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1. Bringing marketing research
into the 21st century
Jan Hofmeyr (Ph.D.)
Chief Researcher: Behaviour Change
Reinventing Tracking… with the new ConversionModel
© TNS 2012

2. Contents
1 A focus on the individual
Contents 03
2 The dynamism of individual behaviour
Contents 02
3 Brand equity tracking: shorter, better, cheaper
Contents 03
4 The future: real-time, intelligent, adaptive surveys
Contents 03
Reinventing Tracking… with the new ConversionModel
© TNS 2012 2

3. Why is respondent-level validity important?
The problem of mutually compensating error
Which brands did you buy in
the past three months?
Coca-Cola, Sprite,
and Ariel
Panel Data (Retailers, Detergents) Past 12 months
USA, UK, China
40% Use 60% Did not Use
 The percent who said they used the brand was equal to the percent who actually
used the brand
 Yet, many of the people who claimed to use the brand – didn’t
 Mutually compensating error: for everyone who says they used the brand but didn’t,
there was another person who said they didn’t use the brand but did
Reinventing Tracking… with the new ConversionModel
© TNS 2012

4. The problem is…
... profiling and driver analysis are nonsense!
Claim to use brand Claim not to use brand Actual users
Reinventing Tracking… with the new ConversionModel
© TNS 2012 5

5. This was just one example…
How widespread is this problem?
What is the relationship between
the answers people give to our questions
and what they actually do?
Reinventing Tracking… with the new ConversionModel 6
© TNS 2012

6. And let’s make a solemn commitment here…
… because we do care about truth
If we find that it’s not very
good; and we find a better way –
we will use the better way
Reinventing Tracking… with the new ConversionModel 7
© TNS 2012

7. Testing survey questions on panel data
Seven data sets from the UK, the USA, and China
Not
Awareness First Mention Awareness 0.92 0.57 Valid
Aided Awareness 0.68 0.11
Brand Use Stated share (Last 10) 0.96 0.74
Not use, Use, Use most 0.97 0.65
Brand Most Often 0.96 0.69 Not
Respondent
Aggregate
Needed
Brand Strength Overall satisfaction 0.89 0.35
Purchase intention 0.91 0.42
Equity Attributes Brand I trust 0.48 0.16
Value for money 0.86 0.24
Good quality 0.55 0.18
Reinventing Tracking… with the new ConversionModel
© TNS 2012

8. How often do people really use the brand they say
they use most?
UK: Past 3 months1 USA: Past 6 months2
68
58
36
20
13 8
Don’t Use Use Most Often Don’t Use Use Most Often
Panel Loyalty Card Record
Record
R: Aggregate 0.96
Respondent 0.66
Reinventing Tracking… with the new ConversionModel
© TNS 2012

9. Principle (1)
It’s not good enough to be
accurate about groups of people. You have to
be accurate about individual people
Reinventing Tracking… with the new ConversionModel 10
© TNS 2012

