Archive for the ‘Mktg – Customer Acquisition’ Category

Odds: Are casinos really that smart?

December 4, 2014

Harrah’s is a poster child for “predictive analytics” … using hard numbers to make good decisions.

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Why then – asks the IO Creative Group of tiny York, PA – did the Las Vegas big boy casinos lose over one billion dollars? (more…)

Odds: Are casinos really that smart?

February 21, 2014

Harrah’s is a poster child for “predictive analytics” … using hard numbers to make good decisions.

image

Why then – asks the IO Creative Group of tiny York, PA – did the Las Vegas big boy casinos lose over one billion dollars.

According to IOCG, casinos attendance is up, their hotel stays are up, their night club business is up, restaurant and bar sales are up.

How could their profits be down by one billion dollars???

It is because of their belief that new customers were in order – which attracted a lot more customers who are completely NOT PROFITABLE.

These new Vegas fans sleep all day, party all night and do not gamble. They don’t shop nor do they utilize the services and amenities of the buildings.

Vegas became married to the idea that their money should be invested in attracting new younger, hipper, sexier customers and they achieved that.

What they failed to do was to invest in their current very profitable customers who were actually making them money.

Casinos got caught up in the “shiny object syndrome” —  the need to go after something new when their most profitable market was already right in front of them.

When they were going after completely new markets, they should have been further investing in the one they already had.

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IOCG offers up a couple of ways to increase current customer “monetization”:

(more…)

Odds: Are casinos really that smart?

March 25, 2013

Harrah’s is a poster child for “predictive analytics” … using hard numbers to make good decisions.

image

Why then – asks the IO Creative Group of tiny York, PA – did the Las Vegas big boy casinos lose over one billion dollars.

According to IOCG, casinos attendance is up, their hotel stays are up, their night club business is up, restaurant and bar sales are up.

How could their profits be down by one billion dollars???

It is because of their belief that new customers were in order – which attracted a lot more customers who are completely NOT PROFITABLE.

These new Vegas fans sleep all day, party all night and do not gamble. They don’t shop nor do they utilize the services and amenities of the buildings.

Vegas became married to the idea that their money should be invested in attracting new younger, hipper, sexier customers and they achieved that.

What they failed to do was to invest in their current very profitable customers who were actually making them money.

Casinos got caught up in the “shiny object syndrome” —  the need to go after something new when their most profitable market was already right in front of them.

When they were going after completely new markets, they should have been further investing in the one they already had.

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IOCG offers up a couple of ways to increase current customer “monetization”:

(more…)

NetTrax: If you think that you’re being followed around on the net … you’re right.

October 2, 2012

And the company doing it is probably Acxiom … recently profiled in the NY Times.

I had some weird happenings recently.

A friend who works internet marketing for a “plus sized” women’s clothes company used my computer to show me her site’s cool redesign.

For the next couple of weeks I was getting pop-up ads for big women’s clothes … even when I was on common sites like ESPN or WSJ.

Huh?

Another time, I checked the spelling of a Spanish word via Google.

Next couple of times that I went to You Tube, the lead in ads were in Spanish.

Double huh?

I was wondering how the web “knew” … now I know, courtesy of the NY Times.

Here are some highlights …

Acxiom

IT knows who you are. It knows where you live. It knows what you do.

It peers deeper into American life than the F.B.I. or the I.R.S., or those prying digital eyes at Facebook and Google.

If you are an American adult, the odds are that it knows things like your age, race, sex, weight, height, marital status, education level, politics, buying habits, household health worries, vacation dreams — and on and on.

Right now, more than 23,000 computer servers are collecting, collating and analyzing consumer data for a company …  called the Acxiom Corporation, the quiet giant of a multibillion-dollar industry known as database marketing.

Acxiom has amassed the world’s largest commercial database on consumers —  Its servers process more than 50 trillion data “transactions” a year.

Acxiom maintains its own database on about 190 million individuals and 126 million households in the United States

Its database contains information about 500 million active consumers worldwide, with about 1,500 data points per person.

Acxiom’s Consumer Data Products Catalog offers hundreds of details — called “elements” — that corporate clients can buy about individuals or households, to augment their own marketing databases. Companies can buy data to pinpoint households that are concerned, say, about allergies, diabetes or “senior needs.”

