It doesn't matter how much work you might put into various parts of a project, by far the thing that generates the greatest interest is when a map is included.
Generating segments or profiling customer behaviour is all very well but the advantage of a map is that it is highly visual and also relates to tangible real-world locations rather than some abstract concept of customers with similar behaviour.
Maps can help show where you have high/low customer penetration, which areas have higher average order value, more delivery complaints etc., They can also be used to find areas that have the closest profile to your best customers to help aid acquisition.
At Analysis Marketing we use maps in a variety of scenarios and have put a brief guide together to the kind of things you can do using maps.
The guide is available on our website here. If your business could benefit from using maps then get in touch with us for a no obligation discussion on how we can help you to visualise your customers.
Dan Barnett
Director of Analytics
blog@analysismarketing.com
LinkedIn: http://www.linkedin.com/in/danjbarnett
Thursday, 30 September 2010
Thursday, 5 August 2010
Can I get you to read this?
Where in traditional Direct Mail the envelope design took on the role of trying to entice the recipient to be interested enough to open and spend proper time considering the contents, in the online world the email subject line has the same job put is hampered by being purely text.
Unless it’s from someone you know well or a business you have a regular relationship with, that particular email is fighting for attention with all the others that flood in along relating to work, social life and all the emails saying their various non-existent online bank accounts have been suspended (I hope it isn’t just me getting those).
A good example of an email subject that does its job is from Tier1 Online (a computer/electronics supplier) who I get an email from most workdays, an example of a recent subject line being ‘Netbook clearance Archos 10 Windows XP netbook only £169’, from this I don’t need to read the email, if I’m interested I’ll open, if not, I’ll leave it.
A not so good example are the emails I get from Staples, with examples such as ‘FREE Flying Lanterns – offer ends tomorrow!’ and ‘FREE Cocktail Set!’ which are just wrong on a number of levels:
1. What on earth do these products have to do with a stationery/office supplies company?
2. Everybody wishes they worked for a cool, fun brand but exclamation marks have their place and it isn’t here
3. In the body of the flying lanterns email (I only looked for research purposes) is a banner at the bottom saying ‘10% off Ink and Toner’ which actually is relevant to me (if not the most exciting thing in the world)
For me the main things to consider are:
1. Avoid generic terms such as ‘August Newsletter’ or ‘Great Gift Ideas’, these aren’t going to tip the balance and make me bother to open the email
2. A bit of personalisation might help as it’s a quick way of sorting the real from the spam (e.g., ebay emails contain my user ID so I know they are genuine)
3. Test, Test, Test: if ‘FREE Flying Lanterns’ really is the best way to get people to buy paper clips and post-it notes then go for it but if not try out different options to improve your open rates, click through rates and ultimately sales
Dan Barnett
Director of Analytics
blog@analysismarketing.com
LinkedIn: http://www.linkedin.com/in/danjbarnett
Unless it’s from someone you know well or a business you have a regular relationship with, that particular email is fighting for attention with all the others that flood in along relating to work, social life and all the emails saying their various non-existent online bank accounts have been suspended (I hope it isn’t just me getting those).
A good example of an email subject that does its job is from Tier1 Online (a computer/electronics supplier) who I get an email from most workdays, an example of a recent subject line being ‘Netbook clearance Archos 10 Windows XP netbook only £169’, from this I don’t need to read the email, if I’m interested I’ll open, if not, I’ll leave it.
A not so good example are the emails I get from Staples, with examples such as ‘FREE Flying Lanterns – offer ends tomorrow!’ and ‘FREE Cocktail Set!’ which are just wrong on a number of levels:
1. What on earth do these products have to do with a stationery/office supplies company?
2. Everybody wishes they worked for a cool, fun brand but exclamation marks have their place and it isn’t here
3. In the body of the flying lanterns email (I only looked for research purposes) is a banner at the bottom saying ‘10% off Ink and Toner’ which actually is relevant to me (if not the most exciting thing in the world)
For me the main things to consider are:
1. Avoid generic terms such as ‘August Newsletter’ or ‘Great Gift Ideas’, these aren’t going to tip the balance and make me bother to open the email
2. A bit of personalisation might help as it’s a quick way of sorting the real from the spam (e.g., ebay emails contain my user ID so I know they are genuine)
3. Test, Test, Test: if ‘FREE Flying Lanterns’ really is the best way to get people to buy paper clips and post-it notes then go for it but if not try out different options to improve your open rates, click through rates and ultimately sales
Dan Barnett
Director of Analytics
blog@analysismarketing.com
LinkedIn: http://www.linkedin.com/in/danjbarnett
Wednesday, 23 June 2010
Incremental vs. Absolute Sales - giffgaff mobile
In recent weeks I’ve noticed an increasing number of advertisements for a mobile operator called giffgaff.
