3L                                                                                 +3L
  • Iced tea                    5L                                   0L                            -5L                                 -1L                                         - 4L
  • Water                        6L                                   1L                            -5L                                 -1L                                         - 4L
  • Total                         11L                                  9L                            -2L                                 -2L                                            0L

The total volumes of the customer are not increasing this time, but decreasing:

  • The customer bought 2L less non-alcoholic beverages in total. We proportionally allocate those 2L to the references with a decreased volume, in this case, iced tea (for 5/10 or 1L) and water (for 5/10 or 1L). 
  • Then we allocate the remaining volumes to the switching  (In/decresed spending + Switching = Diff).