A Look Ahead
The most important component of the Multichannel Forensics project is the five year, forward-looking sales forecast.
For many of us, we've experienced three or four or even ten consecutive years of customer acquisition response degradation. After adjusting for the sometimes epic collapse of Q4-2008, there's been a consistent drop in performance of maybe ten percent per year, for each of the past several years.
With the economy fundamentally changing e-commerce growth rates, we can no longer count on easy online sales growth. Without easy online sales growth, catalog customer acquisition activities are about to be exposed in a big way.
Here's an example. Let's assume that catalog customer acquisition continued to decline at ten percent a year, for each of the next five years. And let's assume that online customer acquisition (customers not driven by catalog mailings) only increases by five percent per year, for the next five years. What do we observe?
2008 Results | HHs | Rebuy | Spend | Value | Demand |
Existing Buyers | 49,182 | 55.0% | $300.00 | $165.00 | $8,115,030 |
LY New Catalog | 15,000 | 40.0% | $250.00 | $100.00 | $1,500,000 |
LY New Online | 10,000 | 30.0% | $225.00 | $67.50 | $675,000 |
Lapsed Buyers | 125,000 | 8.0% | $200.00 | $16.00 | $2,000,000 |
TY New Catalog | 13,500 | 100.0% | $160.00 | $2,160,000 | |
TY New Online | 10,500 | 100.0% | $140.00 | $1,470,000 | |
Total Volume | $15,920,030 | ||||
2009 Forecast | HHs | Rebuy | Spend | Value | Demand |
Existing Buyers | 46,050 | 55.0% | $300.00 | $165.00 | $7,598,267 |
LY New Catalog | 13,500 | 40.0% | $250.00 | $100.00 | $1,350,000 |
LY New Online | 10,500 | 30.0% | $225.00 | $67.50 | $708,750 |
Lapsed Buyers | 153,132 | 7.2% | $200.00 | $14.40 | $2,205,099 |
TY New Catalog | 12,150 | 100.0% | $160.00 | $1,944,000 | |
TY New Online | 11,025 | 100.0% | $140.00 | $1,543,500 | |
Total Volume | $15,349,616 | ||||
2010 Forecast | HHs | Rebuy | Spend | Value | Demand |
Existing Buyers | 44,903 | 55.0% | $300.00 | $165.00 | $7,409,004 |
LY New Catalog | 12,150 | 40.0% | $250.00 | $100.00 | $1,215,000 |
LY New Online | 11,025 | 30.0% | $225.00 | $67.50 | $744,188 |
Lapsed Buyers | 178,279 | 6.5% | $200.00 | $12.96 | $2,310,495 |
TY New Catalog | 10,935 | 100.0% | $160.00 | $1,749,600 | |
TY New Online | 11,576 | 100.0% | $140.00 | $1,620,675 | |
Total Volume | $15,048,961 | ||||
2011 Forecast | HHs | Rebuy | Spend | Value | Demand |
Existing Buyers | 44,417 | 55.0% | $300.00 | $165.00 | $7,328,748 |
LY New Catalog | 10,935 | 40.0% | $250.00 | $100.00 | $1,093,500 |
LY New Online | 11,576 | 30.0% | $225.00 | $67.50 | $781,397 |
Lapsed Buyers | 201,940 | 5.8% | $200.00 | $11.66 | $2,355,432 |
TY New Catalog | 9,842 | 100.0% | $160.00 | $1,574,640 | |
TY New Online | 12,155 | 100.0% | $140.00 | $1,701,709 | |
Total Volume | $14,835,426 | ||||
2012 Forecast | HHs | Rebuy | Spend | Value | Demand |
Existing Buyers | 44,053 | 55.0% | $300.00 | $165.00 | $7,268,777 |
LY New Catalog | 9,842 | 40.0% | $250.00 | $100.00 | $984,150 |
LY New Online | 12,155 | 30.0% | $225.00 | $67.50 | $820,467 |
Lapsed Buyers | 224,815 | 5.2% | $200.00 | $10.50 | $2,360,019 |
TY New Catalog | 8,857 | 100.0% | $160.00 | $1,417,176 | |
TY New Online | 12,763 | 100.0% | $140.00 | $1,786,794 | |
Total Volume | $14,637,383 | ||||
2013 Forecast | HHs | Rebuy | Spend | Value | Demand |
Existing Buyers | 43,612 | 55.0% | $300.00 | $165.00 | $7,196,057 |
LY New Catalog | 8,857 | 40.0% | $250.00 | $100.00 | $885,735 |
LY New Online | 12,763 | 30.0% | $225.00 | $67.50 | $861,490 |
Lapsed Buyers | 247,252 | 4.7% | $200.00 | $9.45 | $2,336,001 |
TY New Catalog | 7,972 | 100.0% | $160.00 | $1,275,458 | |
TY New Online | 13,401 | 100.0% | $140.00 | $1,876,134 | |
Total Volume | $14,430,875 |
Without the dynamic, organic growth of the e-commerce channel, sales begin a slow tumble, as catalog customer acquisition fails to provide the opportunities once enjoyed by catalog brands.
This is what we need to adjust to. We're not going to see a rapid return to the economic conditions of the bubble period --- but we will see a continued flattening of organic e-commerce growth, and we will continue to see the death of catalog customer acquisition.
Strategically, we need to work on a plan for replacing what have now become expensive catalog customer acquisition names from co-ops. This should be one of the top three objectives we have for 2009 --- customer acquisition experimentation.
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