Buyers who were exceptionally heavy or light purchasers in one period move toward the average in the next, whatever is done to them.
The regularity is robust across categories and follows from the statistics of purchase incidence rather than from any change in loyalty. Its practical importance is that loyalty programmes and win-back campaigns targeted at extreme buyers will appear to work, because the extremes were going to moderate anyway, and almost no evaluation controls for it.
In practice
- A campaign aimed at lapsed heavy buyers reports a recovery that would have occurred without it.
- A branch flagged as worst-performing improves after intervention, and so do the worst branches nobody visited.
- Subject
- Economics & Incentives
- Essay
- The regularities money obeys