Last week, Casey Carey commented about the dynamic of sales declines in the catalog channel during my three-part series on Multichannel Forensics. He believed I was focusing too much attention on the channel where sales were recorded, as opposed to the vehicle (catalog) that drove the sales volume (see here for Part 1, Part 2 and Part 3).
A big part of the Multichannel Forensics includes the use of long-range planning scenarios. This link takes you to a simple two-channel planning scenario.
In the spreadsheet, Casey's point is illustrated. Fifty thousand catalog customers migrate through an ecosystem. After two years, these catalog customers are spending more money online than in catalog. Casey is right. It doesn't matter which channel records the sales. It matters how much value a customer generates over time, across all channels. Kudos to Casey!!
EXCELLENT POSTS! Casey and you have a great point--even though one channel might not make more money it does drive the sale even if to other channels. Many companies that invested in online advertising in mid to late 90's thought they were wasting money because online sales were down, but on the other hand they did see improvement at their brick and mortar stores. If they kept investing in online, the online sales actually did "catch up" (e.g. Penney's which now makes $1 billion + from online alone, and also helped their store regrowth 2001-2004).
ReplyDeleteOn a related note, I see quite a bit people who are hesitant about online buying become more comfortable if there is a brick and mortar store involved---e.g Blockbuster's return online rented movie to the store, or pickup at Walmart, Penney's or Bestbuy.
These days, you have to look at all the different ways you can market to a customer as a portfolio. Each method has its own benefits, and own level of ROI.
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