Use And Misue Of Personas In Marketing

July 21st, 2017

Buyer persona is the bedrock of targeted marketing. HubSpot provides a succinct definition of the term:

“A buyer persona is a semi-fictional representation of your ideal customer based on market research and real data about your existing customers.”

A sample persona is shown below:

Persona-based marketing has become increasingly popular in recent times, both in B2C and B2B realms. Maybe it’s only me but I see a strong correlation between PBM and the rise of Facebook Ads, which is arguably the first platform to provide the ability to run ads at scale segmented by buyer attributes like demographics, behavior, and preferences. (In contrast, Linkedin Ads helps you target ads by title and Google Ads, by purchase intent.)

We develop personas for companies in IT, BFSI and other technology-intensive industries. After doing that, we create persona-specific messaging and content for our customers’ technology products and services. Campaigns based on personas help our customers’ offerings resonate better with their buyers’ goals and preferences, thus accelerating lead flow and improving lead-to-deal conversion rates.

Like all popular tactics, persona is susceptible to overuse. A few marketing professionals have already started panning personas e.g. Marketoonist, which lampooned personas in a recent article with the following cartoon:

The article went on to say:

“Marketers have more customer insights at their disposal than ever. Buyer Personas can be one useful tool to turn this customer data into a story. They can help capture an abstract target audience as a tangible character sketch. But buyer personas are only as useful as what they help you to do. Marketers can get carried away with the fiction. I’ve literally seen “watches Game of Thrones” in the personality sketches of buyer personas for enterprise software. These personality-driven personas may read well, but aren’t necessarily actionable.”

Reading the reference to Beatles in the cartoon, I was reminded of an ad released by one of my ex-employers years ago. The company had just become the distributor for Sun Microsystems in India. The launch ad proclaimed in bold letters, “Here comes the sun”. Even if you’re not a Bealesmaniac, you’d recognize the name of one of the band’s most popular songs in the copy.

Given this experience, I wouldn’t dismiss references to music bands in a buyer persona so easily. The key is to use them – as well as automobile brands or TV shows – in the right context.

This is where I think Marketoonist has gone wrong: Its cartoon depicts a classic case of misuse of persona.

I’m not alone. Like commenter ALLEN ROBERTS says:

“Like any complex tool, personas can be misunderstood, misused, and give crap results, but in the right hands, and right context, can be very useful.”

The misuse stems out of targeting the persona at Sales. While the output of personas can be shared with sales, personas themselves are meant strictly for Marketing.

Now, let’s see what can happen if the persona described in the aforementioned cartoon is consumed by Marketing – i.e used in the right way. Based on this persona, Marketing can shape the content, messaging and medium of the software in the following ways (if not many more):

  1. Pepper the marketing collateral of the product with Acura-related terminology. From personal experience of marketing ERPs, an enterprise application offers tremendous scope for flaunting a wide range of terms. Slipping in an Acura-related term or two in the product and / or marketing collateral is a piece of cake!
  2. Seek product placement and / or advertising in Game of Thrones
  3. Lace the ad copy and demo videos with Beatles lyrics and background music respectively.

Needless to say, a campaign based on such persona-shaped elements will have a higher success rate than a “spray-and-pray” campaign, as my ex-employer’s Sun launch ad did.

Beatles was popular at the time. The reference to the band’s popular song “Here comes the sun” in the copy of the ad for Sun servers elicited an immediate connect with the thousands of Beatles fans in the target audience. The ad elicited a chuckle or two from the early adopters of the product and triggered a strong brand recall for the distributor amongst prospective buyers of RISC-based servers for years to come. (If you knew that the product manager of the company’s Sun division went by the initials of SUN, you might even spot another pun in the copy!).


Ergo, in the right hands, personas – including the one described in the cartoon – can be very valuable.

That said, everything is not hunky-dory in the world of personas. In a follow-on post, I’ll describe three ways in which personas are misused nowadays. Stay tuned.

How To Fight Card Payment Surcharge And Take #CashlessIndia To Next Level

July 14th, 2017

I recently read the following tweet:

I replied back pointing out that:

He replied back with the following tweet:

@logic was implying that merchants will definitely pass on the MDR cost to consumers.

Even if that’s true, he was confusing MDR for Surcharge. While both amount to a charge on card payments, they’re not the same. By definition, MDR is borne by a Merchant whereas Surcharge is slapped on a Cardholder. There are many other differences between them. Before I list them and explain why they matter to a common man, here’s a graphical depiction of how a card payment works.

The key entities in the so-called “card payment value chain” that processes a card payment are as follows:

  1. Cardholder: The consumer that uses a credit or debit card to buy something e.g. John Doe, Jane Doe
  2. Merchant: The business that sells that “something” to the Consumer and receives payment via payment card e.g. ASDA, Big Bazaar
  3. Issuer: The bank that issues the card used by the Consumer e.g. Barclays, State Bank of India
  4. Acquirer: The bank that issues a Merchant Account and POS (or POS alternatives like Bharat QR) to the Merchant, both of which are required for the Merchant to accept card payments e.g. Citi, HDFC Bank
  5. Card Network: The company that owns the infrastructure – aka “rails” – for processing card payments e.g. Visa, MasterCard.