In a fast-changing digital economy, Acxiom is developing the most advanced techniques to mine and refine data.

Digital marketers already customize pitches to users, based on their past activities … think “cookies”.

Acxiom  is pursuing far more comprehensive techniques in an effort to influence consumer decisions.

It is integrating what it knows about our offline, online and even mobile selves, creating in-depth behavior portraits in pixilated detail …  Its  a “360-degree view” on consumers.

 

How it works

Scott Hughes, an up-and-coming small-business owner and Facebook denizen, is Acxiom’s ideal consumer.

In fact,  Acxiom created him.  Mr. Hughes is a fictional character who appeared in an Acxiom investor presentation in 2010.

A frequent shopper, he was designed to show the power of Acxiom’s multichannel approach.

In the presentation, he logs on to Facebook and sees that his friend Ella has just become a fan of Bryce Computers, an imaginary electronics retailer and Acxiom client.

Ella’s update prompts Mr. Hughes to check out Bryce’s fan page and do some digital window-shopping for a fast inkjet printer.

Such browsing seems innocuous — hardly data mining. But it cues an Acxiom system designed to recognize consumers, remember their actions, classify their behaviors and influence them with tailored marketing.

When Mr. Hughes follows a link to Bryce’s retail site, for example, the system recognizes him from his Facebook activity and shows him a printer to match his interest.

He registers on the site, but doesn’t buy the printer right away, so the system tracks him online.

Lo and behold, the next morning, while he scans baseball news on ESPN.com, an ad for the printer pops up again.

That evening, he returns to the Bryce site where, the presentation says, “he is instantly recognized” as having registered.

It then offers a sweeter deal: a $10 rebate and free shipping.

It’s not a random offer.

Acxiom has its own classification system, PersonicX, which assigns consumers to one of 70 detailed socioeconomic clusters and markets to them accordingly.

In this situation, it pegs Mr. Hughes as a “savvy single” — meaning he’s in a cluster of mobile, upper-middle-class people who do their banking online, attend pro sports events, are sensitive to prices — and respond to free-shipping offers.

Correctly typecast, Mr. Hughes buys the printer.

But the multichannel system of Acxiom and its online partners is just revving up.

Later, it sends him coupons for ink and paper, to be redeemed via his cellphone, and a personalized snail-mail postcard suggesting that he donate his old printer to a nearby school.

 

Waste”

There is a fine line between customization and stalking.

While many people welcome the convenience of personalized offers, others may see the surveillance engines behind them as intrusive or even manipulative.

Privacy advocates say they are more troubled by data brokers’ ranking systems, which classify some people as high-value prospects, to be offered marketing deals and discounts regularly, while dismissing others as low-value — known in industry slang as “waste.”

Exclusion from a vacation offer may not matter much …  but if marketing algorithms judge certain people as not worthy of receiving promotions for higher education or health services, they could have a serious impact.

“Over time, that can really turn into a mountain of pathways not offered, not seen and not known about.”

A bit creepy, right?

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McKinsey: A marketer’s guide to applying behavioral economics

March 18, 2010

TakeAway: Marketers have been applying behavioral economics—often unknowingly—for years. A more systematic approach can unlock significant value.

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Excerpted from McKinsey Online: A marketer’s guide to behavioral economics, Feb. 2010

Long before behavioral economics had a name, marketers were using it.

“Three for the price of two” offers and extended-payment layaway plans became widespread because they worked — not because marketers had run scientific studies showing that people prefer a supposedly free incentive to an equivalent price discount or that people often behave irrationally when thinking about future consequences.

Here are four practical techniques that should be part of every marketer’s tool kit.

1. Make a product’s cost less painful 
In marketing practice, many factors influence the way consumers value a dollar and how much pain they feel upon spending it.

Retailers know that allowing consumers to delay payment can dramatically increase their willingness to buy.

One reason delayed payments work is perfectly logical: the time value of money makes future payments less costly than immediate ones. But there is a second, less rational basis for this phenomenon. Payments, like all losses, are viscerally unpleasant. Even small delays in payment can soften the immediate sting of parting with your money and remove an important barrier to purchase.

Consumers use different mental accounts for money they obtain from different sources.

Commonly observed mental accounts include windfall gains, pocket money, income, and savings. Windfall gains and pocket money are usually the easiest for consumers to spend. Income is less easy to relinquish, and savings the most difficult of all.

