February 07, 2011

Mobile Analysis Week: The Eyeball Test

Those who lived through the transition from traditional direct marketing to e-commerce knew a simple fact:
  • E-commerce passed the "eyeball test".
In other words, you looked at sales totals, and you could "see" that e-commerce mattered.  I worked at Eddie Bauer during that time ... we did something like $15 million in e-commerce in 1997, $60 million in 1998, and $100 million in 1999.  Going from $0 to $100,000,000 in five years means that the emerging channel "passed the eyeball test" ... regardless of the attribution challenges that still plague e-commerce.


So take a look at your sales trends by year.  Just give the sales trends a simple eyeball test.  Here's data for a company we're going to analyze in this series:
  • Telephone Demand:  2008 = $7.5 million.  2009 = $6.0 million.  2010 = $5.6 million.
  • Online Channel:  2008 = $12.0 million.  2009 = $10.8 million.  2010 = $11.0 million.
  • E-Mail Channel:  2008 = $4.5 million.  2009 = $4.2 million.  2010 = $5.2 million.
  • Search Channel:  2008 = $2.1 million.  2009 = $2.2 million.  2010 = $2.5 million.
  • Social Channel:  2008 = $0.4 million.  2009 = $0.6 million.  2010 = $0.9 million.
  • Mobile Channel:  2008 = $0.1 million.  2009 = $0.5 million.  2010 = $1.3 million.
Look at online, e-mail, and search.  In 2008, those channels generated $18.6 million.  In 2010, those channels generated $18.7 million.  In other words, these channels are no longer growing, they are mature.  Look at demand from the telephone ... this is in free-fall, as customers abandon customer service departments in favor of e-commerce.

Now it is time for the eyeball test.

Look at Social.  Social is growing, but is not exhibiting exponential growth.  Social, in this example, does not pass the eyeball test.  It's maybe 4% of sales today, and it's hard to see a scenario where it could be 20% of sales in two years.

Look at Mobile.  Mobile is experiencing exponential growth.  Mobile passes the eyeball test.  Mobile could easily generate $6.0 million two years from now, $12.0 million four years from now.  Or not.  But it certainly passes the eyeball test.

If you are dabbling in Mobile, run a rolling-twelve-month demand analysis ... is growth exponential, linear, or non-existent?  Channels that will cause a fundamental shift in customer behavior start slow, but tend to exhibit exponential growth.

Tomorrow, we analyze new vs. existing customers.