Uber Masters Abandoner Remarketing

June 23rd, 2017

Uber didn’t invent targeted offers but the world’s largest taxi company sets itself apart from other brands by the innovative ways with which it uses the fledgling marketing tactic to deepen customer engagement, as I’d highlighted in Mastering Targeted Offers – The Uber Way.

I recently saw Uber’s mastery of another “next gen” marketing tactic, namely, abandoner remarketing.

For the uninitiated, abandoners are those who visit a website (or fire up a mobile app), click around but leave without making a purchase; and the act of following up with them and persuading them to convert (i.e. make a purchase) is called abandoner remarketing.

I abandoned all my bookings during a week in the recent past when I suspected surge pricing. I say “suspected” because, as I highlighted in Uber Creates Loyalty To The Deal But Not For The Brand, the fare estimate displayed by the Uber app no longer mentions whether it’s subject to surge pricing or not.

At least 50% of the B2C – and 90% of B2B brands – I come across regularly don’t provide any evidence of even tracking conversions, let alone employ remarketing techniques to win back their abandoners. Most of the others that do take abandonments seriously use Retargeted Ads to remarket to people who fail to convert. But not Uber.

The world’s largest taxi company uses a combination of cross-sells and special deals – herewith termed “targeted offers” for the sake of convenience – to remarket to its abandoners.

During the week week following my spate of abandonments, I got the following Targeted Offers from Uber:

  1. Whenever I fired up Uber, the app placed the highlight on the uberPOOL icon. For the uninitiated, this is the ride share (“car pool”) product recently introduced by Uber. An uberPOOL ride typically costs 40-60% of uberGO, which is Uber India’s entry level private cab product. Sensing that I’d abandoned surge rides the previous weeks, Uber perhaps thought that I was price sensitive and tried to propose a cheaper offering
  2. I got an email from Uber summarizing the number of uberGO rides I’d taken the previous month along with the fare I’d paid. The email also simulated my savings had I chosen uberPOOL instead of uberGO. This was obviously yet another attempt to draw my attention to a lower-priced alternative
  3. For the first time ever, I started seeing cabs with wait times exceeding three minutes. On one occasion, Uber showed me two options with varying wait times and fares: 3 minutes @ INR 75 and 12 minutes @ INR 60. In this, I see an attempt by Uber to make my preferred product cheaper if I was willing to live with a slight delay in getting picked up
  4. My wife got a targeted offer of 50% off “to make up for the cancellations you experienced in the last 2 weeks”
  5. My daughter also got the same offer
  6. I got 50% off but for a different reason: “to make up for the long wait times you experienced in the last 2 weeks”.

Uber’s targeted offers were personalized and based entirely on my actions of the previous week. Contrary to what some people may think, I didn’t find them creepy at all. In fact, I thought Uber’s responses were very smart and reflected a strong intent on the part of the company to deepen its engagement with me.

Now let’s examine the relevance / accuracy of these targeted offers.

To me, a taxi is a private mode of transport. When I think of Uber – or its chief rival Ola for that matter – I’m not thinking of sharing a ride with a stranger. Therefore, I won’t order an uberPOOL (or Ola Share) at any price – even if keep ditching uberGO only because of surge price. So, Uber wasted its first two targeted offers on me. But I don’t fault the company for making them: It’s only by proposing and testing my response to its cross-sell offers that Uber can learn my preferences and make better offers going forward; besides, the offer for uberPOOL may have worked on many others who don’t mind a compromise on privacy in return for a lower price.

From the way the app kept switching between the two fare-wait time options every few seconds in TO #3 above, I felt that Uber was running an A/B test on me. But two can play the A/B testing game. I never intended to take a cab for that journey and fired up the app only to test Uber’s response to my previous week’s abandonments.

My wife did experience one cancellation during the previous week. So TO # 4 was totally relevant.

My daughter had booked an Uber the previous week. While the cab came in two minutes, the app displayed a wait time of 154 minutes. So TO # 5 was well-grounded in data (though not in reality!)

I abandoned my bookings because I suspected surge pricing or was A/B testing Uber. So the trigger for the last targeted offer – long wait times – was wrong.

But I’m not complaining. 50% off is 50% off – I’ll take it regardless of its rationale. When I convert on it, I’m guessing Uber’s algorithm will tag me as a big sucker for its targeted offers and keep making more of them going forward. Mission accomplished!

Oh wait, just as I was about to publish this post, I got an offer from Uber for 50% off on my next 10 rides. This is the mother of all targeted offers I’ve got from Uber so far.

Looks like Uber’s algorithm has fulfilled my wish!

How Relevant Is “Crossing The Chasm” After 25 Years?

June 16th, 2017

As the title of our website’s WHAT WE DO page proclaims, GTM360 helps growth-stage companies in technology-intensive industries to “cross the chasm” and break into the mainstream market.

In a recent MEDIUM article titled 25 Years Later, ‘Crossing the Chasm’ Has Withstood the Test of Time, author Tiffani Bova has a fireside chat with Geoffrey Moore, the author of “Crossing the Chasm”, the classic published nearly 25 years ago.

When asked how relevant the principles of chasm marketing are in today’s world, Moore quipped:

“With over a million books sold, and it being in its third edition, (I have) only made small updates to the book (including new company examples). However, the frameworks have remained consistent and continue to be completely applicable to today’s B2B businesses.”

I pondered about the “completely” part of Moore’s reply and left a detailed comment below the article. A lightly-edited version of my comment is given below.

—–

I’ve been in the B2B technology space for three decades and read “Crossing the Chasm” a decade ago. During this period, I’ve come across two major categories of enterprise software:

(A) New versions of good old transaction processing-cum-analytics software viz. ERP, CRM, CBS e.g. SAP, Salesforce and FLEXCUBE respectively

(B) Altogether new genres of software viz. Enterprise Chat, Social Media Management e.g. Slack and HootSuite respectively.

CATEGORY A

Purchase of Category A software continues to be quite centralized and the TALC persona of the buyer company asserts itself at some stage of the process. Therefore, I’ve no hesitation in agreeing that the key takeaways of chasm marketing continue to be relevant for this category.

For the uninitiated, TALC refers to “Technology Adoption Lifecycle”. TALC spans five segments of the market with varying sizes, namely, Innovators (5%), Early Adopters (10%), Early Majority (40%), Late Majority (40%) and Laggards (5%). A given buyer company belongs to one of these segments and exhibits the traits of the correponding TALC persona.

