Continuing the theme … how to give me customised discounts based on my purchasing patterns? One way is to send me vouchers in the post, but that’s unsexy and expensive. And I’ll forget to bring the vouchers or lose them. Or I might give them to someone else, defeating the purpose of the targeted discount.

Let’s see if we can use an app to solve these problems … Vouchers can be pushed to the phone, but then how to validate them at the checkout? I suppose I could get a code to give to the cashier, but that’s clumsy, and again I might give the code to someone else. We need to make arbitrage a bit more difficult. We could do that by pushing the vouchers to my phone only when I enter the supermarket, but how to know this has occurred? GPS isn’t that accurate …

So how about this: When I enter the supermarket, I scan a QR code on my phone that is posted at the entrance. This code changes daily, and prompts the app on my phone to download my targeted offers for that day and show them to me. This also alerts the supermarket’s checkout computer that I’m in the store, and activates the discounts when I swipe my loyalty card at the checkout.

I still think this is a bit clumsy, what we really need is a better GPS system …

The supermarket I regularly use has a loyalty card which allows them to track my spending patterns. But they don’t seem to do anything terribly useful with all the data, they just simply send me some ‘reward’ vouchers from time to time. That will make me a little bit more sticky, but surely they can do better …

A smart thing to do would be to figure out products that I don’t regularly buy and give me special discounts on those. I obviously have high demand for the products that I do regularly buy, so there’s no point to give me discounts on those, my demand is inelastic. But give me a discount for something I have low, elastic demand for, and I might buy it. If chosen carefully, this could increase my total spending (rather than just cannibalising my existing spending) and increase revenue for the supermarket.

A large supermarket opened in the ground floor of my office building, giving me the option to buy ingredients to make lunch at a significant discount from what I would usually pay to buy lunch in the city.

Of course this raises the question of why I didn’t do this already when I visited the local supermarket near to my home. You might say I’m lazy, but the economist in me has other answers -

I only visit my local supermarket infrequently, so I would need to buy larger quantities, with the accompanying risks and costs of spoilage and storage, plus less daily variety in my lunch.

It’s a little inconvenient to bring the lunch with me on the bus, and I might forget.

I have to decide what I want for lunch in advance and give up the option value of deciding at the last minute.

So, apparently I was willing to pay a price premium because of these costs. But now having a supermarket very near to my office means I can have the best of both worlds. The supermarket should be able to charge a higher price and extract some of the surplus, but they don’t seem to be doing that, so it’s all gain for me!

A tweet today got me thinking a little about mobile number portability (MNP) … The conventional wisdom is that MNP increases competition in mobile markets as it allows customers to switch more easily between networks. However there is also a limited supply of ‘good’ numbers on any given network (123-4567, 888-8888, etc). A new network with its own number prefix is able to replenish the supply of ‘good’ numbers and some customers who have a ‘bad’ number on their old network will be willing to switch even if they have to change their number.

So MNP is not necessary for the new network to compete for all customers, and in fact the new network is at an advantage in terms of attracting customers with ‘bad’ existing numbers. (Whether or not customers with ‘bad’ numbers are valuable customers is another question, however.)

On top of this, unless there’s some system for alerting customers about which network the people they are calling belong to, MNP possibly introduces some confusion about the cost of making a call, if there are different prices for calling on the same network versus calling other networks. This could have effects on customer behaviour and competition between networks that are more subtle … without a formal economic model it’s hard to be sure.

Anyway, I don’t have any strong conclusions here, just that there are some aspects MNP that might not be immediately obvious. And it’s interesting how a simple tweet can get you thinking about all sorts of things.

I found these targets published by a government organisation that shall remain nameless:

• 80% of customers served within 10 minutes
• 80% of telephone calls answered within 30 seconds
• 80% of email inquiries responded to within 7 days

Why is it considered acceptable to take SEVEN DAYS to answer email, while walk-in customers should not be kept waiting for more than 10 minutes and telephone callers not more than 30 seconds?! If anything it should be the other way around …

One of my favourite blogs, Flowing Data, has just introduced a membership model. For US $25 per year you get access to some premium content like tutorials and curated links. I guess it’s not fundamentally different from the leaky paywall a la New York Times style, but it’s pretty novel for a relatively niche blog about data analysis. Anyway, Nathan Yau does an awesome job on the blog, so show him some support if you’re a data geek.

(Note my carefully crafted search engine optimal title for this post :) )

A recent trend among popular restaurants in Auckland is not accepting dinner reservations. While this may seem a good strategy for a restaurant while popular, it is equivalent to a price increase. Without reservations, there is some probability that you will be unable to get a table or will have to wait a long time. Thus there is some prospect of having to search for an alternative while hungry. This reduces the expected pleasure from eating at that restaurant in the same manner as a price increase.

Diners will take this into account when deciding where to eat, reducing demand for restaurants that don’t accept reservations, everything else equal. It also means such restaurants are nearly impossible to use as a venue for special occasions such as birthdays or a date, which effectively ‘prices’ such customers out. Finally it makes establishing long run relationships with diners difficult as you may be able to get a table one time but not subsequently. This makes it difficult to build up customer loyalty.

From the restaurant’s perspective, these losses must be balanced against the benefits of possibly having a higher table occupancy rate and not having to deal with last-minute cancellations. But, overall, I think not accepting reservations is a somewhat short-sighted strategy and the truly successful restaurants in the long run will not adopt it.

My colleague Reiko Aoki told me today that book publishers in Japan are so behind the times with regard to selling digital books that people go to great lengths to digitise their own dead tree books. You can buy a device that will chop the binding off a book so that it can then be fed into an automatic scanner. Or pay a service to do it for you. This practice has become so popular that there is even a Japanese word for it (Jisui).

Publishers are clearly leaving money on the table here. Even if they cannot give up the dead tree model, they could offer something like iTunes Match for books and provide digital versions to people who have bought physical books. Or allow people to swap a physical book that they own for a digital version. Since the self scanning process destroys the book anyway and it sounds like a lot of trouble, people should be willing to pay something to exchange their physical book for a digital file. And since the publishers presumably already have the books in some sort of digital format, the marginal cost should be pretty close to zero. Sounds like a real win win is possible.

The new Air New Zealand Grabaseat app offers daily special airfares. One feature is that you can set alerts when a particular airfare is on sale below a certain price level. If Air New Zealand is smart they will be using the data on the alerts that people have set to understand the demand for these special airfares. There is little incentive to lie about your preferences and so the airline should be able to collect good data on willingness to pay.

The new film by Gary Hustwit (of Helvetica fame) is available to rent for watching online. You can get it through iTunes, or use the player below to rent it from Distrify. The Distrify business model is interesting, if you watch the video through an embedded player, the host site gets a cut of the revenues. I wonder if Vimeo and YouTube will adopt this model too or just stick with their subscriptions / ads models.