They are being marketed as being a more ‘community’ based company with support coming in the shape of on-line member forums rather than call centres. In return they are offering quite competitive rates.
On further examination the company is owned (but independent from) O2 so is to some extent an aim by O2 to increase market share by appearing to be a new challenger to the existing brands rather than a brand extension.
In the saturated mobile phone market, a new customer for giffgaff will be coming from either O2 itself or one of their few other competitors. As giffgaff uses the O2 network the people most likely to switch over will be current O2 customers (of which I am one), not least because O2 customers will be able to use O2 locked handsets on giffgaff.
From an analytical perspective the key is the overall incremental profit made between O2 and giffgaff combined, the numbers below are purely speculative but give an indication of the kinds of things that need to be thought of when acquiring sales.
The incremental profit depends on the proportion of O2 customers being cannibalised and the profit giffgaff make from a customer compared to how much O2 were making from the same customer.
In the calculations below I’ve taken a very basic £5 a month lower profit as this is the drop in price for some of the equivalent tariffs. The figures are purely for illustration only showing a potential scenario:
Example Figures for use in calculating incremental impact:
Proportion of giffgaff customers that are from transferring from O2 – 30%
Average monthly profit from a giffgaff customer - £8.75
Average monthly profit from a customer on O2 prior to moving to giffgaff- £13.75
Average incremental monthly profit – £4.63 (70% of base providing £8.75 and 30% costing £5 a month)
In the example above the level of incremental profit is just over half of the figure when cannibalisation is not taken into account.
There are lots of other factors to throw into the mix such as Advertising and Operational costs and how giffgaff impacts on retention (better a move to giffgaff than T-Mobile), but the figures above show how if you concern yourself with absolute rather than incremental sales, you could end up spending a lot of money for little incremental gain.
Dan Barnett
Director of Analytics
blog@analysismarketing.com
LinkedIn: http://www.linkedin.com/in/danjbarnett
They are being marketed as being a more ‘community’ based company with support coming in the shape of on-line member forums rather than call centres. In return they are offering quite competitive rates.
On further examination the company is owned (but independent from) O2 so is to some extent an aim by O2 to increase market share by appearing to be a new challenger to the existing brands rather than a brand extension.
In the saturated mobile phone market, a new customer for giffgaff will be coming from either O2 itself or one of their few other competitors. As giffgaff uses the O2 network the people most likely to switch over will be current O2 customers (of which I am one), not least because O2 customers will be able to use O2 locked handsets on giffgaff.
From an analytical perspective the key is the overall incremental profit made between O2 and giffgaff combined, the numbers below are purely speculative but give an indication of the kinds of things that need to be thought of when acquiring sales.
The incremental profit depends on the proportion of O2 customers being cannibalised and the profit giffgaff make from a customer compared to how much O2 were making from the same customer.
In the calculations below I’ve taken a very basic £5 a month lower profit as this is the drop in price for some of the equivalent tariffs. The figures are purely for illustration only showing a potential scenario:
Example Figures for use in calculating incremental impact:
Proportion of giffgaff customers that are from transferring from O2 – 30%
Average monthly profit from a giffgaff customer - £8.75
Average monthly profit from a customer on O2 prior to moving to giffgaff- £13.75
Average incremental monthly profit – £4.63 (70% of base providing £8.75 and 30% costing £5 a month)
In the example above the level of incremental profit is just over half of the figure when cannibalisation is not taken into account.
There are lots of other factors to throw into the mix such as Advertising and Operational costs and how giffgaff impacts on retention (better a move to giffgaff than T-Mobile), but the figures above show how if you concern yourself with absolute rather than incremental sales, you could end up spending a lot of money for little incremental gain.
Dan Barnett
Director of Analytics
blog@analysismarketing.com
LinkedIn: http://www.linkedin.com/in/danjbarnett
Tuesday, 13 April 2010
Lovefilm - The Sequel
In a previous post, I mentioned how I’d had repeated offers from Lovefilm to come back as a customer but that I couldn’t take up their offers as they said I wasn’t eligible as I’d had an offer in the past.
Since then I’ve had another mailing and as the offer of 3 months for the price of 1 is too good to resist I thought I’d try something different.
The code they provide you can be used by yourself or given to a friend so I decided to give it to myself but just called myself Daniel instead of Dan and used a different email address and payment card.
This worked fine, so ultimately, I can’t come back as the same customer (where they would then have my information around previous history/preferences etc.,) but instead I’m tracked as a new customer albeit one with the same initial, surname and address.
This means that whoever is in charge of acquisition rather than reactivation will be happy (but not so happy when I cancel as soon as the three months are up and I show in their churn figures).
As before, the question is why send someone an offer that they are unable to take up. Following on from that, if you don’t want them taking the offer, have a few more checks in place to make sure they aren’t just using a different person (or even just different email address) to take the offer as it messes up your understanding of who your customers are.
