March 14, 2011

Forecast Forensics + Digital Profiles: Kill The Catalog???

In the spreadsheet, I build in cells that allow me to change important advertising parameters.

For instance, I use prior mail/holdout test results to estimate what happens to annual retention rates.  Combining this information with new customer acquisition information, I can forecast what would likely happen to a business if a business unit or advertising channel was "killed off".

In this case, I ran a scenario where I killed off the catalog division.  After all, with the growth of Social Media and Mobile, who needs an old school channel like the catalog?  Recall, the catalog portion of the ecosystem wasn't necessarily connected to the rest of the business.

Well, in the case of this business, if we kill off the catalog, we kill off most of the business, don't we?  Within just one year, half of the business disappears ... by year five, 70% of the business is gone.  Take a look at annual retention rates ... around 45% with the catalog, around 25% without it.

In other words, a decent portion of this business is "organic", it will happen without the catalog.  But the overall health of the business is seriously compromised when this advertising channel is taken away from the business.

This is one way that you can combine Forecast Forensics and Digital Profiles to better understand your business.  Contact me if you'd like to have this analysis run for your business!