Maintaining the envy

The latest issue of Outlook Business has an article titled "Resurrecting the Devil". This article talks about Onida and the position taken regarding the usage of devil and the tag line "owners pride, neighbours envy".

In course of the article, during the discussion on the decision by Onida to discontinue the devil, advertising consultant Gopi Kukde has been quoted as the devil being an idea and as such cannot get old.

The stance of Mr. Mirchandani is that with television being a commodity today, owning one is no longer an envy evoking event. Hence, the devil and the "envy" is not relevant today.

The way I see it, the discussion is not about the devil character or tv being a commodity. It is about ownership of an idea in the consumer mindspace.

Obama owns the word "change". Similary, Onida owns the word "pride" and more so the word "envy". Even today, more than a decade of the first envy advertising launch, a majority of todays buyers (30 to 45 year olds) would remember "owners pride, neighbours envy" and immediately associate it with Onida. This association is an envy of other electronics companies. How many of them can claim such a recall and association?

I find it disappointing that Onida is letting this association go to waste. If I believe Mr. Mirchandani, and I do so, television is a commodity. Fair enough. So ownership is not a cause for envy.

I would suggest that the Onida guys then seek out what would cause the envy in today's world. Somewhere in the article, there is a passing mention of Onida losing out on service. In today's world, where every house has a television set, some even more than one, the numbers game have set in big time. Each TV brand has lakhs of customers. Each customer is just a "customer id" to the TV brand.

In this scenario, if a company can treat customers on a more personalized level. That would sure cause envy.

Lets take Onida. I think a lot of customers would still have a functioning Onida TV. If Onida can trace these customers out and create a process of felicitating them and maybe even replace the TV sets with a LCD or LED TV. Keep communicating with them so that the neighbourhood is aware. That would create envy. And Onida can still claim ownership to the "envy" word.

How much would it cost? A TV ad costs around 3 to 5 crores. The mileage and ownership of envy word is worth not doing one such ad and still it would not cost 3 crores to create a "carnival" to replace the Onida TV sets.

I get a call from the airlines....

Remember my post on the letter to chairman of Kingfisher Airlines relating the incident when everyone was in the aircraft and the pilot was late. See post here.

I got a call few days back from the airlines related to this mail. The lady on the phone apologized for the same. I asked what action has been taken. She said the roster committee has taken serious cognizance of the fact and the captain has been warned.

Now did that satisfy me? I dont care. I was happy that the airlines called me and apologized. And to reply to some of my friends... No they did not offer a free ticket. Neither was I hoping or aiming for one. I had been submitting my feedback forms regularly when I travel the same airline. But never was my feedback acknowledged or replied to. So just receiving a call was enough faith in the customer relationship program of the airlines.

I wish they show equal importance to the feedback forms passengers fill out. It will show that atleast they read the forms. Today, I have no idea if any of my forms have been even opened by them.

I had an excellent tip for them (well.. since its my creation, i think it is excellent). Kingfisher sells the t-shirts with the company logo. If they provide an incentive to passengers wearing the Kingfisher t-shirt to board first, it will form a good incentive for passengers to flaunt their Kingfisher t-shirts. It also gives the airlines a good mileage to have a few tens (if not hundreds) of passengers travelling door-airport-door wearing the airlines red colours.

Do you guys have any such ideas on how they or any airlines can provide a inclusive experience on customer relationship? If yes, comment here or mail me at michaeldsilva@gmail.com

Factory approach to Analytics

I try to be an active contributor to the blog on my company website. Hence, my future posts are segregated as those that derive through my association with Customer Centria and the ones that derive from personal experiences and interactions. The former category will be posted on the company website. I will post the link here. Only the posts related to the later category will be posted here.

Today's post relates to KXEN User Conference and is available for reading at my company website:

Factory v/s Craftsman Approach to Analytics: Notes from KXEN EMEA User Conference 2010

Await your views / feedback on the same.

Notes from KXEN EMEA User Conference

The conference was a good one. There were many customer presentations wherein they highlighted the returns and the ease from using KXEN software. Following are the notes I jotted from the event.
* John Ball started the conference. One of his slides stated a "Factory Analysis v/s Craftman Analysis" (source Gartner).
* La Boite a Outils spoke about using KXEN to identify customers who are ready for a big purchase. They claimed an 80% uplift by using KXEN modelling.
* James Kobielus from Gartner presented the key note. One of his slides stated that businesses can "confidently place your business bets only if you know whether the odds are in your favour"
* He also stated that for businesses to be agile, preditive analytics is necessary as it supports fast response.
* European Commission spoke about building over 1500 models using KXEN to control the shipment of live animals and processed animal products into EU.
* Wolters Kluwer spoke about diversifying risks with multiple projects as opposed to a single large initiative.
* MonotaRo spoke about moving from a state of "selecting which customers to send a 1700 page catalogue" to a state of "select which catalogue to send to each customer"
* The presentation of Logica was the highlight of the session, where they presented how social network is used to identify potential terrorists.

Look out for detailed posts on some of these topics.

KXEN EMEA User Conference -- Day 1

I am in Windsor, UK, attending the KXEN EMEA User Conference. The theme for this event is "Success in Business Analytics". This seems such a relevant topic. Analytics had moved from an academic and research world to the business work a couple of decades ago. This also defined the success of companies such as SAS. Incidently, SAS still retains the "Institute" label in its name. Does that mean it still has flavour of academic and research ... maybe.