CATEGORY B

When it comes to Category B software, purchase decisions are quite decentralized. Slack’s founder once said that his company initially targeted end users directly, created excitement, got individuals in sales, marketing, and other functions to sign up for the platform using their personal or corporate credit cards, and used the critical mass of business users as a fait accompli to get the enterprise to purchase and roll out the platform across the whole company. As you can see, the buyer company’s TALC persona hardly comes to the fore in the buying process.

Even if we stretch the notion of TALC to individual buyers, the same messaging resonated with all of them without any ostensible attempt to segment them into Innovator / Early Adopter or Early Majority cohorts. This vitiates the basic principle of chasm marketing, which is, “what works in Innovators and Early Adopters segments does not work in the mainstream market comprising Early Majority, Late Majority and Laggards”.

Chasm marketing proponents could counter this by positing that all Slack buying companies were themselves Innovators / Early Adopters, that’s why the same messaging worked with all of them. While this is consistent with the “what works here does not work there” mantra of chasm marketing, it would amount to an admission that Slack? hasn’t yet entered the mainstream market. If Slack  – and, by extension, all Category B software? – are still on the left side of the chasm, how can we assert that chasm marketing principles are relevant / valid as they try to go over the right side of the chasm? Or that they even face a chasm?

—–

In short, chasm marketing is certainly relevant for Category A software but I’m somewhat undecided about its applicability for Category B software.

As of now, bulk of the software industry’s revenues comes from Category A software (Source: McKinsey).

Ergo, “Crossing the Chasm” is still very much valid for the B2B technology market taken as a whole and will continue to be relevant for the forseeable future.

As if to prove this point, there’s no shortage of companies I come across virtually everyday that are facing the chasm and need a drastic change in their approach to cross over to the mainstream market.

Not just companies – even entire technologies.

In closing, let me post Geoffrey Moore’s response below:

GTM360 – Response from Geoffrey Moore

Crossing the chasm is at its core a B2B model focused on high-risk purchasing decisions that get reviewed by multiple constituencies within the enterprise before they are confirmed. For the bulk of the 20th century this was IT. In this century, consumer IT developed a very different path to market based on low-risk adoption decisions going viral – a very different model. We talk a bit about it in the appendix to the third edition of Crossing the Chasm. Nowadays we can see some blending of the two. In the freemium model, for example, you start with the consumer path but at some point look to close a B2C deal. In the SaaS model you often “land” with a given early adopting unit but seek to “expand” by crossing the chasm to pragmatic later adopters. In data-driven business models you would like to get the signal-collecting edge devices deployed for free (or as close to it as you can get) and then monetize the analytical and predictive value of the data streams via B2B contracts with interested parties. In each case, when you get to the big contract signed by the enterprise executive, you should see “chasm dynamics” prevail.

Geoff

 

Why Branch And Digital Channels Will Coexist Forever

June 9th, 2017

I noticed a huge crowd during a recent visit to my bank branch.

I happened to spot the bank’s Head of Relationship Banking – let me call her Sonia – in the branch.

I asked her how come their branch was so full when finsurgents have been predicting the death of branches for so long.

Sonia told me that, let alone die, their branches are growing. Despite the fact that branches are expensive – think mounting real estate costs – her bank is opening new branches and expanding many of its existing branches. As a matter of fact, there was a vacant space right below where we were standing and the bank was negotiating a deal with the landlord to rent it for expanding the branch in which we were having this conversation.

I then quoted her bank’s nearest competitor’s claim that 60% of its transactions were happening digitally and ribbed her by asking if her bank wasn’t so successful with its digital banking initiatives. She shot back saying 90% of their transactions were happening on digital channels. While she didn’t mention it, I know for a fact that the help desk at the entrance of the branch pushes many customers out of the branch, telling them to use ATM, Internet / Mobile Banking for carrying out balance inquiry, statement printing and other routine transactions.

Despite all that, this bank is growing its branch network.

What gives?

According to Sonia, the key reasons for her bank to expand its branch network were as follows:

  • Many branches were seeing rising footfall of customers who walk in to open new accounts, apply for a credit card and inquire about car / home / business loans
  • New account holders prefer to learn their banking ropes in a branch before moving to digital channels
  • Heavy use of cash and cheques in business banking, both of which involve branch visits. In fact, I’d visited the branch that day to withdraw petty cash from my company’s bank account. (For the uninitiated, unlike a personal savings account, it’s quite painful to get a debit / ATM card for a company’s current account, so I’ve not bothered to get one).

Now, before some financial zealot predicts the imminent death of this bank for its continuing use of branches, let me assure you that this bank is the most valuable bank in India and is also the #1 brand across all industries in India.

From what this banker said, it follows that people prefer a branch when

  1. They’re totally new to banking
  2. They’re new to a certain financial product (even if they’re familiar with the basics of banking).

i.e. when they’re considering “new banking products”.

Going by the following reports, the above inference seems to be universally true:

  1. According to an SMF study, over 60% of people would go into a branch when making a big decision.
  2. As Jeffry Pilcher, CEO/President & Publisher of The Financial Brand, points out in Branches Refuse to Die, “While the majority of consumers prefer online or mobile banking, … a surprisingly high number of consumers still visit the branch. It might be tempting to dismiss the findings and assume these branch visits were triggered by consumers who were frustrated that they weren’t able to accomplish some financial task in digital channels. But that would be a mistake.”
  3. According to McKinsey, while customers want digital, it’s not to the “exclusion of other channels, which remain critically important.”

For reasons highlighted in my blog post Secret Of Survival Of Bank Branches, banks also prefer a branch for selling new banking products.

So, branch is the mutually-preferred go-to channel in the “new banking products” scenario.

In every part of the world, there will always be

  • People who will enter the banking system to open new bank accounts
  • People with bank accounts today who will want a credit card tomorrow, a mortgage five years from now, and a retirement product ten years from now.

The number of people in each of these two categories will depend upon the demographics of a country – or even the specific geographic region of large countries with heteregeneous demographics like USA, China, and India. However, there will always be a market for new banking products.

In short, customers and banks both prefer a branch for “new banking products” scenario and the market for “new banking products” is inexhaustible.

Ergo, branches will never die in the forseeable future.

