Mobile Analysis Week: Forecast Forensics By Channel

Over the previous four days, we analyzed a business that has a burgeoning mobile presence.  We know that mobile is something that resonates with customers of this business.

• Annual sales pass the eyeball test.
• Existing customers are more likely than average to use mobile.
• Mobile customers are becoming more likely to stay within the mobile channel than in the past.
• Online customers are becoming more likely to migrate to the mobile channel in the future.

As you already know, the majority of my consulting projects involve a complex five-year forecasting process ... a 16mb spreadsheet that predicts how customers will migrate across channels in the next five years.


Let's apply the spreadsheet to our business.  Click on the image below to make it larger:

In this forecast, I maintained the trends observed in the past year.  Each subsequent year, I decrease new online customers at the rate that they were decreasing due to increases in the mobile channel.  I increase new mobile and social customers at the same rates that they were increasing in the past two years.  And I use the same migration trends that we observed last year ... we know this is a false assumption, because customers are migrating to mobile at ever-increasing rates, but let's go with this assumption for the purposes of our blog post.

First of all, this business is not growing, it's a static business that is in balance between sales from new customers and sales lost by previously loyal customers.

Second, given the trends observed last year, we can clearly see that old-school channels like the telephone are in decline.  E-mail and Search are exhibiting modest growth.  Social is growing, but not at a rate that would impress even the most ardent supporter of the channel.

Mobile, however, is growing at a healthy rate, 21.1% per year, every year ... and this only takes into account what is likely to happen if trends stay the same as they were in 2010.  We know that this is unlikely.


If trends accelerate, we'll see mobile at $5 million or $8 million ... and we'll see the online channel suffer more as a consequence.  And when that happens, oh, look out ... organizationally, that kind of channel shift sends shock waves through career paths, investment strategies, and the "informal internal pecking order", if you will.

Again, let's look at the evidence:

• Annual sales pass the eyeball test.
• Existing customers are more likely than average to use mobile.
• Mobile customers are becoming more likely to stay within the mobile channel than in the past.
• Online customers are becoming more likely to migrate to the mobile channel in the future.
• Our five-year sales forecast, quite conservative in nature because it doesn't factor in changes in adoption rate, strongly suggests that e-commerce will suffer in the future as the mobile channel encourages channel shift.

This is the introductory analysis I advocate for all retail/e-commerce/catalog brands with a mobile or social presence ... it's step one of the process of learning the impact of a new channel on a legacy business.  If you can demonstrate each piece of evidence that we demonstrated, then as Executives, we have no choice but to dive-in with both feet, maximizing the mobile experience for our customers.


If, however, the data shows that mobile growth is more similar to the growth observed in the social channel in our analysis, well, then we don't have to run around with our hair on fire trying to maximize the mobile channel.


Make sense?


Ready to run your own analysis?


Need help?  Hire me, and I'll do it for you, I've got the tools to do it.  Click here to contact me.