Naga Chokkanathan

Why Not? — Focus On Long Tail

Posted on: December 3, 2010

Recently, an online store from India launched an interesting campaign – During a 48 hours period (weekend), they will pick the ‘top spender’ and give them some fancy electronic gadget. Means, if you spent more than everybody else, you get the gadget free!

I thought this was a good, fun way to improve sales over the weekend. But after 12 hours or so, they did something which brought down the whole campaign effectiveness – They sent an SMS to all their members saying “Mr. XYZ is the top spender now with Rs 15,000/- worth purchases. Buy more than Mr. XYZ to win this contest.’

Will this SMS make more people buy more from them? I seriously doubt it!

The moment you disclose that somebody has bought items worth Rs 15,000 already, I am motivated to join the race if and only if I can spend at least Rs 15,001. Otherwise, I may drop out from your contest – Means, I may buy an item worth Rs 100/- or Rs 14999/- if I really need it, but not for the sake of this contest, because I know I can’t win anyway. By sending this SMS, they might have attracted some people who wanted to spend more than Rs 15000 to win the contest, But I strongly feel they would have driven away some potential (small) customers.

As writer Chris Anderson points out, concentrating on our long tail (selling less of more) is much more effective than trying to please the short head (big customers who buy more from us).

(043)

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N. Chokkan …

03 12 2010

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1 Response to "Why Not? — Focus On Long Tail"

Comment from Narain (Via Email) –>

People mis understood long tail. Long tail is about “the sum of all small things will be bigger than the blockbuster”. So if you really wanted to maximize your long tail value, you should basically have items, products and others which only few people will like & buy. The longer the tail, the opportunity to capture the smallest customers (as in monetary terms) is high.

To give you a simple example, in any hotel’s menu, you always have the exotic items which people will try once. The regular staple of Idly, Dosa, Pongal, Chappathi & Coffee / Tea is what the money earners, despite they are low priced compared to exotic products. What the hotel servers don’t understand is ordering for 2 Idlies + Coffee may not give him “tips”, but that’s what makes the kitchen burning for the hotel.

Also, when it comes to Numbers particularly, we as humans have a different perceptions about that. Dan Railey wrote about predictably irrational, which lazygeek wrote in tamil paper. Look at my comment for that post on “Mental Accounting”. This is part of Behavioral economics / finance. Any Number “said” will end all the assumptions, presumptions about the value behind the number. That kills the excitement normally associated with valuing something. In your campaign, by declaring 15000, the company practically sealed the possibilities for lots of customers once for all. For the rest, who can afford, it then suddenly makes them to do the calculation of whether spending say 20,000 is worth to get a 4GB Pen Drive or what ever.

Its a big science on “carrots” – the art of incentivising & motivating customers / employees to perform. Its a study by itself. In total, i agree with your assertion, that the company missed the boat & also created “negative mental imprint” to their customers.

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