July 21, 2008

Multichannel Forensics A to Z: Equilibrium Mode

As business leaders, we're very comfortable with Multichannel Forensics projects (book, study) that demonstrate products, brands or channels in Equilibrium Mode.

Catalog marketers believe that paper drives customers online and into stores.

E-Mail marketers believe that best practices drive customers into all channels.

Online marketers want to demonstrate the offline benefits of online marketing.

Equilibrium Mode happens when customers are willing to shop in other channels. Say you have 1,000 customers who purchased online in 2007. During 2008, 500 of these customers will buy again, and 150 will buy in stores. The repurchase index for stores (150 / 500 = 30%) illustrate that the online channel is in Equilibrium Mode with stores (any index between 20% and 50% is in Equilibrium Mode). Online customers, in this example, are willing to shop in a store.

The magic of Equilibrium Mode is that customers seldom stay at the same rate of equilibrium --- instead, behavior changes over time. In 1999, catalog buyers seldom purchased online. In 2003, catalog buyers were willing to buy online. In 2008, catalog buyers happily buy online.

The magnitude of the metrics we evaluate are always changing.

And the metrics, when used to forecast the future, illustrate the future trajectory of your business. Given the downturn in the economy, it is important to forecast what the future looks like, important to forecast how a lack of file momentum will drag down business.

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