This long-held belief of mine was reinforced recently when I read that payment banks were opening branches. This new category of banks in India are licensed to operate solely on mobile phones. But they’re still setting up branches. One of them is PayTM, which has a valuation of $9 billion. The near-decacorn is a pure-play fintech without any bank DNA, so it hasn’t suffered from legacy thinking when it decided to open branches.

That said, branch networks won’t be immune to growth of digital channels. But the churn in branch count driven by digital channels will be specific to individual banks rather than being a secular issue that sweeps the entire banking industry. In other words, some banks will open new branches whereas others will close existing branches.

Let me elaborate this by using a metric called “Ideal Branch Count” or IBCO, which is the number of branches required to service the market for new banking products. I’m using the term “service” a little broadly – it includes the execution capacity required to fulfill demand and the marketing efforts required to generate the demand in the first place.

If a bank has fewer branches than IBCO, it might open new branches. If a bank has more branches than IBCO, it might shut down some branches.

IBCO depends upon the individual bank. Other things remaining the same, a bank with higher productivity will have a lower IBCO than another with lower productivity.

IBCO is also impacted by the country – or even specific geographic region of large countries with heteregeneous demographics – because of the link between demographics and size of market for new banking products market.

I doubt if IBCO is affected too much by the size of the Millennial population in a given demographic. While people of this generation like to do many things on mobile phones, buying new banking products is not one of them. I anticipated this in my blog post titled Will Millennials Bankrupt Neobanks? published two years ago. I’m convinced about this from recent personal experience and research findings e.g:

  1. The Millennials I saw in the branch were glued to their smartphones but they’d still come to a branch.
  2. The aforementioned SMF study reports that “72% of those under 30 would go into a branch when making a big decision, versus just 61% of those over 50.”

There could be other factors that shape OBCO.

But whatever be the factors, IBCO will not be zero for any bank.

If I were to take a wild guess, IBCO will be around 60% of current branch count for overbranched banks and 150% of current branch count for underbranched banks. In other words, overbranched banks may slash their branch network by 40% whereas underbranched banks may grow their branch network by 50%.

Even if all banks in the world turn out to be overbranched – which is impossible IMO – there’ll be enough branches left for a long time.

Digital channels aren’t going away, either.

Therefore, branch and digital channels will coexist with each other forever.

Optimizing the channel mix is an area of opportunity for fintechs to partner with banks. More on that in another blog post.

Indian IT – Crisis Or No Crisis?

June 2nd, 2017

Wipro lays off 600 employees due to poor performance. Cognizant fires 6000 employees consequent to its annual appraisal. So on and so forth.

Notwithstanding all the bad news that dominates the media, rumors of existential crisis for the Indian IT industry are grossly exagerrated.

That’s because, whether you use a bell curve or a parabola or good old gut feeling, 5-10% of any IT company’s workforce are non-performing at any given time. Indian IT employs 4 million people directly. 5% of that works out to 200,000 people. As of now, layoffs total to 56,000, which is no where close to 5%.

So the media is making a mountain out of a molehill.

That’s also what NASSCOM co-founder Saurabh Srivastava says in his Economic Times op-ed dated 27 May 2017.

Now, let’s come to the remedies proposed by media pundits.

  • Reskill employees on digital technologies. Fact is, for the last 4-5 years, IT companies have retrained their employees on S-M-A-C technologies that form the bedrock of digital transformation. Fact is many such retrained employees are on the bench. Problem is cloud software requires far less resources than onprem and custom-developed software, which have been the mainstay of the Indian IT industry for most of its 30 years existence. As I highlighted in my earlier blog post, IT services companies are seeing an 80% drop in billing for SAAS implementations. Furthermore, few Indian IT companies have understood the change in mindset required to engage with the CMO organization, which is by far the largest driver of digital engagements. Top to bottom, there’s a surfeit of sensitivity about how to sell digital technologies. Therefore, reskilling more employees on digital technologies without addressing the other challenges will only worsen the problem.

  • Indian IT should look inward and focus on mobile broadband triggered explosion of market in India. Since the dawn of the Indian IT industry in the mid 1980s, there has always been a huge opportunity to provide IT services in India. But the industry achieved global scale only by going West. That’s because the West is where the money is for IT services. India gets 70% right for a fraction of IT spend as the West, which spends many times more money to get IT 100% right first time. (Some companies in the West spend more and still get IT wrong, but that’s a story for another day.) As a result, while there’s a lot of work available in India, I doubt if the Indian IT industry can make the big bucks it’s used to by looking inward.

  • Form labor unions to protect employee interest. This is a horrible idea. If you’re above a certain age, you’d recall the number of industries virtually decimated by militant labor unions e.g. textiles. Extremely leftist in their thinking, Indian labor unions behave more commie-like than even their counterparts in Russia and China. India has moved on from those days and a return to that era won’t help an industry that generates $150 billion in annual revenues largely because it has been free of labor unions.

These are extremely simplistic remedies and raise questions on whether their proponents have ever set foot inside an Indian IT company.

Going forward, if the number of layoffs increase and reach the 5% mark, would that spell doom for the industry?

I don’t think so.

Year after year, world-class IT companies – from the West and even Japan and China in the East – shed their non-performers. Typically known as “clearing the deadwood”, their annual retrenchments amount to 5-10% of staff strength. So far, it has been socially and politically difficult for Indian IT companies to do the same. The present market uncertainties have provided the Indian IT industry with the opportunity to carry out long-overdue house cleaning. While this will cause pain in the short-term to employees of the industry, the industry itself will emerge more competitive from the exercise. And, as Parag Naik points out in his email to the The Economic Times, eventually the good quality people who work in the industry will also thrive.

Does this mean the industry can be blasé about the future?

No. The Indian IT industry faces a looming crisis on the horizon from growing automation, digital challenges, H1B restrictions and Trumpism-driven Middle America outsourcing.

How can the industry avert this looming crisis? Based on my experience of working in the Indian IT industry for over two decades, I can think of the following imperatives:

  • Go up the value chain from project management to program management
  • Gear up to win large digital transformation deals
  • Help customers avoid building software systems from scratch.

More on these in a follow-on post. Watch this space.

(Spoiler alert: These imperatives will call for new capabilities that go well beyond coding, testing and other technical skills that have been the mainstay of the industry so far.)

Can Chatbots Replace Humans?

May 26th, 2017

If you think bots will never replace human agents, you’re amongst the lucky few who has been served by intelligent human agents.

I admit that I’ve also been among the lucky few at times. But more often than not, I come across fairly dumb human agents. And, lately, I’ve started experiencing fairly intelligent chatbots.

