Archive for June, 2012

Making QR Codes Work

Thursday, June 28th, 2012

Over the past 18 months or so, we’ve written several blog posts (herehere and here) about the whats, the whys and the why nots of QR codes. We’ve subsequently seen a steady stream of QR codes used in print ads by banks, insurers, real estate developers, retailers and others. There’s no doubt that this technology has entered the mainstream.

Having said that, we’re noticing a disturbing trend: Almost 50% of QR codes don’t work – as in they can’t be scanned from most smartphones using standard QR code reader apps. A few such QR codes are shown below.


We’ve also come across ads using QR code surrogates that promise an ‘augmented reality’ experience. The one below displays pictures of three banking products / features of a leading private sector bank in India and invites readers to “experience this ad with augmented reality”.


We downloaded and installed the required app on a smartphone. When we scanned each picture in the ad, we expected to be served content that was specific to the respective product / feature e.g. DIRECTCONNECT. However, what actually happened was something else: All three scans directed us to the same place i.e. homepage of the bank’s website. This is quite dumb since we could’ve entered the URL of the homepage directly on the smartphone’s browser in a fraction of the time it took us to download and install the special app. Besides, the website is not optimized for a mobile phone.

Having covered the whats and the whys of QR codes, the aforementioned proliferation of malfunctioning QR codes suggests that it’s time to focus on the question of “how QR codes”. Here are some tips:

  1. The QR code should have a minimum size of 1″ x 1″ on print or 1.5″ x 1.5″ onscreen.
  2. The white space around a QR code is an integral part of it. Do not crop it or let it get hidden beneath something else. The best way to ensure this is to place a border around the QR code, like we do on our QR360.
  3. Link the QR code to a landing page that is specific to the topic on hand and optimized for a smartphone screen. Directing users to the homepage of a website, especially one that’s not mobile-optimized, will bounce them away in no time, leading to tarnishing of the brand image and negative return on your advertising dollars.

Alternatively, if you’d prefer to let the experts take care of your QR code advertising campaigns, simply head over to the landing page of our QR360 SmartResponse QR code application.

Price Optimization: Boon Or Bane For Big Box Retailers?

Friday, June 22nd, 2012

Over the years, my family has been shopping mostly at four big box retailers. Let’s call them A, B, C and D. Unlike D, Retailers A, B and C run loyalty programs, of which we’re members. Recently, we stopped making any purchases at the first three and diverted our entire custom to Retailer D.


It’s only at Retailer D that

  1. Checkout never takes longer than 10 minutes, and
  2. We escape “checkout sticker shock”. This relatively uncommon term is an extension of the more familiar term ‘sticker shock’ and matches the following broad definition of the latter given in Urban Dictionary: “the condition resulting from seeing the total price of a bunch of items and realizing the damage is much greater than you originally expected.” In simple English, as my wife or I quickly scan the price tag on each item that we add to our shopping cart in Retailer D’s stores, we get a feel of the total bill by the time we reach the checkout. Once the store attendant rings up our purchase, the actual bill amount more or less matches our estimated figure at Retailer D and far exceeds it at the other three retailers.

pic01-250wWhile there could be several reasons for checkout sticker shock, my personal experience suggests that ‘price optimization’ could be a major culprit. Flaunted by research analysts and IT vendors as a best practice for the retail industry for boosting topline while preserving margins, price optimization works as follows: A retailer identifies a few ‘high-involvement’ items in a typical shopper’s basket. Research shows that a typical shopper only looks at the price of such items – constituting roughly 20-25% of a typical basket – before deciding whether a store is a rip-off or offers value-for-money. A retailer adopting price optimization marks down the prices of these high-involvement items and drums up footfall to its stores by aggressively advertising only these prices. Once shoppers are attracted by these low prices, they visit the stores and first pick up these items. But, they don’t stop there. They tend to load up on many more items without realizing that these items are selling at full price. As a result, the aggregate discount on the total basket is negligible.

As long as all consumers shop in this manner, the retailer can indeed boost its topline while preserving margins.

However, personal experience shows that different consumers exhibit different shopping behaviors.

Let’s take my family’s example. In all likelihood, Retailer A has adopted price optimization because, while shopping there, we’ve often received receipts saying, “You have saved 3 Rupees”. What? A measly three bucks savings on over INR 4,000 worth of shopping? On a few occasions, this line was missing altogether, suggesting that we actually saved nothing. Add to this our experience of checkout sticker shock at Retailer A. When seen together, it does appear that price optimization and checkout sticker shock are strongly correlated.

