Archive for July, 2010

Have Your Overdraft And Eat It Too!

Saturday, July 31st, 2010

While other banks in America are fiercely resisting any caps being considered by regulators on their overdraft fees, ING Direct USA proclaims that it doesn’t charge any overdraft fee on its Electric Orange checking accounts. While it does admit to charging an interest on the overdrawn amount, this online calculator published on ING Direct’s website claims that “they charge dollars, we charge pennies”.    


ing01_50pctFor its default of $100 overdrawn amount for 10 days duration, the calculator shows that other banks charge $30 whereas ING Direct charges only 20 cents by way of total overdraft costs.

By permitting overdrafts without charging overdraft fees, ING Direct tries to convey the overall impression that its Electric Orange checking account lets you “have your overdraft and eat it too”.

However, the same online calculator tells a different story when you play around with the numbers, completely belying ING Direct’s claim that “they charge dollars, we charge pennies”.

ing02_50pctAccording to this calculator, other banks charge a flat fee but no interest whereas ING Direct charges a flat rate of interest but no fee. Think about it, since interest is always charged on the principle and for the duration of a loan, it becomes obvious that ING Direct’s overdraft costs will increase proportionally with increase in overdraft amount and / or borrowing period. This is borne out by the calculator when you select an overdraft amount of $3,000 for a borrowing period of 30 days. For these figures, the calculator shows other banks’ charge to be $30 and ING Direct’s as $17.88.  ING Direct’s cost is no longer in the pennies.

If you keep increasing the numbers, you’ll notice that an overdraft of $5,000 for 30 days attracts almost the same cost from ING Direct ($29.79) as from other banks ($30).

It doesn’t take a PhD in mathematics to work out that ING Direct’s overdraft cost will actually overtake that from other banks if you go beyond these numbers. 

ing03_50pctCurious to find out if the calculator actually admits to this, I tried out higher amounts and longer periods. Interestingly, it refuses to accept overdraft figures exceeding $5,000 or tenors crossing 30 days.

Hopefully, so does the Electric Orange checking account.

Otherwise, customers switching their accounts to ING Direct USA would suddenly find themselves incurring higher costs with ING Direct despite its policy of zero overdraft fees.

Select The Right Contact Provider And Boost Campaign Success

Sunday, July 25th, 2010

The marketable offerings are created, the email flyers, telescripts and other marketing collateral are ready. It’s now time for business development executives to reach out to the target market via email blasts and  telephone calls in order to create awareness and generate leads. This is when they need a Target Mailing List comprising of companies and contacts belonging to the addressable market of each of their outbound marketing campaigns.  

Maintained in Excel spreadsheets or CRM systems (e.g., ACT, etc.), a Target Mailing List would typically contain 2-3 contacts per target company and the following minimum contact info per contact: full name, title / designation, email, direct telephone number, and country.


Additional information like city, postal address, contact’s birthday, and so on, are useful at later stages of the sales cycle that involve face-to-face meetings and rapport-building, but are not mandatory at the time of kicking-off email- and telephone-based outbound marketing campaigns.

To accelerate the development of a Target Mailing List, marketers might choose to take up subscriptions to Jigsaw, onesource, Hoovers and other broadbased contact list providers or buy them outright from Glenbrook, GTM360, and other special-purpose mailing list providers.

The two key considerations in selecting a contact list provider are (1) Coverage, and (2) Quality.

Coverage refers to the breadth of contacts available for a given campaign. For example, if you’re planning to execute a campaign for SAP Add-on Solutions, you’d want a contact list provider who can provide contact information of decision-makers at a large number of SAP customers – not just any company.

Quality refers to the reliability of the given contact information e.g. Is the contact still working in the same company? Is his/her telephone number correct?

contact03_250Before selecting a contact list provider, we urge marketers to define a sample target audience of around 100 companies per campaign and evaluate each provider on the coverage and quality of the contact information available with each of them. We say this because we’ve experienced significant differences in coverage and quality from one contact list provider to another across campaign dimensions like geography (e.g. USA, UK, Middle East), industry vertical (e.g. BFSI, Retail, Telecom), title (CEO, COO, CxO, SVP, Director), and domain (e.g. SAP, Payments).

Coverage percentage (i.e. the percentage of contacts from our sample list that we could source from a given contact list provider) varies from 8% to 30% across different contact list providers. In other words, you’d be able to get only one contact for every 12 you need with the “worst” contact list provider; and, even with the “best” provider, you’d have to look elsewhere for two out of every three contacts you need. Quality percentage (i.e. the percentage of accurate contact information) ranges between 40% and 70% from one contact list provider to another.

100PercentMoneyBackGuarantee_01With coverage and quality differing so significantly across contact list providers, we recommend marketers to sign up for PAYG (pay as you go) plans with providers who don’t insist on upfront membership fee, and charge you only for contacts that you wish to buy. If you can’t find any PAYG plans, you can still protect your investments by seeking a moneyback guarantee – like the one we offer on our SAP Customer & Partner Mailing Lists – if the purchased contact information turns out to be inaccurate.


The New Rupee Symbol & Hammer-and-Sickle

Saturday, July 17th, 2010

I’m especially happy with the new Rupee symbol because it is designed by an alma mater, D Udaya Kumar, from IIT Bombay. Hearty congratulations to him!

pic01_200By rotating the symbol clockwise by around 30 degrees, you might be able to spot a certain resemblance to the hammer-and-sickle.

I wonder whether this is a relic from our past history with Russia.