Let me give you three recent examples.

#1. MNO (HUMAN AGENT)

I sent an email to this leading mobile network operator in July last year inquiring about its 3G plans. I get its quote in November! Although he – yes, it was a he – took four months to respond, the human agent hadn’t found the time to check my customer record in his CRM. Had he done so, he’d have found out that I already had a 3G connection by then! (Which I got by connecting with the MNO on social media after waiting in vain for a reply to my email)

#2. PUBLISHER (HUMAN AGENT)

I recently renewed the subscription of a reputed global business magazine. From the date of the last issue mentioned on the magazine’s jacket, I got a feeling that my subscription period was calculated wrongly. I decided to take this up with the Indian distributor of this global media giant. I sent the following email to this company:

Dear Fortune Subscription Department:

My newly renewed subscription is for 30 issues. I opted for Special Gift of “10 Bonus Issues”.

Therefore, my subscription should cover a total of 40 issues (being 30 + 10).

According to the cover sheet received along with the first issue dated 15 Dec 2016, my new subscription apparently expires in JUNE 2018.

This covers only 25 issues, calculated as follows:

December 2016: 1 issue

2017: 16 issues (being 12 + 4, given that frequency is monthly plus 4 extra issues per year).

Jan-Jun 2018: 8 issues (50% of full year figure of 16 issues)

TOTAL: 25 ISSUES

So there is a discrepancy of 15 issues (being 40 – 25) between what my subscription should include and what your cover sheet states it includes.

Please arrange to resolve this discrepancy and restate my correct last issue date – it can’t be June 2018.

Thanks in advance.

Thanks and Regards / Ketharaman S

I got the following reply:

Dear Mr Ketharaman,

Greetings from Business Media Pvt Ltd !

This is further to your appended mail regarding FORTUNE ASIA magazine.

Please be informed that FORTUNE is a monthly magazine with 4 Quarterly double issues which counts as 20 issues in a year.

Please feel free to contact incase of any further information is required.

Looking forward to your continued readership.

Best Regards,

Dhanpreet   |   Fortune Asia

Chief Manager – Consumer Marketing Services

As you can see, the reply – from the head honcho of the Indian distributor’s consumer marketing – was extremely casual and didn’t come anywhere close to answering my question.

I gave up on this company and finally got my issue resolved by escalating it to the parent company’s Asia Pacific headquarters in Hong Kong.

#3. BANK (CHATBOT)

I recently tested out Eva, the chatbot deployed by a Top 3 private sector bank in India.

I first raised a straightforward query:

Eva passed this test with flying colors.

I then logged a complaint related to the discrepancy in the length of the narration field between the bank’s IMPS and NEFT payment methods:

Eva failed this test.

But so did the human agent handling the bank’s Twitter account. Despite explaining the problem by attaching a screenshot to my tweet, I didn’t even get the bank’s customary auto-response.


When I wrote about chatbots here and here seven years ago, I found many of them to be quite human-like. I thought virtual agents – as chatbots were called at the time – showed tremendous potential and predicted that they could replace lower-end human call center staff within the forseeable future.

Well, that future is already here. Even a simple chatbot like Eva can match or outdo the two human agents described above.

From this, can we conclude that chatbots can replace all human agents?

NO.

Because there have been other situations where I’ve received a much better level of response from human agents that can’t be matched by chatbots available today.

This got me wondering when a chatbot can replace humans and when it can’t.

To answer this question, I’d a look at the so-called QRC model. According to this popular model used in customer service, customer missives to brands fall under Query, Request or Complaint e.g.:

  • Query: What 3G plans do you offer?
  • Request: Please send me a paper bill ASAP.
  • Complaint: My printer has stopped working.

When we think of Customer Service, we tend to think only of complaints. However, that’s not an accurate representation of what happens in contact centers. According to several CX leaders I’ve spoken to in the course of executing some of my company’s engagements, only 60% of support tickets are complaints, with the balance 40% split evenly between queries and requests.

From personal experience and anecdotal evidence, chatbots can outperform human agents for answering virtually all customer queries.

With the recent advances made in Artificial Intelligence / Machine Learning, chatbots may soon be able to match mid-level human agents for fulfilling most customer requests.

However, chatbots will lag high-end human agents for resolving complaints for the forseeable future. That said, sophisticated chatbots can already complement human agents in this area.

I saw a great example of this when I couldn’t access one of my websites recently. Like I usually do, I used Twitter as my first port of call to reach out to my hosting service provider. Involving SSL, domain redirects and a few other complicated issues, the problem soon went over the chatbot’s paygrade. At that stage, the chatbot handed me over to the company’s live chat channel handled by a human agent. Normally, whenever I switch channels – say from email to telephone or vice versa – I’d have to start all over again. That didn’t happen this time. The chatbot seamlessly passed on the transcript of the Twitter DM conversation to the human agent so I could continue from where I left the Twitter DM conversation.

Agreed that such examples of seamless “omnichannel customer service” are few and far between today but I expect the technology to go mainstream soon.

So, to return to the title of this post. As things stand, with my vast experience with human agents and limited experience with chatbots, I’d answer the question “Can Chatbots Replace Humans?” thus:

  • “Yes” for Query.
  • “Maybe” for Request.
  • “No” for Complaint.

Looks like I’m not the only one who is so optimistic about chatbots taking over many customer service activities from humans.

According to a MarketingCharts.com / PegaSystems survey of 6,000 adults in North America, EMEA and APAC, the largest segment of the surveyed audience (38%) felt that chatbots can provide better customer service than human agents in the future.

This is great news for service providers who suffer from severe attrition of human agents caused by the tedious nature of most customer service work. By taking over their mundane work, chatbots can free human agents to focus on cross-selling, upselling and other value-added areas of customer engagement.

How To Win A Deal By “Sharing An RFP Template”

May 19th, 2017

“Can you give us an RFP template to share with our client?”, asked one of my company’s customers recently. “We can Google it but you can save us the trouble if you have something readymade”.

Good they didn’t use Google – there’s lot more to sharing an RFP template than Googling, downloading and handing over a standard template. B2B technology providers can use the opportunity to “share an RFP template” as an opening for introducing specs favorable to their product or service in the evaluation process. By shaping the purchase process in this manner, they can substantially increase their win rates.

But they need to play this right. Most prospects are savvy enough to see through one-sided specs and throw the vendor’s RFP template – if not the vendor itself – out of the purchase process.