Dan Barnett
Director of Analytics
blog@analysismarketing.com
LinkedIn: http://www.linkedin.com/in/danjbarnett
Since then I’ve had another mailing and as the offer of 3 months for the price of 1 is too good to resist I thought I’d try something different.
The code they provide you can be used by yourself or given to a friend so I decided to give it to myself but just called myself Daniel instead of Dan and used a different email address and payment card.
This worked fine, so ultimately, I can’t come back as the same customer (where they would then have my information around previous history/preferences etc.,) but instead I’m tracked as a new customer albeit one with the same initial, surname and address.
This means that whoever is in charge of acquisition rather than reactivation will be happy (but not so happy when I cancel as soon as the three months are up and I show in their churn figures).
As before, the question is why send someone an offer that they are unable to take up. Following on from that, if you don’t want them taking the offer, have a few more checks in place to make sure they aren’t just using a different person (or even just different email address) to take the offer as it messes up your understanding of who your customers are.
Dan Barnett
Director of Analytics
blog@analysismarketing.com
LinkedIn: http://www.linkedin.com/in/danjbarnett
Tuesday, 9 March 2010
SAS Training - Blinkered Vision?
I recently received a mailing from SAS regarding their training courses. For some reason the promotion they are leading with offers ski goggles as an incentive to sign up:
This appears to be quite a convoluted way of shoe-horning the offer and the proposition 'See your course more clearly' together.
The assumption is either they came up with something along the lines of 'See more clearly' then racked their brains to try and find a prodcut to match or someone turned up at their HQ in Marlow with a lorry load of ski goggles going cheap.
Either way ski goggles have nothing to do with data analysis or statistics and it's odd to use an item which has niche appeal. Although companies using M&S vouchers or iTunes cards aren't exactly original, they know that they are almost as good as cash.
Also, offering the alternative of a £15 donation to the Prince's Trust means you are left with the perception that this is the value of the goggles when in fact they retail at £30 so they have undermined their proposition immediately.
For something like SAS training they would be better off either using something with broader appeal or pushing an 'early bird' discount for those booking within 2 weeks of receiving the brochure.
An inventive creative can work wonders but can also fall flat on its face so you always need to ask "Is this really adding anything?".
Dan Barnett
Director of Analytics
blog@analysismarketing.com
LinkedIn: http://www.linkedin.com/in/danjbarnett
This appears to be quite a convoluted way of shoe-horning the offer and the proposition 'See your course more clearly' together.
The assumption is either they came up with something along the lines of 'See more clearly' then racked their brains to try and find a prodcut to match or someone turned up at their HQ in Marlow with a lorry load of ski goggles going cheap.
Either way ski goggles have nothing to do with data analysis or statistics and it's odd to use an item which has niche appeal. Although companies using M&S vouchers or iTunes cards aren't exactly original, they know that they are almost as good as cash.
Also, offering the alternative of a £15 donation to the Prince's Trust means you are left with the perception that this is the value of the goggles when in fact they retail at £30 so they have undermined their proposition immediately.
For something like SAS training they would be better off either using something with broader appeal or pushing an 'early bird' discount for those booking within 2 weeks of receiving the brochure.
An inventive creative can work wonders but can also fall flat on its face so you always need to ask "Is this really adding anything?".
Dan Barnett
Director of Analytics
blog@analysismarketing.com
LinkedIn: http://www.linkedin.com/in/danjbarnett
Tuesday, 2 March 2010
MPs Expenses - 1st Class Cost for 2nd Class Service?
An awful lot has been written concerning MPs expenses with the focus being mainly on claims for items that didn’t exist or for excessive claims such as the Duck House.
Now that the furore has to some extent settled down, we have the opportunity to look at less sensational examples where spending is merely higher than it arguably needs to be.
In any business, the way some people treat costs is different where it isn’t their money as opposed to if it came out of their own pocket. A good example of this is MPs postage costs for pre-paid envelopes.
It doesn’t have the whiff of scandal of other areas but the cost of MP postage for 07-08 (the most recent published data purely for postage) was £1.66m so small changes could deliver significant benefits.
Most analysis of MPs expenses has focused on overall spend, but the advantage of having detailed item expenditure as you have for postage is that you can get into the detail of how the total is created.
There are a number of price points at which the majority of postage is sent:
24p C5 Envelope 2nd Class
34p C5 Envelope 1st Class
60p C4 Envelope 2nd Class
70p C4 Envelope 1st Class
£1.84 Small plastic mailer
£5.75 Large plastic mailer
For reference, C4 is an envelope big enough to send A4 unfolded and C5 is big enough to send A4 items folded in half.
For C4/C5 postage there is a huge variation in the proportion sent 1st class by MP:
You can argue that constituents should receive prompt correspondence using 1st class post, but a sizeable proportion of MPs appear to balance their use of 1st and 2nd Class as appropriate.
