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Why do you find Pizza Hut next to Domino’s?

We went shopping. Our son, who is 12 years old, noticed something during the trip.

Once we got back home, he asked:

Why Domino’s & Pizza Hut are next to each other everywhere?

That’s a good observation, I told him.

This is called as #NashEquilibrium named after the mathematician John Forbes Nash Jr.

In game theory, let us say, there are two players – Alice & Bob. They choose strategies A & B respectively. Then (A, B) is a Nash Equilibrium, where the players don’t have any other better strategy other than (A,B) that maximizes their pay-off in response to the other player. [credit: Wikipedia]

NE applies to a #zero-sum game whether there are two or more players. If you add up the profits of all players & subtract their total losses then it sums up to zero.

You don’t gain by changing your strategy in response to your competitor if they also don’t change theirs. On the contrary, you stand to lose if you change your strategy. The optimum level is discovered and each party sticks to the same strategy.

This is the reason you find,

KFC next to Taco bell [& Burger King & Mc Donald’s].
Pepperfry next to Urban Ladder.
Max Fashion is followed by Reliance Trends & Pantaloons.
Petrol bunks located next to each other.
Starbucks, Costa Coffee & Barista next to Coffee day.
Restaurants are grouped together.
Jewellery shops in the same location.
Silk Saree shops all lined up together.

You may want to watch a TED-Ed video titled “Why do competitors open their stores next to one another? – Jac de Haan” [https://www.youtube.com/watch?v=jILgxeNBK_8]

This is the reason you find Amazon’s “The Great Indian Festival” overlapping Flipkart’s “Big Billion Days”.

This is election season everywhere. Some countries have two players whereas we have multiple players, in India. 🙂

Find your Nash Equilibrium Vis-a- vis your competition!

HappySelling!!

#b2b #b2c #sales #innovation #entrepreneurship

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Life Time Value [LTV] of a Customer

Are you maximizing your revenue potential with your clients? Are you extending your Customer Life Cycle? Are you able to acquire net new clients, retain them and most importantly are you able to improve your profitability? Are you engaging your clients enough to drive their buying behaviour and get their mind share? Are you able to sustain that engagement? Are you using digital tools and technologies to improve your customer engagements and customer relationships? Is your Organization customer centric? Are your customers loyal to your brand? What are you doing to build their trust and confidence in you?

In essence, have you measured the Life Time Value of each of your customers and worked towards improving the relationship to increase that Life Time Value ?

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Segmentation

Segmentation is the process of identifying customer needs, buying pattern, buying behaviour and also studying demographics. Sending mass email blast is very old-fashioned and does not produce the desired results. Hence, one needs to send targeted emails that generate interests and hence improve conversions.

A campaign that uses segmenting based on past behavior, such as opens, clicks or conversions, can bring in nine to ten times more revenue than one in which the entire list receives the same message. Segmenting can help you keep your mailing list fresh and engaged. For example, target subscribers who haven’t opened or clicked in your emails for a while and try to re-engage them. Also, get new subscribers – the ones most likely to open and click – by targeting them with a welcome message, special offers to capitalize on their enthusiasm and other incentives to get them into the fold. This can help your deliverability, because when your messages are more targeted and relevant, they will stand out in an overflowing inbox. Ultimately, your subscribers will be more likely to open and act on your emails and less likely to delete them or report them as spam when they’re relevant and expected.

If your email marketing tool allows you to segment customers only into two groups – one who bought your products / services and the other who did not, it doesn’t help much. If your email marketing tool allows you to add any kind of variable to your customer record, then you will be able to build a segment by querying these variables and hence build a targeted campaign around a particular segment.

Ultimately, if you are a realty company, you don’t want a customer who is interested in farm houses to receive your emails regarding commercial office spaces. Cross-selling is different. Once someone becomes your customer for farm-houses, you may try to find out if he is also interested in commercial office spaces but not until he becomes your customer.