Saturday, 1 December, 2007

Bootleggers’ barrels

I have often wondered why fight sequences in the villain’s den in our movies always involve people jumping off and on barrels. In most cases, I could find no reason for the barrels being there.

The bad man would be into extortion or gambling or kidnapping. So what were those barrels storing? Petrol? Maybe. You won’t get time to tank up if the cops or rivals were at your heels. But I can’t remember ever seeing a car being filled out of them.

Now I have a theory. Nobody knows why the barrels are there. The fight masters put them in because they are essential props in their choreography. They were taught to fight with barrels, so they use them.

I strongly suspect barrels came in big time Hollywood gangster movies of the 1930s, when gangsters were synonymous with bootleggers and the barrels had a legitimate (well, illegitimate) reason for being in their dens.

They were imported to another land, and they stayed, long after their original justification was gone.

I once read a book on of the so called ‘stupid superstitions’ came out good reasons. For example, people who had suffered bereavement were forbidden to meet with others for a week or fortnight to avoid risk of infection. It was a cruel but effective way of confining the fatal disease to one household. If the survivors showed no symptoms after a week, they were considered healthy and declared ‘no risk’.

Today, when diseases can be diagnosed well, and precautions can be easily adapted if they are infectious, the superstition has been done away with in most middleclass homes that I know.

How much of business outdated anchorless superstition? I have no fondness for ‘out of the box’ and ‘cutting edge’. Yet I believe we can do our jobs in half the time we take if we took some time off every day to investigate why we are doing whatever we’re doing.

Tuesday, 20 November, 2007

Let’s take a random sample and see

Why do you want to take a random sample? An engineer makes his entire plan on a computer first, and subjects it to every sort of test, even when each element in it has known properties. He makes scale models, and makes corrections and tests every step of the way, till he’s absolutely sure. Then puts the structure into use very gradually. Ditto for pharmaceuticals. Yet direct marketing must hold up to testing on a random sample!

When any idiot will tell you that a test on a random sample is bound to fail, because most people in the list are bound to say No. For starters, many will never buy what you are selling. And even the ones who will are very unlikely to all be in the market exactly when you’re testing.

Which means even if a section gave a ‘thumbs up’ to the test, it’s bound to be swamped by the overall and overwhelming failure that permeates through the list as a whole?

Does that mean we shouldn’t take random samples? Of course, we should. But after understanding what the term means. We should take a random sample of those sections which we think are most likely to form the market; take enough from each of these to yield dependable numbers; and a random sample of the balance, to see how well your selection works out in real life.

Mutual funds and film dance

Switch on any film music channel and you see the same dance in every song. It’s invariably jerky and graceless. And many a time seems to have nothing to do with the song going on.

Anyway, one common characteristic of these dances is that their parts don’t seem have any sequence.

Now, in the nice old fashioned dances you sometimes had entire episodes of the story. Some were elaborately choreographed. Two prime examples that come to mind are Goldi Anand’s Guide (dances by Hiralal and Sohanlal) and Teesri Manzil (Herman Benjamin).

So why don’t we see dances like that any more (that is a ridiculously sweeping statement, but let’s stay with it)? I think it’s because a collage of ‘pretty’ sights can’t go very wrong. Lacking perhaps the time, talent and guts to do a really good piece, directors, chorographers and stars put together a sum of pretty parts that passes muster, though the whole is certainly not beautiful, let alone memorable.

It’s something like a mutual fund. It’ll never be as good as a blockbuster stock, but overall, it’ll do. Parts may even be excellent. (Ref: http://en.wikipedia.org/wiki/Curate's_egg)

Thursday, 8 November, 2007

Jumbo mistake?

Jumbo vada pao (a Bombay adaptation of the hamburger, which uses a potato patty) is one brand everyone admires.

While flipping channels I caught its younger owner describing his business. I remember one particular point: He said he wanted to expend overseas, but when he found that the population of mere suburb of Bombay was higher than the entire population of Indian expatriates in some gulf emirate, he decided against overseas expansion and concentrate on home.

At that time I admired his commonsense and his ability to put profits before ego.

Now, I’m not so sure.

Did he take into account the premium that gulf Indians would pay for food that reminds them of home?

Did he wonder about the chances of locals liking the food too?

Or of a rich sheik liking it so much that he’d buy a share in Jumbo and help them grow?

There are almost no Chinese in India. Yet there are hundreds of Chinese restaurants. Maybe Jumbo could have returned the favour to China.

Anyway, a single-factor decision looks very strange, especially from a successful chain. Perhaps there were more things on their minds when they decided against expanding abroad, and the owner ‘dumbed’ it down for TV (‘Dumb down’ is an idiotic thing to say, because it assumes people who cannot talk cannot think. I don’t mean that, of course. But I’ll let this stay to remind myself how ‘dumb’ I am.)

No web shopping in India?

Right now we have many festivals in India – Dushera, Id, Diwali, Chat, Christmas, New Year. Yet there is very little of web shopping in the news. I haven’t come across even one article. There are ticket offers, but that’s about it.

Why not an Indian food chain?

My wife and I have lived in Kolkata, Bangalore, Delhi and Bombay. And we are pretty sure that recipes don’t cross borders too well. For example, sambar becomes sweet in Bombay. And South Indians add tej patta to almost everything. While these adaptations may make the dishes more palatable to local palate, there are surely many who want the authentic taste. After all, what’s the fun in eating out if it tastes like the food one has at home every day (Eating out from compulsion is another matter.)

Now, South Indian fried snacks are accepted across the country, as are Delhi chaats, and Bengali sweetmeats. Rajasthani savouries are also relished. So why aren’t there food chains for any of these?

I guess there are a few with shops across India, but none at the scale of, say, McDonald’s or KFC in USA.

Is it a only a matter of time for big chains come up in India?

Or is Indian food far more difficult to cook, and cannot be adapted to industrial cooking the way hamburgers are?

Or is it the ‘vision’ thing?

Monday, 5 November, 2007

Keep in touch in B2B

Would it make sense for B2B marketers if they insisted that people who want their newsletters have to give email ids and business addresses? This will ensure that they change contact details when they shift jobs. Of course, one must publish a fantastic newsletter for this to happen.

Bake me a plan

Pat a cake, Pat a cake, baker's man
Bake me a cake as fast as you can;
Pat it and prick it and mark it with a 'B',
And put it in the oven for Baby and me.

Prospective clients have the same attitude towards agencies wanting their business. Give us a plan, and if it’s any good (read: If you are cheapest) we’ll take it forward.

You won’t expect a lawyer, doctor or architect to work under those terms, would you? Or a dress designer? You hire on the basis of recommendations and reputation, fix a price, then start the work.

But agencies are supposed to do elaborate speculative plans, including detailed costing, creative elements, response rates, and RoI.

