December 10, 2014

When Mobile Adds Incremental Sales

When you run diagnostics (click here for the booklet) on an emerging mobile business, you usually observe one of two outcomes.

The first outcome is most common ... customers are simply shifting from old-school channels to newer channels, with no incremental increase in business.

The second outcome is illustrated here ... not as common, but an outcome we all wish would happen more often.

As you can see, total comp segment demand is increasing, annually. That's good! Now, old-school channels are declining, so channel shift is still happening. However, mobile is providing incremental value.

  • 2012 = ($80 - $77) / ($5 + $1 - $2 - $0) = 3/4 = 75% of mobile demand is incremental.
  • 2013 = ($84 - $80) / ($10 + $3 - $5 - $1) = 4/7 = 57% of mobile demand is incremental.
  • 2014 = ($86 - $84) / ($8 + $9 - $10 - $3) = 2/4 = 50% of mobile demand is incremental.
This is a wildly favorable outcome. The analysis tells us that mobile is, on average, 60% incremental. For every $10 generated by mobile, $6 would never happen otherwise, $4 is shifting from other channels.

Run this analysis! If you obtain this outcome, you've made magic happen!