Shaping an RFP calls for “outside-in” thinking, where you start from the customer’s pain area, spec a solution that alleviates the pain and also happens to showcase your differentiators.

Let me illustrate this approach with the following case study:

—–

The prospect was a large company with multiple production facilities and a wide network of regional and zonal offices. The company wanted to purchase and implement an ERP solution and invited all leading ERP vendors for a pre-bid conference. One of them was the protagonist of this story – let’s call it ACME. Its sales manager had a good rapport with the prospect’s CIO and was invited to share a sample RFP template.

To give you a bit of background about the market: ACME implemented its own ERP. Whereas its competitors just sold their software and left it to the customer to get it implemented by a “third party implementation partner”. ACME touted self-implementation as a strong differentiator on the back of the logic that, since a product owner knows the product best, it should be the one to implement the product.

In line with its usual strategy of using self-implementation as its USP, ACME added the following spec into the RFP template:

“Self-implementation: ERP vendor should implement its package by itself.”

Like it happens often in sales, the logic that makes great sense for a vendor crumbles when competition enters the picture. That’s what happened here.

ACME’s competitors billed their third-party implementation partner network as a major benefit, saying this provided access to global best practices and brought superior program management skills to the implementation. They also thwarted ACME’s thrust on self-implementation by saying that ACME was too small to attract third party implementation partners, which is why it had to do its implementations by itself.

In effect, competitors persuaded the prospect that, by touting self-implementation, ACME  was merely trying to create a virtue out of a weakness. As a result, ACME’s attempt to stipulate self-implementation in the RFP went out the door.

This was a big blow to ACME because self-implementation was a major plank of ACME’s pitch. It was about to lose the golden opportunity to steer the purchase decision in its favor by spec’cing the RFP.

This is when ACME brought us in.

We dug deep and were able to spot a fundamental flaw in ACME’s tactic: “Self-implementation” was an “inside-out” attribute. While ACME did try to convert the feature into a benefit, competitors were able to counter it effectively by promising other benefits from their third-party implementation offering.

In our experience, an “outside-in” perspective has a much better chance of working – not just in an RFP but in all stages of the sales process. Here, the spotlight is on the prospect’s pain area. All benefits and enabling features are shaped by alleviation of the pain. Not the other way round as is the case with an “inside-out” approach.

After a round of brainstorming with ACME’s team, we came up with a different spec:

“ERP product vendor must take responsibility for the success of implementation”.

Now the RFP didn’t forbid use of third party implementors. It just asserted that the product should work for the customer – a very logical ask from customer’s point of view. It also sought to mitigate the risk of failure, which was – and still is – is a clear and present danger in any enterprise software implementation. No prospect in its right mind could argue against this stipulation. And so the spec was inserted into the RFP and circulated to all the vendors.

Since ACME was doing the implementation by itself, it was a no-brainer that it took the onus for its success. That was not the case for competitors who wouldn’t / couldn’t underwrite implementations done by third parties.

This gave ACME the winning edge.

Let me hasten to add that we need to be careful while writing specs like these so that they don’t pose an undue risk to the vendor, especially when it comes to implementation of enterprise-grade software with hundreds of locations, thousands of employees and countless moving parts. We mitigated the risk for ACME by specifying a set of success criteria and multiparty roles and responsibilities.

—–

I highlighted the importance of spec’cing an RFP in What Happens Before A Prospect Contacts Sales?. Getting ahead of the RFP is the only way for sales to escape the blindzone caused by the modern Buyer 2.0 purchase behavior.

Like a veteran B2B sales manager used to say, “if you get an RFP without working on it in advance, you’ve already lost the order”. Although his statement is two decades old, his words ring more true today than ever before. As McKinsey highlighted in a recent report, “two-thirds of B2B deals are lost before a formal RFP process even begins.”

Vendors can shape an RFP on several dimensions including core product features, company stature and attributes of the total ownership experience. While we’ve used the example of ERP to illustrate how to do this right, the basic principle contained in this post can be adapted for any kind of B2B technology product or service. If you need any help with this, we’re always there!

Why Gmail When Hosting Provider Gives Free Mail Boxes?

May 12th, 2017

After trying out a half-dozen hosting providers, I settled on one that I’ll call ACME. Among other things, I selected ACME for its following two features:

  1. Hosting for virtually unlimited domains on a single hosting plan
  2. Free unlimited number of mail boxes, each with virtually unlimited storage (subject only to the overage storage limit under the selected hosting plan)

These two features were strong differentiators for ACME when I signed up for it. Apparently, they’re not widely available from other hosting providers even now because, whenever I talk about them, many people find them unique to ACME.

I also use these features extensively – as you can see from the following screengab of the Mail section of ACME’s control panel, I’ve over 70 mail boxes.

The above USPs that attracted me to ACME have made me loyal to ACME – a decade after I selected ACME, I still host all my personal and business websites on ACME.

Not only that, I keep talking about them to many people. Ironically, without any explicit loyalty program, ACME has cracked the Holy Grail of modern loyalty programs.

While the first USP of ACME will only appeal to people who own multiple domain names and websites, the second USP is more broadly useful because everyone – individual or company – needs email, typically one mail box per employee. And many people whom I’ve recommended ACME to have signed up for it, primarily attracted by its offer of free mail boxes.

That’s why I was stunned to see the following “banner ad” on the email section of ACME’s control panel recently.

“Upgrade to Professional Gmail”, proclaimed the ad.

I thought, what the heck, people are choosing ACME because of its offer of free mail boxes, why would they want to move to Gmail.

Turns out the operative term in the ad copy is “Professional”.

While ACME provides mail boxes, its three web apps for viewing emails  – horde, roundcube and SquirrelMail – are a bit scrappy.

I noticed their poor UI right in the beginning and never used them. Instead, I’ve been using Microsoft Outlook as my email client from Day One of signing up with ACME. You can’t get more professional than that. Therefore, I’ve never felt the need for Gmail or any other email service provider.

However, that’s only me.

Outlook is de riguer in the enterprise world but many startups don’t have much love for Microsoft Windows in general and MS Office in particular. Many of them prefer the open-source Linux / Ubuntu and Libre Office, which are free. They don’t have Outlook and, in its absence, they’re compelled to use frontends like horde, which do look unprofessional. Ergo, the relatively more professional-looking Gmail will appeal to them.