Anyone with commonsense will understand the whole thing is absurd. How can another company, no matter how intelligent and experienced its people are, solve your business problem on the basis of an interview and a few downloads from your website?

What we probably don’t realise is that this method is counterproductive. Because an agency doing a speculative plan will be stupid to work hard. Besides, even if it did, it just doesn’t know enough about the intricacies involved to come up with something truly worthwhile. If it does, it probably owes more to luck than skill or brains.

Wouldn’t it be better to buy the agency’s commitment by appointing first, giving a few simple jobs to familiarise their people with your company, then scaling up to plans and programmes?

PS: Admittedly, in certain engineering work detailed plans are asked for in the contract bid. However, three things need to be kept in mind: (a) These are for very large contracts, where the rewards are very large too, and make the risks worthwhile (b) The requirements are given in some detail (c) Engineering projects are notorious for budget and time overruns.

Tuesday, 30 October, 2007

No beta, yes risk

In direct marketing texts very little is discussed about sample sizes, and even less about Type I and Type II errors. Admittedly, the latter is somewhat complicated, and business statistics books often recommend that readers go over sections covering it carefully and repeatedly.

‘Complicated’ is, unfortunately, not synonymous with ‘of theoretical value only’. In fact, the opposite is true in this case, because the Type II error is of fundamental importance, as becomes apparent if we step back and ask why we bother about test and sample size in the first place.

We do so, basically, for two reasons. First, we don’t want to throw the baby out with the bathwater. We don’t want to take a test result that is somewhat less than our expectation on its face value. We’d rather use the test to estimate the list characteristic leading to the result, and if that turns out to be acceptable, we’d like to scale up. This is why we worry about a (the probability of rejecting a true null hypothesis).

At the same time, we don’t want to lose money by scaling up when we shouldn’t have. This means we should worry about the minimum response that would be ok. For this we must worry about b (the probability of accepting a false null hypothesis).

Yet, the commonly used formula for sample size completely ignores beta (not only in direct marketing books and online calculators but also in most of the business statistics texts I’ve come across)!

The formula goes like this:

N =

za/22p(1-p)

E2

Where

z is the value used for the specified confidence level

p is the estimated response (population proportion) and

E is the ± sampling error allowed.

Let’s say estimated response is 2%; the allowed error is ±0.25%; and confidence level is 90%.

Putting these into the template yields a sample size of 8,485.

Let’s see what this means in terms of b if the true response (which we’ll get to know only if we scale up to the entire list) is, say, 1.65%. b turns out to be 23%, that is, 1 in 4!

Humm, that’s bad. There’s a 1 in 4 chance that while accepting a figure between 1.75% and 2.25% as ‘as good as’ a 2% response rate, we’ll actually accept a list with only 1.65% response.

No wonder one of the well accepted rules of the thumb in direct marketing goes: “As a rule, the response rate from a rollout to the balance of the list after a successful test mailing will usually be lower than the response from the test.”

This may be because of a variety of differences between test and rollout conditions. But one thing needs to be kept in mind: If one ignores Type II errors, the success of the test can be very suspect indeed.

A way out could be to use an alternative formula:

N = (

|z0|(p0(1-p0))1/2 + |z1|(p1(1-p1))1/2

)2

p0 – p1

Where
p0 is the estimated response

p1 is the value for which Type II error will be monitored

z0 is za or za/2 depending on whether the test is one- or two-tailed and

z1 is zb where b is the limit on type II error probability when p = p1.

Let’s see what happens if estimated response is 2%, the allowed error is ±0.25%, and confidence level is 90% (as before); while p1 is 1.65% and b is 10% (i.e., there is only a 1 in 10 chance – not 1 in 4 as earlier – that we’ll accept a list with a real response rate of 1.65% by performing the test).

We get a sample size of 12,643.

Sure, it’s a 50% increase in sample size. But it may be well worth it if the roll out numbers and costs are far higher than the test’s.

In any case, won’t decisions be better if they were taken with a clearer idea of the risks?

PS: Please excuse the ungainly appearance of the formula. It's the best I could manage using a Word file. Both formulas can be found in the useful templates at http://highered.mcgraw-hill.com/sites/0070620164/student_view0/excel_templates.html

Saturday, 13 October, 2007

Reader’s Digest list

Reader’s Digest is often talked of as a good magazine to learn English from. Shouldn’t they target people buying English courses?

Would you tell your plumber how to do it?

It’s your kitchen, your money, your headache. Yet you won’t tell your plumber how to fix your kitchen. You may try, but if he thought it won’t work, he won’t do it your way. If you insist, he won’t do the job. He’ll tell you, in no uncertain terms, to go to someone else. Chances are, you’ll back off. He know best.

Yet you’ll rewrite your agency’s copy, and redo their art. Chances are they don’t know a thing. Then why did you hire them in the first place?

Yet you pay them a lot more than you pay your plumber.

Call to enjoy

If we want data from a sales promotion form we have to enter it from a filled form. This takes time and can lead to errors. Also, all participants may not fill their forms entirely. What can be a way out? What if we asked participants to fill the form online, after which their coupon (number) will be emailed. Or fill it over the phone (single entry, by the tele-operator) after which the coupon number will be SMSed?

Thursday, 4 October, 2007

This work is not important

We’ve heard this often.

Another one we hear, somewhat less often, is: “We’re doing it for billing. Don’t get involved.”

The second is downright idiotic. Unless we are doing charity, we all work for money. For billing.

By that logic, only those who work for charity can get emotionally involved.

Ironically, they’re the ones who can’t get too involved. Because they frequently have to make very hard choices. About who should get aid first and who’ll have to wait. They have to take enormously risky decisions, on whether A will work or B. Because if A doesn’t work, it’ll be too late for B.

So it’s they, not we, who have to harden their hearts. It’s they, not we, who have to be ‘professional’. It’s they, not we, who have to keep one eye on the money at all times. If they go wrong, other people lose lives; if we go wrong, people – we – at most, lose jobs.

That said, working for money shouldn’t be shameful. It doesn’t mean ‘disgrace of talent’. Maybe communists think like that. Are we communists? If we aren’t, why should we feel so bad about being paid for an honest day’s work, more so when the day so often drags out into the evening and night?

Getting money is not a good enough reason for not taking our work, and, by extension, ourselves, seriously. Perhaps a prostitute shouldn’t hope for much because she’s getting paid. The same logic needn’t apply to us, unless we wish so.

Also, there’s an important difference between her work and ours. Sex is normally not bought; our work is always bought.

There is nothing wrong in selling it. And there is no reason why professional pride should come as a free gift with that sale.

Anyway, let us return to the title: This work is not important to him.

Let’s rethink this one by asking three questions.

First, what is his – the client’s – salary? Is it not, as a minimum, 50% more than yours, even when he has the same experience as you? If the work was not important, why is his company paying him so much to get it done? Why are more and more companies adding direct marketing and CRM managers and paying them far more than agencies pay their employees?