Statistics managed a transition into business applications. In some cases, it defined the survival of the organization. The best example is actuarial function for an insurance. A hard core statistics driven function that is at the core of an insurance business.

For other functions, such as marketing, it is still regarded as a "good to have" approach. Marketing is still focussed on mass media, on having the most creative ads, on winning the Lions award and in some cases on being the PR for the CEO (see my post on this).

Even the concept of database marketing seems to be wrong. I meet a lot of people who claim to be doing database marketing. Unfortunately, their understanding of database marketing is that there is a "list or database" of people and they send out communciations to this list.

So while statistics managed to cross the divide between academics and business, it is still not accepted and made welcome in the business world.

I hope to capture ways in which analytics was made a success in business during this conference.

The conference is yet to start, since I am an early breakfast person, I decided to use the time to pin down my thoughts. I will be returning with my take at the end of the day. For now, see the beautiful autumn in front of my room balcony.

Dumbest guy on the flight ... The Pilot

"Dear Chairman,

Greetings and best wishes to you.

Let me take this opportunity to highlight a deficiency in the service of Kingfisher Airlines.

Last Monday, I was flying on IT316 from Delhi to Mumbai. The flight was STD at 2050 hours. Accordingly, all passengers were boarded and we were ready to take off. Or so most of us thought.

Around 2115 the co-pilot announced that the pilot has still not arrived. He said the pilot is coming from his residence. The pilot is stuck in Delhi traffic and hence delayed. Since it is traffic, it is not fault of the airlines and there is nothing they can do about it. He also stated that he has "just" spoken to the pilot and was told that the pilot has reached Mahouli and would reach airport in 15 minutes.

Now, even a non-Delhite like me knows that based on the traffic outside the airport, there is not way the pilot can reach the airport in 15 minutes.

Around 2200, the co-pilot came back on the announcement stating that he has "just" spokent to the pilot and the pilot is still stuck in the traffic. He said we will take off immediately on arrival of the pilot. He also stated that the ATC has given him the takeoff slot. And again he stated that since it is traffic, it is not fault of the airlines and there is nothing they can do about it.

I would like to point out that the approach to the Delhi airport is always crowded duriing evening hours. Me and about 100 other passengers had taken this into consideration and left our respective locations much in advance to reach the airport. The rest of the airline crew were also in the aircraft in time.

So I would like to inform the pilot that there was something he could have done. "Left early". The co-pilot harping repeatedly on the pilot coming from his residence created a bad taste. There were people on the aircraft, who were either coming from their residence or going towards it. For one person, the pilot, a whole lot of people had to suffer inconvenience.

I am typing this out as I wait for my boarding in the KF lounge. This mail is not a complaint or a crib. I am still flying KF. Sincerely hope such incident dont reoccur.

Regards"

=======================================================================
I have sent this mail to the Kingfisher feedback. Its really sad to know that the pilot turned out to be the dumbest guy on the aircraft. I really wished the flight could have taken off without him... but alas such things are restricted to fantasy.

My past comments to KF has never resulted in any response or even acknowledgement of the communication. I have regularly filled in the feedback form in the flight highlighting deficiencies as well as exceptional service. But zilch response. I filled up the feedback form for this flight also.

Lets wait and watch how KF responds (if they do).

Stupid.Maybe..... Cheated.Surely....

I have noticed a very peculiar thing about the menu at the ATMs of HDFC Bank. While nothing seems wrong with the menu flow, it is when the option of having a receipt printed for the transaction is presented that something odd happens. The options for the response are reversed. The buttons that are used to capture the "yes" response is now switched to reflect the "no" option. And it is only for this question that the reply buttons are switched.

The first time I realized this was when I pressed the erstwhile "yes" button and registered a "no" to the "print receipt" option. I felt so stupid that I did not analyse and read the screen before pressing the "yes" button. I made a mental note of this. The next time I was at the ATM, I again accidentally clicked the top button which was a "yes" response on all other questions. Now I was really angry at myself for having fallen to this trick twice in a row. I felt cheated that I could not get a receipt for the transaction I just conducted.

From that time onwards, I have reprogrammed my mind to always pause at the question of "print receipt" and always respond with the correct "yes" button press.

Yesterday, I walked in to an IDBI Bank ATM. The menu were so standard. No doubt I felt so good walking out of the ATM. With HDFC Bank, I always feels as if I prevented myself from being cheated out of a receipt.

I can only guess that HDFC Bank has reversed the menu for saving the cost of printing. Now if this is for purpose of saving cost, then I wonder how much of a cost will this translate to. But, lets say in the spirit of CSR, if this is to save one tree somewhere, then it has been done in a bad manner leaving a bad taste in the customer who just "fell for the trick".

A better way would have been to prominently display the message encouraging the customer to opt for no receipt. If the reason is for saving cost, then the benefit could be shared with the customer by say crediting 1 Rupee for every 10 transactions where the customer did not opt for a reeipt.

But the way, the bank went about it was very sly leaving the customer feel stupid sometimes, but cheated always.

True Value of "Free"

Last week I bought a Horlicks. Part of my regimen to be fit and healthy. The bottle came with a free AddGel pen. The comment on the packaging said boldly "Free gel pen worth Rs. 30". During checkout, the lady at the counter packed the free pen alongwith the other items.

