Do refill reminders work in Guwahati?
Before the decision
A store owner sees stronger repeat sales among customers who opt into messages. The owner invited repeat shoppers first because their phone numbers were easy to find. That choice makes the opt-in group different even before any messages arrive.
The problem
Should the team choose Reminder programme or Usual service for the next 12 months?
Decision owner: The business unit lead.
Opt-in customers had higher purchase frequency before the programme.
Option economics
Scroll the table to see all figures.
| Option | Volume (refill orders) | ₹ per unit | Fixed cost | Net contribution |
|---|---|---|---|---|
| Reminder programme | 38,000 | 126 | ₹39 lakh | ₹8.88 lakh |
| Usual service | 31,700 | 131 | ₹31 lakh | ₹10.53 lakh |
Make the call
- Calculate net contribution for Reminder programme and Usual service. Which assumption makes the comparison most fragile?
- If the leading option delivers 10% fewer refill orders, does your recommendation change?
- What evidence would you ask for before the team makes an irreversible commitment?
Reveal the worked solution
Start by validating Usual service. It contributes ₹10.53 lakh after fixed costs and leads by ₹1.65 lakh. Treat that gap as the amount of unmodelled cost or lost contribution the option can absorb before the ranking reverses.
- Frame the decision
Specify the eligible population and the outcome before collecting data. Treat the figures as planning estimates. Use comparable groups to measure the effect before rollout.
- Calculate both options
Reminder programme: 38,000 refill orders × ₹126 less ₹39 lakh in fixed costs gives ₹8.88 lakh. Usual service: 31,700 refill orders × ₹131 less ₹31 lakh in fixed costs gives ₹10.53 lakh.
- Stress-test the forecast
Usual service leads by ₹1.65 lakh in the base case. If Usual service delivers 10% fewer refill orders (28,530) at the same margin and fixed cost, it contributes ₹6.37 lakh. Holding the other option constant, the stressed result falls behind. This isolates volume risk. Check whether both options would respond to the same change in demand.
- Set a decision threshold
Holding the other option’s result fixed, Usual service needs at least 30,443 refill orders to match or beat it under the model. Invite a random eligible group and analyse by invitation, including nonresponders.
Opt-in customers had higher purchase frequency before the programme. Compare the cost of a limited test with the loss the business would face if the full commitment failed. Ask the team to agree the decision criterion before collecting more evidence.
What if the whole market moves?
The worked solution tests a change to one option at a time. Here, both options gain or lose the same percentage of volume. Unit contribution and fixed costs stay constant.
| Volume scenario | Reminder programme | Usual service | Higher contribution |
|---|---|---|---|
| Both lose 10% of volume | ₹4.09 lakh | ₹6.37 lakh | Usual service |
| Base assumptions | ₹8.88 lakh | ₹10.53 lakh | Usual service |
| Both gain 10% of volume | ₹13.67 lakh | ₹14.68 lakh | Usual service |
Explain which option you would take forward. Check whether capacity, price or customer mix would also change as the market moves.
Practise this case as an interview