January 22, 2020

But One Channel Helps Another Channel, Right?? Right??

Not in the case of future File Power.

You hear this in the case of Retail ... you have a customer who previously purchased in stores, and you work terribly hard to get that customer to buy online instead. Then you wonder why store sales decline?

Store sales decline because the physical act of converting an in-store customer to any online channel helps overall File Power at the expense of individual channel File Power.

How do I know this?

Because I've run a boatload of models measuring the phenomenon.

Try this sometime ... take all weighted online purchases (36 variables, one for dollars spent in each of the past thirty-six months online) and all weighted mobile purchases (36 variables, one for dollars spent in each of the past thirty-six months via mobile) ... heck, do the same thing for your call center purchases while your are at it ... and then regress the 36*3 = 108 variables against spend next year in your Desktop/Laptop channel. You'll quickly observe that historical purchases in Mobile do not assist future Desktop/Laptop purchases.

The key is to have the 36*3 = 108 variables ... monthly purchase variables in each channel. This allows you to unlock the secrets of your business.

Back to retail.

Want to know why retail is dying? Because retail loses File Power as other channels gain File Power. When Google steers a purchase out of a store to an online channel, Google helps overall File Power but greatly harms in-store retail File Power. In essence, you lose a Recency = 01 in-store purchase and gain a Recency = 01 online purchase ... and the online purchase (via regression equations) does not increase future in-store purchase activity.

Yes ... Google, Facebook, and Amazon are emptying your favorite shopping centers. They've been doing this for a long time. It doesn't matter how many lies trade journalists, consultants, gurus, vendors, consultants, and research brands tell you ... the lies cannot overcome the truth revealed by simple regression equations.

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