2.4 Descriptive Statistics For Marketing

The following is an example of a marketing project utilizing only descriptive statistics to gain valuable knowledge. Imagine working at a consulting firm and asked to do the following project:
Your client is the cell phone division within a telecommunications company (Example: DTAC). You want to give your client an understanding of its customers. Who are they, etc. In addition, you want to give your client an understanding of how valuable each customer is. Your client is the cell phone division within a telecommunications company. You want to give your client an understanding of their customers. Who are their customers and how valuable or not each specific customer is. To answer this you must first answer what is value? The client has given you the entire dataset, and you will work with the entire dataset. Such information will include payment history. Keep in mind that one of your clientś concerns is that some of its customers do not pay. Remember the question what is value? This is somewhat subjective. The client is concerned about people not paying though. Always listen to your client!!! Listening helps, even statistical projects. Note: Often a large part of success (assuming honesty) in consulting is a happy client. You can not ensure a happy client if you never listen to him or her.

The file you have been given includes the following customer information.

• Name
• Gender (male=1)
• Home owner or not (own=1)
• There are 5 mobile phone plan types, listed below, each with different minimum minutes required and pricing:
  • 1: no minutes charge 4.0 baht/minute (No minimum payment)
  • 2: 200 minutes charge 3.5 baht/minute (Pay at least 700 baht)
  • 3: 400 minutes charge 3.0 baht/minute (Pay at least 1200 baht)
  • 4: 600 minutes charge 2.5 baht/minute (Pay at least 1500 baht)
  • 5: 800 minutes charge 2.0 baht/minute (Pay at least 1600 baht)
• Customer income
• Government job or not (if working in government=1)
• Age category
• Location
• Minutes (the total number of minutes used for the most recent month)
• Payment history. You are given information on the past 24 months for each customer as to whether the customer paid on time or was late and how late.
  • 0=current, not late on payment
  • 1=30 days late
  • 2=60 days late
  • 3=90 days late
  • 4=120+ days in default, and are not expected to pay, very bad

Do not underestimate the power of basic statistics. A lot can be learned from basic graphs and cross tables, and presentation is very important. The descriptive statistics are easy to calculate using computer software – organizing that computer output to learn something is the hard part. Be sure you leave time to make the presentation; do not spend too much time on the statistics and get overwhelmed.

First, what is a successful project? Success is a happy client. Of course it is doing the work correct as well. Correct does not mean it has to be the most complicated, the best statistics, etc. The client wants insight into his or her problem, not a statistics lesson and confusion. I can not stress this concept enough. Finally, if you know that a client wants something, you need to do it. If you think the client is wrong, this needs to be discussed with the client politely before you present the deliverable to him or her and his or her boss or subordinates. There are three main possible outcomes from not presenting what was requested without discussing beforehand, and they are all bad:

1. You are right and make your client lose face. Very bad; you probably will not get repeat business.
2. You are wrong and the client is right, you lose face. Very bad as well; you probably will not get repeat business.
3. You are both wrong, you still lose face for presenting the wrong material and not doing what was requested. Very bad as well; you probably will not get repeat business.
   

This can be avoided with a discussion before the presentation of the deliverable. Often consultants discuss high level findings and what to expect with their client before the actual presentation.

A major but common mistake is spending too much time on the statistics and not enough time on the presentation. The presentation is the deliverable; it is what you are graded on in real life. It can provide everyone with insight, or confusion. Honestly, this is something I had a difficult time with as well when doing projects. It was the most difficult thing for me to accept, but after being responsible, managing projects, and with enough client interaction, I learned and understood. ”You can have brilliant ideas, but if you can’t get them across, your ideas won’t get you anywhere.” Lee Iacocca said this. Many times, if people do not understand your findings, they will not use them and they may not even know how to use them – thus, making all your hard work worthless! Yes, this really happens. Some people sometimes do great analytical work but cant explain it, making everyone unhappy. Many of you may work with statisticians at one point in the future. These statisticians may use advanced statistical techniques, but they can almost always be presented in a simple manner. How, will be covered later in future chapters and in greater detail. Try to get the statistics into a simpler form for presentation. Do not present a bunch of stuff you do not understand. You are expected to know what you are presenting. You may think it is OK if you do not understand but the statistician does understand. It is often not OK. If the statistician can not explain it to you, there is a good chance he can not explain it to others. People do not buy/trust what they do not understand and they often do not even bother to listen after awhile. You as management will be responsible for avoiding this situation when delivering presentations.