By “our past history”, I’m not just referring to India’s traditional relationship with the former USSR and steadfast adherence to socialist principles before the big reforms of 1991.

I’m also talking about the past history of IIT Bombay.

During their formative years in the late ’50s and early ’60s, each IIT had some sort of affiliation with an overseas country e.g. IIT Kanpur with the USA, IIT Madras with the UK, and IIT Bombay with Russia.

There were traces of this affiliation with Russia even as late as 1985, which is the year I graduated from IIT Bombay. For example, there were many professors who’d earned their doctorates in Russia; the institute library had several Russian books, although we never actually found anyone actually reading or borrowing them!

And, above all, we had the notorious EC1030 mainframe computer that was made by a company called Robotron from East Germany, which, as readers would be aware, was a part of the former USSR until the Berlin Wall came down in 1989. Touted as an IBM360 clone, this mainframe used to make us students go back-and-forth several times a week between hostel and computer center with its unerring frequency of breaking down. One week, the central processing unit would fail. By the time it was fixed, it would be turn of the memory unit to conk out. Then, the Hollerith Card Reader would refuse to read, well, the Hollerith cards in which our programs were punched on a heavy-duty typewriter-like equipment.  Since the user and operations manuals were all in Russian, the aforesaid professors who’d studied in Russia and had a working knowledge of the language had to be called in to translate them so that repairs could be undertaken.

While it’s possible to look back at all this with nostalgia now, let me assure you that EC1030 used to be one of our biggest pain areas during those days.

Let me take this opportunity to wish Dr. D Udaya Kumar a successful career at IIT Guwahati.

Banks Can’t Look Down On Remitters

Sunday, July 11th, 2010

Long unable to understand why banks are not anywhere as successful in the remittance business as money transfer operators (MTOs) like Western Union and MoneyGram, I found some clues in this recent article written by Charlie Corbett of Western Union.

According to Corbett, many banks still view remitters in developed countries as impoverished, nearly illiterate, and hence not worthy of selling checking accounts, credit cards, mortgages and other banking products. According to one former banker and remittance specialist quoted in this article, “not all banks will want the footflow into their branches on the sending side. They don’t want these guys coming into their branches and cluttering up their nice clean offices”.  Apparently, banks fear that putting remittance service stickers on their windows would dilute their brands.

Banks had better start worrying about dilution of their brands caused by their own staff before looking down on the stereotype remitter.

Banks offer remittance services based on the account-to-account model, which demands more information like account number, SWIFT BIC code, and so on. Agreed that such information is beyond the grasp of a typical remitter who finds the cash-to-cash remittance model offered by traditional money transfer operators like Western Union and MoneyGram much simpler. However, in my personal experience, banks’ own staff are clueless about the greater information needs of the account-to-account model.  

A couple of years ago, I was trying to remit some money from London to a leading bank in India. When I called the beneficiary bank’s call center to get their BIC code, I was told that it was ABCDINBBNNN. Since I knew a thing or two about BIC codes, I was able to instantly point out to them that the last three places had to be numerals and couldn’t be “NNN”. Only then did they check and got back with 005 as the right value. I shudder to think about the fate of my payment had I naively used the BIC code the bank had given to me in the first instance.

In another instance, another leading bank in India told me to use a BIC code that I noticed was only 8-digit long. I was looking for the 11-digit version because (a) the sending bank in the UK asked for a 11-digit beneficiary BIC code, and (b) because I knew that the 8-digit BIC code only pertained to the bank whereas my money had to go to a particular account in a particular branch of the bank, which could only be identified by a 11-digit BIC code.  When I insisted upon the 11-digit version, the bank staff had no clue. In the absence of this critical piece of information, I decided to abandon the transaction instead of risking my money floating around somewhere in the bank’s systems without a destination account available to be credited.

Banks surely know that their account-to-account remittance model calls for greater knowledge and sophistication not just from remitters but also from themselves. What they need to do is to train their staff so that they’re able to better respond to its greater information needs. Only then can they hope to make any dent on the towering market shares of money transfer operators using the far simpler cash-to-cash model.

Why Are Hotel Taxes So Different?

Friday, July 2nd, 2010

To host the recently-held first GTM360 Foundation Day, we’d visited three 5* and two 4* hotels in Pune to have a look at their banqueting facilities and get their quotes. When we got a quote with 28% taxes, we were somewhat taken aback. When we expressed our surprise at such a high tax rate, the hotel’s banquet manager told us that it was the rate applied by the government and that they could do nothing about it. We would’ve taken this in our stride except that the very second quote we got had a tax of 22%. The balance three quotes had tax rates of 17%, 24% and 19%.

If each hotel claimed that the tax was determined by the government, we quizzed them, how come their rates varied so drastically from one another? None of the five banqueting managers were able to give us a satisfactory answer.

Now, when we reviewed the break down, we found that the total tax included VAT and Service Tax, among a few other components. Now, as readers would be aware, VAT is charged on products and Service Tax is applicable on services. Since a given item is either a product or a service, it didn’t make sense for both VAT and Service Tax to be applicable on it. When we raised this point, only one hotel accepted our viewpoint and clarified that they were indeed charging only the applicable tax on each item e.g. VAT @ 80% for food and Service Tax @ 20% for serving the food. The other four hotels kept insisting that they would charge both VAT and Service Tax on every item!

Since we still haven’t managed to get a convincing explanation from any of the five hotels, we’re left wondering what’s up with taxes in the Indian hotel industry. We invite readers to share their knowledge and experience by leaving behind their comments at the bottom of this post. Thanks!