I had completely forgotten this episode. It was just one of those routine, boring grocery purchase chores that had to be done and was done with.

It was when my daughter walked to me and said "Dadu, They lie to us. I bought same pen for Rs. 27 and on the bottle it says it is Rs. 30." It was just an observation from her and she passed me onto more important things like drawing her 1029th shoeflower.

This comment set me thinking. How right was the manufacturers of Horlicks to print the value of "Rs. 30" on the pack? Are they to blame if market forces or AddGel makers decide to change the purchase price. The value printed on the pack... from whose perspective was it. It definitely was not from GlaxoSmithKline. They would have bought it at bulk... costing them probably less than 50% of the amount mentioned. It was surely not from the consumer perspective, when alternate channels of procurement sold the pen for Rs. 27.

The word "Value" is so misleading. Everyone of us who have bought a car has fallen into this trap. The dealer always puts a "list price" value to each accessory he throws in free. I remember a friend who bought a Swift a few years back. He sat down with the dealer to negotiate on a better deal. The dealer as usual starting listing the accessory he is throwing in free and stated the list price against it. He worked up a total of Rs. 35,000. After the entire discussion, my friend coolly told him that he will buy the accessory separately and the dealer just deduct the "value" of Rs. 35,000 from the price of the car. This had the dealer fuming. But eventually he gave in and gave him the discount of Rs. 35,000. My friend also got a couple of accessories free at the time of delivery. He got the same set of accessory fitted onto his Swift for Rs. 17,000 from alternate sources.

I enjoy watching the bundling of items by electronics retailers. A couple of years back I bought a gas stove from Snehanjali. Once I selected the model of stove and asked for a discounted final price, the sales person informed me that I get a free steam iron with it. For someone who already had three steam iron at home, what was the value of an additional steam iron. It was probably negative. I told him that I dont need the steam iron and would rather get a discount. He started the discount with the value of the cost of the iron to him. Whereas, I started the negotiation with value of the iron as advertised. Finally, we decided to settle mid-way. I came away with a gas stove, a discount and minus the steam iron. Today, when I see adverts showing free steam irons with washing machines, and other such items, I chuckle trying to think of what the customer might be thinking holding on to his third or fourth steam iron.

Back to Horlicks and GSK, it probably would have been better for them to just mention a free gel pen rather than state the value of it. Especially when they do not control the value.

Empowering customers

Enough talk. Now its time to walk the talk. Time to apply all my principles of CRM.

I have the power to choose the government when I vote. Sadly the students of Maharashtra do not have the power to choose their favourite college.

But soon, I am bringing you another area of empowerment.

Keep following me to hear more about it.

Marketing for Dummies

I just got an email from HDFC Bank Limited. The mailer is supposed to promote net banking. It uses opening a fixed deposit using net banking and goes into various features available. The mailer ends with a four step guide on how to open a fixed deposit using net banking from HDFC Bank Limited.

So far so good. Maybe an interesting mailer.

I open a fixed deposit every month using "net banking of HDFC Bank". {Yeah.. thats how my savings go... me no risk taker on the share market}. As I was going through the mailer, I was getting a feeling of being taken for a dummy. Why is the bank teaching me the ABCs of opening a fixed deposit on the net? Why did they not check my transactions with them on the net? Why did they not know that I am already a master of opening fixed deposits on the net?

I had written a post two years back on the same bank. Here is the link. I so wish the marketer does his homework. Show some respect to the customer. Spent some effort on understanding the customer.

Now if only they teach me how to use futures and options... me heard one cannot lose money there... but then me a dummy when it come to futures and options.

If you find this interesting, dont forget to share it. Also, get yourself registered as my follower... there are more stuff coming up which you sure dont want to miss.

We dont need METERJAM... we need DISCIPLINE

Yesterday was the "MeterJam" day. A lot of noise have been created over this. There is facebook, twitter, and t-shirts. Today the papers scream of it being a success. Its "AHHH POOOOH". It you were at Andheri Station in the morning, it was everyday chaos. People were stepping out of the railway station and running behind auto-rickshaws. The rickshaw drivers were refusing almost all the fares till they get one to the place of desire. And considering the number of people, each rickshaw found a fare to the place of desire. But the same cannot be said of the people trying to hitch a ride.

Compare this scenario with the one that existed prior to the construction activity at the same location. There was a auto-rickshaw stand next to the station. A RTO officer diligently forced every auto-rickshaw to join the queue at the rickshaw stand. People stood in a queue in a disciplined manner. It was a first come first served case. No rickshaw driver ever refused. Well, there were some exceptions. But then the collective public force and the RTO officer presence resolved it in favour of the public immediately.

When the construction activity started, the rickshaw stand was disbanded. That brought out the Darwinism in each one of the people. Everyone started running after the rickshaws pulling into the station area. It was survival of the fittest.

Nobody thought of redefining the rickshaw stand at a different location and showing the same discipline.

Let me think from the perspective of the rickshaw driver. I am trying to maximize my revenue for the day. And most probably the rickshaw does not belong to me, in which case I need to submit my daily rentals for the shift of using the rickshaw. This maybe anywhere from Rs. 100 to Rs. 200. I need to fill in petrol (or CNG) before I return the rickshaw. After this, any leftover cash is my earning for the day. When I think of it, its probably sufficient but not enough. So when I start my rickshaw shift, I am thinking the minimum I need to earn and the maximum I can earn that day.