Ok, client companies often have very different economies than agencies, so some comparisons will be erroneous and misleading. Still, the client’s employer is paying him to get work out of you. That should be good enough for you to believe that your work is important.

Second, what will happen if you, that is, the agency, goofs up? Will he, that is, the client company, say, “It’s alright, don’t bother”? Or will he bite your head off? He’ll do the latter.

Possibly people react badly when anything they pay for goes wrong, regardless of whether it’s important or not. Yet, we may suspect that whatever you’re doing is important enough for the client to be bothered.

Third, how does it matter if the work is important to him or not?

It’s very important to you. It’s your job. It’s your source of livelihood.

A restaurant is not important to you. Even your favourite restaurant isn’t. If it shuts down tomorrow, very little will change in your life. You’ll find some other favourite restaurant, and, perhaps, remember the old one once in a while.

But the restaurant is very important to its owner, to its waiters and cooks and cleaners. To its suppliers. To its creditors.

For them it does matter whether it’s doing well or badly.

Or take your maid. Her work is unimportant. If she doesn’t show up one day, you can do the work yourself. Or not do it at all. If she works sloppily, or is absent too often, you can easily replace her.

But her work is very important to her.

One wage less may be the difference between a full stomach and hunger. Or keeping her children in school and dooming them to a life as bleak as her own. She better take her work very seriously.

Just as I must take my work, and myself, seriously. Regardless of its worth to my client, to the economy, to humanity, and to history of the universe.

None of them are responsible for me.

Only I am.

Besides, if it has to be done, why not do it well? If you’re going to spend lots of time and energy doing this job, and you can’t immediately switch to saving the world, why not save your spirit by taking your work seriously.

Look at it this way: If you take up an account where your client feels your work is not important, you’re looking for trouble; but if you think your work is not important, you’re staring at disaster.

Respond and be damned

My colleagues got a very fancy invitation from HP about their new cost-effective technology. Beautiful graphics, amazing personalisation.

But when the got there, on the evening of the 20:20 final, no less, they met reality.

The presentation was ok. No problem there.

But the sales representative was most uninformed and unhelpful, though my colleagues were keen to know more. He didn’t even take their business cards. Wonder why they bothered to spend the thousands?

Saturday, 22 September, 2007

In leaps and bounds…

“In India, we’re skipping technologies.”

“Forget everything. Everything’s changed.”

“Traditional advertising is dead.”

“Direct mail never took off and now it’s too late.”

It drones on and on.

Blanket statements with the surety of the sun’s rising in the east.

And what are they backed with? The ‘fact’ that we now have 147 million mobile subscribers in India. (http://www.coai.in/archives_statistics_2007_q3.htm)

This one statistic is supposed to be symbolic of all that is good and great in emerging India.

Frankly, that ‘fact’ is dubious. I bet we neither understand nor report churn correctly. I guess that 147 figure overestimates the subscriber base by at least 1/3.

Even if it was right, and we threw in all the telephones and Internet connections and what have you, you get a tele-density of 10 to 12%.

Big deal.

Actually, big shame.

It’s like celebrating progress in literacy when every second Indian can’t read, or, for that matter, in economic growth, when one out of four lives below the poverty line.

But I digress.

My main point here is the absurdity of taking one statistic, no matter how impressive, as the basis of a universal judgement. One Indian company buys a western one, and India conquers the word. One Rolls Royse sells somewhere in the back of beyond and we’re all maharajas. One NRI author in English wins a prize and we acquire a voice, at last. The literature of our 25 languages doesn’t count. Never did.

You hear this logical pole-vaulting in meeting after meeting. If a Western person is present, the absurdity attains insanity.

Nobody asks, “What are the facts of this case? Can we see them first?”

70% are businessmen

I won’t have believed this had I not seen this.

One of India’s largest companies did a customer ‘survey’ for one of their new brands. The largest proportion in the finding was 70%: 70% of the buyers who agreed to be surveyed were businessmen.

The upper confidence level for that fraction (at 95% confidence level) is 90%; the lower confidence level is 50%; the figure is meaningless.

Yet this company will use this to take decisions involving tens of thousands.

Monday, 10 September, 2007

The new consumer?

Open any book on marketing and it will tell you that the consumer has changed. She won’t fit into stereotypes any more, has a mind of her own, is adapting technology, and the rest.

In other words, mother was a cardboard cut-out but the ‘significant other’ is a real human being. Or a hyper-real human being. Or is whatever inane that you heard in the party last night.

How did the ‘paradigm shift’ happen? Was the Web suddenly able to connect purchases to people and shatter stereotypes? Possibly.

Or are marketers waking up to something that direct mail people knew all along: Psychographics is nothing; demographics is nothing; list is everything.

Was there any reason to believe that consumers ceased being different and diverse and interesting and unpredictable and neatly slotted themselves into segments? Why did the segments exist? To describe neighbourhoods (for distribution) or media (for advertising) or markets overall (for planning products and fixing prices)? Which of these really confirmed to type? Niche B2B magazines maybe? Yet we thought in segments and profiles, never asking which ones we fit into?

Most probably we needed ‘something’ to think on, and the stereotype was that something, a comforting explanation not unlike primitive man’s lava demons and rain gods.

Friday, 31 August, 2007

Worth no more than…

We were talking to an HR executive recently, and came across something quite horrifying. The conversation went like this:

“How did you find Mr X, who I had recommended for the loyalty manager’s post?”

“Oh, he wasn’t any good. Incidentally, another chap from your office turned up on his own, Mr Y. He was ok, but he wanted Rs 12 lakh (1.2 hundred thousand). We reckoned that he was worth Rs 10 lakh, at most.”

“Who did you take ultimately?”

“Mr Z. He has 15 years’ experience, and came for 18 lakhs.”

We couldn’t believe our ears. How can you have salaries as different as Rs 10 lakh and Rs 18 lakh for the same position! One expects a range of ± 10%, but +80%! The profiles and responsibilities have to be very different for that to make sense. Were they?

Because if they weren’t, it tells you a good deal about how companies value CRM and evaluate CRM managers.

Who do we send the cake to?

Meet any B2B marketing manager and about the second thing he tells you is that he wants to do CRM with his customers.

“What exactly?”

“Send cakes and cards on birthdays. Take the relationship to the next level. There’s so much you can do…”

(To yourself) “Can’t think of one thing I want any of my vendors and suppliers to do for me except do my work, and not overcharge me – but maybe I’m ultra-professional.”

(To him) “Of course, of course, there’s so much one can do.”

“Yes, but you see the problem is that we don’t know who to send the cake to. The person who books the call may be just a flunkey, with no say in the decision. We want to reach out to the decision makers and influencers (with cakes). We have to do the ‘mapping’.”

And so it goes on.

