We'll keep things simple today.
When you are evaluating a new channel, like mobile, you want to understand if the customers who use this channel are your existing customers. When existing customers are first to use a new channel, and the new channel passes the "eyeball test", you have the very real potential for channel shift. When new customers are first to use a new channel, and the new channel passes the "eyeball test", you have the potential for significant sales growth.
Let's look at our sample company. In 2010, here's what we observed:
- Telephone Channel = 62% of customers were existing customers.
- Online Channel = 54% of customers were existing customers.
- E-Mail Channel = 68% of customers were existing customers.
- Search Channel = 53% of customers were existing customers.
- Mobile Channel = 67% of customers were existing customers.
- Social Channel = 67% of customers were existing customers.
Let's look at demand in the two years prior to the customer migrating to the mobile channel:
- Telephone Demand = $133.
- Online Demand = $610.
- E-Mail Demand = $153.
- Search Demand = $62.
- Mobile Demand = $74.
- Social Demand = $23.
In our example, mobile passed the eyeball test. Mobile is, on average, generating volume from existing customers, and the existing customers are, by and large, prior e-commerce buyers. Long-term, this is going to be a problem for the e-commerce channel.
Not many folks talk about this stuff ... mobile is seen as a +1 channel, a way to grow sales. New channels are seldom in a +1 situation ... often, the new channel adds little in incremental sales over time ... just ask catalogers who went through this whole transition in the past decade. In fact, e-commerce experts would be well-served to interview a half-dozen catalog leaders about the changes that happen in an organization when a new channel begins to cannibalize a legacy channel.
Up Next: We'll explore the Migration Probability Table. This will tell us if the switch from e-commerce to mobile is happening at an increasing rate, and it will tell us if mobile buyers are willing to go back to shopping via e-commerce.