Over the period I have learnt the flow of people traffic and have set up a pseudo algorithm in my brain. So when a person asks me to drop him at Sahar Road, I quickly analyse my past experience. I realize that after this trip, I would not get another trip from Sahar Road. I may have to either wait for a fare (wasting precious time) or drive to another point of demand (wasting precious fuel). Now another person asks me for a trip to Saki Naka. I realize this is longer trip and I will definitely get another fare from there immediately. So I prefer this person over the earlier one.

This is very much what a corporate would do. Given a choice of different customer needs cluster, it will select the one that would give higher revenue over the lifetime. But nobody would cry foul. No METERJAM for the corporate.

I don't think METERJAM was a success. Neither do I think it is any solution. What we need is public discipline...which is so lacking in our country. What we need is appointed rickshaw stands at every alternate block or street (not more than, say, 5 to 8 minutes walking distance). Like Singapore, a rickshaw should only be allowed to pickup and drop customers at the stand (unless he is travelling to a private area such as the society compound .. in which case the fare is extra Rs. 5). This is what will solve the problem. Not boycotting rickshaws and taxis.

Looking forward to your views.

Come grow with me...

Recently while discussing with a prospect in life insurance, something just clicked me regarding upselling. All along we have been talking of selling more and more policies to existing customers. So goes the definition of cross sell (or up sell). I was discussing the applicability of analytics in cross sell with this gentleman from the prospect company.

Suddenly, it was like an eureka movement. I realized that I have a Rupees 1 lakh policy that I am still servicing. This was opened during my first year of employment. A friend had joined as an agent of LIC and he convinced me to go for it. Naive as one is regarding insurance at that stage of first true employment, I promptly went for it. Today, I realized that the value of the sum assured is not significant. How long can a family sustain on 1 Lakh in a city like Mumbai?

I get calls almost regularly from an LIC agent (not the friend who sold me... he has probably moved on in life and moved away too) trying to sell me a new policy. But I somehow always resist actually purchasing one.

Now if someone can realize that its been over 15 years for the Rs. 1 Lakh policy and in these 15 years the value of the Rs. 1 Lakh has fallen to a tenth. While my worth and salary has grown multi fold. If someone could converse with me and show me how this policy needs to increase and provide me a simple hassle-free method of topping up the policy to 10 times the amount, I would gladly go for it without thinking twice. But in trying to sell me another policy, LIC is creating a barrier and probably initiating a process of comparison with other companies.

When I mentioned this to my prospect, he was just equally stumped. I dont know why a life insurance company does not track its customers and increase the policy coverage on the same old policy. The customer is a known customers and after 5 or ten years, the customer is probably also a good customer. Getting an increase in the sum assured on the existing policy is so much easier than selling a new policy. Probably if someone from the life insurance industry is reading this, maybe you can answer why this is not attempted? If this has not been thought of then maybe i can lay a claim over this mode of selling. And dont tell me its a nightmare for the Acturial department to come with tables for every year of vintage of existing customer. The increased premium and more importantly the lock-in of the customer is justification enough.

Dread that visit to the bank

This is the time of the year to get all paperwork ready for tax filing. Which reminds me that I need to visit my local bank to get my housing loan repayment statement. Which also reminds me that I hate visiting this bank. The process is so cumbersome and I have to visit three desks to get my statement. Thinking of it, since its a statement that every loan holder would need, the bank should proactively give it.

This also reminds me how I hate going to one other bank because of the guard giving a loud vocal alarm announcing my entry. See my earlier post "too-eager-to-serve-frightens-customer".

I also hate going to my regular bank branch since it is so crowded that there is no place to stand without touching somebody else. The last time I was there, there were a couple of kids running and screaming all over... adding to the chaos. And I was still waiting to be served.

The local branch of the largest bank is no better. The queues are so long and snakes through the branch. Right from the entry, one has to work through a maze. Just like the snake games on mobiles... only one survives by cutting across the snake body rather than the ends.

I wonder if it is just me or others also face this annoying situation. I am running a survey on experiences during your last bank visit. Kindly fill the survey at "Last Day at the Bank".

Also, I would appreciate if you pass this on to others.

Participate ... Don't just Communicate

Go back to your college days. Whose discourse was more impactful? The professor who placed himself at the head of the class and just finished off that day's topic. Or the college senior who agreed to spend an hour with you to explain the same topic (in exchage for a beer). Or in my case, in exchange for sharing a bowl of Maggi Noodles at a classmate's hostel.

Often most campaigns are run like communication engines. Some message is defined to be communicated. The creative guys come in... with their accented language and maverick looks. They start discussing pictures and layout on the message medium. Finally, the d-day arrives and the message is broadcasted (or in case of database marketing ... mailed across). A lot of science goes in to test and decide the most appropriate content and format for the message.

Now, the campaign owner waits... and keeps calling the analyst to check on the number of responses.

These are akin to a politician standing on the podium just communicating his propaganda. What is needed is for the party worker to meet each citizen and take part in the discussion related to the citizen's life. There is a need to participate.

This is very difficult in mass marketing. In fact, most database marketers also run their campaigns as "mass marketing". The only difference is they have a "filter criteria" and know to whom the message is going. But they have no idea of whether the time and place is a right one. There is no pre-campaign message to gauge the receptiveness of the campaign message.

