August 16, 2008

Multichannel Forensics A to Z: Migration Mode

At its core, Multichannel Forensics (book, study) is all about migration.

Will the customer who trusts Amazon.com when buying books also trust Amazon.com when buying electronics? If the customer doesn't trust Amazon.com to buy electronics, can Amazon.com obtain new, unique customers who prefer electronics?

And if the customer trusts you enough to buy something from a different product line, will the sale cannibalize something that would have already been purchased?

Too often, we create a new product line, eagerly anticipating customer response. And sure enough, the new product line works well! But then, after a bit of time, we notice that customers don't seem to like the core merchandise assortment as much as they used to like it. Our ad-to-sales ratios appear to be increasing.

This is when we run the Migration Probability Table. We need to see who, specifically, is buying from the new merchandise line. We need to understand if the new product line appeals to best customers, marginal customers, infrequent customers, or new customers. Then, we evaluate the long-term trajectory of our product lines, trying to understand how one line impacts the other.

Customer migration is at the core of this process.

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