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.