It is very effective if the campaign are designed as a series of dialogues rather than as just one great message. Campaigns should start off with a message identifying the state of the customer. For example, an general insurer targeting flight insurance could start off with a message asking the customer if "he has flown in the past 5 days?". Based on his response, the next message could be sent. Its like a dialogue with the customer which slowly leads to establishing the pain, need and finally the solution.

I agree that this will increase the cost of communication... but it will offset by the increased offtake.

I will be happy to work out a pilot in my free time to establish this theory. Mail me at michaeldsilva@gmail.com if you think we can employ this strategy in your business.

Learn from the babies

Recently while reading a health magazine, one particular article caught my attention. This article was different from the rest. It discussed on the exercises that one must perform and spoke something about the cartilages covering our muscle. What was really interesting in the article is the author's attempt to draw our attention to babies.

He stated that babies come with a natural instinct to develop their bodies. The actions and movements actually help them stretch, maintain flexibility and strengthen body parts. As they grow older and the need to develop body parts are desired but not critical, these actions move from the subconscious to the conscious. And the new adult now needs external stimulus (read health resolutions, gym adverts) to perform the same actions.



Consider the baby in the picture. We have seen all babies do this activity. Raise their legs in the air and often hold their toes in their hands. My physiotherapist prescribed me a similar exercise to stretch my lower spine and strengthen my abdomen and thigh. Its really surprising how simple this idea seems. All we need to do is watch and learn from the babies.

So where is the CRM connection?

Every marketing person I interacted with (and i mean "every") discussed about identifying profitable customers, about cross selling to existing customers, about predicting relationship demise, etc. But it always was about a customer who has been in the environment for a significant period.

Never have we focussed on the new customers -- the babies. We have not spend effort to observe and understand the behaviours and interactions of new customers. Just as a baby grows into an adult and is shaped by its cultures, surroundings, elders, etc. Similarly, a new customer grows into a vintage customers shaped by her experience in the early days. The customer settles into a state of acceptance and gets into a predictable behaviour. As analyst we try to map this behaviour and identify opportunities to benefit from any behavioural event.

It is useful to note here that the behaviour of the customer is partly due to the "state of acceptance" that was defined in the infant days. For example, a customer facing bad customer service in the initial days often settles for the state that the provider will always provide bad service. As such the service criteria is never considered in the sphere of influence. So many times we hear the phrase "...they have bad service..." from customers of the service providers.

It is important that we track the new users, the babies, and observe their behaviour so that the processes can be optimized for the desired customer profile. If the first thing a customer does after buying the product is call the call-center, then we should ensure that the call center is equipped to handle the infant appropriately. This will create a positive impact on the customer which she will carry in her vintage stage.

If this idea appeals to you, drop me a mail at michaeldsilva@gmail.com. We can jointly work out an initiative to observe and study the infant customers.

Oh...for a rainy day

Have you ever liked an item in a store only to be disappointed because they did not have the right size or colour or model in stock? I bet everyone of us has had this experience. Many a times I have walked into a clothing store, selected a handsome shirt and found that size 42 is no longer available. There is 40 and there is 44... But no 42. The store clerk with a very disinterested or disappointed look (probably depends on how his day went by) tells you that there is no size 42... not even in the stock in the back of the store.

The interaction often ends there. Never have I had any store clerk or manager show eagerness to get my contact details and commit on delivering the size 42 (or colour blue or whatever) to me as soon as it arrives in store.

I remember way back in 1999 when I was in Cincinnati, Ohio. The local Walmart store had a special deal going on for a "DIY shelf". As a bachelor, it attracted me as something that might get some order in one corner of my bedroom. So I get into my car and drive over to the Walmart store. They are out of stock. Apparently there were many more who thought same ways on the deal and were much quicker than me. The store clerk immediately took me to the customer service desk and handed me a "rain check" which entitled me to the "DIY Shelf" at the same price as it was available in the special deal. After 3 days, I get a call from the store saying that the shelf has arrived in stock. So I go down there on the way back from my office and pick it up.

My friend had a similar experience with Best Buy. There were giving a desktop PC for 300 dollars as part of the thanksgiving promotion. My friend stood in queue waiting for the store to open. However, he was probably 2 persons too late. The stock was picked up before he could reach the PC aisle. The Best Buy attendant gives him a rain check for the deal. He gets a call on the second day to pick up the PC at 300 dollars. Apparently, there was one store in an adjacent town that could not sell its stock and had some leftover. They got the PC shipped to the local Best Buy store and my friend ended up owning the PC.

I wish the Shoppers Stop, Big Bazaar, Lifestyles in India learn this lesson. When a customer decides on a product and starts looking for a special fit... whether size or colour... thats point of sale. Knowing that his size or colour is not available after spending time going through the various options to narrow on the design he likes is a big disappointment. But NO retailer in India has ever tried to leverage this situation. They always say the required SKU is out of stock and move on.

It would create such a delight to the customer if the retailer could just provide a rain check on the item and make sure the customer is either alerted or delivered the said item.

Aim for captivity... Not loyalty

Every marketer worth his salt wants to implement a loyalty program. What the word "loyalty" in a loyalty program means is still debateable. Also, whether the loyalty programs actually result in loyal customers is also something that need to be proved. Many times a pissed off customer will first consume all the loyalty points and then terminate the relationship. A much worse scenario is when the "terms and conditions" make it very cumbersome and irritable for a customer to enjoy his loyalty earnings. How many marketers have actually walked in the customer's shoes thru the loyalty reimbursement process? I don't think very many have done so. Especially not the airlines .. which are the most avid adopters of loyalty programs aka frequent flyer programs. Ever tried to reimburse the frequent flyer points at the last moment... there will never be any "seats" available on the program.

