Let's look at an oldie-but-a-goodie, the "Migration Probability Table". Remember this one? We used this a half-decade ago to demonstrate how customers were leaving the catalog channel for e-commerce. It's only logical that the same methodology can be used to measure the shift from e-commerce to mobile, right?
Take a look at the Mobile column. Each row in the top half of the table represents the probability of a mobile customer purchasing in each channel in the next twelve months. The mobile customer, for instance, has a 10.4% chance of buying via the telephone in the next year.
It's the bottom half of the table that is most important. Here, we calculate an index, we divide the probability of buying from any given channel by the overall repurchase rate. For the telephone channel, we divide 10.4% by 58.8%, yielding an index of 17.8%. When the index is below 20%, it means that customers, by and large, do not like to purchase from that channel.
When the index is between 20% and 50%, it means that customers like to buy from the channel.
When the index is greater than 50%, it means that customers are transferring their loyalty to that channel.
What do we observe with the mobile channel? Well, the customers are about twice as likely to buy from mobile again as they are to buy from either e-commerce or e-mail.
Now, these numbers don't mean anything unless we have something to compare them against. Let's see what the trends looked like one year earlier.
Oh oh. Just one year earlier, the mobile buyer was more likely to shop via e-commerce than via mobile again. In other words, a year ago, customers who shopped via mobile went back to buying from e-commerce. Today, customers who shop via mobile generally stay within the mobile channel. This is an important finding ... it means that the mobile channel is much "stickier" than it used to be, it means that any sales trends we are already observing should accelerate in future years.
If the rates were the same as they were in 2008-2009, then we'd be likely to conclude that mobile is more of a "fad", because customers were going back to e-commerce after a mobile purchase.
One last thing to look at ... look down the online channel row.
- 2008 - 2009 = 5.3% index into the mobile channel.
- 2009 - 2010 = 12.7% index into the mobile channel.
In our example, mobile is passing all of our tests.
- It passed the eyeball test.
- Existing customers are migrating to mobile.
- Online customers are migrating to mobile at increasing rates.
- Mobile is holding on to customers at increasing rates, and is not sending customers to other channels at the same rates it used to.
Up Next: We'll take a look at a five-year sales forecast for each channel.