As well as the issue above, over £187k was spent on large plastic mailers which are charged at £5.75 per item (I'm presuming they are guaranteed next day delivery items). The distribution of these is even more skewed with over 42% of MPs not using these at all but with one MP (Betty Williams) spending nearly £5k on these items.
It may be that Mrs Williams had a valid reason for using these envelopes but as she claimed for very little other postage (£1,100), it may be that her team were using these £5.75 envelopes as standard.
This difference in attitudes as to making every penny count versus a more ‘extravagant’ approach is also likely to be visible in other areas of expense claims such as making sure bills are paid by direct debit to ensure a discount.
They key point (as mentioned in previous blogs) is without the detailed data that creates the summary figures the real insights will be lost. Whether it’s expenses or campaign reporting, the real value is gained when digging into the detail.
Dan Barnett
Director of Analytics
blog@analysismarketing.com
http://www.analysismarketing.com/
LinkedIn: http://www.linkedin.com/in/danjbarnett
Note: 07-08 Postage Figures from:
http://mpsallowances.parliament.uk/mpslordsandoffices/hocallowances/allowances-by-mp/stationery-and-postage/
Now that the furore has to some extent settled down, we have the opportunity to look at less sensational examples where spending is merely higher than it arguably needs to be.
In any business, the way some people treat costs is different where it isn’t their money as opposed to if it came out of their own pocket. A good example of this is MPs postage costs for pre-paid envelopes.
It doesn’t have the whiff of scandal of other areas but the cost of MP postage for 07-08 (the most recent published data purely for postage) was £1.66m so small changes could deliver significant benefits.
Most analysis of MPs expenses has focused on overall spend, but the advantage of having detailed item expenditure as you have for postage is that you can get into the detail of how the total is created.
There are a number of price points at which the majority of postage is sent:
24p C5 Envelope 2nd Class
34p C5 Envelope 1st Class
60p C4 Envelope 2nd Class
70p C4 Envelope 1st Class
£1.84 Small plastic mailer
£5.75 Large plastic mailer
For reference, C4 is an envelope big enough to send A4 unfolded and C5 is big enough to send A4 items folded in half.
For C4/C5 postage there is a huge variation in the proportion sent 1st class by MP:
Ignoring any issues about the huge variation of volume sent by MPs. Simply switching to 2nd class post could have a major impact on the postage budget:
You can argue that constituents should receive prompt correspondence using 1st class post, but a sizeable proportion of MPs appear to balance their use of 1st and 2nd Class as appropriate.
As well as the issue above, over £187k was spent on large plastic mailers which are charged at £5.75 per item (I'm presuming they are guaranteed next day delivery items). The distribution of these is even more skewed with over 42% of MPs not using these at all but with one MP (Betty Williams) spending nearly £5k on these items.
It may be that Mrs Williams had a valid reason for using these envelopes but as she claimed for very little other postage (£1,100), it may be that her team were using these £5.75 envelopes as standard.
This difference in attitudes as to making every penny count versus a more ‘extravagant’ approach is also likely to be visible in other areas of expense claims such as making sure bills are paid by direct debit to ensure a discount.
They key point (as mentioned in previous blogs) is without the detailed data that creates the summary figures the real insights will be lost. Whether it’s expenses or campaign reporting, the real value is gained when digging into the detail.
Dan Barnett
Director of Analytics
blog@analysismarketing.com
http://www.analysismarketing.com/
LinkedIn: http://www.linkedin.com/in/danjbarnett
Note: 07-08 Postage Figures from:
http://mpsallowances.parliament.uk/mpslordsandoffices/hocallowances/allowances-by-mp/stationery-and-postage/
Friday, 26 February 2010
David Lloyd - SMS Marketing
In a previous Blog I mentioned about the letter I'd received from David Lloyd trying to get me back as a member of one of their gyms.
Since that letter I've also had a number of text messages from them, my 'favourite' of which is reproduced below as sent by them, (I've commented out the phone number) :
TREAT YOURSELF THIS PAYDAY WITH A MEMBERSHIP AT DAVID LLOYD! 1ST 20 RECIEVE A SPORTS BAG AND NO JOINING FEE. CALL 01582XXXXX T&Cs Apply. /2 REMOVE RPLY STOP
There are a number of issues I have with the message:
Capital letters - It feels like someone's shouting at me and also means the message looks like Spam.
If I was the kind of person who lived from payday to payday I wouldn't be considering forking out £60-£70 a month on gym membership. I'd also consider it a pretty big financial commitment rather than a treat.
I stopped being a member over 3 years ago, it feels strange for them to start using SMS regularly out of the blue. (I also had one text from them last October which did manage to user both upper and lower case and had a better promotion).