Creating a loyal customer is not sufficient. Lets learn some lessons from the masters who have designed process to never lose their customers (if I may term them as customers). Which is the jail houses. The customers are prisoners. The program is captivity.

A marketer should design process that makes the customer a captive inmate. The cost of exit should be exceptionally high. Thats how a jailhouse is successful. The cost of escape is often the danger of being shot at or worse being nabbed and getting a longer session.

A telco can use convergence to its benefit to captivate its subscribers. For example, a telco in europe provided its subscribers to create a phone book of sorts on the web site. The phone bill created, instead of showing the phone numbers of the call records, replaced the number with the name of the person as defined in the phone book. The bill also grouped interactions person wise. Now a subscriber who goes through the toil of creating a phone book on the web site will not want to go through the same grind with another service provider.

Mobile manufacturers have an excellent opportunity to lock in their users. The concept of "customized tunes for callers" is a very very strong feature. Imagine someone having a 100 entries in the contact list and have defined customized tunes for a large number of them. This will definitely form a barrier to switching mobiles on the fly. I must make a note here.. that this is not the only thing that will hold a user. Unfortunately, none of the Nokia, Sony Ericsson, LG, HTC, Blackberry (and others) leverage this feature strongly. It should be simple to do... when a user gets a call from the caller without a custom caller tune attached, the phone should prompt the user to select one after the call is over. Over time the number of people with custom caller tune will exceed the point where the user would not want to do it all over again. At this stage, another feature which allows a Nokia user (say) to transfer the setup from one Nokia phone to another Nokia phone will be very useful and helpful in creating a stickiness to the Nokia brand.

Grocery purchases are often a chore rather than fun activity. A grocery retailer could allow a customer to define her basket of regular purchase. Then have an SMS facility wherein the customer sends in her request for a particular basket and have it delivered to her home. What a convenience that would be? Would this customer want to go over the pain of defining her baskets with another retailer... highly unlikely.

I have found in my interactions with people performing retention models for banks that the "bill pay" facility is very high on the captivity factor. Yet, so many banks charge the customer for this facility. They should make bill pay a impulse activity. Whenever a customer drops a cheque for payment of any utility the bank should proactively offer to enable "bill payment" for that utility. But, alas, how many banks do so? None that I know.

Back to our prison case, if the life in prison is better than the life outside prison then the "customer" may love to be in for life. During my recent trip to South Africa, I came across a news item wherein an arrested suspect was found innocent but he refused to leave the prison compound since it was the first time in his life that he had a proper bed to sleep in and a personal space in his cell. Now, if only we had customers who felt life with their service provider is better than life without the same, we would not need any more marketing budget.

So aim for captivity... think like a jailer. Lets talk on how to achieve this in your business... mail me at michaeldsilva@gmail.com

ROI on IPL 3?

A lovely final match of the IPL 3rd version. A month long extravaganza is finally over. And apparently a lot of money has flown through - either officially or unofficially.

I wonder if any of the advertisers actually have an ROI put in place for any of the investment. I heard a CMO discuss on advertising options in one of the IPL matches. He was easy to spend over a crore rupees on this one match. After he hung up, he had only one comment ... good investment to have the CEO present the man of match award.

That got a lot of alarm bells ringing. Are marketing departments supposed to work on the brand image and acceptance or Are they PR agencies of the CEO?

I decided to question all the companies who advertised in the IPL and whose shares are owned by me. Fortunately, only Idea Cellular Limited was such a company in my portfolio. That also shows, that my portfolio is comprised of companies which focus on customer and market rather than on any fad such as the IPL.

I have sent a query, as a shareholder, to Idea Cellular Limited's invester relations asking them on the amount spent on IPL and the ROI model on which this amount was sanctioned. Am hoping to get some reply from them.

Do let me know if you own shares in any other advertisers to the IPL? If so, I urge you to send similar queries to the companies asking for ROI. Do let me know if you get a reply. Especially, if you get one where the ROI has been justified and realized. We should celebrate such a company.

Waiting for your feedback....

The TIME Factor in Modeling

Last week I read a question on one of my linkedin community on whether "marketing is science or art". There was a lot of debate on it being a bit of both or more of one and less of other. I had my two bit answer to it also. I was pondering on the question. That seems a bit odd since I remember having the same question for my marketing management question during semester exams of my MBA program... the answer was by rote. Today I ponder. Does that mean I am wiser? Before you answer, that was a rhetoric. My response was that marketing was both an art and a science. The science part of marketing lies in all the theory and algorithm that is available to be applied. The art part of the marketing depends on what theory or algorithm to use.

I recall an incident at a general insurance company a few months back. The team had built a cross sell model. They had first segmented the customer base and done a product association analysis. Two particular products were found to be closely associated. For sake of confidentiality lets call them ... well... Product 1 and Product 2 (not very innovative... are we?).

The next step was to find customers who had only Product 1 and not Product 2 and treat them as the target for scoring the propensity for purchasing Product 2. The data set of the customers demography, transactions, etc., was formed and the model building and scoring process executed. The customers were ranked to give the potential base for cross sell.

