February 08, 2011

Mobile Analysis Week: New vs. Existing Customers

We'll keep things simple today.

When you are evaluating a new channel, like mobile, you want to understand if the customers who use this channel are your existing customers.  When existing customers are first to use a new channel, and the new channel passes the "eyeball test", you have the very real potential for channel shift.  When new customers are first to use a new channel, and the new channel passes the "eyeball test", you have the potential for significant sales growth.

Let's look at our sample company.  In 2010, here's what we observed:
  • Telephone Channel = 62% of customers were existing customers.
  • Online Channel = 54% of customers were existing customers.
  • E-Mail Channel = 68% of customers were existing customers.
  • Search Channel = 53% of customers were existing customers.
  • Mobile Channel = 67% of customers were existing customers.
  • Social Channel = 67% of customers were existing customers.
In this case, mobile skews more to existing customers than does the average channel, suggesting that, long-term, channel shift is going to be a problem.


Let's look at demand in the two years prior to the customer migrating to the mobile channel:
  • Telephone Demand = $133.
  • Online Demand = $610.
  • E-Mail Demand = $153.
  • Search Demand = $62.
  • Mobile Demand = $74.
  • Social Demand = $23.
Though demand is spread across all channels, it's obvious that the e-commerce customer is shifting from e-commerce to mobile.

In our example, mobile passed the eyeball test.  Mobile is, on average, generating volume from existing customers, and the existing customers are, by and large, prior e-commerce buyers.  Long-term, this is going to be a problem for the e-commerce channel.


Not many folks talk about this stuff ... mobile is seen as a +1 channel, a way to grow sales.  New channels are seldom in a +1 situation ... often, the new channel adds little in incremental sales over time ... just ask catalogers who went through this whole transition in the past decade.  In fact, e-commerce experts would be well-served to interview a half-dozen catalog leaders about the changes that happen in an organization when a new channel begins to cannibalize a legacy channel.


Up Next:  We'll explore the Migration Probability Table.  This will tell us if the switch from e-commerce to mobile is happening at an increasing rate, and it will tell us if mobile buyers are willing to go back to shopping via e-commerce.