While you wonder what stops them for doing the far easier job of sending B2B offers and deals, which, if they are meaningful, should land up on decision-makers’ desks.

Then you realise you are seeing a replay of one of our favourite excuses: Because the impossible cannot be achieved, the obvious shouldn’t be attempted.

We Indians are great at ‘change at the grassroots’ and ‘rethinking the entire structure’. No doubt these are necessary. But what are to do till we do these? Twiddle our thumbs?

Monday, 20 August, 2007

What can you say about this man?

“He has bought Brand A. What does that tell you about him?” How many times have you heard this question? How many times have you had to made up a wonderful pen picture of this customer, based on this one single purchase and agreeing with brand manager’s reading of who constitute his market?

And how many times have you told yourself that this Sherlock Holmes act is totally absurd?

Holmes would at least have a well-used object, with plenty of tell-tale marks on it, to base his deductions on. All you have is a single purchase. And some completely unsubstantiated assumptions.

Yet brands’ creative and media plans are based on these mental gymnastics.

Is it so difficult to say, “The only thing we can tell about the customer is that he can, most probably, afford this brand. If we have additional data on customers, we can probably hazard a few more guesses. For instance, if we know that 67% of customers are Sindhi grandfathers with four-and-a-half gold-filled teeth, we can say, ‘There’s a 67% chance that our new friend is a Sindhi grandfather with four-and-a-half gold teeth.’ Beyond that we can’t say anything.”?

Why must we know our customers profiles? Why can’t we just restrict our interest to the whys and wherefores of their liking our brand?

We use many brands ourselves: In how many cases do we fit those brands’ (apparent) target markets? Or are we ‘beyond marketing’, non-slot-able, unique, different?

Lend your card

Would it make sense to ask loyalty programme members to lend their cards to friends and relatives during festive seasons? If there are exclusive offers to cardholders, and the primary purpose of these offers are to hike sales among heavy users, not necessarily to curry favour among them (‘Here’s your bulk discount’ vs. ‘Something special for someone special’), loyalty cards can become, in effect, reusable discount coupons. Members won’t, of course, mind some extra points on their friends’ purchases.

In short, card lending can do, more or less, what a referral programme does.

There are three immediately discernable drawbacks though:

(a) We may not get the card borrowers’ data, as we’d do in a referral programme;

(b) The card borrowers may be lost as prospects to the loyalty programme (Why should I become a member when I can enjoy membership benefits by flashing my friend’s card? Well, because you won’t get points. But I don’t buy often enough to collect very many of them. In that case, both sides are perhaps better off with you not having a card.); and

(c) The members’ data can get somewhat contaminated (Data says grandmother is buying itty-bitty bikinis; in reality, her next-door neighbour bought them, while swiping her card. This may not be so horrible though, as long as grandma doesn’t mind passing on the bikini catalogues, sent as a result of this purchase, to her neighbour.)

Monday, 13 August, 2007

I ‘eurekad’ when I read Caples the first time, but when I started reading again! –

John Caples’s Tested Advertising Methods is a book I will unhesitatingly recommend to any copywriter. As I will recommend his How to Make Your Advertising Make Money and Making Ads Pay.

So what I am about to write is, for me, sacrilege. Yet it must be committed.

The tests that Caples talks about leave a lot to be desired. I was just going through Tested Adverting Methods (5th edition, revised by Fred E. Hahn [a revision that does it only harm]) again, and found the inadequacy of the data particularly puzzling.

Take the famous example where Caples says changing an ad headline from “Repair Cars – quickly, easily, right” to “Fix Cars – quickly, easily, right” increased response by 20%. He gives no information about what the actual numbers or percentages were, or where the ad came out.

So let’s suspend belief for a while and pick some numbers out of the Web.

The average weekday circulation of a newspaper in the US (whatever that is supposed to mean!) in 1940 was 21,902 and the Sunday circulation was 61,659 (Please see this section of The State of the News Media 2004 report at journalism.org).

Tested Advertising Methods came out in 1932, so here are our assumptions: (a) The circulation was not too different in 1932 (we have no reason to do that, but the data at the site is only till 1940) and (b) Readership was equal to circulation (again, a rather silly assumption, but the purpose of this to explore a possibility and not to prove a point).

The situation we can imagine goes like this:

The ‘repair’ ad could have pulled up to 201 responses

And the ‘fix’ ad 20% more, that is, 241 responses

Without the response rates being significantly different (at a 5% level of significance).

Had the ad come out on an average Sunday newspaper, the responses could have gone up to 209 and 250, respectively, without the response rates being significantly different.

The same complaint can be made against the comparison between “Save one gallon in every ten” and “Car owners! Save one gallon of gas in every ten” where, on testing in a daily newspaper, the latter pulled 20% better than the former.

Another famous example is the one where “Hay Fever” pulls 297 sample requests while “Dry Up Hay Fever” pulls 380, a ‘27% increase’. The increase in response rate (assuming the ads came out in average newspapers on weekdays) could have been between 0.15% and 0.61%.

In quite a few cases, neither response rates nor responses have been quoted; we’re simply told A did better than B.

Now, if the differences in response rates were not always significant, from either a statistical or business perspective, the businesses involved in those testing decisions would not have gained or lost much.

The trouble lies elsewhere, with direct marketing copywriters who believed the ‘tested’ fact that ‘straight and simple always out-pulls the creative’ and put their own careers into jeopardy, because that belief is almost always seen as an excuse for lack of talent.

To all such writers, and to writers who have not yet formed their beliefs, I would recommend this site: Statistics Every Writer Should Know. A little knowledge may be a dangerous thing, but none at all can be disastrous.

PS: I used an Excel template from Aczel & Sounderpandian for my calculations. My calculations are at http://docs.google.com/Doc?id=dd3bjnd7_28rt37t and the templates are available here.

Monday, 30 July, 2007

“We have to strengthen primary education.”

Every time I hear someone say that we need to strengthen primary education to solve the reservation issue, or develop sports at the grassroots level to get an Olympic medal, or rewrite the law books to get justice, I’m reminded of the sales manager who keeps asking for more leads to improve sales.


Of course, more leads will help. But so will more conversions. Better bookkeeping. Salesmen who know something about what they are trying to sell.


Getting leads is hugely dependent on the market, converting them to sales has a lot to do with our efforts. Why don’t we work on what is difficult to improve, instead of waiting for that impossible day when the fundamentals will change?

3 problems with multiparty loyalty programmes

The future may well belong to networks. But multi-party loyalty programmes need to solve three problems before they get there.


First, and the most obvious one, is the technology hurdle. How will these programmes ensure that the software that runs the unified loyalty programme smoothly links with the separate transactional, sales and marketing software and CRM databases (I assume that all participating companies will not equate ‘giving points’ with ‘taking care of customers.’)