10. On a different track
What percentage of people stay loyal in a year
Behavioural Loyalty Transition Matrix
2009
2008
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 99 100 Total
A matching bunch2 of
0 2931294 9295 8325 5135 3450 2503 1883 1337 1030 818 632 570 396 352 270 217 170 166 97 53 108 1068 2969169
5 12001 2610 1556 870 474 283 150 106 70 40 32 20 24 12 11 5 2 5 0 3 14 18290
10 9335 1538 1973 1287 902 557 372 228 168 130 95 66 53 new loyals13 11
29 17 22 9 3 6 50 16864
15 5542 675 1219 1050 772 555 383 282 176 140 81 81 62 35 37 37 26 23 11 9 6 74 11276
20 3645 380 827 741 662 546 377 307 186 140 113 101 72 60 47 31 23 15 19 7 7 77 8383
25 2595 204 523 546 531 427 368 284 220 154 102 89 61 51 40 33 22 20 14 8 7 68 6367
30 1885 111 312 349 366 346 314 240 181 157 112 80 65 36 44 29 32 15 15 9 10 73 4781
35 1386 80 220 272 275 262 229 226 167 153 101 91 58 45 41 32 25 11 19 7 9 53 3762
40 1068 59 163 172 176 218 189 183 170 125 130 103 68 55 40 33 36 17 14 6 10 64 3099
45 833 38 104 145 172 145 167 132 143 127 104 83 67 76 49 45 32 22 12 8 6 53 2563
50 698 30 79 104 121 107 99 124 134 125 95 83 78 51 50 32 35 20 18 12 7 69 2171
55 560 22 57 72 76 79 92 96 75 89 100 87 79 80 64 41 38 23 17 15 8 55 1825
60 467 17 45 57 67 80 70 67 92 84 79 90 79 77 78 54 47 29 25 16 13 65 1698
65 387 8 40 57 56 64 62 56 72 77 70 79 85 60 55 69 43 30 24 21 13 56 1484
70 26% 34% slide down
297 13 29 42 41 63 44 43 57 57 50 61 68 40% stay Highly Loyal
7483 72 48 41 26 14 19 62 1304
75 271 6 24 23 38 38 28 38 46 37 60 42 60 49 66 72 47 42 24 20 11 69 1111
80 196 7 13 20 39 14 26 31 41 45 45 45 46 57 52 58 64 39 41 27 20 73 999
85 170 5 7 14 20 12 30 16 33 23 25 28 37 36 49 In absolute terms 23 62
40 52 44 41 28 795
90 118 3 6 13 15 10 7 8 10 14 12 21 28 26 just 4% of 2008’s users were
31 33 32 32 41 35 16 71 582
95 60 4 3 6 5 9 12 14 12 9 18 17 18 17 17
loyal in both years
21 18 30 23 37 39 64 453
99 112 0 3 3 10 8 11 6 11 8 9 15 17 14 18 23 16 21 21 22 39 86 473
100 821 5 23 39 51 41 37 39 44 37 42 37 35 54 48 48 51 60 76 41 78 472 2179
Ttl 2973741 15110 15551 11017 8319 6367 4950 3863 3138 2589 2107 1889 1556 1346 1207 1047 872 716 589 398 458 2798 3059628
Reinventing Tracking… with the new ConversionModel
© TNS 2012
11

11. The Dynamism of Individual Behaviour
From McKinsey 2002: Financial services and Airlines
Financial Airline
Value People Value People
Year 1 100 100 100 100
Loss due to defection -3 5 -3 3
Loss due to reduced spend -24 35 -19 35
Gain due to increased spend +25 35 +25 25
Reinventing Tracking… with the new ConversionModel
© TNS 2012

12. So this is the old Conversion Model
A segmentation: Commitment and Availability
Commitment Availability 26%
18%
15%
12% 11%
6% 4% 8%
Entrenched Convertible ^ Available Unavailable
Here is where most of your
new users come from
Prediction: Defection and Acquisition
61%
43%
27%
13% 13% 16%
9% 6%
^
Reinventing Tracking… with the new ConversionModel
© TNS 2012

13. So this is the old Conversion Model
A segmentation: Commitment and Availability
Commitment Availability 26%
18%
15%
12% 11%
6% 4% 8%
Entrenched Convertible ^ Available Unavailable
This entire way of thinking Here is where most of your
is incomplete
new users come from
Prediction: Defection and Acquisition
61%
43%
27%
13% 13% 16%
9% 6%
^
Reinventing Tracking… with the new ConversionModel
© TNS 2012

14. Principle (2)
It’s not good enough to be
accurate about groups of people. You have to
be accurate about individual people
It’s not even only about individual people. It’s
about fractions of people.
Reinventing Tracking… with the new ConversionModel 15
© TNS 2012

15. Models (1) Predicting behaviour/behaviour
Sales: A function of Power in the Mind and Power in the Market
Sales
Consumption
Reinventing Tracking… with the new ConversionModel
© TNS 2012

16. Models (2) A General Theory of Brand Relationships
Factors that drive commitment to a brand and the equation
Share
é m æ Share ö ù
Ranki ê å i =1 ç
s
ú
ë è Rankis ÷ û
ø
Reinventing Tracking… with the new ConversionModel
© TNS 2012