In the last 3 weeks I've had 3 texts from them. I know I could reply to stop them but I quite enjoy being outraged at wasted marketing like this. Why don't they offer me a free day/week pass to see what I'm missing or offer me 3 months for the price of 2, anything must be more effective than a free sports bag.
Of course the main thing in any campaign is how effective it is, if David Lloyd have tried different message tone/content and a Cash4Gold style approach works best then fair play to them. I'd be amazed though that it's the best way to get people coming back.
Dan Barnett
Director of Analytics
blog@analysismarketing.com
LinkedIn: http://www.linkedin.com/in/danjbarnett
Since that letter I've also had a number of text messages from them, my 'favourite' of which is reproduced below as sent by them, (I've commented out the phone number) :
TREAT YOURSELF THIS PAYDAY WITH A MEMBERSHIP AT DAVID LLOYD! 1ST 20 RECIEVE A SPORTS BAG AND NO JOINING FEE. CALL 01582XXXXX T&Cs Apply. /2 REMOVE RPLY STOP
There are a number of issues I have with the message:
Capital letters - It feels like someone's shouting at me and also means the message looks like Spam.
If I was the kind of person who lived from payday to payday I wouldn't be considering forking out £60-£70 a month on gym membership. I'd also consider it a pretty big financial commitment rather than a treat.
I stopped being a member over 3 years ago, it feels strange for them to start using SMS regularly out of the blue. (I also had one text from them last October which did manage to user both upper and lower case and had a better promotion).
In the last 3 weeks I've had 3 texts from them. I know I could reply to stop them but I quite enjoy being outraged at wasted marketing like this. Why don't they offer me a free day/week pass to see what I'm missing or offer me 3 months for the price of 2, anything must be more effective than a free sports bag.
Of course the main thing in any campaign is how effective it is, if David Lloyd have tried different message tone/content and a Cash4Gold style approach works best then fair play to them. I'd be amazed though that it's the best way to get people coming back.
Dan Barnett
Director of Analytics
blog@analysismarketing.com
LinkedIn: http://www.linkedin.com/in/danjbarnett
Tuesday, 23 February 2010
Supermarket Pricing - Beware of Averages
On 13th Feb, the Guardian had a front page ‘special report’ on how Tesco and Asda had undertaken "...cynical and aggressive" price rises in the week before Christmas. The figures provided showed that for Tesco over 1,500 items had price increases between 9th and 22nd December with an average increase of 32p.
Tesco countered this by saying that they dropped the prices of 2,638 products with an average decrease of 54p over the same period (i.e., more products with prices dropped and a higher average price reduction).
Although both statements are factually correct they are both pretty much pointless, as an average (mean) is only really applicable if the data is not skewed. For the Tesco price rise data, the price rises are between 1p and £15.17, with a handful of items skewing the average:
Also, looking at the top 10 price rises it can be seen that 3 of them are for the same product (FIFA 10) on 3 different formats which, it could be argued, gives an unfair distortion of the figures.
If you were looking to show a lower level of average price rise you could just focus on Groceries rather than including non-foods where the absolute rise will be higher due to the generally higher item price.
It’s also likely, however, that Tesco’s price cut figures have a similar level of skew.
The other point to make is that the average in this case would only be valid in terms of the impact to the customer if all the items were sold in the same quantities. A penny on a pint of milk is likely to yield more profit that would be lost by knocking a pound off an obscure item.
The Guardian yesterday (22nd Feb) issued some new data around the supermarkets’ use of 1p discounts to promote a feeling of a ‘price war’ between supermarkets. The tone is that supermarkets are being ‘sneaky’ as the majority of price cuts (70% for Tesco) in the period 16-23 Dec 2009 were for just 1p when the typical price rise is higher.
The Guardian implies that when Tesco (and Asda) cut prices they cut them by a little amount and when they put them up they put them up by a greater amount so the consumer pays more overall. This implication is only valid if the overall comparative volume of sales from discounted and increased items results in a higher overall basket.
If customers buy 10 times the volume of an item discounted by 1p as an item increased by 5p then overall customers are better off than they were before the price changes.
With the huge range of products available it is easy for any supermarket to cherry-pick which prices it manipulates to look good in comparison to the competition. This should be taken for what it is, headline grabbing marketing, rather than each retailer cutting prices to the bone to give you, as the customer, the best deal possible.
All the noise in adverts about which retailer is the best probably cancels itself out so you are left with the same impression that you had as before of the main supermarkets. But none of the major supermarkets can risk not running similar campaigns for fear of customers believing the version of events its competitors run.
It would be interesting to see what this flurry of price cutting adverts has done to the extremes of the market – for example Aldi or Lidl at the lower end, Waitrose or M&S at the higher end.
Has the advertising of the big players made the low end seem irrelevant and the high end seem even more expensive by comparison? Or has the ‘price war’ lumped the main supermarkets in with the low cost brands and therefore created a distinction in quality for Waitrose and M&S?
