How Many MIT Marketing Professors Is Too Many?
Actually, I don't know -- I haven't found that number just yet.
We had a board meeting Monday with not 1, not 2, but 3 MIT Professors in attendance; Glen Urban, Drazen Prelec, and Nelson Repenning. We were talking through the data from our most recent field study which, again, yielded an average offer acceptance rate of 66% and cost per action of about $5 (table below).
If you aren't familiar with our Qmarketing system, we enable marketers to pay people to find the marketer's offer that best fits their needs by asking people 3 questions; the answers are then used to locate the right offer -- which we deliver via email. We deploy the system whenever and wherever a payment is made (e.g. online bill-pay, e-checkout) and pay the consumer in the form of a discount or cash-back.
Glen brought up the idea of a "Golden Leaf" -- or that group of people who have identified themselves as being particularly attractive to the marketer. For example, in the real-estate segment, the "Golden Leaf" is the home seller who isn't currently working with an agent. For the auto dealer, it's the car owner servicing her vehicle at a competing dealership. The question to the marketer then becomes, "What's your cost to get an offer accepted by those highly qualified customers today?" Of course, the answer depends upon the industry but, we were able to deliver offers to all qualified segments for between $4-10. If a marketer pays $3 for a paid search click, and 10% of those visitors download an offer from the website - the offer delivery cost is $30. If 10% of those offers, redeem, the customer acquisition cost is $300, plus the price of the discount. It looks like we can acquire customers for a fraction of that cost.
Drazen then proposed a study aimed at quantifying the advantage of the Micronotes system wherein we would compare the offer redemption rates of 3 groups:
- Group 1: Distribute offers randomly, much like marketers do today in the Sunday newspaper.
- Group 2: Ask people 3 questions about their preferences, then distribute offers randomly much like we do today by asking people to take a market research survey - then deliver a one-size-fits-all offer in the Sunday newspaper.
- Group 3: After being asked 3 preference questions, distribute unique offers according to preferences the Micronotes way.
- We'll take up the results of that experiment in a future blog. So, if you are a marketer, what does it cost you to deliver the right offer to the right person at the right time today?