17. Models (3): Putting the Greek into English
Zipf Equation  Step One: Add the scores (10-points, 7-point) and turn into shares and ranks
PMnd Zipf
 Examples:
1
Share
 R1 (3 brands): 14, 13, 11; Shares: .37, .34, .29 Ranks: 1, 2, 3
é m æ Share ö ù
1
Ranki êå i=1 ç
s
ú
 R2 (3 brands): 16, 14, 10; Shares: .40, .35, .25 Ranks: 1, 2, 3
ë è Rankis ÷ û
ø  R3 (4 brands): 16, 12, 12, 11; Shares: .31, .24, .24, .21 Ranks: 1, 2.5, 2.5, 4
 There is still an ‘s’, but it’s set to ‘1’. No exponential transform needed.
 Calculate share/rank R1 .37/1 = .37 R2 40/1 = .40 R3 31/1 = .31
.34/2 = .17 35/2 = .18 24/2.5 = .10
.29/3 = .10 25/3 = .08 21/4 = .05
Sum = .64 Sum = .66 Sum = .62
[.37; Share .29]
.34; [.40; Share .25]
.35; [.31; Share .21]
.24;
é m æ Share ö ù 58; 27; 16 é m æ Share ö ù 61; 27; 12 é m æ Share ö ù 60; 15; 15; 10
[1; 2; 3]å i=1 ç Ranks ÷ ú
ê X .64
è
[1; 2; êå i=1X .66 ú
3] ç
è Rankis ÷ û
êå X .62
[1; 2.5; 4] i=1 ç Ranks ÷ ú
ë i øû ë ø ë è i øû
Reinventing Tracking… with the new ConversionModel
© TNS 2012

18. All of this is well known…
… award winners
Ipsos ‘Wallet
Allocation Rule’
Rank 2
Attitudinal Equity (1- )´( )
1
No Brands+1 No Brands
é m æ 1 öù
Rankis ê å i=1 ç ú
ë è Rankis ÷ û
ø
Reinventing Tracking… with the new ConversionModel
© TNS 2012

19. How the new Conversion Model compares
… a more than 20% improvement
Old ‘Power in the
Mind’ R = 0.51
Ipsos ‘Wallet Rank 2
Allocation Rule’ R = 0.59 (1- )´( )
No Brands+1 No Brands
1
Ipsos ‘Attitudinal
R = 0.59 é m æ 1 öù
Equity’ Rankis ê å i=1 ç ú
ë è Rankis ÷ û
ø
Share
New ‘Power in the
R = 0.62 é m æ Share ö ù
Mind’* Rankis ê å i=1 ç ú
ë è Rankis ÷ û
ø
Reinventing Tracking… with the new ConversionModel
© TNS 2012

20. The Survey: Questions that measure Commitment and predict
the share of wallet that a person will give each brand
 Establish Personally Relevant products, services, brands
 Brand Performance
 Affective Connection
 It takes about 46 seconds
Reinventing Tracking… with the new ConversionModel
© TNS 2012

21. Models (4): How to quantify Power in the Market
Market Drivers: Push (presence), Barrier (weakness, failure)
 Market Drivers Association  Accessibility
 Push factors (positive)  Affordability
 Barriers (negative)
 Product
 Survey time: 48 secs
 Purchaser
 Respondent Correlation
 Monopolies
 From R = 0.62…
 … to R = 0.74
 Regulations
Reinventing Tracking… with the new ConversionModel
© TNS 2012

22. Models (5) Driver Analysis
How many Touch-points or Attributes do you need
Marry This is the question Not Marry
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© TNS 2012

23. Models (5) In Charles Darwin’s case…
… it was really only one
Marry Not Marry
Children — (if it Please God) — Constant Freedom to go where one liked — choice of
companion, (& friend in old age) who will Society — Conversation of clever men at
feel interested in one, — object to be clubs — Not forced to visit relatives, & to
beloved & played with. — better than a have the expense & anxiety of children —
dog anyhow. — Home, & someone to take perhaps quarrelling — Loss of time. —
A nice soft wife on a sofa
care of house — Charms of music & female
chit-chat. — These things good for one's
cannot read in the Evenings — fatness &
idleness — Anxiety & responsibility — less
health. — Forced to visit & receive relations money for books &c — if many children
but terrible loss of time. — forced to gain one's bread
No, no won't do. Only picture to yourself a nice soft wife on a sofa with good
fire, & books & music perhaps. Marry, marry, marry QED
Reinventing Tracking… with the new ConversionModel 24
© TNS 2012