The moral of the story is to make sure that you have access to the raw data behind any figures as, depending on which side of the fence you sit, you can ‘prove’ pretty much anything you want by defining the terms of the analysis and the metrics used.
Dan Barnett
Director of Analytics
blog@analysismarketing.com
LinkedIn: http://www.linkedin.com/in/danjbarnett
Tesco countered this by saying that they dropped the prices of 2,638 products with an average decrease of 54p over the same period (i.e., more products with prices dropped and a higher average price reduction).
Although both statements are factually correct they are both pretty much pointless, as an average (mean) is only really applicable if the data is not skewed. For the Tesco price rise data, the price rises are between 1p and £15.17, with a handful of items skewing the average:
Also, looking at the top 10 price rises it can be seen that 3 of them are for the same product (FIFA 10) on 3 different formats which, it could be argued, gives an unfair distortion of the figures.
If you were looking to show a lower level of average price rise you could just focus on Groceries rather than including non-foods where the absolute rise will be higher due to the generally higher item price.
It’s also likely, however, that Tesco’s price cut figures have a similar level of skew.
The other point to make is that the average in this case would only be valid in terms of the impact to the customer if all the items were sold in the same quantities. A penny on a pint of milk is likely to yield more profit that would be lost by knocking a pound off an obscure item.
The Guardian yesterday (22nd Feb) issued some new data around the supermarkets’ use of 1p discounts to promote a feeling of a ‘price war’ between supermarkets. The tone is that supermarkets are being ‘sneaky’ as the majority of price cuts (70% for Tesco) in the period 16-23 Dec 2009 were for just 1p when the typical price rise is higher.
The Guardian implies that when Tesco (and Asda) cut prices they cut them by a little amount and when they put them up they put them up by a greater amount so the consumer pays more overall. This implication is only valid if the overall comparative volume of sales from discounted and increased items results in a higher overall basket.
If customers buy 10 times the volume of an item discounted by 1p as an item increased by 5p then overall customers are better off than they were before the price changes.
With the huge range of products available it is easy for any supermarket to cherry-pick which prices it manipulates to look good in comparison to the competition. This should be taken for what it is, headline grabbing marketing, rather than each retailer cutting prices to the bone to give you, as the customer, the best deal possible.
All the noise in adverts about which retailer is the best probably cancels itself out so you are left with the same impression that you had as before of the main supermarkets. But none of the major supermarkets can risk not running similar campaigns for fear of customers believing the version of events its competitors run.
It would be interesting to see what this flurry of price cutting adverts has done to the extremes of the market – for example Aldi or Lidl at the lower end, Waitrose or M&S at the higher end.
Has the advertising of the big players made the low end seem irrelevant and the high end seem even more expensive by comparison? Or has the ‘price war’ lumped the main supermarkets in with the low cost brands and therefore created a distinction in quality for Waitrose and M&S?
The moral of the story is to make sure that you have access to the raw data behind any figures as, depending on which side of the fence you sit, you can ‘prove’ pretty much anything you want by defining the terms of the analysis and the metrics used.
Dan Barnett
Director of Analytics
blog@analysismarketing.com
LinkedIn: http://www.linkedin.com/in/danjbarnett
Sunday, 21 February 2010
Deal or No Deal - All Humanity Is Here
As a statistician, it’s fascinating to watch Deal or No Deal as it is a great example of game theory, mathematics, fear, greed and irrational thinking.
The contestant picks one of 22 boxes, which are valued between 1p and £250,000. The mean of these is £25,712.12 and the median is only £875 (the average of the £750 and £1,000 boxes). The huge difference between these figures shows how the few really big values skew the mean.
Detractors of the show don’t understand where the tension or excitement is in opening a random selection of boxes but the reality is that the game has something in common with poker in that the banker is trying to gauge the contestants appetite for risk by offering the smallest amount that they think will be enough to tempt the contestant to accept his offer to ‘buy’ their box.
The chart below shows the difference in the average box value of the contestant and what the contestant received , if nobody ever dealt and just took what was in their box, they’d be an average of almost £9k an episode better off.
With well over a thousand episodes that’s over £10m the banker has avoided paying out compared to if all contestants formed a collective, never dealt and shared their value in the box equally (although this would of course make for a terrible game show).
This is because in situations where a contestant left with one small and one enormous sum of money for example the contestant will often deal at a value far below the mean of the two boxes for fear of going home with next to nothing. 
You might say all this is very well but what has this got to do with running a business? The first lesson is being able to differentiate between what is random and what is a trend, all too often people focus on the last few events and try to rationalise these rather than looking at the bigger picture. If there’s been a run of low value boxes then people think a high value is due when in reality every episode is an independent event.
