dma14 thought leadership series: "the last mile"

The Last Mile: Leveraging Decision Science

to Get Your Most Important Audiences to Act.

We All Make Decisions…

We All Make Decisions……in Ways We’re Not Aware of.

Decisions We All Make,All The Time.

Neal Boornazian

Chief Client Officer

Cramer

Anne-Marie Farrell

Head of Behavioral Economics

Research, Global SMB Marketing,

Google

On Amir

Associate Professor of Marketing,

UC San Diego

Candace Brenner

Director, Global Brand Marketing

Sony Online Entertainment

“The Last Mile”

Today’s Discussion

The power of the context

Framing vs. description Invariance

Incentive framing and mental accounting

Transaction utility to habit formation

Forms of sociality

Framing and description invariance

Mental accounting

Transaction utility to habit formation

Forms of sociality

IRRATIONAL LAB:

the art and science of Marketing

Behavioral economics

proposes that the real

reason people don’t adopt

our products is...

Too much friction

No immediate benefits of doing an action

We don’t think about the benefits at

the right time

People don’t know it’s a good thing for them

Desired User Behavior

Benefits

Barriers

Overcoming initial fear…

…setting up for long term success

using smart incentives

Incentives

Free coupons Spend X Get Y

Free coupons Spend X Get Y

• Skin in the game

• Product engagement

• Free vs own investment

Qtr A - Y1 Qtr B - Y1 Qtr A - Y2 Qtr B - Y2

Increase in Average Revenue per Account

Free coupons

Spend x Get y

Decrease in Activations

Free coupons Spend x Get y

Desired User Behavior

Benefits

Barriers

Cell 1:$20 AdWords credit

Cell 2:$50 AdWords credit

Cell 3:$20 Play credit

Cell 4:2 Movies

• No incentive

• $20 AdWords credit

• $50 AdWords credit

• $20 Play credit

• 2 Movies

0%

10%

20%

30%

40%

50%

60%

$20 Play $50 AdWords 2 Movies $20 AdWords

Results from Intuition Study

$20 Play $50 AdWords 2 Movies $20 AdWords No Incentive

3x control

4x control

4x adoption rate for $20 Play vs no incentive (control)

2.5x control2x control

• Pick the right user behavior

• Use incentives to help users engage with product

• Think about different reward types

• Hedonic rewards - for our pleasure (e.g. movies)

• Utilitarian rewards - more functional (e.g. AdWords

credit)

• Smaller amount of a hedonic rewards out

performed larger amount of the utilitarian rewards

• Test – our intuitions are not always right

Sony Online Entertainment

Candace Brenner

Director, Global Brand Marketing

Company Overview

Managing the Player Lifecycle

Overview: Institute a “nudge” program in-game to present uniquely tailored offers in response to players’ likelihood to:

» Extend membership (prevent lapsing)» Convert to 1st time payer» Repeat purchase conversion

How:Score and predict future behavior of players to intervene at appropriate touch points to change and/or pivot customer behavior.

The “Nudge System”

Sample Nudges

New Membership Return Membership Consumables

ADDITIONAL RESULTS:

• Better understand different player segments (1st Time, Regular, Repeat, Dedicated).

• Proactive retention is easier than winning them back!

• Increase overall product satisfaction.

Increased monthly incremental revenue by 5-8%

Make it EASY

Overview: Serve a timely message based on what THAT customer is experiencing at THAT moment

CHANGE consumer behavior – Habit Formation

How:Identify key moments in time that customers experience, specific to that moment, and offer them convenience with a lower barrier to entry (lower price points, more frequently).

“Point of Need”

Example: Heroic Characters

Examples: Upgrade and Revive

Spell Upgrades

Revive

Monthly Average Revenue Per User for Point of Need Customers

Mo

nth

ly A

RP

U

Before PoN Use After PoN Use

Daily purchase rate increased from 8% to 13%

# of purchases increased from 3 to 4 for active purchasers

Custom Communications

Most Loyal Cohort

Unprompted, No-Strings-Attached Reward for Loyalty and Ongoing Engagement

Personalized Communication

Valuable Gift

Email Performance

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

Open Rates

Top Performers

SOE Benchmark

IndustryBenchmark

Top

Performers

also have

50% CTR’s!

The Last Mile: Leveraging Decision Science

to Get Your Most Important Audiences to Act.