Apr 6, 2006

I've analyzed my payments data, now what?

Data mining is useful for gaining an insight into the customer’s behaviour. Creating “Actionable Customer Insight”. You still have to act on that insight. You still have to answer this question: is it better to send the voucher by mail, or is it better to print it at the bottom of the customer’s credit or debit card receipt, as a targeted receipt offer?

Here are three major reasons why it is better to print it on the receipt.

1 – Cost. Sending the voucher by mail requires it to be physically printed and inserted into the statement, then mailed out to the customer. Printing it on the bottom of the credit or debit card receipt adds a few centimetres of paper. Otherwise it’s free. Plus, if the merchant feels he already has a basic insight into his customers’ spending habits, he can probably skip the data analytics for the majority of the promotions that he wants to do. How complicated is it to decide to give the voucher to somebody who hasn’t been to Skycity Cinemas in over 60 days? The voucher could cause that person to come back in the next couple of weeks. You don’t need sophisticated data analytics to get this level of insight.

2 – Privacy. Let’s step away from the fun and entertaining world of cinemas for a moment. Imagine you go to Carrefour hypermarkets from time to time, but not very often. Imagine receiving a special offer from Carrefour inserted in your monthly bank statement, which you receive at home several weeks after you last went to Carrefour. You probably understand that your bank is somehow tracking your buying habits and is trying to encourage you to go to Carrefour. Did privacy warning bells just go off? Compare that to receiving the same offer on your credit or debit card receipt while you are paying at Carrefour. The effect is completely different. You receive an offer at Carrefour encouraging you to shop more at Carrefour. That takes me straight into the next point.

3 – Contextual relevance. When you receive the voucher in the mail, what do you do with it? Even if you decide to keep it, there are chances that it won’t go straight into your wallet since you are probably not standing around with your wallet open. You’re going through your mail, not your wallet. But when you receive the voucher at the POS, your wallet is open, waiting for your card to go back in. The probability of the offer going into your wallet is obviously much higher. Receiving an offer from Skycity while you are at Skycity is also natural. Receiving the offer at the bottom of your card receipt right now, while you are holding the card, makes the link clearly understandable; you are encouraged to use the card more often for surprises that might appear elsewhere. The context is right. It is much more relevant to receive the offer at the moment of payment than to receive it when you are going through your mail.

Prior posts:
Cinema vouchers in Auckland
Finding hidden revenue in electronic payments data

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