The card payment value chain is also called a “4-corner marketplace”. Created over 50 years ago, it’s subject to the so-called “network effect”, which explains its popularity and longevity. The Merchant incurs a cost for using this infrastructure to accept card payments. This cost is called MDR or Merchant Discount Rate.

With the basics of card payment out out of the way, let me come back to the key differences between MDR and Surcharge. They’re as follows:

  1. MDR is the fee incurred by the Merchant for accepting card payments. Any charge levied by the Merchant on a consumer paying by card (over and above the price of the product or service purchased by the Cardholder) is called Surcharge. As we’ll see shortly, Surcharge need not equal MDR (and often does not)
  2. Set by the Card Network, the schedule of MDRs forms a part of the Merchant Account signed between the Merchant and the Acquirer. As a consequence, MDR is pre-defined, strictly regulated and ranges from 0.5-3% depending upon the product purchased and the type of card used for payment. (For the sake of convenience, I’ll assume a uniform MDR rate of 2% during the rest of this post.) On the other hand, Surcharge is totally arbitrary – it’s whatever the Merchant says it is. I’ve come across Surcharges ranging from 2 to 10%. In other words, Merchants slap Surcharge – masked as ‘Convenience Charges’ – that’s as high as 5X of the MDR cost they incur
  3. MDR is deductive. That is, if the sale value at the till is £100, the acquirer retains £2 and passes on £98 to the Merchant. On the other hand, Surcharge is additive. That is, against the purchase value of £100, the consumer incurs a cost of £102 at checkout (or even higher, if the Merchant passes on costs in excess of MDR to the Cardholder).
  4. Being deductive, MDR attracts no taxes. Whereas, being additive, Surcharge attracts taxes. So, the total debit the Cardholder sees on their statement is even higher than £102
  5. In return for MDR, a Merchant gets many freebies from the Acquirer e.g. fire insurance for store. Cardholder gets nothing for shelling out Surcharge.

In case all this sounds a bit technical, that’s because it is. However, there’s a reason why it matters to an average John / Jane Doe consumer and impacts the adoption of card payments.

I’ve made no secret of my distaste for Surcharge. The way I see it, MDR is the Merchant’s cost of doing business – if they don’t accept card payments, they can lose business. Like rent, electricity, employee and other costs, Merchants have to recover their card processing fees from their sales and can’t pass it on to me explicitly. If a Merchant still insists on a Surcharge, I can walk out and buy the same thing somewhere else without paying Surcharge.

Armed with this knowledge, I flatly refuse to pay Surcharge for paying with my credit card.

When Merchants try to justify their demand for Surcharge on the grounds that they pay this fee to banks, I turn the last point mentioned above to my advantage and fire back: “You get fire insurance for your store by paying MDR. Will you give me fire insurance for my home if I pay you Surcharge?” When they hear this, many Merchants quietly accept my credit card without any Surcharge.

Of course, my tactic only works when there’s a human being on the other side whom I can challenge with this logic.

Whenever a website demands a Surcharge, I abandon my shopping cart and rant to the company via Twitter.

Somtimes it works!

I know you “can’t win ’em all” but that’s no reason why you shouldn’t try!

I know many people who use cash because they don’t want to pay extra charges for using their cards. This is a serious stumbling block in front of greater spread of digital payments. I hope this post gives such consumers enough ammunition to fight Merchants’ demand for Surcharge so that they pay by card without incurring any extra charges and, in the process, take the adoption of #CashlessIndia to the next level.

Indian IT: Turning Crisis Into Opportunity

July 7th, 2017

At the end of my blog post entitled Indian IT – Crisis Or No Crisis?, I reflected on the zeitgeist about the looming crisis faced by the Indian IT industry due to growing automation, digital challenges, H1B restrictions and Trumpism-driven Middle America outsourcing.

Even if these challenges are real, there’s no need to panic. The industry has been through several crises in its 30 year history and emerged from each of them stronger than before. I predict that the same will happen even this time.

But not if it continues to bury its head in the sand. The Indian IT industry can escape the dark clouds on the horizon only by taking a few concrete measures on a war footing. I suggest the following imperatives for the industry in which I’ve spent over 20 years of my professional life:

  1. Go up the services value chain
  2. Target the CMO organization
  3. Set up component factories
  4. Rethink fixed price deals
  5. Redefine digital transformation

#1. GO UP THE SERVICES VALUE CHAIN

No, I don’t mean develop products. For reasons highlighted in my blog post entitled “Going Up The Value Chain” Is Wrong Path For Indian IT Services Industry, the industry’s DNA is in services. And services has a lot of headroom for growth, as highlighted recently by Mr. N Chandrasekharan, ex-CEO of India’s largest IT company Tata Consultancy Services and currently Chairman of TCS’ holding group Tata Sons. So there’s no need to jump off the services bandwagon.