On the other hand, Retailer D doesn’t deliver checkout sticker shock, thus managing to earn my family’s loyalty. Interestingly, Retailer D doesn’t even run a loyalty program. Ironically, Retailers A, B and C have lost my family’s patronage despite running loyalty programs.

Is this reason enough for us to conclude that price optimization, which is the most likely cause of checkout sticker shock, is a bane for big box retailers? No. It’s a well-known fact that Retailer A has been consistently posting profits when most of its competitors are still making losses and, worse still, some of them have even downed their shutters. Therefore, the ability of ‘price optimization’ to protect margins can’t be denied, even if it might cause checkout sticker shock and result in the defection of a certain segment of customers.

If this segment is small, price optimization is a boon for big box retailers. But, if it’s large, it’s a bane for them.

Would You Like Your Photo On Your Banknote, Sir?

Saturday, June 16th, 2012

In this post on the consult hyperion’s blog, Dave Birch exhorts banks to be innovative or face extinction. While the blogosphere is full of such articles claiming that traditional banks will get disintermediated by Google, Facebook, mobile network operators and young startups, I decided to call this one out because its criticism of and expectations from banks are amongst the most ridiculous I’ve come across so far.

In his post, Birch describes the experience of his son – let’s call him Tom – trying to organize a party with his friends through Facebook. According to Birch, Tom “…doesn’t use PayPal, doesn’t have a cheque book, has a debit card but some of his friends don’t have bank accounts (and in any case he doesn’t know their account numbers). I told him to use PingIt, but he can’t install PingIt on his iPhone because it’s been jailbroken”. When Tom asks his father why he can’t send money to his friends via FB, the father is speechless. But, he recovers in time to confidently assert that it’s “only a matter of time” before someone comes up with a new payment product to do just that. And, when that happens, we’re to infer that banks will go the way of the dodo.

To the banks who tell him, “payments work fine, why are you bothering us (with such alternative payment methods)?” Birch draws an analogy with Square, the mobile payments startup founded by Jack Dorsey, one of the co-founders of Twitter. By enabling small businesses to accept credit card payments on a smartphone fitted with a small cardreader, Square is widely seen as disrupting the retail payments space. Square doesn’t disintermediate banks, but more on that later.

This analogy is flawed. A new payment method for Tom’s situation is unlikely to have a business model even if it finds enough takers amidst competing payment products, whereas Square solves a real problem that people are willing to pay for. Let me explain.

Banks offer accounts. Why can’t his friends have them? Bank accounts come with cheque books, what stops Tom from getting one for himself? In a market full of genuine iPhones, why should Tom buy a jailbroken one and then blame the Barclays PingIt mobile app for refusing to install on it (BTW, even Square’s payment app doesn’t install on a jailbroken iPhone).

I’ve no doubt that some bright startup will come up with a new payment product to cater to just this kind of target audience. If somebody claimed that such a product addresses a mainstream need, I might agree, at least in markets where GenY constitutes a sizable part of the local demographics. I’ll even grant that the startup might somehow find a way to fly under the radar of regulators, at least in some parts of the world.

However, with the amount of fees Tom and his friends might be willing to fork out for such a payment product, the question is how long the startup will survive before it downs its shutters or gets acquired by a traditional bank and finds itself consigned to the backburner. Even behemoths like Nokia Money have realized that, while innovation and superior consumer experience are necessary, they’re not sufficient to pay the bills. This is where the difference between such a startup and Square becomes obvious.

Without Square, individuals and small businesses who wish to accept credit card payments have a tough time getting a merchant account from their banks. I can vouch for this from my personal experience: The so-called merchant integration form issued by my bank is so complex that, even after 25 years of being in the IT industry, I’m unable to complete it. Square offers its own merchant account to these people, who no longer need to go to their banks to get one in their own name. Then, by converting smartphones into a card-swiping device with a small dongle, Square obviated the need for merchants to buy / rent costly POS equipment. It is with these alleviations to existing pain areas that Square manages to blaze the trail of retail payments. (Let me hasten to add that Square doesn’t do anything close to disintermediating banks. On the contrary, it adds transaction volumes to existing card networks and boosts the interchange revenues of banks while keeping them insulated from a new category of merchants whose higher risk profiles they’re unwilling to take on directly).

Whereas, unfortunately, I don’t see any such disruption potential of an alternative payment product that caters to Tom’s situation. People have been writing cheques for ages, people can buy genuine iPhones, so cheques and Barclays PingIt are very viable options today. Besides, there’s always cash – although I don’t know what would happen to that option if Tom and his friends suddenly decide that they’d accept banknotes only if they had their own photos on them.