Ergo upgrading to Gmail is worth it for the market segment that doesn’t have Outlook or a another professional email client.

As for me, I’m happy with my free ACME mailboxes and perpetual-license of Outlook that I bought many years ago.

In this day and age of sophisticated audience targeting, ACME might want to check what email client its users use and then take a decision whether to target its banner ad to them or not – instead of showing it to all and sundry and shocking some of them like me!

Why Is Software Still Built From Scratch?

May 5th, 2017

A few months ago, I’d visited the South Indian temple town of Tirupati with my family. On the way, whenever the train stopped at a station, the engine was switched off. But the air-conditioning still worked because it was powered by huge battery packs installed in the AC coach. Coincidentally, the manufacturer of these battery packs is located close to Tirupati. I know this company from the time it purchased my employer’s ERP in the early 2000s. Through the years, I’ve stayed in touch with the ex-CEO of the unit, Rajesh Bapu.

I met Rajesh during my latest trip and introduced him to my family as the guy who “built the electronic circuit that manages the battery packs on AC coaches of Indian Railways trains”.

He corrected me, saying, “I assembled the circuit using available integrated circuits without building every part of it.”

12?F Capacitor (Source: Amazon.com)

Yes, indeed. Since times immemorial, automobiles, printed circuit boards and many other products are assembled from standard components, which can be sourced from catalogs.

But not software.

I joined the software industry two decades ago. From then to today, I’ve been hearing of technologies like SOA, CBSA and microservices that purportedly allow programmers to build systems by assembling prebuilt functionality.

But that vision has still not turned into reality.

Once upon a time, developers had to build software systems from scratch perhaps because there was no prebuilt functionality.

Then, it’s quite likely that developers built reusable components by using technologies like SOA. But, despite the existence of methodologies like CBSA, development teams still had to build software from scratch because they didn’t know about the existence of reusable components.

Then came innovations like open source repositories and open API marketplaces.

For the uninitiated, an open source repository (e.g GitHub) contains prebuilt source code for components that can be used by programmers to develop their own systems; and an open API marketplace (e.g. Algorithmia) expose readymade functionality that can be accessed by developers from their systems via application programming interfaces.

In theory, if you want to develop a new system, you should be able to review the catalog on these platforms, pick and choose the component or API you need, and integrate the prebuilt functionality into your new system.

In practice, this has worked reasonably well in building software pilots / proofs of concepts / MVPs.

However, when it comes to enterprise systems, these platforms haven’t made a big dent in the traditional way of building software systems from scratch. I’ll outline the key hurdles of changing the time-worn development methodology by continuing to use the PCB analogy:

  1. A 12?F (twelve microfarad) capacitor will work on any PCB. Whereas, since software is heterogeneous, a .NET component won’t work in a Java system.
  2. You can’t manufacture a capacitor ab initio even if you wanted to – at least not within the timescales of most PCB development projects. Whereas, most development teams believe that they can develop any piece of software from the ground-up within software project timescales.
  3. You use a capacitor as it is. Whereas developers inevitably need to make some changes to borrowed code before being able to integrate them into their systems. According to open source foundation rules, you’re required to share the enhanced / modified code back with the community. That can be tricky if it contains a company’s secret sauce. You either flout OSF rules – à la  the investment bank described in Michael Lewis’s book Flash Boys – or eschew open source code altogether.
  4. You can buy a capacitor. But you can only license an API, which is not the same as buying it. The license is subject to the Terms of Service of the API owner (“OEM”). Now, many of these TOS are ambiguous and easy to infringe without any wrongful intent. The deadpool is littered with startups that got on the wrong side of the TOS of an 800-pound gorilla’s API.
  5. Once you plug a capacitor into your PCB, it will work the same way throughout its lifetime. Whereas an API won’t. When its OEM releases its next version, you’ll need to modify your software such that it works with the updated API. We faced a costly change to our HEATMAP360 social intelligence platform when Twitter changed its API specs.
  6. If the manufacturer of a capacitor (also “OEM”) folds up, your PCB will still work. But, if the API’s OEM dies, your system will stop working and you’ll need to find an alternative source for the said functionality. As illustrated by the examples in Does Cloud Increase Vendor Risk?, the death of a few API OEMs has caused existential crises for many software systems and their owners.
  7. Then there’s the big elephant in the room that no one talks about: Programmers don’t like working on code written by anyone other than themselves.

As a result of these challenges, it has been hard to develop enterprise-grade software systems by assembling prebuilt functionality.

That’s not to say it can’t be done.

But cracking the Holy Grail of software engineering will require structural changes in the way software is packaged and sold. The purchase process for software should mimic that of electronic components whereby customers can:

  • discover software components in an open catalog
  • find out their specifications and select which components they need to assemble their system with
  • buy the selected components outright without onerous licensing terms or dependency upon any form of first- or third-party IP
  • be assured of getting the same functionality throughout the life of the software, and
  • modify components without having to share the source code with external entities.

If you’re wondering “what’s in this” for a software product vendor, you’re not alone. Actually, this model is more closely aligned with IT services. More on that in a follow-on post.

Uber Creates Loyalty To The Deal But Not For The Brand

April 28th, 2017

In his book Loyalty 3.0, author Rajat Paharia, Founder of gamification solution provider Bunchball, says that loyalty programs of most brands generate loyalty to the deal but completely fail at their fundamental purpose of fostering loyalty for the brand.

Uber is a great example of such a brand.

In Mastering Targeted Offers – The Uber Way, we saw how Uber uses targeted offers to generate loyalty for its deals.

Ironically, it’s another type of targeted offer – or, more precisely, the way in which Uber runs it – and a few other practices followed by Uber that hamper fostering loyalty for the brand.

#1. SHADY WAY OF RUNNING SURGE PRICING

Surge pricing is the culpable targeted offer I’m referring to.

For the uninitiated, surge refers to the multiple of normal fares charged by Uber from time to time. For example, 1.25X surge means the fare is 25% more than the normal fare and 8X surge means the fare is eight times the normal fare (Don’t flinch, Uber has reportedly run trials of 50X surge in Sweden).

Surge is a form of dynamic pricing practised by airlines, hotels and ecommerce for ages. While these industries have seemingly gotten away with the practice, Uber has attracted a lot of bad press for it. That’s probably because cab riders are hard-pressed in a way that vacationers or online shoppers are not. But I digress.