Second, sooner or later, the programme will need to play the role similar to a points market. This will entail ensuring that points accounts (members’ and marketers’) are properly settled and points-to-purchase ratios are commonly acceptable. For example, the trade in points (which are, to all intents and purposes, deferred discounts) is bound to lead to deficits and surpluses, and problems within individual companies.


Even if these two are solved by importing experts from other fields, there remains a third problem: A multiparty loyalty programme lessens choice, for both customers and marketers.


Let’s take customers first.


With single-party loyalty programmes, as a customer, I will not be penalised for buying petrol from my favourite brand and staying at my favoured hotel: I get points on both counts.


On the other hand, if petrol companies and hotel chains tie up, I lose if my favoured hotelier is not my petrol brand’s (loyalty) partner.


I may, though, reason that I’ll reach the loyalty rewards faster by pooling points from different sources; decide that the hotelier’s petrol partner is not so bad after all; and switch.


(For sure, the number of rewards redeemed will go up [as compared to stand-alone programmes], but this shouldn’t hurt marketers very much if they pool their rewards budgets. Unfortunately, we don’t know how much the redemption rates and amounts will increase.)


It may be argued that since consumers usually buy from a number of brands, there is no conflict of interest between consumers’ need for choice and multiparty programmes rewarding only purchases within a set of brands.


I suppose the matter is somewhat more complicated in real life. While customers may well buy from a number of brands, in frequently bought categories like groceries, credit cards, air travel, and telecommunications the basket is not equally split: A particular (favoured) brand takes the lion’s share. And it is inconceivable that any multiparty programme should have all or most of any member’s favoured brands.


Rationally, that may not be horrible. The consumer just needs to enrol in multiple (multiparty?) programmes and get his fill of points from multiple sources. Now, if only consumers were that rational.


Let’s take the marketer’s point of view. Suppose he wanted to run a sales promotion. As long as he didn’t tie up with other brands, the whole paying population was his market.


Once he gets into partnerships, he limits his choice, at any rate, his first choice, to his partners. There is perhaps little to suggest that his partners’ customers will be his best prospects. (It’s like some direct mail companies agreeing to exchange lists exclusively - an arrangement that is extremely unlikely to benefit any.)


There will certainly be some overlap, but what else can one expect with promiscuous consumers and markets dominated by a few major brands. (The drivers of any multiparty loyalty programme will have to major brands, though many small ones, and even single outlets, may join it… with limited rights, and even more limited powers… primarily to rent loyalty infrastructure and services.)


I don’t think there is any empirical evidence that shows this fear to be misplaced. There are, of course, quite a few multiparty loyalty programmes. There was, of course, the USSR.

Why Indians don’t read

Why can’t you do any direct mail or, for that matter, long copy ads in India? Simple. Indians don’t read.


But opening your eyes shows you that there are more papers, magazines and books than ever before, and more bookshops. And there is the www. While much of what is written in the world, for work or pleasure, is never read, surely enough is read to sustain the writing, financially and physiologically (Almost all sperms don’t make it, but enough do to make 9 billion of us).


So what’s going on?


While I haven’t got any surveys to refer to except this one, I suppose a simple and possible answer may be obtained if we look at a family’s reading. The calculations are here: http://spreadsheets.google.com/ccc?key=pjtNNMP33DgsJnLoV4Sy1Pw&hl=en_GB. (The logic is not different from the explanation to the GMAT paradox.)


As is apparent, each member’s reading goes up, yet the average, dependent on the number of members, keeps fluctuating – and in two cases, goes down.


It can easily be that, in the larger market, readership is going up, as is each individual’s reading; yet the average reading is going down because neo-literates form larger and larger fractions of the population (while the bibliophiles’ fraction, and their power to influence the average, keeps getting smaller [though their numbers increase]).


In short, simply asking where an average came from could have led to a very different explanation, and decision!

Friday, 20 July, 2007

A possible list business?

My previous rant notwithstanding, the paucity of reliable lists is the biggest hurdle to sensible direct marketing here.

So where are the Decision Makers (B2B) and High Net-worth Individuals (B2C)? Besides credit card companies and loyalty programmes, ‘VPP’ (Very Probable Prospect) contacts should, logically, be available with:

  • Builders and housing societies
  • Business associations
  • DRTV companies (anyone who can buy a Rs 2,999 magic tummy-trimmer over the phone may not be in the Ambani and Big B league - in all probability he makes far less than the assistant brand manager does - nevertheless he is, sorry to say, somewhere near the top of our unfortunate country’s income pyramid)
  • Organisations and trusts (based on charitable cause, religion, and language-based)
  • Private colleges, MBA institutes and education companies (get the students’ parents)
  • Sports and fitness clubs
  • Trade magazine subscription departments (e.g., magazine’s for, say, the film trade, for CAs, for doctors and engineers) and
  • Tour operators.

While none of the lists would be very large, together they should be sizable. Besides, the list is far from exhaustive.

This much is obvious. Yet, we don’t know of list brokers who maintain and market these lists. Worse, the owners of these lists are not known to approach direct marketing agencies. (If they approached brands directly, the latter wouldn’t keep asking us for lists.)

Demand exists, but little supply.

Why? Perhaps because the demand isn’t big enough. Yet.

Perhaps the grey market forbids legitimate trade.

Perhaps because it’s the ‘Indians-cannot-read’ syndrome.

Perhaps it’s because of the cold calling disease that infects brand managers. Which club secretary would want to be responsible for members receiving bizarre sales calls in the middle of meetings?

But what if someone went to these list owners with this proposition: “I will update (“I am calling from the club. May I please confirm your address? Is it 123 ABC Street?” “Oh, no, my dear, that’s where great-grandfather lived during the Sepoy Mutiny.” and so on.), clean and standardise your lists; I’ll obtain consents from the people on the list (Give permission to mail for an x% reduction in membership/maintenance/subscription fee, which I will make up); and
I’ll market these lists. (Profiling may not be required. One doesn’t need to know the annual household income of a club member when the membership fee is a quarter of a lakh a year.)

My only conditions are that I will have the exclusive contract for marketing your lists; I will get a commission on every deal; and if I can prove that somebody other than me has traded the data, you will have to pay a fine.”

This will undoubtedly take a good deal of time and money. It’ll probably fail a few times before taking off.

On the other hand, investors are supposed to be waiting with money to throw on India’s emergent economy.

Why doesn’t someone import a list expert from the US and start this business here?

Tuesday, 17 July, 2007

Demented Dialogue

Prospective Client: What databases can you get me? I have a 5,000-seater call centre, which I’m ramping up to 7,500 next week, and 10,000 by the end of the month. I need to give the girls and boys leads to call up.

Anxious Agency Executive: We do five loyalty programmes, for X, Y and Z… and P and Q. That should give you, let’s see… X has 1½ lakh ‘active’ members, Y has 3,000 members, we have some 2,000 odd in P…

PC: Thousands and all my people will finish in a day. I need lakhs.