24. What we do..
This can only be described as torture…
Financial Services Packaged goods – 50+ attributes
The makers of this brand understand my needs in a laundry detergent product Delights my senses (sight, smell, feel) Makes it easy to figure out what product is right for me
This brand does what it promises Offers scents that I wish were available in other products besides laundry detergent I feel a connection to other people who use this brand
This is a brand I can trust Has scents that are better than any other brand This brand has a clear and distinct point of view
This brand provides the right level of cleaning for me Offers the best variety of scents This brand aims to fulfill a purpose beyond mere profit making
Is an excellent product for the money Leaves laundry with a long-lasting scent I can identify with the values that this brand represents
Simplifies the laundry process Provides scents that make doing laundry more enjoyable The values that this brand stands for are highly relevant to me
Is a brand I would recommend my friends to buy Has a scent I prefer This brand inspires me to talk about the brand and its values
Keeps colors bright Offers scents I canÆt get enough of I engage with others about the values that this brand represents
Leaves clothes smelling fresh Has great-looking packaging Removes stains better than any other detergent
Keeps clothes looking their best The best smelling way to get laundry done Cleans better than any other detergent
Is good for all the laundry I do Makes the laundry experience more enjoyable than I would expect Is an authority on taking care of fabrics
Is a reliable laundry detergent Helps me feel in control of the laundry process Prevents colors from fading better than any other detergent
Is an effective laundry detergent Helps me feel I am taking good care of my family Provides superior whiteness
Provides a deep down clean This brand makes me feel confident This brand makes my clothes soft
Provides superior results in any type of load I feel like this brand acts in my best interest Keeps clothes looking like new
Is effective at removing odors This brand makes me feel proud of my laundry results Provides benefits that justify the price
Leaves clothes feeling their best This brand helps me feel good about myself I love this brand
Gets my clothes clean even in cold water Allows me to present my family at their best I would miss this brand if it went away
Works on clothes of all colors Helps me to always make a good impression with my appearance I try to buy this brand whenever I can
Is effective at removing stains Makes fabrics more enjoyable to wear This is pretty much the only brand I would buy
Brand doesnæt let me down Is a pleasure to use This brand is fun
I always have a consistently positive experience with this brand Provides thoughtful solutions to my own needs Helps me get my familyÆs recognition
Everything I see from this brand is consistent (in store, TV, online, etc) This brand is innovative Is a pleasure to shop for
This brand provides a more natural solution for detergent Is a good member of the community Is youthful
Helps me feel I am spending my money wisely by buying this brand This is an honest brand Is safe for those with sensitive skin
This brand makes me feel like a smart shopper Is currently a leading brand Does not cause allergic reactions
Reinventing Tracking… with the new ConversionModel 25
© TNS 2012

25. Models (5) Continued: Doing what people do..
Using heuristics and comparative scoring..
Brands
 Personally relevant brands (3 – 7)
 Personally relevant attributes (8 – 17)
 The 80 x 12 matrix becomes 12 x 6
 Response items reduce from 960 to 72
Attributes
 Survey time reduced from 13 mins to 3 mins
 Share of mentions modeling
 Correlation goes from R = 0.31 – R = 0.62
Reinventing Tracking… with the new ConversionModel 26
© TNS 2012

26. Models (5): Simple transformations that improve validity
Weighted share of mentions…
Brand1 Brand2 Brand3 Brand4 Brand5 … Brandi
Power in the Mind 0 56 0 22 9 13
Attribute1  …
Attribute2   …
Attribute3    …
Attribute4   …
… … … … … … …
Attributej …

Reinventing Tracking… with the new ConversionModel
© TNS 2012

27. Models (2): Simple transformations that improve validity
(5a): Simple transformations that improve validity
Unweighted share mentions…
Weighted share of of mentions…
Brand1 Brand2 Brand3 Brand4 Brand5 … Brandi
Power in the Mind 0 56 0 22 9 13
Attribute1 
100 …
Attribute2 50
 50
 …
Attribute3 
33 
33 
33 …
Attribute4 
50 
50 …
… … … … … … …
Attributej 100 …