While the process used was appropriate there was a major flaw in the way the scoring exercise was used. The data created for model building was derived from a cut of the customer database as of a particular time... say January 31, 2010. This is where the process went .. drastically .. wrong. A cardinal mistake committed by statistical standards.

For sake of explanation, consider three customers who have bought both Products 1 and 2. The following gives the timeline of purchase of the two products.




As can be observed, by taking last 12 months data from a cut of Jan 2010, the actual purchase of the two products were not taken into consideration. For Customer 1, the purchase of Product 2, which is the target event in this analysis, actually happened outside the period of analysis.

The correct approach would be to identify the event of purchase of Product 2. Term this period as Base period. For each customer, basis the purchase of Product 2, the base period will be different. Then take the data for 12 months past from this base period.

The reason this needs to be done is we are studying the pattern of behaviour a customer exhibits before he purchases the product. Thus, the period of analysis is relative to the purchase of the product.

The following figure shows the period for which data needs to be extracted for each customer. This is dependent on the purchase of Product 2. Notice that this period is different for each customer. In fact for customer 1, this period is way in the past and goes beyond the period that was displayed. It probably needs to be decided whether Customer 1 is a "vintage" customer and should be excluded from the analysis.



This is classic case of the wrong science applied to correct art. No doubt this cross sell campaign had a high chances of failure. And the blame to be put on the statistical model which failed to predict the correct potential base.

If you want to avoid this and similar pitfalls, I will be glad to discuss ... contact me at michaeldsilva@gmail.com.

Dimensions of Customer Segmentation

Discussion on customer segmentation invariably moves towards the variables or dimensions on which a segmentation exercise can be carried out. Words such as demographic, psychograpic, product purchase, transaction and interaction often pop up as possible dimension. And like the founder of a retail analytics product vendor, RFM is another definition of customer segmentation (see earlier post).

Today I attempt to list down the categories and dimension which could be input into a customer segmentation model. This list, though comprehensive, is in no way exhaustive. But I don't think this is an area of concern since not many companies could fill in a majority of these dimensions with customer data.

I have categorised the dimension into classes. For some dimension, I have also stated some sample values. I am not attempting to explain the dimension since a quick google on the meaning of the dimension name should give enough insight into its explanation and the likely values the dimension with contain in the data set.

1. Class: Geographic
 1.a: Region
 1.b: City size
 1.c: Density of area
 1.d: Climate
2. Class: Demographic
 2.a: Age
 2.b: Sex
 2.c: Marital status
 2.d: Income
 2.e: Education
 2.f: Occupation
3. Class: Psychological
 3.a: Needs-motivation
  sample values: shelter, safety, security, affection, sense of self worth
 3.b: Personality
  sample values: extroverts, novelty seeker, aggressives, low dogmatics
 3.c: Perception
  sample values: low-risk, moderate-risk, high-risk
 3.d: Learning involvement
 3.e: Attitudes
4. Class: Pscychographic
 4.a: Lifestyle
  sample values: economy-minded, couch potatoes, outdoor enthusiasts, status seekers
5. Class: Sociocultural
 5.a: Cultures
  sample values: Bangla, Egyptian, Indian, Nepali, Pakistani
 5.b: Religion
 5.c: Subcultures
  sample values: African, American, Asian, Hispanic
 5.d: Social Class
 5.e: Family life cycle
  sample values: bachelors, young married, full nesters, empty nesters
6. Class: Use related
 6.a: Usage rate
  sample values: heavy users, medium users, light users, non users
 6.b: Awareness status
  sample values: unaware, aware, interested, enthusiastic
 6.c: Brand loyalty
  sample values: none, some, strong
7. Class: Use situation
 7.a: Time
  sample values: leisure, work, rush, morning, night
 7.b: Objective
  sample values: personal, gift, snack, fun, achievement
 7.c: Location
  sample values: home, work, friend's home, in-store
 7.d: Person
  sample values: self, family members, friends, supervisor, manager, peers
8. Class: Benefit
 sample values: convenience, social accpetance, long lasting, economy, value-for-money
9. Class: Hybrid segmentation: implies using output of other segmentation model as an input to the current segmentation exercise.

Contact me at michaeldsilva@gmail.com if you want to discuss further on conducting a segmentation exercise for your customer base.

Market Segments v/s Statistical Segments

The "Mint" financial newspaper in India is covering a 33 part article covering all the consumer segments identified via market survey. The series of article is really good and a must keep for anyone interested in B2C business. You can find the articles till date at this link on the mint epaper.

The following diagram shows the map of the segments identified and that will be covered in this series by mint.



Today's blog covers the role of such market-survey driven segments and the statistically driven segment. Each has its own use.

When a company is entering a new segment or when it is new to the market, knowledge of the market is key in deciding the entry strategy. At this stage, not much is known "intimately" about the consumers in the target market. This is the stage when a market defined segment is useful. The company can evaluate the segments so defined and decide on appropriate strategy for entry as well as sustenance and growth.

Over time the company becomes successful and garners a decent size of customer base. Depending on the type of product being sold and the purchase and consumption pattern this time could vary from 6 months to 3 years or more. At this stage, the company has a significant number of customers in its fold as well as its able to capture data related to demography, transactions and interactions with the customers.

A clustering exercise at this stage to understand homogenous groups of customers will often lead to a completely different definition of segment. The following diagram is a representation of this scenario.



