October 27, 2011

Death Spiral: Channel Shift

There are two situations where channel shift leads to big problems.
  1. Customers shift from an old technology (newspapers) to an newer technology (online), and in the process, trade customer dollars spent on old technology for dimes spent in the newer technology.
  2. Rate of Adoption.  When customers, after controlling for age, are slow to shift to new technology (say mobile), pay close attention to customer counts.  When this happens, it can become ever more difficult to acquire customers.  As new channels emerge, customers tend to shift behavior, adopting the new channel over the old channel, making it harder and harder to acquire customers via the old channel.
Set up your dashboards to understand this phenomenon.

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