Uber uses fancy verbiage to spin surge pricing. According to its website, “surge helps ensure that pickup is available quickly and reliably”. But virtually no customer likes surge. As HBR says, “surge pricing has a major image problem. Hardly anyone has a good thing to say about it, and far too many people equate it with price gouging.”

That includes me. I abandon my booking whenever I suspect a surge price. Which, according to personal experience and anecdotal evidence, is switched on quite regularly:

  1. 3X surge the moment it starts raining in Mumbai or snowing in New York City
  2. 2X surge when phone battery goes below 20% and 4X surge when it goes below 8%
  3. 5X surge if you enter a hospital in the “Where to?” box.

The second and third instances of surge pricing belie Uber’s claim that it uses surge solely to match demand and supply.

But Uber is a for-profit company operating in a free market and it’s well within its rights to seek whatever premium it wants whenever it wants. Just as I’m well within my rights to take an Uber ride or not.

So surge pricing per se does not sully Uber’s brand image (although it does crimp repeat purchase).

What does tarnish Uber’s brand in my mind is the way it communicates – or does not communicate – surge pricing. When it introduced surge a couple of years ago, Uber had committed that it’d provide warning of surge pricing before passengers confirmed their booking. That’s not happening lately.

After I updated to the latest version of Uber’s app, I don’t see any surge warning. If I want to avoid getting ripped off, I need to find out my trip distance and time, calculate Uber’s normal fare for the trip, compare the figure with the estimated fare displayed by Uber, and then infer whether surge pricing is on or not. Every booking has become a painful, mini-R&D project. As a result, I think twice before I fire up the Uber app.

#2. AMBIGUOUS RECEIPTS

Uber displays the receipt summary on the app and sends the detailed receipt by email. Receipts have become ambiguous of late. My wife’s receipts show distance and time fares separately. Mine only show the overall fare. When Targeted Offer #4 (25% off for next three rides. No Promo Code required) was on, I booked a ride from her app and got the promised 25% discount. I happened to book another ride on the same day from my app. I expected either 25% off (assuming I was eligible for the offer but hadn’t received Uber’s communication about it) or no discount (if I wasn’t eligible for the offer). As you can see from the receipts for these two trips, something else happened:

On this occasion, I got a gift horse that I shouldn’t look in the mouth. But, on another occasion, I might get a 4X surge slap on my face. Scary!

#3. OSCILLATING BUTTONS ON ORDER PANEL

The UberGO button normally comes before the UberX button on the ordering panel of the app, as shown below.

For the uninitiated, the cheapest private cab offering of Uber is UberGO, which is a hatchback. The next higher offering is UberX, which is a sedan.

One day, I was going to travel to a frequent destination. I got a fare estimate, which was almost double the usual fare to that destination. I was wondering if surge was on. It wasn’t. Just that, by habit, I’d tapped the second button on the panel to order an UberGO but, on this occasion, Uber had placed the UberX button on the second place. Had I taken a screenshot, the order panel would’ve looked as follows:

In short, Uber had tried to trick me into ordering the costlier UberX cab when I wanted the cheaper UberGO option. Sneaky!

(#ProTip: When you book an UberGO, more often than not you end up getting the more spacious UberX cab. That’s because UberX drivers tend to accept UberGO orders. Therefore, savvy riders never book an UberX – they just enjoy it without paying anything extra!).

#4. CASUAL SOCIAL MEDIA SUPPORT

After I updated to the latest version of the Uber app, I noticed that the UberHIRE button was missing. Like I do with all brands as my first port of call, I tweeted to Uber.

Let me reproduce the thread below:

Then, there was radio silence from @UberINSupport. I still don’t see the UberHIRE button on my app.

On top of that, they didn’t even spell my name right! So, I’m a bit outraged. I’ll recuse myself and leave it to you to judge whether I used the right language for the heading of this point.

#5. VANISHING EMAIL SUPPORT

I’ve never cancelled an Uber ride. But a few drivers have bailed out after accepting the ride. Uber has always billed me a cancellation charge of INR 60. I’ve never understood why I should be penalized for no fault of mine. Without digging too deep, I’ve simply forwarded Uber’s receipt for this charge to support@uber.com and sought a refund. I’ve gotten it promptly in the past.

But not any more.

When this happened most recently, my email to Uber bounced back. I found out that Uber has stopped email support. AFAIK, Uber never offered telephone support.

I gave up trying to recover this amount. Which is probably what Uber wanted me to do for the welfare of its P&L.

But this is a cheap tactic and leaves a bad taste. The way I see it, for all its prowess for raising billions of dollars of funds and its distinction as the world’s most valuable privately held company yada yada yada, it’s extremely sad if the only way Uber knows how to make a profit is to snooker customers for a paltry sixty bucks (which is less than a dollar).


Caveat emptor or “buyer beware” is a universal warning while dealing with any brand. But, even by that standard, it’s hard to be loyal to a brand you find Shady, Painful, Scary, Sneaky, Casual and Cheap.

That said, I’d be remiss if I missed out a recent update: Uber named me Top Rider of the Week a couple of weeks ago.

Called “reputation badge” in gamification, it’s a technique advocated by CEM gurus to go beyond generating loyalty to deals to fostering loyalty for brand.

 

Looks like Uber has taken the first step in that direction. I just hope it doesn’t die a premature death amidst the other questionable practices followed by the company.

Why COD Still Rules Ecommerce In India

April 21st, 2017

Contrary to popular belief, ecommerce began in India way before Flipkart came into existence in circa 2007. I remember placing orders from a dial-up modem on Fabmall, Rediff and a couple of other Indian ecommerce pioneers in the late 1990s. The only mode of payment supported was online by credit card.

That said, Flipkart did pioneer COD in 2010, which gave a huge fillip to ecommerce in India. For the uninitiated, “Cash on Delivery” is a mode of payment whereby a customer buys online from the ecommerce website but pays offline to the person who delivers the goods at their doorstep. The actual payment is made typically by cash but also increasingly with credit card, debit card or mobile wallet nowadays. So COD could equally well stand for “Card on Delivery” or “Wallet on Delivery”. Given the variety of payment instruments actually used in a COD transaction, “offline payment” is perhaps a more accurate term for this method of payment. But that’s a post for another day.

In this post’s context, there’s another characteristic of COD that plays a more important role: In this mode of payment, the customer does not pay at the time of order placement but only against receipt of goods.

