Big Macs and Sliding Scales *Each Monday, Prophet’s Chief Curator and Provocateur, Andy Stefanovich, or a member of our innovation team* shares a Monday on-ramp with Prophet employees across the globe. We’ll begin sharing them here, and encourage you to join the conversation by answering questions and providing your own comments below. Happy Monday! Whether a family living from one paycheck to the next, or a single mother relying on public assistance, households tend to change spending activities between pay periods - reducing spending near the end of the month until their next payday. Bill Simon, CEO of Wal-Mart’sU.S.business, talked about the behavior during a Goldman Sachs conference last year: DDB Stockholm noticed the same behavior among Swedish students living on monthly student loan payments and developed a sliding scale menu for McDonald’s restaurants. Rather than rely on coupons and discounts, the Student Loan Menu adjusts prices lower each week over the course of a month. Prices are at their highest around the 25th of each month, when students first receive their monthly student loan payment.“…you need not go further than one of our stores on midnight at the end of the month. And it’s real interesting to watch, about 11 p.m., customers start to come in and shop, fill their grocery basket with basic items, baby formula, milk, bread, eggs, and continue to shop and mill about the store until midnight, when electronic — government electronic benefits cards get activated and then the checkout starts and occurs. And our sales for those first few hours on the first of the month are substantially and significantly higher.” Created by ad agency DDB, each week’s print creative describes the students’ mindset and behaviors aligned with their predictable student loan payments. For example, week one, the students’ bank account is described as a “smorgasbord of opportunities.” By week four, the creative describes “looking for spare change in your friends couch.” What are your thoughts on McDonald’s approach? This is more than a charitable endeavor - what revenue benefits might McDonalds realize? How much of an impact do you think this might have on retention or referrals? *This week’s on-ramp was brought to you by Geof Hammond in our Richmond office.

Big Macs and Sliding Scales

*Each Monday, Prophet’s Chief Curator and Provocateur, Andy Stefanovich, or a member of our innovation team* shares a Monday on-ramp with Prophet employees across the globe. We’ll begin sharing them here, and encourage you to join the conversation by answering questions and providing your own comments below. Happy Monday!

Whether a family living from one paycheck to the next, or a single mother relying on public assistance, households tend to change spending activities between pay periods - reducing spending near the end of the month until their next payday.

Bill Simon, CEO of Wal-Mart’sU.S.business, talked about the behavior during a Goldman Sachs conference last year:

DDB Stockholm noticed the same behavior among Swedish students living on monthly student loan payments and developed a sliding scale menu for McDonald’s restaurants. Rather than rely on coupons and discounts, the Student Loan Menu adjusts prices lower each week over the course of a month. Prices are at their highest around the 25th of each month, when students first receive their monthly student loan payment.“…you need not go further than one of our stores on midnight at the end of the month. And it’s real interesting to watch, about 11 p.m., customers start to come in and shop, fill their grocery basket with basic items, baby formula, milk, bread, eggs, and continue to shop and mill about the store until midnight, when electronic — government electronic benefits cards get activated and then the checkout starts and occurs. And our sales for those first few hours on the first of the month are substantially and significantly higher.”

Created by ad agency DDB, each week’s print creative describes the students’ mindset and behaviors aligned with their predictable student loan payments. For example, week one, the students’ bank account is described as a “smorgasbord of opportunities.” By week four, the creative describes “looking for spare change in your friends couch.”

What are your thoughts on McDonald’s approach? This is more than a charitable endeavor - what revenue benefits might McDonalds realize? How much of an impact do you think this might have on retention or referrals?

*This week’s on-ramp was brought to you by Geof Hammond in our Richmond office.

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