We now have a responsibility, an important one, to take a look at what our future looks like.
E-Commerce leaders need to understand the "inflection point", that point where customer acquisition stalls and the online business stops growing organically. Catalog leaders need to understand what happens when catalog customer acquisition ceases to be a viable channel.
Take a look at this business. Here is a common table run by direct marketers, reviewing how the customer file (as of 2008/01/01) purchased during 2008 ... and then the forecast for 2009 and 2010.
This business has stalled. Assuming that customer acquisition and customer retention stay the same in the future, this business will not grow. Among catalogers, we know that for many, customer acquisition is dying.
Take a look at the forecast for the next two years, assuming that customer acquisition drops by 20% each of the next two years.
Notice that the business starts sinking ... slowly. Now let's look at this same trend, for 2011, 2012, and 2013.
The business is imploding. This is the challenge we face.
Those of us managing the catalog channel have to decide if we can find micro-channels online that can replace what we're losing via catalog customer acquisition --- and if we cannot find those customers, we have to seriously consider what size of business we are comfortable managing in the future.
Those of us managing the e-commerce channel have little experience with this style of business analysis --- we've grown very comfortable taking "Saturn Research" channel growth estimates and applying them to our sales growth trajectory.
Ok, your turn. What has been your experience with this style of forecasting, and what have you done with the forecasts you've generated?
You've probably already viewed this, but if you haven't, view it and think about it ( click here if you are viewing this via email)...
RFM is great for targeting one catalog to one customer. However, RFM is tough to manage in a multichannel environment. This becomes clear ...
Look at the first four rows of our life table (values of 0/1/2/3). These are the first 12-15 weeks after a customer buys for the firs...
If you don't like geeky math, please skip this post, because I am about to show you how the sausage is made! I have eight variables in...