Initially, Flipkart and other ecommerce companies ascribed the runaway success of COD to low card penetration in India. Even the mainstream media went along with their claim that there were very few cards in India. This claim was highly patronizing at the time – I used to pay for my online purchases in the late 1990s by credit card. Today, it’s total BS: There are more than 600 million cards and only 40 million online shoppers in India, so an average Indian shopper has a choice of 15 different cards with which to pay for an ecommerce order.

If card penetration is not the reason for the overwhelming popularity of COD, what is?

Going by personal experience and anecdotal evidence, it could be friction and failed payments caused by two factor authentication. For the uninitiated, 2FA became mandatory for all online payments in India in 2009. For reasons explained in the below exhibit, 2FA mucked up online payments and drove many long time credit card users like me to COD for online purchases.

Cue to the present.

The Government of India demonetized high value currency notes in November 2016. On the back of the “Note Ban”, the government began pushing cashless payments. Trending as #CashlessIndia, the drive has resulted in the proliferation of several new digital payments such as UPI, BHIM, BharatQR and, most recently, Aadhaar Pay.

Credit card, debit card, e-wallet, m-wallet, realtime A2A, biometric – you name it, India has it. I wouldn’t be bragging if I claimed that India has more types and brands of digital payments than any other country in the world today. Some of them (credit and debit cards, mobile wallets) involve incumbent banks and card networks (Visa, MasterCard and the indigenous RuPay) whereas others (UPI, BHIM and Aadhaar Pay) disintermediate card networks from the payment value chain. But I digress.

More important point is some of the recent digital payments have found innovative ways to enhance the CX of online payments and improve their success rates while still remaining compliant with the regulator’s two-factor authentication mandate. Think HDFC Bank’s PayZapp and PayTM.

The proliferation of frictionless digital payments has had an immediate and perceptible impact on brick-and-mortar retail, going by the direct attribution made by the doyen of India’s organized retail industry of digital payments to his company’s topline.

But ecommerce still remains stubbornly driven by cash. According to latest reports, nearly 70% of online purchases are paid by COD, with some reports putting the figure as high as 83%.

If that sounds puzzling, it is – but only if you think of payments in the isolated context of its operating model.

If, on the other hand, you look at the entire customer journey, payment plays another role: It acts as a seal of trust placed by the buyer on the seller. In simple terms, you pay someone only if you trust them to deliver. It’s this facet of payment, which is unrelated to the mechanics of its operating model, that determines the winners and losers among payment methods.

From personal experience and anecdotal evidence in the recent past, cash still rules ecommerce in India because of the following reasons related to trust:

#1. Delivery Address Ambiguity

While ordering a pizza on Pizza Hut’s mobile app, I reached the checkout page. I was asked to enter my building’s name. As soon as I finished typing in the first three characters of my building’ name (SAT), the app went into a tizzy. It recovered after 2-3 minutes and displayed a long list of buildings from which I had to select one. None of them matched mine. Ditto when I entered the first 3 characters of my street name on the next field of the checkout screen. Since I had to do something to move forward, I selected the option that came closest to my location. (No, the app didn’t allow freeform text entry of my building or street name). The app again went into a tizzy. When it came back, it displayed the delivery address the way it had reckoned it. This didn’t match my real address.

With so much ambiguity in the delivery address, I wasn’t sure if my order would ever reach me. No sensible customer under those circumstances would pay online by card in advance. Neither did I. I opted for Cash on Delivery.

#2. Delayed Deliveries 

Ashish Vyas articulates this problem very well on LinkedIn:

Order a Laptop on 7th April from Flipkart. Expect it to be delivered by 11th April. Delivery partner E-Kart’s phone is not reachable for the entire day on 11th April. The delivery person calls me in the evening to tell me that the delivery couldn’t be done on that day due to manpower shortage and would be done on 12th April 2017, 2.00 p.m. I explain to him that my work is suffering because of the delay in delivery. But he is not bothered and gives me more reasons why he couldn’t deliver on that day. 12th April – Entire day passes, again E-Kart’s telephone is switched off for the whole day. No way I can speak to any executive of Flipkart to understand by when the delivery will be made. Flipkart’s Customer Care only gives an automated response. Now that the money is already with them, they don’t give a damn.

No prizes for guessing what payment mode this guy would select the next time he orders something online.

#3. Fake / Wrong Deliveries

As I’d highlighted in Beware of Credit Card Reward Redemption Theft, fake / wrong delivery of documents, bills and magazines is a widespread problem. Looks like the epidemic is spreading to ecommerce packages now.

It’s easy for a courier company’s delivery boy – yes, they’re always boys – to log into his app that he has delivered a consignment successfully without even ringing the consumer’s doorbell. Ergo fake / wrong delivery is easily possible. If you pay upfront, you’d have to chase the courier. With COD, the courier will chase you. In this situation, any sensible customer would like to be chased rather than to have to do the chasing.

 


As the above incidents illustrate, many people who otherwise use credit cards extensively in their day-to-day lives – and have been doing so for ages – turn to Cash on Delivery when it comes to ecommerce (and then pay by card or m-wallets when they receive the goods!). In each example, the key issue is when the payment is made rather than how it is made. Lack of cards or fear of fraud risk – the go-to reasons given by online retail honchos – has had no role to play in the choice of COD in these three cases.

And it’s not only me.

Flipkart’s first employee Ambur Iyyappa, spills the beans about the real reason why Flipkart introduced COD. Contrary to what the top brass at ecommerce companies say, he makes the following observation in Times of India:

By 2010, Flipkart was doing brisk business. But the challenge to scale up was that customers didn’t want to pay for something before getting it. And our delivery partners at that time lacked the infrastructure for cash on delivery. It would’ve been easy for Flipkart to wait for others to build the capability first. Instead, Ekart, Flipkart’s supply chain, launched cash on delivery.

So, it’s trust deficit, specifically related to delivery, that explains why COD still rules ecommerce in India. 2FA-related issues will continue to pose challenges to the mainstream adoption of online payments but, even if those issues were to be resolved over time, delivery risks would continue to ensure that COD remains the most popular method of payment for online shopping.

In Will The Sad State Of Logistics Hurt eCommerce?, I’d highlighted the growth challenges posed by core logistics (also called “3PL”) to ecommerce in India. It now appears as if the finance side of logistics (“4PL”) is posing existential threats to the industry. Just when the Flipkarts and Snapdeals of India are trying to turn profits, logistics is pushing their customers to COD (or keeping them there), which is by far the most costly method of payment for a merchant to service.