What I mean is move up from project management to program management level within a services engagement.

For the uninitiated, a program is an aggregation of individual projects around business analysis, architecture, design, development, testing, infrastructure, deployment and communications. In addition, a program also manages relationships with other internal and external stakeholders such as business, legal, compliance, regulators, industry associations, and so on.

Historically, bulk of Indian IT companies’ revenues have come from development projects involving requirement gathering, design, coding and unit testing. Program management activities are left to the customer. Quite often, the customer outsources these activities to other IT services companies.

If Indian IT companies can start playing a larger role in the end-to-end program, they can stand to achieve a manifold increase in revenues.

Let me explain how by using the following case study.

A Top 5 UK bank was mandated to introduce a new payment system (“FastPay”) by the regulator. The bank’s Board directed its C-Suite to launch FastPay by a certain deadline. Within the C-Suite, the initiative was owned by the MD of Global Payments (“Executive Sponsor”), who had to fulfill it by collaborating with IT, IT, Operations, Product, Marketing, Legal and the Scheme Operator. Busy with the BAU pressures of running a multibillion dollar business, the MD needed someone to handle the day-to-day minutiae of FastPay’s introduction. This “someone” was the “Program Manager”, who was a partner at a Big 5 consulting firm.

The overall program structure is shown below.

The project level comprises individual projects around business analysis, licensing of new product, implementation of new product, modifications to existing systems, testing, and systems integration.

All these individual projects fold under the Program Manager. In addition, the Program Manager also leads the Steering Committee and the War Room. Chaired by the Executive Sponsor (MD of Global Payments in this case), the Steering Committee comprises of all key stakeholders and convenes on a weekly basis to review the progress of the program and make midcourse corrections as required; the War Room also comprises of all key stakeholders but convenes during go-live and at other critical program milestones.

Most Indian IT services companies – including my employer at the time – typically function in the capacity of (a) implementation partner and (b) systems integrator. For the sake of clarity, an implementation partner makes a new product work at a given company by providing consulting, training, customization, extension and other services; and a systems integrator “lands” the new product into the given company’s systems landscape by developing interfaces between the new product and the company’s existing systems. As you can see, both roles are largely technical. Typically, these vendors are not part of the Steering Committee or War Room and don’t have the ears of the program stakeholders or much say in the overall direction of the program.

In the specific instance, vendors of individual projects made revenues in the $5-8M range, which totaled up to around $40M at the program level. In addition, the program manager and the infra project manager spec’ced a plethora of environments such as development, system integration testing, user acceptance testing, sandbox, staging and production that contributed incremental revenues in the high single-digit millions for the infra workstream. All told, the program management vendor billed nearly $50M, which is 6-10X of the billing of any individual project vendor.

This is how moving up the value chain from project management to program management can result in manifold increase in revenues for an IT services company.

#2. TARGET THE CMO ORGANIZATION

While new tech initiatives can happen anywhere in an enterprise, most companies are looking at customer experience and revenue growth as the low hanging fruits to gain rapid ROI for their tech investments. As a result, technology projects are increasingly driven by the CMO organization nowadays. According to Forrester, “CMOs are the most likely C-level executives to have taken full control of their tech spending.”

The Indian IT industry has developed a keen sense of efficiency, having traditionally sold technology to the CIO organization, which is a cost-center in most companies. Besides, dealing with the CIO organization has shielded the industry from end-users of technology, whether it’s consumers or “business”. As a result, the industry has managed to get away by paying lip service to UX and by treating performance and other non-functional aspects of their software as an afterthought. These characteristics won’t help while targeting the CMO organization because CMOs are more interested in the effectiveness of technology and are driven by customer experience. Therefore, to open opportunities in the CMO organization, Indian IT needs to

  • shed its traditional cost-centric mentality and develop a revenue-oriented mindset, and
  • come out of its technical shell and gain an appreciation of how people use technology to run a business instead of using technology for its own sake.

Neither is an easy change to make but Indian IT can jumpstart the transition by keeping in mind the following realities of CMO organizations:

  • Online ads and social networks play a vital role in today’s marketing world
  • UI goes beyond color and fonts and encompasses psychological drivers like shortage, sense of urgency, and so on
  • UI, UX and CX are super important for any customer-facing software
  • What looks like a cosmetic defect to a programmer (or even project manager) could actually be a CX breakdown that could cause revenue and reputation loss, both of which are critical issues for a CMO needing immediate redressal
  • Learn to make conversation beyond technology. CMO orgs are fairly garrulous (present company included!)


Like I’d warned in Indian IT – Crisis Or No Crisis?, relying solely on coding, testing and other technical skills will no longer suffice. To successfully execute on the above imperatives and capture the revenue opportunities offered by them, the Indian IT industry will need to develop new non-technical skillsets in its delivery organization around stakeholder management, commercial acumen and marketing.

In a follow up post, I’ll describe the next three imperatives. Stay tuned.

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!