It’s also a lesson in yield management in that the banker attempts to provide an offer that is sufficiently high to be acceptable but not as high as the true value (therefore the margin between these two figures can be considered as ‘profit’).
This can be applied in business by varying the level of offer for someone to join, return as a customer or upgrade a level as depending on their circumstances and affinity with your organisation they will need a different level of incentive to accept.
The more you know about a customer the more you can tailor your offer to get the person to deal at a price that’s right for you.
Dan Barnett
Director of Analytics
blog@analysismarketing.com
Note: Stats for this blog relate to activity from Series 2 to end of 2009 – raw data taken from http://www.dealornodeal.co.uk/backstage/stats/
The contestant picks one of 22 boxes, which are valued between 1p and £250,000. The mean of these is £25,712.12 and the median is only £875 (the average of the £750 and £1,000 boxes). The huge difference between these figures shows how the few really big values skew the mean.
Detractors of the show don’t understand where the tension or excitement is in opening a random selection of boxes but the reality is that the game has something in common with poker in that the banker is trying to gauge the contestants appetite for risk by offering the smallest amount that they think will be enough to tempt the contestant to accept his offer to ‘buy’ their box.
The chart below shows the difference in the average box value of the contestant and what the contestant received , if nobody ever dealt and just took what was in their box, they’d be an average of almost £9k an episode better off.
With well over a thousand episodes that’s over £10m the banker has avoided paying out compared to if all contestants formed a collective, never dealt and shared their value in the box equally (although this would of course make for a terrible game show).
From a summary of outcomes of these episodes you can see that the player ‘wins’ more often than the banker (i.e., receives a greater amount than the value in the box) but that when the banker wins, he wins a greater amount.
This is because in situations where a contestant left with one small and one enormous sum of money for example the contestant will often deal at a value far below the mean of the two boxes for fear of going home with next to nothing.
Outcome Summary:
You might say all this is very well but what has this got to do with running a business? The first lesson is being able to differentiate between what is random and what is a trend, all too often people focus on the last few events and try to rationalise these rather than looking at the bigger picture. If there’s been a run of low value boxes then people think a high value is due when in reality every episode is an independent event.
It’s also a lesson in yield management in that the banker attempts to provide an offer that is sufficiently high to be acceptable but not as high as the true value (therefore the margin between these two figures can be considered as ‘profit’).
This can be applied in business by varying the level of offer for someone to join, return as a customer or upgrade a level as depending on their circumstances and affinity with your organisation they will need a different level of incentive to accept.
The more you know about a customer the more you can tailor your offer to get the person to deal at a price that’s right for you.
Dan Barnett
Director of Analytics
blog@analysismarketing.com
Note: Stats for this blog relate to activity from Series 2 to end of 2009 – raw data taken from http://www.dealornodeal.co.uk/backstage/stats/
Monday, 15 February 2010
David Lloyd - Offering Little
I received a direct mail piece last week from the David Lloyd chain of gyms attempting to regain me as a member. It’s been over 3 years since I left so they must be contacting pretty much everyone who used to have a membership.
With membership around £70 a month they can afford a scattergun approach as their mailing (with 25p mailing cost) doesn’t need a huge response rate for the campaign to pay its way.
Selling gym memberships is a rare example in business where almost all incremental sales revenue is incremental profit so with the sums involved you’d expect a professional approach.
The letter however (reproduced below), is an example of poor layout, bad grammar, omissions and garbled marketing:
Far too often companies treat ex-customers as a homogenous group without considering why the person left, how likely they are to come back and what incentive would be required to get them back.
Rather than concerning themselves with maximising the value of this pool of ex-customers, as long as a campaign is profitable no further questions are asked.
Dan Barnett,
Director
Analysis Marketing Ltd
blog@analysismarketing.com
With membership around £70 a month they can afford a scattergun approach as their mailing (with 25p mailing cost) doesn’t need a huge response rate for the campaign to pay its way.
Selling gym memberships is a rare example in business where almost all incremental sales revenue is incremental profit so with the sums involved you’d expect a professional approach.
The letter however (reproduced below), is an example of poor layout, bad grammar, omissions and garbled marketing:
Far too often companies treat ex-customers as a homogenous group without considering why the person left, how likely they are to come back and what incentive would be required to get them back.
Rather than concerning themselves with maximising the value of this pool of ex-customers, as long as a campaign is profitable no further questions are asked.
Dan Barnett,
Director
Analysis Marketing Ltd
blog@analysismarketing.com
Monday, 1 February 2010
The Chiltern Communications Group
Analysis Marketing are proud to be a member of the Chiltern Communications Group.
This is an alliance of independent marketing companies based in Beds, Bucks and Herts. Members hail from every marketing discipline, from copywriting to public relations.
The CCG run a lively networking event every month. At the last one I attended in Hemel Hempstead, we had an excellent talk by the very connected Steve Windsor about LinkedIn and a demonstration of origami as advertising from Michael Trew of Papershake!
