November 24, 2011

Diagnosing Business Issues Via The 3Ts

The three T's (Traditionals, Transitionals, and Transformationals) help us understand how (or if) our business is evolving and changing.

Here's an example.  A business leader suggests that a customer shift from traditional channels to the web is costing him business.  Well, there may be truth to that, but at least we can measure how customers are truly migrating.  We'll run a query, watching how customers in the 3Ts migrate (Traditional = Mail/Phone, Transitionals = Web/Email/Search/Affiliates/Banners, Transformationals = Mobile/Social).

Ok, there's a few things we have to digest here.

  1. Between last year and this year, customer counts across all segments are in decline.
  2. Transitionals (primarily the online channel) actually repurchase at a higher rate than Traditionals.
  3. Traditionals are not migrating to Transitionals at high rates, and if they were, the data suggests that this would be a good thing, because repurchase rates actually increase.
  4. Transitionals are not migrating at high rates to Transformationals.  In other words, new channels are not capturing customer mindshare.
  5. Even when this brand generates Transformational purchases, these customers head back to the Transitional segment, suggesting that the experience in the Transformational realm isn't satisfactory.
  6. Customers who purchase in the Transformational realm have the highest repurchase rates, suggesting that if this brand can get customers to "stick" there, there is opportunity for heightened customer loyalty.
This is a business where customers have largely migrated from Traditional to Transitional status.  Unfortunately, customers are not taking the next step, as those who migrate from Transitional to Transformational status go back to Transitional status.

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