AAE: I’m afraid then you’ll have to advertise.

PC: Why am I talking to you then? Ultimately, that’s what you guys bring to the table.

AAE: We could help in taking forward the communication with the people who respond to the ads.

PC: So what will you do? All you guys want to do is mailers. That my ad agency can also do. But who has time to read these days. I throw away everything I get. Honestly, when was the last time you read something? Only copywriters read what they write. In India, nobody reads.

AAE: What about your own database? Surely you have a house list, now that you have been in this market for a couple of years.

PC: That you don’t worry about. Tell me what lists you have? Actually, you guys have got your priorities all wrong. Some agencies have understood databases and focussed there. You people just want to do mailers. I’m telling you mailers are dead. Just call and sell.

AAE: You mean you can sell your complicated B2B/financial/health/whatever product over the phone? Without reading anything? Or seeing a website?

Incidentally, when was the last time you called the number on your ad? I called a fortnight ago. It took me three calls to get through. And I am yet to receive the brochure I requested for.

And who told you that direct marketing agencies do lists anywhere? Lists are a separate business in the West. Do you have any idea how many people you need to maintain lists? Do you ask a film director to make film? Or a doctor to make drugs? So why should a direct marketer bring his own list?

And how many times a list has to be rented to recover costs? Do you think any list in India gets hired often enough to make it worthwhile for the list owner to keep it updated?

And how many lists are stolen and sold every day, to the biggest brands? How shamelessly brand managers boast about having other brands’ lists? And how much it’d cost to run a call centre in a legit way?

PC: Throw out this idiot!

Kahan kahan se chale ate hain…

Man vs. computer

My brother was in town to get married and had an interesting observation to make about local train ticketing. According to him the old method of punching cardboard tickets was much than the computerised ticketing we have now. Also, it’s difficult to understand how the railways gain by computerising local train ticketing.

I suppose one needs an Occam’s razor for technology, at least in a poor country like ours: “All things being equal, the solution that uses the least and cheapest technology is the best.”

It also recalls an old joke about NASA spending millions of dollars developing a pen that would write in space (zero-gravity) while the Russians simply used pencils. The story is apparently false, but the lesson is most pertinent.

Wednesday, 11 July, 2007

Outbound Pizza

How many times has a take-out joint called you and offered to take an order? None has ever asked us. On the other hand, food service is supposed to be among the worst paying professions around. Those delivery boys need every order and tip they can get. Yet they don’t try.

Why not? Why doesn’t the neighbourhood grocer pay a courtesy call when you move into your new home? Or the dubbawala, when you take a new office? Why don’t desperately poor people market their services? Beats me. Something ‘wrong’ with our national character?

Do we find selling dishonourable? Otherwise why do we look down on BTL so? The leaflet is the last thing the customer sees before he parts with his money.

‘It needs to cut the clutter’

Umm, what clutter?

I can’t remember the last time I got a snail mail solicitation, for anything. I get, at an average, two tele-sales calls a week. From the time when I switched to a post-paid subscription, almost the only sales SMS I get is from my service provider, trying to sell me tunes. (Which I never buy. Why they don’t stop trying? A mystery.)

I do get piles of spam in my inbox, but let’s ignore that for a moment (Why? Because spam is so easy to ignore and chuck out).

Fact is, clutter is not the problem at all. If you want proof, just call a relative or friend in the US or UK and ask how much direct marketing material he gets every day.

The points I’m trying to make here are: (a) We should quit bothering about clutter and (b) maybe all that direct marketing needs to do to get attention here is exist.

Decision makers’ list

Is there a business in just listing the names of key people from companies’ annual reports and websites?

Sawai stupid

Sawai means 1¼. So Sawai Man Singh meant Raja Man Singh was 1¼ times as intelligent as ordinary mortals.

A recent episode finds me keen to confer the ‘honour’ on the people who maintain records for a certain mutual fund.

We got four almost identical letters assuring us that the change of address that we had asked for had been made. To reassure us the old and new addresses were printed side by side.

The trouble was (a) not only had we never asked for address to be changed; but also that (b) the two addresses, old and new, were identical. The old ended with ‘Maharashtra India’, the new, with ‘Maharashtra’ - otherwise, the address was unchanged!

What made matters worse was their sending two of the letters to the old address, not that in our case it made any difference at all.

Why did they send the same address-change communication in quadruplicate? Well, one reason was that we have two accounts, and they don’t seem to have bothered to note that.

This miniature misadventure in CRM points to graver problems. First, are we worth half as much as we actually are in their eyes? They do treat the two accounts quite separately.

Second, is it possible that they are over-quoting, among themselves and to the world, the number of investors? If yes, then by how much? We are small fry, but there are surely many big fish, with numerous accounts. What if these accounts are counted as unique investors?

And if this is how things are, how long before they end up misreading the market (reality: I sell off three units; perception: three investors sold their units)?

Perhaps I’m too naive to understand these matters of high finance. Yet, one comes across plenty of such nonsense every day in marketing. Is it impossible that they are absent in more serious matters.

Friday, 15 June, 2007

Japanese loyalty

Who makes the best quality products? The Japanese. Whose customers are most satisfied? The Japanese. And most loyal? The Japanese. Ever heard of a Japanese loyalty programme? For that matter, how many Japanese marketing books or gurus have we heard about? They may not like to boast, but shouldn’t we translate (I assume there is much worth translating)?

Why 24 hours?

Companies promise response within 24 hours of complaining. Why not 24 minutes? What comes in the way? Perhaps little would be gained by super-fast response in most categories. Yet an innovator can do it and set a new standard, which others will struggle to meet. He will get plenty of publicity as well.

Monday, 4 June, 2007

As the chowkidar said

Said the old judge to the youthful civil servant, “When you are a bit older, you will not quote Indian statistics with that assurance. The government are very keen on amassing statistics – they collect them, take the cube root and prepare wonderful diagrams. But what they must never forget is that every one of those figures comes in the first instance from the chowkidar, who just puts down what he damn pleases.”

Substitute ‘buttonholed shopper’ for chowkidar, and that becomes good advice for every survey spouting MBA.

All active!

Credit card companies claim that their lists are the best because all the contacts belong to active cardholders. Strange, but for the two years I was in my previous residence I got mails to the previous tenant from his credit card company.

Maybe that was an exception. So I have a simple suggestion: Would the credit card company wanting to rent its list agree to address verification of about 100 names before the list is rented? Even if each verification cost Rs 50, and we found that 1 in 4 addresses were wrong, you’d save 4 to 8 times of the verification cost on a mailing to 10,000.

Not bad.

Direct marketing needn’t make sense…

…it only needs to make money. Didn’t Denny Hatch say something like that? Anyway, here’s something similar from a data mining book (Data Mining Techniques, Berry & Linoff): “If a direct mail firm obtains a model that can accurately predict which numbers of a prospect pool are most likely to respond to a certain solicitation, the firm may not care how or why the model works (italics mine).”

