July 15, 2008

Multichannel Forensics A to Z: Backorders

In Multichannel Forensics (book, study), channels are typically viewed at a physical channel level, classifying customers by retail purchases, online purchases, or telephone purchases (among others).

However, most projects these days go deeper, exploring the concept of micro-channels. Backorders fall into the micro-channel category.

You're likely to learn that customers who are willing to wait for an item that is not available are more valuable than customers who purchase merchandise that is always available.

You're likely to learn that each item that is backordered lowers long-term value (lifetime value, LTV, long-term ROI).

And you're likely to learn that if every item the customer wanted to order is not available, long-term value significantly decreases.

Multichannel Forensics add value because one can demonstrate the long-term impact of short-term customer service issues. For the first time, you'll be able to demonstrate to your inventory management team the role they play in the long-term health of your business.

For the Web Analytics community, Multichannel Forensics significantly complement your activities. You can see if customers look at various items that sell out, and you can see if the customer looks at complementary items if the item the customer wants is sold out. Combine that information with long-term value, and you really have something!!

2 comments:

  1. Anonymous9:21 PM

    Kevin,
    Interesting take on backorders. Out of stocks are by far the quickest way to turn a customer to a competitor. I almost posted this under the cannabilization, due to your comment about doubling skus offered.
    Chris Anderson in The Long Tail believes in the niche, the endless online sales shelf, and for an online customer, offering endless choices allows the customer whose item is out of stock, to stay with the online retailer but switch to a similar product without losing the sale.
    When tracking the customer whose original item is backordered, do you also calculate if they cancel and then purchase another item from you vs just canceling(either not purchasing at all or more likely, going to competitor)?
    K

    ReplyDelete
  2. Yup, you can do that.

    ReplyDelete