The new customer segment definition does not match the market defined segment. This is primarily because:
1. The culture of the company parentage (for example, different profiles of people get attracted to a Reliance or a TATA or a Future group),
2. The culture of the geography (for example, a retail outlet customer base will be highly influenced by the street from which it is accessible),
3. The culture of doing business (the business process followed will attract specific set of customers).

When this happens and a company is able to define and identify its customized segment, the stage is set to discard the market defined segment. The company need to realign its strategy to the identified segment of customers and plan to grow in this niche segment. Another strategy would be to identify market segments that got completely left out and define surrogate offerings to attract this segment.

I hope I have covered the role of market survey based segment and statistical segment in this brief post. In case you need to discuss on this further do drop a line at michaeldsilva@gmail.com

Perspectives of Segmentation

One of the three activities on customer analytics is segmentation. (psst: wanna know the other two... mail me on michaeldsilva@gmail.com). Most often when I discuss on performing segmentation analysis with the marketing folks.. I get the "we know our segment" arguement.

I have had marketing managers retort with "Yeah, we know what segments we target" or "we have the corporate, retail and government segment". They believe they have already segmented their segments and as such do not need analytics to further do any segmentation exercise. And they are correct. {now wait... am i contradicting?}.

It is at this point that I often take a tangential topic and take the white board for a chalk talk on the perspectives of segmentation. Let me take this opportunity to use this white space to do the same here.

There are basically three levels at which customers are segmented. The following diagram shows the three levels of segmentation.



The first level of segmentation is at a Strategic level. The segment defined at this level is primarily used for organization setup. As such, this segment should survive for atleast 5 years.

The second level of segmentation is at an Operational level. The segments defined at this level dictates the processes within the organization. Each of the segments require its specific approach to selling and servicing. This segment should survive for atleast 2 years.

The third level of segmentation is at a tactical level. The segments defined at this level often requires specific communication modes. This in marketing terms, refers to specific campaigns as well as offers. The segments at this level are more of an ad-hoc nature. These segments do not survive for more than a year at the max.

The role of statistics is primarily at the third level, that is the tactical level. And this is where the mismatch happens. While me as a statistical solution provider is taking of segmentation at level 3, the marketing personnel is often referring to level 1 or level 2 segmentation. However, often the two parties are not aware of their perspective at two different levels.

I often use this theory to address the conflicting scenario during my pitch to the marketing personnel. All the best with your understanding on marketing segmentation and the role of statistics.

Loyalty has a new dimension

The last year has seen increasing request for loyalty management solutions from prospects. The requirements typically hinge on accumulation, management and redemption of loyalty points. There are complexities built in via arrangements of shared loyalty programs.

A few prospects look beyond point management and define loyalty as management of customer lifecycle. Here the requirements are more analytically oriented as against the earlier transaction oriented.

I have noticed a peculiar behaviour among the young generation. This generation is completely different to the previous one. My earlier posts highlights why a company should refocus or create a separate focus stream on the new generation of customer (Loyal customers are dying).

Though I may not necessarily belong to the "young" generation, let me start this post via my personal experience. A few years back I was transferred to a office location which was towards north of Mumbai. There was a Axis Bank branch in the adjacent building to this office. Since this was convenient, I opened a savings account with this branch to cater to my daily cash need. The bank also announced a web portal to maintain my bank account. When I checked the portal, it was pretty basic (this was quite some years back). There was not much I could do. I could not even open a new fixed deposit. So I stayed with ICICI Bank (which was the primary bank for me then). The only reason for me not to stray from ICICI Bank was the activities I could perform on the web site.

I have noticed a similar behaviour around. People often are comfortable with one channel and tend to focus their transactions on this channel. The recent percolation of smart-phones provides a good example. Ever watched two smart-phone owners converse. They compare the activities that they can perform on their phones and are quick to identify the bottleneck which prevents these activities. Whether this is a mobile banking activity or social networking. The introduction of Blackberry by just two telecom is a case in point. A good number of people known to each would have shifted their telecom provider so they could do some "blackberry" transactions, even if it meant just checking and replying mails.

Where the addiction to the channel is high, this often will take priority on the loyalty and will kill any brand or company loyalty present. Consider the purchase of books. If one had to walk to the bookstore, then there will often be a top of mind bookstore outlet or brand that one would frequent. For me, I love frequenting Crossword. But recently, I have sort of become comfortable with online purchase of my books. So do I have the same preference for Crossword online store? Not anymore. A quick search on google for the book... click on the first link... check the price and order. Thats it... Done. No more store loyalty for me.

So how does a company leverage this loyalty to a channel? As a first step, one needs to understand the profile of customers basis the channel of interaction or transaction. Any new product or service or cross sell that needs to be made to this set of customers should be provided on the channel of preference. It will not be a success if an offer is made on the phone for a customer who prefers the internet for his purchases. Similarly, expecting a in-store customer to buy into a offer by subscribing on the web will also not be too successful. Unfortunately, there is a initiative among many marketing personnel to move the customer to the lowest cost channel. Ever noticed a bank trying to entice you to go the ATM when you want to withdraw money. Maybe they are losing the additional business a customer would have given them while he is in the branch. Pushing him to the ATM will only result him in frequenting some other bank who accommodates his presence in the branch.

Want to know how to identify channel loyalty and leverage this knowledge, mail me at michaeldsilva@gmail.com