Identifying persuadable fence sitters and designing personalized offers to maximize incremental revenue and ROI

1. When Less is More: Focusing on the Persuadable Guest
#org#chrs14

2. Marketing & Promotions Effectiveness – The Belief, The Test and The Truth
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3. 4th night free!!!
(with 3 paid nights)
Would you run this promotion again?
Promotion Performance
3
Test
100 k
13 k
13% Response
Targeted
10 k
1 k
10% Response
Hold Out
Control

4. 4th night free!!!
(with 3 paid nights)
The Success of a Campaign is determined by Precision in Targeting
Promotion Performance
Benefit:
• Lift in Response Rate = 13%-10% = 3%
• Incremental Stays = 3% of 100k = 3k
• Incremental Nights = 3k x 3 Nights = 9k
Cost:
• Non Incremental Stays = 13k-3k=10k
• Free Nights = 10k x 1 Night = 10k
Net Benefit is -1k Nights
Now consider the economics
4
Test
100 k
13 k
13% Response
Targeted
10 k
1 k
10% Response
Hold Out
Control

5. Over targeting has multiple disadvantages…
Loss of Revenue
Triggers Shopping Behavior
Trains Loyal Customers to wait for
Offers and Discounts
Dilutes the Offers
Increases Marketing Costs
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Why do Marketers Over Target?
WHY

7. Responsiveness
NumberofProspects
Unresponsive Responsive
Negative ROI Low-Med ROI High ROI
Today, most marketers know who will respond to a given offer.
That helps, but only to a point…
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8. Responsiveness
NumberofProspects
Negative ROI Low-Med ROI High ROI
Unresponsive Responsive
Persuadable
Sure Fire
Responsive Guests are of 2 types – The Persuadable & The Sure Fire
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So, how do we identify Persuadable Guests?
How

10. To identify the Persuadable Guest, we must first understand the difference
between Persuadable and Responsive
Responsive
Guest
Buys when given an offer
Buys when
given an offer Buys when
given an offerPersuadable
Guest
Buys Only when given an offer
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11. There are Proven Analytical Methodologies to predict influence and identify
Persuadable Guests – e.g. Uplift Modeling
• PR(Offer) is high
• Where PR is the Probability of Response
Responsive
Guest
Buys when given an offer
Buys when
given an offer Buys when
given an offerPersuadable
Guest
Buys Only when given an offer
• PR(Offer) >> PR(No_Offer)
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Through Decision Engineering, we go beyond insights…to recommendations!
What promotions worked in the
past?
1
How can we make it better?2
Who should we target?3
Who can we persuade?
1
Where can we find them?2
What should we offer them?3
Old Backward Looking Process New Forward Looking Process
Understanding the Persuadable Guest can completely turn around the way
Promotions are Developed and Executed

13. 3 Phased Approach
A success story in Hospitality
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Phase 1: Identifying & Understanding the Persuadable
Guests (for 1 Promotion)
Phase 2: Designing offers and touch points around the
Persuadable Guests
Phase 3: Limited in-market tests followed by full scale
roll out

14. Impact on One Promotion in One Quarter
A success story in Hospitality
Saved $2MM by not targeting the
Sure Fires
Used a small part of the savings
to give richer offers to the
Persuadable Guests
Generated an additional $4MM in
incremental revenue with no
increase in budgets
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15. Across many industries, focusing on Persuadable Customers is the new Best in
Class approach to driving Incremental Revenue
15
Telecom companies use this
approach to retain customers
Banks use this approach to cross-
sell
Obama’s 2012 campaign used
this approach to identify the
Persuadable Swing Voter

16. Thank you