2. Harness the power of a default option
The evidence is overwhelming that presenting one option as a default increases the chance it will be chosen.

Defaults — what you get if you don’t actively make a choice — work partly by instilling a perception of ownership before any purchase takes place, because the pleasure we derive from gains is less intense than the pain from equivalent losses. When we’re “given” something by default, it becomes more valued than it would have been otherwise — and we are more loath to part with it.

An Italian telecom company, for example, increased the acceptance rate of an offer made to customers when they called to cancel their service. Originally, a script informed them that they would receive 100 free calls if they kept their plan. The script was reworded to say, “We have already credited your account with 100 calls—how could you use those?” Many customers did not want to give up free talk time they felt they already owned.

Defaults work best when decision makers are too indifferent, confused, or conflicted to consider their options.

That principle is particularly relevant in a world that’s increasingly awash with choices — a default eliminates the need to make a decision.

3. Don’t overwhelm consumers with choice
When a default option isn’t possible, marketers must be wary of generating “choice overload,” which makes consumers less likely to purchase.

Large in-store assortments work against marketers in at least two ways.

First, these choices make consumers work harder to find their preferred option, a potential barrier to purchase.

Second, large assortments increase the likelihood that each choice will become imbued with a “negative halo” — a heightened awareness that every option requires you to forgo desirable features available in some other product.

Reducing the number of options makes people likelier not only to reach a decision but also to feel more satisfied with their choice.

4. Position your preferred option carefully
Economists assume that everything has a price: your willingness to pay may be higher than mine, but each of us has a maximum price we’d be willing to pay.

How marketers position a product, though, can change the equation.

Marketers sometimes benefit from offering a few clearly inferior options. Even if they don’t sell, they may increase sales of slightly better products the store really wants to move.

Similarly, many restaurants find that the second-most-expensive bottle of wine is very popular — and so is the second-cheapest.

Customers who buy the former feel they are getting something special but not going over the top.

Those who buy the latter feel they are getting a bargain but not being cheap.

Sony found the same thing with headphones: consumers buy them at a given price if there is a more expensive option — but not if they are the most expensive option on offer.

Marketers have long been aware that irrationality helps shape consumer behavior. Behavioral economics can make that irrationality more predictable.

Understanding exactly how small changes to the details of an offer can influence the way people react to it is crucial to unlocking significant value—often at very low cost.

Full article:
https://www.mckinseyquarterly.com/Marketing/Strategy/A_marketers_guide_to_behavioral_economics_2536

Creating demand … by tapping non-customers.

December 8, 2009

Ken’s Take: “Blue Ocean” Strategists say to stop competing head-on in established markets and refocus on uncontested part of markets — the wide open, blue ocean.  A critical componect of a blue ocean strategy is to “unlock” non-customers …

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From the folks at the Blue Ocean Institute …

Traditional strategic thinking looks to capture a greater share of existing demand. But companies can reach beyond existing demand to unlock demand from non-customers, too.

The key is to understand the three tiers of non-customers who buy opportunistically  … or  refuse to buy  …or are unaware of the product offering.

First-tier non-customers are closest to the existing market. They are the buyers who minimally purchase an industry’s offering out of necessity but are mentally
non-customers. They are waiting to jump ship and leave as soon as an alternative is spotted. These are potentially “soon-to-be” non-customers.  But, if they are offered a step-up in value, they can be retained … and may even increase their purchases.

Second-tier non-customers are people who consciously refuse an company’s offerings. These are buyers who have recognized an company’s offerings as an
option to fulfill their needs but have opted against them. These are “refusing” non-customers.

Third-tier non-customers are furthest from the existing market. They are non-customers who have never thought of a company’s offerings as an option. These are “unexplored” non-customers.

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The key question to ask: “What are the factors keep non-customers out of the market … and what can be done to pull them into the market?”

Start by by focusing on the key commonalities – not differences – across these non-customers and existing customers to gain insight into how to create demand among these non-customers.

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Time for a makeover: the future of brand managers

November 10, 2009

Takeaway: If you are pursuing a career as a brand manager, your role may be very different than you imagined.

