Multichannel Forensics: How Customers Interact With Advertising, Products, Brands And Channels

1. Multichannel Forensics: How Customers Interact With Advertising, Products, Brands And Channels Kevin Hillstrom

2. “Back In The Day”

3. Amazon.com Homepage

4. Amazon.com Refresh

5. Amazon.com Refresh #2

6. Amazon.com Refresh #3

7. Our Business Changed Cataloging and Mail Order Database Marketing, CRM, Compiled Lists E-Commerce and E-Mail Portals, Banners, Affiliates Multichannel Search Web 2.0

8. Executive Challenges: 1995 Determine the annual marketing budget. Determine in-home dates, new creative verses remails, pages per catalog. Housefile Circulation. Prospect Circulation: Lists, Catalog Requests, Compiled Lists Control: The Executive controlled everything. If the business failed, it was largely the fault of the Exec.

9. Executive Challenges: 2001 Catalog Productivity Stagnating, Rampant Online Growth Budgeting, In-Home Dates, New Creative Verses Remails, Pages per Catalog. Housefile and Prospect Circulation E-Mail Contact Strategy, Allocation of Budget to Online Channel. Control: The Executive Still Managed Growth

10. Executive Challenges: 2007 Marketing Allocation Problems Between Catalog And Online Channels. Print Response Is Down. Catalog, E-Mail And Online Strategies Integrated. Google Sits At The Executive Table: They Steer Your Loyal Customers And Your Prospects To Your Site For A Small Fee. Executives Have Much Less Control: Marketers Influence Purchase Process, Do Not Determine It.

11. Executive Challenges: 2013 Web 2.0 Morphs Into The Primary Way That Brands And Customers Talk To Each Other. Online Retailers Flock To A Series Of ‘Second Life’ Competitors Offering 3D And Virtual Reality Communities. The Online Marketing And Search Industry Becomes ‘Old School’. Google Begins To Lose Market Share. Why Use Google When You Can Just Ask Your Avatar?

12. Losing Control Mail Order Marketers Used To Control The Relationship Between Brand And Customer. Today, The Relationship Is Becoming ‘Shared’. Customers Have Input (E-Mail Subscriptions), And Influence (Web 2.0). Google Might Own 10% To 60% Of Your Business. Tomorrow: Customer > Marketer/Merchant? The Problem: How To Make Sense Of All Of This?

13. Multichannel Forensics • Multichannel Forensics is an analytical study of how customers interact with Products, Brands, and Channels. • There are two components of Multichannel Forensics that the marketer must understand. • Repurchase Rate, Measured Annually • Migration Patterns

14. Annual Repurchase Rate Retention Mode: When Sixty Percent or more of last year’s buyers purchase again this year from the same product, brand or channel. Hybrid Mode: When Forty Percent to Sixty Percent of last year’s buyers purchase again this year from the same product, brand or channel. Acquisition Mode: When less than Forty Percent of last year’s buyers purchase again this year from the same product, brand or channel.

15. Example: Telephone And Online Assume your Direct business has the following annual repurchase rates: Phone Customers: 53% Repurchase Rate Hybrid Mode 44% Phone Repurchase Rate 19% Online Repurchase Rate Online Customers: 39% Repurchase Rate 7% Phone Repurchase Rate Acquisition Mode 36% Online Repurchase Rate

16. Executive Strategy Retention Mode executives need to focus on increasing purchase frequency, and items per order. Hybrid Mode executives have enjoyable businesses to manage. They can increase purchase frequency, items per order, and can ramp-up customer acquisition. Acquisition Mode executives need to have a laser-like focus on acquiring as many new customers as possible --- this is the single best way to grow these businesses.

17. Migration Modes Once we understand how we retain customers, we have to understand how customers migrate across products, brands or channels. The repurchase index: Channel Repurchase Rate divided by Corporate Repurchase Rate

18. Migration Modes There are four types of migration modes. Isolation Mode = Index less than Twenty Percent. Buyers are loyal to the product, brand or channel. Equilibrium Mode = Index between Twenty and Fifty Percent. Customers cross-shop other products, brands or channels. Transfer Mode = Index above Fifty Percent. Customers are likely to switch to another product, brand or channel. Two-way Transfer Mode = Oscillation Mode.

19. Migration Modes Telephone Channel Phone = 44% / 53% = 83% Online = 19% / 53% = 36% (Equilibrium) Online Channel Phone = 7% / 39% = 18% (Isolation) Online = 36% / 39% = 92%

20. Executive Strategy If your product, brand or channel is in Isolation Mode, you have advantages. Your customers don’t leave for other products, brands or channels. You have control over your business. Equilibrium Mode introduces challenges, because your customers scatter to other products, brands or channels (i.e. Phone customers moving Online). Transfer Mode can be very difficult for the executive. Customers leave you for other products, brands or channels.

21. Multichannel Forensics Matrix Twelve modes that ultimately define the strategy for an executive managing a product, brand or channel.

22. Executive Strategy The most favorable combination is ‘Retention / Isolation Mode’. This executive retains her customers, and her customers do not leave for other products, brands or channels. The least favorable combination is ‘Acquisition / Transfer Mode’. This executive cannot retain her customers. Worse, if her customers are retained, they are likely to migrate to another product, brand or channel.

23. The Ecosystem Once we understand how customers migrate between products, brands and channels, we can map the ecosystem our businesses operate within. The ecosystem becomes an important element to understanding how to grow a business that we have less and less control over. Let’s view a simulated ecosystem.

24. An Ecosystem

25. Long-Range Sales Forecasts

26. Putting It All Together Management Strategies: Retention / Isolation businesses are probably the easiest to manage. There are fewer levers to pull. New executives have fewer distractions or challenges. Hybrid / Equilibrium businesses are probably the most fun to manage --- many levers to pull. Acquisition / Equilibrium-Transfer businesses are the hardest to manage or grow.

27. Putting It All Together Marketing and Multichannel Strategies: Catalog and E-Mail strategies can be calibrated to the natural paths that customers take when migrating through your ecosystem. The incremental value of your catalog/telephone channel can be derived via the long-term planning scenarios yielded by multichannel forensics. Short and long-term investment choices can be measured via long-term planning scenarios.

28. Multichannel Forensics Questions?