Value= 100 ´ (1/ Number of Attributions)
Reinventing Tracking… with the new ConversionModel
© TNS 2012

28. Models (2): Simple transformations that improve validity
(5b):
(2a): Simple transformations that improve validity
Unweighted share mentions…
Weighted share of of mentions…
Brand1 Brand2 Brand3 Brand4 Brand5 … Brandi
Power in the Mind 0 56 0 22 9 13
Attribute1 
100 …
Attribute2 50
57
 50
43
 …
Attribute3 
33
50 
33
38 
33
12 …
Attribute4 
50
20 
50
80 …
… … … … … … …
Attributej 100 …

æ Number Brand Attributesö
Value = 100 ´ ç ÷
è Total Attributes ø
Reinventing Tracking… with the new ConversionModel
© TNS 2012

29. There is one more crime to which I must refer..
The obvious idiocy of straight-line modelling
P = 0.64
P = 0.28 Day-to-day
P = 0.08 Use
Relevant
Endorsement
Market
Visibility
Planned
Power in the Mind Communications
Commitment
Reinventing Tracking… with the new ConversionModel 30
© TNS 2012

30. Summary: The new ConversionModel
The pillars of brand equity, image, and motivation
Relevant Brands
 Consider 54s Salience
 Stated Share
Commitment to All
 Performance 46s
Relevant Advantage
 Involvement Personal Connection
Brand Drivers Image
 Relevant Attributes 120s
 Share of Mentions Motivation
Market Drivers
 Push Factors 48s Presence
 Market Barriers
Reinventing Tracking… with the new ConversionModel
© TNS 2012

31. Let’s summarize…
 We can reduce survey length by 30% to 40%
 Key principle (1): Stop asking questions that don’t predict very well
 Key principle (2): Stop torturing respondents – ask them what’s relevant
 Key principle (3): Fix simple and obvious mistakes of modeling
 Key principle (4): Tie everything to market share and market share flows
 Leads to highly actionable results, very specific recommendations
 Real example: 50 mins to 24 mins; $3 million to $1.6 million
Reinventing Tracking… with the new ConversionModel 32
© TNS 2012

32. Our approach…
New markets
4
3
More customers
2
New New products
customers & services
1
Today’s Loyalty &
business new spend
More money from
each customer
Reinventing Tracking… with the new ConversionModel 33
© TNS 2012

33. Waitrose (1): Equity signature
Overall market position
Share gained from New Users
Acquisition
3.9%
2%
Current market share
Opportunity
5.4%
7%
Implicit market share
Increase spend from
existing users
Decreased spend by
1.5%
Gains are most likely to
existing users At risk come from new users
-0.3% -0.5%
Defection
Share lost due to
defections Steady
-0.2% 2.0%
Decrease Increase
Reinventing Tracking… with the new ConversionModel 34
© TNS 2012

34. Waitrose (2): Competitors
Quantifying share gains and identifying from which competitors
Waitrose
1.2% 1.2%
+4.9%
0.8%
0.6%
2.5% Sainsbury’s Tesco Asda Morrison's
Reinventing Tracking… with the new ConversionModel 35
© TNS 2012

35. Waitrose (3): Marketing levers
Identifying which marketing levers need to be pulled…
… and how much each one is worth: net GBP 5.1 billion
Waitrose
1.5%
1.3%
+4.9%
0.6%
0.3% 0.3%
2.5% Affordability Convenience Proximity to Offered Good Other factors
other shops Specials measured
Reinventing Tracking… with the new ConversionModel 36
© TNS 2012

36. Waitrose (4): Messaging
Leverage ‘worth paying’, strengthen ‘reasonable prices’
Your Your
Business Competitors
Attributes
Waitrose Tesco Asda Sainsbury’s Morrison's
Produce is fresh and good quality
Stores are clean and hygenic
Prices are reasonable
Worth paying a bit more to shop there
Strong Average Weak
Reinventing Tracking… with the new ConversionModel 37
© TNS 2012