A report that will soon be released by Forrester will provide a redefinition of what a brand manager should be. Their groundbreaking finding: marketers should get back to marketing. Beyond focusing solely on your product, you should really get into the mind of your consumers and appeal to their needs and desires.

And with the rise of digital media, targeting specific segments can be done with more precision than ever before.

The report also claims that decisions really need to be performance-oriented, with more reliance on research and analytics.

Hmmm, recommending a focus on people and performance? It looks like those extra P’s we learned about in Markstrat were well worth it.

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Excerpted from AdAge, “Why It’s Time to Do Away With the Brand Manager” by Jack Neff, October 12, 2009

Managing a brand has always been a slightly odd concept, given that consumers are the real arbiters of brand meaning, and it’s become increasingly outmoded in today’s two-way world. That’s why a new report is going to recommend changing the name “brand manager” to “brand advocate,” and fundamentally changing marketer organizations in response to the onset of the digital age.

The report, due out next week from Forrester, finally puts the onus on marketers to change their structures — a welcome conclusion for media owners and agencies who keep hearing how they should change, but often complain that their clients have done little to shift their organizations to cope with an increasingly complex world of media fragmentation and rising retailer and consumer power.

Among the specific recommendations in its report, “Adaptive Brand Marketing: Rethinking Your Approach to Branding in the Digital Age,” Forrester suggests “brand advocates” be responsible for rapid adaptations of global brand platforms and programs, charging centralized global brand strategists with ensuring what local managers do conforms with the brand equity and strategy.

It also advocates recognizing the brand isn’t the only organizational structure that’s important for multibrand companies, but that structures aimed at marketing to demographic or other segment cohorts are equally important. And it also maintains that marketing executives should think less about anchoring annual plans around one or two big hits and more about doing many smaller things quickly and adapting based on real-time consumer feedback and other data.

He believes marketers in the digital age need to be more “numerate,” with more training in research and analytics even if they still rely on staff for help. Marketers today need to balance art and science, he believes, not unlike architects, musicians or cinematographers.

Key to any change, the former Tide brand manager said, is a return to marketing as the focus of brand management, “rather than one of six things a brand manager does.”

“So much of [brand managers’] time is subsumed by internal management, and so much of the creative process and planning is outsourced to agencies and other parties,” Forrester’s Ms. Bradner said. Brand advocates, she said, “really need to be in charge of the heart and soul of what the brand stands for. It does move you off the generalist track to be more of a pure marketer.”

Edit by JMZ

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Full Article:
http://adage.com/cmostrategy/article?article_id=139593

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AT&T’s iPhone – The cost to acquire customers … lots of them

November 17, 2008

Excerpted from the New York Times, “Even AT&T Is Startled by Cost of iPhone Partnership”, by Laura M. Holson, October 22, 2008

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AT&T’s successful relationship with Apple comes at a price: $900 million.

That is the amount of money AT&T paid to Apple for the 2.4 million iPhones the phone company sold in the third quarter. It is a number that surprised even AT&T, which did not anticipate such huge demand for the smartphone.

The company said that it expected to make up the difference in iPhone-related revenue over the two-year contracts of the iPhone buyers. Users of smartphones, like the iPhone, are heavy users of the Internet and text messaging, which are more profitable for AT&T than voice calls. Those customers also tend to spend more than customers who use their telephones just to make calls.

“We are winning share at the high end,” Ralph de la Vega, the executive overseeing AT&T’s wireless operations, said in a conference call with analysts. Same-store traffic to AT&T retail centers has increased 15 percent, largely because of interest in Apple’s phone, he said. With the iPhone, he said, “there is a significant halo effect.”

Investors, though, might be forgiven if they missed any halo after watching AT&T’s shares drop Wednesday by $1.95, or 7.6 percent, to close at $23.78. Analysts said the iPhone’s negative impact on earnings caught them and investors off guard.

There is also uncertainty — if sales of the iPhone continue at this pace — about how much more AT&T will have to pay Apple next quarter.

But Roger Entner, a senior vice president at IAG Research, which studies market trends, said iPhone sales made now would pay off in the long term because they provide AT&T with more predictable earnings.

“That is a short-sighted view,” Mr. Entner said of concerns about iPhone sales. “It is a nice problem to have.”

Edit by DAF

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Full article:
http://www.nytimes.com/2008/10/23/technology/companies/23phone.html?ref=business

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