Espresso: Rory Sutherland "10 x 1 Is Not The Same as 1 x 10"

0:00Yes, yes, people. So the hungry reading list is here, right? If you listen to the podcast regularly, you know I love reading. I think books are the most beautiful thing in the world. As Stephen King said, they're teleportable magic or something like that. these books i whittled down my gargantuan bookshelf into 46 absolute 30 bangers the link is in the show notes to get the list whatever and it'll also make you a subscriber to our weekly newsletter which i think is sick so yeah get your fucking books buddy it's a failing when you accumulate statistics yeah for example uh one repeat customer is not the same as 10 one-off customers at a very true level.

0:42Absolutely correct. It's just a really good way of, like, viewing things slightly differently. I really like it. Well, I'll give you an example of this. It also applies to pricing, OK? Right. Which is one of the reasons you have a season ticket is that... Well, as in, like, a train season ticket. So 100 people who take a train journey once are going to be less price sensitive than one person who takes the same journey 100 times. So one of my arguments would be against high-speed two and in favour of high-speed one. So if you invest money in improving commuter journeys, okay, then someone, if you live in Folkestone, high speed one saves you as a Folkestone commuter probably half an hour, roughly 300 times a year, 150 times two, okay, maybe 200 times a year, times two.

1:32Yeah. That's life-changing, okay? If you take high speed two, not that many people go to Manchester every day. That would be silly. OK. And most people will go to Manchester three, four, five times a year. There is therefore a difference between saving one person 200 hours a year and saving 200 people one hour a year. In terms of the mathematical models they use for time saving in journey time, the value of time saved is exactly the same. It obviously isn't. OK. I mean, high speed one means that if you wanted to, you could move to Folkestone. it fundamentally changes behaviour. You could argue that things like the Concorde, which save a few people very infrequently, save them quite a lot of time, are not the same as saving people a little time repeatedly.

2:26So it's a fundamental failure of most mathematical models that they assume that in maths, multiplication is commutative. One times ten is the same as ten times one. The reason you need a season ticket is that someone who makes that journey 200 times a year... I'll give you a perfect example of this. There's an autoroute in France which they charge for. They charge for their motorways. And the route, I think it's the A10 down from Calais, is always known as the Autoroute des Anglais. And you drive on this, and if you're in the summer, every single car is an English car. And you kind of go, this is a bit weird.

3:05Why don't French people use this motorway? And then, of course, you realise that the English people are using the autoroute twice a year, once in each direction. OK, they're paying 25, 30 euros for the trip. It doesn't really matter. It's a small amount compared to the rest of my holiday. Off we go. That probably saves half an hour. If you're a French person and you use the motorway every day, five euros a day for a short motorway journey multiplied by 200 is a significant bite out of your disposable income. And so that's why you have season tickets, because you can obviously charge someone more for a journey they make once a year, whereas if that person is going to make the journey 200 times a year, you need...

3:43Now, Amazon Prime is kind of a recognition of that. OK, there's a difference between 10 people paying for delivery once and one person paying for delivery 10 times in a row. So what Amazon Prime is, in a sense, is it's the realisation by Jeff Bezos that if we want to have frequent customers, we need to find a different way of charging for delivery. and it is in a sense it's a reward for frequency i suppose amazon prime it's a very simple idea and by the way i've never understood why restaurants and pubs don't occasionally try it you know in other words join this pub it's 10 pounds a month and in return you get free x oh she's reading the skin i know yes yes people we're trying to make hungry into the most valuable food and drink business podcast on planet earth but i really need your help i want to make this podcast so valuable for you to help you grow your business faster stronger better have way more fun we've got a super short customer feedback uh sorry consumer survey audience survey thing on google forms there's a link at the top of the show notes if you could fill that out it would be so helpful we make this podcast way better for you