If you'd like to know more about the CCG, please visit their website.
James White,
Analyst
Analysis Marketing Ltd
blog@analysismarketing.com
This is an alliance of independent marketing companies based in Beds, Bucks and Herts. Members hail from every marketing discipline, from copywriting to public relations.
The CCG run a lively networking event every month. At the last one I attended in Hemel Hempstead, we had an excellent talk by the very connected Steve Windsor about LinkedIn and a demonstration of origami as advertising from Michael Trew of Papershake!
If you'd like to know more about the CCG, please visit their website.
James White,
Analyst
Analysis Marketing Ltd
blog@analysismarketing.com
Friday, 29 January 2010
Website Re-launch
I'm happy to announce that we have relaunched our website at http://www.analysismarketing.com
Some of the site's most exciting features are new Xcelsius dashboards on our Resources page. These are interactive Flash-based dashboards of Excel data. We think that they're perfect for presentations and hope to have more up soon.
Please let us know your thoughts on the new site and anything that you would like to see there.
James White,
Analyst
Analysis Marketing Ltd
blog@analysismarketing.com
Some of the site's most exciting features are new Xcelsius dashboards on our Resources page. These are interactive Flash-based dashboards of Excel data. We think that they're perfect for presentations and hope to have more up soon.
Please let us know your thoughts on the new site and anything that you would like to see there.
James White,
Analyst
Analysis Marketing Ltd
blog@analysismarketing.com
Thursday, 14 January 2010
A quick survey
As we look forward to 2010, we wanted to know what the business community felt about their analysis function and what approaches firms had been taking towards marketing analysis.
Therefore, we decided to do a little research.
We would be very grateful if you could complete a short survey about your analytical practices and attitudes to data in your organisation. Responses will be used only by Analysis Marketing and any results that are published will be entirely anonymous.
The insights that we glean from this will be published in future blog posts and on our web site, and may form part of a white paper.
The survey can be found by following the link above or pasting this URL into your browser window:
http://amdatause.questionpro.com
Thanks for your time
James White,
Analyst
Analysis Marketing Ltd
blog@analysismarketing.com
Therefore, we decided to do a little research.
We would be very grateful if you could complete a short survey about your analytical practices and attitudes to data in your organisation. Responses will be used only by Analysis Marketing and any results that are published will be entirely anonymous.
The insights that we glean from this will be published in future blog posts and on our web site, and may form part of a white paper.
The survey can be found by following the link above or pasting this URL into your browser window:
http://amdatause.questionpro.com
Thanks for your time
James White,
Analyst
Analysis Marketing Ltd
blog@analysismarketing.com
Wednesday, 6 January 2010
If you want me back, don't slam the door in my face
I recently received an email from Lovefilm (a DVD/Games rental by post service) asking me to return as a customer with the offer of 3 months for the price of 1.
So far, so good. The problem was that I’d previously taken up one of these reactivation offers, which meant that, under their terms, I was ineligible to take up this new offer.
This fact was buried in the tiny small print of the email so it wasn’t until I went through the whole process of finding my login and password for Lovefilm and confirming I wanted to come back that I was told I couldn’t have the offer but I could still come back at full price.
There are two morals to this story:
1. Don’t contact someone with an offer to which they aren’t eligible. Poor suppression in this case is a bit annoying but in other cases can have far worse consequences.
2. Test the price points of your offers. There is a big gap in the price points Lovefilm are offering (either 3 months for the price of 1 or full price). Testing can help find the best level of payback (e.g. £5 a month off, every second month free, highest tier package for mid-tier cost). They don’t want me back at 3 months for the price at 1, I don’t want to go back at full price – so make me an offer that’s acceptable to both of us.
Dan Barnett,
Director
Analysis Marketing Ltd
blog@analysismarketing.com
So far, so good. The problem was that I’d previously taken up one of these reactivation offers, which meant that, under their terms, I was ineligible to take up this new offer.
This fact was buried in the tiny small print of the email so it wasn’t until I went through the whole process of finding my login and password for Lovefilm and confirming I wanted to come back that I was told I couldn’t have the offer but I could still come back at full price.
There are two morals to this story:
1. Don’t contact someone with an offer to which they aren’t eligible. Poor suppression in this case is a bit annoying but in other cases can have far worse consequences.
2. Test the price points of your offers. There is a big gap in the price points Lovefilm are offering (either 3 months for the price of 1 or full price). Testing can help find the best level of payback (e.g. £5 a month off, every second month free, highest tier package for mid-tier cost). They don’t want me back at 3 months for the price at 1, I don’t want to go back at full price – so make me an offer that’s acceptable to both of us.
Dan Barnett,
Director
Analysis Marketing Ltd
blog@analysismarketing.com
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