I’ve heard similar statements elsewhere.

And all database marketing books teach you basic statistics, e.g., confidence intervals, comparing percentages, and so on, so that you can take dispassionate decisions based on response data.

The first thing we are taught is that we must ‘test, test, and test.’ And we enviously read Western case studies of the wonders wrought by testing.

But something is missing.

When in college, we were taught that physics is, in a way, applied mathematics. It has to make sense. The calculations have to model the real world.

From what little I’ve read about business statistics, its purpose doesn’t seem to be very different.

Right now, I have two (naive?) questions:
1. Given that there is bound to be a time gap between the test and scale-up, and that much can change during that gap, how prudent is it to base the scale-up on test results? I suppose there cannot be any easy (rule of the thumb) answer to this. And some gurus have advised that tests should be repeated before one scales up. Nonetheless, I am yet to come across a case study on ignoring test results. (There are plenty on chimpanzees and ink dots choosing investment portfolios that outperform analysts’ selections [though they do sound too good to be true].)

2. Which of these will be most surprising?
a. Software meant for the express purpose of making segments makes some (peculiar) segments

b. It would have made segments even if the data wasn’t about neighbourhood demographic profiles and frequency of previous orders but about first alphabet of middle name and direction of office desk

c. These segments, no matter how they are created, can be projected into the future, e.g., if Segment A shows significantly higher response for products of Type X than Segment B today they will do so (in most cases) in the future

I’d be unsurprised by if statements a and b came out true, but somewhat surprised if c did, unless the differences between A and B are readily explicable (e.g., A are male, B are female, and X are feminine cosmetic products).

I am also very curious to know what loyalty marketers do with their double-digit segments.

There are quite a few enlightening and entertaining books against the senseless use of statistics to sensationalise or sell or both, particularly in the stock markets. Shouldn’t there be one examining its application to marketing, particualrly direct and loyalty marketing, too?

Friday, 25 May, 2007

Social Security

Americans can do great things, we can’t, because they can track everything anyone does using social security numbers, and we don’t have that. Me thinks that’s balderdash.

First, this assumes that every marketer asks for the social security number while processing every transaction.

Second, it assumes that these numbers are readily and accurately given.

Third, this assumes that the American government is so efficient that it eliminates all false and duplicate numbers.

What is the truth?

Thursday, 24 May, 2007

How are points accounted for?

To our horror we realised that after all these years neither of us knew if there is a standard practise of recording for loyalty programme points in a company’s book of accounts! They do look like debts, albeit with some differences from ordinary debts:
1. The debtor can rescind or revaluate at any time, taking recourse to the small type (terms & conditions);
2. Not all points are redeemable, most being owned (actually, we don’t know who legally owns those points) by members below the redemption threshold; and
3. Not all redeemable points will be redeemed – some will forget, or never find the opportunity.

That’s about all I could think of.

Considering big loyalty programmes can easily carry points inventories worth millions, there must some standard methods for accounting them. I’d be obliged if someone could tell me about these, or direct me to a source.

Commonsense comeback?

I was reading an article (Wrong Again, Vidya Subrahmaniam, Frontline, June 1, 2007) on the failure of pollsters in predicting the results of the recent elections in UP, the one Mayawati won. “Why did the opinion and exit polls go wrong and why did the ordinary journalist get closer to the actual result?” the article asked.

As an answer, it quoted political scientist Yogendra Yadav writing, “This was a clear instance of the triumph of old-style political journalism over the new-fangled number crunching. Political reporters may not have talked about a clear majority for the BSP, but they did capture the hawa in a way that the opinion and exit polls did not.”

The article goes on to conclude that ‘election forecasting is different from market surveys. A journalist with her ear to the ground can perhaps detect sounds not heard by the savvy surveyor who, though equipped with sophisticated tools, may not have the instincts to interpret political signals (italics mine).”

Perhaps, perhaps not. Didn't David Ogilvy write something to the effect that a good ad man can get more out of chatting to a dozen prospects than from pages of research?

Maybe it won’t do us too much harm to get our noses out of those CRM books and read Bird’s Commonsense Direct Marketing again. Maybe the captains and lieutenants of industry are better off with simple observation, more so because they refuse to pick up even the rudiments of statistics.

(Actually, those who talk about the wonders of data mining and modelling and so on are, more often than not, incredibly ignorant of what these things mean. I have found the writers of books on these subjects unfailingly humble, and sometimes overeager to explain the limitations of their art.)

Monday, 21 May, 2007

First mistake

It’s common for loyalty programmes to invite for membership on the basis of a particular purchase going over a threshold. In fact, most programmes offer the membership free, as a sort of reward for making a big purchase.

It’s equally common for those members to never come back. At any rate, most never use the card again.

This is hardly surprising. A cursory examination of any loyalty programme data will show that big purchases are rare events (otherwise they’d not be ‘big’) even among ‘loyal’ customers.

Why then do marketers continue with this wasteful practice, more so when it creates completely unrealistic expectations? (Why so may inactive members? Because they are accidental.) Isn’t a paid programme a better option, from every point of view?

Tuesday, 15 May, 2007

Telegram

It’s still possible to send telegrams. Perhaps someone should try it, at least for a small list, and an announcement.

Why no stuffers?

We always complain about the lack of lists. Strange how few bag-stuffers and savings coupons we use. These require no lists, and goes to customers with the highest possible R (recency). Actually, except for takeaways, especially pizza parlours, who do these all the time, I can’t remember anyone using putting these into my bag along with my purchase.

Ok, banks and credit cards send them, but the not in mind boggling numbers. I wonder why we stay away from stuffers. I’m sure it’s not some high principal against ‘junk’, because we do so many junk calls, SMSs and email.

Wednesday, 9 May, 2007

Why referral programmes cannot take off

Let’s say you started the year with a lakh customers, and plan to add another 12,000, at a modest but constant rate of 1000 every month.

We further assume that customers who have referred once have no more referrals to give, at least not at present. Therefore, they are not approached again.

Furthermore, each referrer gives 5 referrals, and 5% of the referrals are converted. All conversions are, of course, immediate. (At the end of each month, the customer base [for the next month’s referral activity] diminishes by number who refer, and increases by 1,000 new customers [converted referrals].)

A short calculation (http://spreadsheets.google.com/pub?key=pjtNNMP33DgsMGFCNi91xTA) shows that the response rate must climb substantially, from 4% at the beginning of the year to almost 6% by its end.

The calculation is admittedly simplistic, yet it’s not illogical or improbable. Can the response grow in real life? One would expect the opposite to happen if one goes referral hunting every month.

Disgusting

I recently saw an ad for Videocon ACs by O&M that I can only describe as disgusting. It had a nauseating and silly visual of a newspaper with a headline screaming of ‘95% reservation’, and the promise that the ac will keep you cool under any circumstance.

