Jim answers questions from fellow Drillers
(More questions with answers here, Work Overview here, Index of concepts here)
Topic Overview
Hi again folks, Jim Novo here.
Is your mission to increase Sales or Net Margin dollars? Worth getting some clarity on if you’re not sure, and if it’s Margin dollars you are after, watch out for Promotional Proneness. What’s that? The tendency of customers to learn promotional patterns and “wait for a discount”, which can significantly impact campaign profitability. Got Proneness? Read on Fellow Driller, you will learn how to find out – by measuring it using control groups!
Q: I really have enjoyed your book.
A: Thanks for buying it, and for taking the time to tell me you enjoyed it!
Q: I’ve created a first draft of a customer retention strategy that outlines proposed offers at various trip wire stages, and based on your order frequency. So, if you are a one time buyer, and you are 8 weeks over your average buying frequency, you get a certain offer, and this would differ if you were a 4-time buyer, and are just one-week over your average buying Frequency. As you suggested, the offers increase in value the longer it’s been since you’ve purchased.
A: So you are segmenting by Frequency and Latency and then using Recency as a trigger. You must have really learned something from the book, I don’t think I ever covered that one specifically! But it makes a lot of sense to use Latency instead of Recency to segment in a category with a high percentage of consumable products (FYI Dear Reader – office supplies), since there is some expectation for re-supply and the purchase rate should be relatively constant for paper, toner, pens, etc.
Q: But how do you prevent teaching behavior that causes the customer to wait until the better offers come? These offers would only be sent to people that hit the trip wire (not individuals buying on their own). How do we not teach a behavior that encourages the customer to wait for the better offer?
Continue reading How Much is Promotional Proneness Costing You?