Whew! Just stepped out of another meeting with a prospect. I was pitching the world of predictive analytics. The same old question pops up -- "But we do not have data". I am now tired of answering this query everytime people talk of analytics. You may not have demog data ... but you definitely have transaction data. And that is enough to generate a good enough predictive model. Agreed we may not be 100% (pssst: in statistics you never are 100%), we may not even be 95% accurate. But we can atleast be 70%. And that is better than 0%. We can get data updated as we go along business of tomorrow. Maybe in some future post I will highlight how some companies are going about slowly but surely increasing the quality and quantity of customer data.
On the flight to this place, I was scanning one of the business newspaper. I came across a lovely term "Robin Hood Pricing". It implies how we charge a relatively higher premium to serve our good customer and subsidize the net return of our bad customer. This advocates differential pricing.
Today, all service industries (or product industries) charge the same "list" price to all customers. They do not track the cost of delivering the service to the customer. There are two costs involved here. The "Cost of Sales" includes the production, logistics and admin costs incurred for making the sale. The other cost of note is the "Cost of Service" that the customer instigates from the company. A bad customer will keep calling the call center, have complaints and demand more than his share of attention and service. Hence, the cost to serve such a customer will be high. On the other hand, a good customer will not disturb the company too much and will often be understanding towards receiving service from the company.
But in today's world, we charge both the types of customers the same "list" price. Thus, we make the good customer pay a premium of our total cost to serve him whereas the bad customer gets a relatively lesser price compared to the total cost to serve him.
That my dear friends is "Robin Hood Pricing".
Wednesday, July 09, 2008
Monday, July 07, 2008
Mr. Marketer, Please do your homework.
Yesterday I received a call from the local branch of my bank where my account is registered. The lady on the other end of the phone stated that due to my good business :) with the bank they wanted to upgrade me to a Classic customer. She went into various benefits that this upgrade entitled me to.
She wanted to know if I am okay with the upgrade. Now who wants to refuse free stuff. I agreed to the upgrade.
She wanted to verify my contact and details. She read out my address and asked me it is still current and valid. I gave my affirmation. Next, she asked me if the mobile number registered is valid. {now, hello, you called on the number and here I am talking to you... is that not valid number... script writers ... baah}.
She asked me if I was married. Which I said I happily was. She wanted to know how many children I have. I replied I have a 5 year old kid.
Next she asked me the name of my wife and kid. Now, this pissed me off. I am supposed to be upgraded to a premium customer. I have a joint account with my wife at this bank. In the CAF, I have clearly stated that the relation with the joint holder is "wife". I also have a childrens benefit insurance policy in favour of my daughter. The CAF for this obviously have my daughter's name on it. I told the lady that she should have checked my records before calling me. She started justifying that as part of the upgrade she needed more information about me. I repeated that she should have checked my records. I told her to do her homework before calling me.
Quite often marketers just pull out names and phone numbers and generate a standard script for the call center to call. How many times have you been called by your bank or some service provider and asked for information that they should have already have had with them. It is time that marketers do their homework before making that contact to the customer.
She wanted to know if I am okay with the upgrade. Now who wants to refuse free stuff. I agreed to the upgrade.
She wanted to verify my contact and details. She read out my address and asked me it is still current and valid. I gave my affirmation. Next, she asked me if the mobile number registered is valid. {now, hello, you called on the number and here I am talking to you... is that not valid number... script writers ... baah}.
She asked me if I was married. Which I said I happily was. She wanted to know how many children I have. I replied I have a 5 year old kid.
Next she asked me the name of my wife and kid. Now, this pissed me off. I am supposed to be upgraded to a premium customer. I have a joint account with my wife at this bank. In the CAF, I have clearly stated that the relation with the joint holder is "wife". I also have a childrens benefit insurance policy in favour of my daughter. The CAF for this obviously have my daughter's name on it. I told the lady that she should have checked my records before calling me. She started justifying that as part of the upgrade she needed more information about me. I repeated that she should have checked my records. I told her to do her homework before calling me.
Quite often marketers just pull out names and phone numbers and generate a standard script for the call center to call. How many times have you been called by your bank or some service provider and asked for information that they should have already have had with them. It is time that marketers do their homework before making that contact to the customer.
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