The copy in the newspaper in the visual should repulse any SC/ST reader, whether for or against reservation.

I don’t know why they ran an ad like this. Doesn’t Videocon employ SC/ST people? Do all Videocon employees oppose reservations? Does it not need SC/ST customers?

Is it ‘just an ad’? Then try substituting blacks or Jews in place of SC/STs. Other peoples’ sins are easier to notice than our own.

The mudi and the MNC

In Bengal, we call the grocer ‘mudi’. In villages, the mudi is, or was, the moneylender too. The villager, therefore, borrowed from him to buy from him. I don’t know how much margin he kept on the things he sold, but literature is sated with stories of his punishing interest rates. In effect, he sold to lend.

Not at all different from Tesco’s strategy of using a loyalty programme to shift from the low-margin department store business to the high-margin banking business.

Monday, 30 April, 2007

Searching the opposite

For no particular reason, I once Googled the 1967 Israel-Arab 6-Day War. The first dozen and half dozen pages (perhaps more) of links said the same thing, that is, little Israel pulled off the greatest air victory in history by destroying every inimical Arab air force on the ground in a few hours of bombing.

I had almost given up hope of anything different, when I hit an oddly named and badly designed webpage, http://thewebfairy.com/nerdcities/Palestine/some-wars.htm.

In a few short sentences it gave a completely new (to me) picture. I need to quote it in full:

‘The 1967 war was a sneak attack by the Israelis, no different from Pearl Harbor or Operation Barbarossa. It was even justified in the same manner as Operation Barbarossa and the Pearl Harbor attack.

Note the similarity to the German and Japanese justifications for their surprise attacks.

The Israelis claimed that it was only a matter of time before they would be attacked by the Arabs.... so they attacked first. Hence, by Israeli logic.... the Arabs "started the 67 war against Israel".

The Germans claimed that it was only a matter of time before they would be attacked by the Russians.... so they attacked first. Hence, by Israeli logic... the Russians "started the war against Germany".

Israel claims that the blockade of the port of Eilat was an act of war, which forced them to attack. Hence, by Israeli logic.... the Arabs "started the 67 war".

America was enforcing an oil embargo against Japan. The Japanese considered this embargo an act of war, which forced them to attack. So by Israeli logic.... the United States started the war against Japan.’

Suddenly, here was an interpretation that’s diametrically opposite to the usual! The data hadn’t changed, their reading had.

It taught two important lessons in marketing: (a) If you search deep enough, you may be (pleasantly) surprised; and (b) Data by itself can never be enough: It needs to be interpreted with imagination, rigour and an open mind.

Two statistics

“Professor doesn’t understand business requirements. He is more interested in statistical rigour and exploration.”

The implication is that there are two statistics, one, the professor’s, the theoretical one, and the other the executive’s, the practical one.

Of course, practicality consists of agreeing that the data supports the executive’s haunch. Or throw up a miraculous solution - one that is bound to break down in real life, no matter how promising it looks on the computer - to the executive’s problem.

The parallel that immediately comes to mind is a little boy discovering that there are two kinds of cooking, his mother’s and the chatwalla uncle’s. Unfortunately, professor, paid by the executive, can’t play mummy.

Thursday, 26 April, 2007

Creative Chapsari

A client told my agency that a very well-known mainline agency offered to do their leaflets for Rs 1,100 each. He couldn’t understand how we could expect an amount several times that? We argued about specialisation, quality and the rest. Nothing cut ice.

We shouldn’t have. Instead we should have asked a simple question, “If you’re paying them Rs 1,100 how much are they paying their employees?”

Let’s take the minimum-strength agency, a copywriter, an art director and an operator. These three also fill in for accountants, servicing executives and peons.

And let’s say they split the booty in a ratio of 5:5:1. That gives the copywriter and his art partner Rs 500 each. The poor operator gets Rs 100.

How many leaflets do the creative talents have to do a month to make as much as a chaprasi, assuming the latter makes around Rs 5000, all inclusive? 10. That’s about 2½ a week, written, laid out, approved, art worked and paid for. Which is what most copy-art-operator trios normally do.

I’ll be the first to agree that the quick-math is extreme oversimplification. But would the great agency to admit to criminal undercutting? I wonder what they got out of it.

On second thoughts, in all probability it was the client who was playing dirty, using a rate out of a package deal to bring down the quote for a one-time fee. It was almost like asking a restaurateur to discount his breakfast because the hotel gives it 'free' in its 'bed & breakfast' package.

If you are so smart, why aren’t you rich?

Wait a moment. Why should a smart person be rich? Or a rich person smart? That is, assuming ‘smart’ means ‘above average in intelligence’ (And exactly what is ‘intelligence’?). Is there any statistics that shows income and intelligence are correlated? Or otherwise related? Does the relation hold across all income ranges? Or does it cease to hold in the stratosphere? How about the gutter?

Till someone enlightens me of this, let me indulge in some numerical hocus-pocus:

Which, of course, means that the scientist who makes the fundamental discovery probably makes the least money; the engineer who turns this into something of practical value makes considerably more; but he’s a beggar compared to the executive. (This wonderful piece of inference proves that I have the makings of a front-rank scientific socialist.)

I suppose the poor scientist can’t become the rich executive even if he wanted to. And vice versa. And that this may have far more to do with personality traits (whatever they mean) than with brains. And that phrases like ‘If you are so smart, why aren’t you rich?’ are as unsubstantiated as they are insulting. But why bother if you can fling them around to make people shut up.

Wednesday, 25 April, 2007

Two fundamental questions

Open any database marketing or data mining book and you’d be convinced that business should be completely numbers driven.

Switch back to the real world, and you’d be hard-pressed to find a single marketer whose marketing is founded on numbers. (Crazy sales targets fall under dreams, not data.)

Why is it so?

If we take off the frustrated direct marketer’s cap and pull on an unbiased amateur anthropologist’s, we may find some solace.

At any rate, we do find two fundamental questions:

First, at what stage does the store clerk’s memory become inadequate? How many customers, regular and irregular, does the store have become matters go out of hand for the unaided salesman? How many categories and brands can he handle? Are we trying to introduce software, database marketing and CRM into a market that can still make do with traditional shop keeping?

Second, at what stage does the presence of techniques and technology begin to compensate for the absence of the ‘genuine human touch’? Whether B2B or B2C, it’s foolish to discount the role of unquantifiable human element. Perhaps there is a certain value threshold beyond which customers are prepared to be sold by an efficient system instead of a fellow human.

Which leads to another question: Does the answer of the 2nd question begin where that of the 1st ends? Is there a gap between the points where humans become scarce and machines kick in. If there is a gap, what do database marketers do in a market trapped in that gap?

It’d be naive to expect easy answers to these questions. Yet they must be asked. Surely someone has researched these basic points? Please enlighten.