To Pinterest Or Not To Pinterest?

Friday, June 8th, 2012

With all the recent buzz around Pinterest, our inboxes have been flooded with several white papers and blog posts on the relevance of the latest social media network for B2B.

After a quick glance at its website, we realized that it was easier to simply jump aboard Pinterest than to keep mulling over whether to join it or not. So, we went ahead and signed up for Pinterest and set up a few pinboards covering our offerings, blog and marketing collateral templates. You can view our pins by clicking the Pinterest button added to the social media panel located on upper right corner of all pages of our website or the below image.


Social Media Panel on GTM360 Website

Even as we write this, we realize that we’re adding one more blog post on the relevance of Pinterest for B2B. Like us, you could head right over to Pinterest and sign up for an account for your company instead of reading this post any further. Having said that, we know that in several companies – including all our former employers – it might take several months of discussions between marketing, sales, IT and other stakeholders before a decision like this can be taken. In our case, we decided to cut to the chase and go ahead with Pinterest quickly, confident that we can always pull out our pinboards anytime if we find that they don’t attract the B2B type of traffic that forms our target audience.

Stocks Always Underperform Fixed Deposits

Friday, June 1st, 2012

According to common wisdom, stocks outperform fixed deposits, bonds and other fixed income instruments in the long term. Depending on who you talk to, ‘long term’ could mean anything from three years to a decade or even longer. Apart from vigorously spreading this message far and wide in the public, stock brokers, portfolio management services and fund managers never tire of telling the masses that they should not bother to cherry pick stocks or time the market. Instead, the investing public is advised to pay in a fixed sum of money into so-called Systematic Investment Plans every month and leave it to the professionals to do the investing on their behalf.

I turned a ‘closet skeptic’ of these notions when I found that several mutual funds in my personal portfolio had barely shown any appreciation even after I’d held them for 7-8 years. When I applied to redeem them, fund managers argued that my experience was one-off, the market appreciation was actually high but, net of entry load, exit load and other fees, I perceived it to be low, and blah blah blah. However, as a lay investor, I didn’t bother getting into these debates. After all, there was always the alternative instrument of bank fixed deposits. Whether high or low, they offered guaranteed returns. They didn’t erode capital via entry and exit loads. And, best of all, they were not accompanied by reams of fine print. For better or worse, I changed my personal investment strategy at that point although I kept my views to myself.

Not any longer. According to the following article in a recent edition of The Economic Times, fixed deposits overperformed stocks in the long term.


Click to enlarge

Although it doesn’t mention it explicitly, the table at the bottom of the article indicates that fixed deposits have beaten stocks from the very first year itself and not just after a 20 year holding period. Therefore, in actual practice, stocks haven’t outperformed fixed deposits even in the short or medium terms.

Having said that, this conclusion is true only for investments made in index stocks. It can’t be denied that certain scrips (e.g. Infosys) have delivered much greater returns than fixed deposits during this period. (On the other hand, as an ex-broker friend pointed out, a few other scrips have wiped out investor capital as well, but let me ignore that for a moment.) This is strike one against the common personal finance advice not to indulge in stock picking. Well, you know what, the only way you could’ve played the stock market and done better than fixed deposits was by picking the right stock – and not by passively settling for an index tracking fund.

It’s also interesting to note that, had this chart started just one year later (March 1993) when the Sensex was at 2281, the title of the ET article would’ve read the exact opposite of what it does now. In the very next year (March 1994), stocks would have shot up to 3779 whereas fixed deposits would have inched up to 2509, being 2281 + 10% (1-year interest in 1993-94). Having gained such a massive headstart so early, stocks would’ve stayed well ahead of FDs through this entire period despite the Sensex’s nosedive in 2009. This is strike two against conventional wisdom not to time the market. Quite clearly, a person who delayed his or her investment by one year would’ve made far greater returns from stocks compared to fixed deposits.

While none of this is a sign of a ‘rational market’ as economists would define the term, it’s the market we have. Fund managers and personal finance advisors will no doubt continue to urge people to invest in stocks by saying that most retail investors aren’t knowledgeable and lucky enough with picking the right stocks and timing the markets at the same time. To that, I’d say neither are the so-called investment professionals. On second thoughts, the question of luck doesn’t apply in their case – after all, they’re playing around with someone else’s money.

UPDATE: Looks like the situation is quite similar in the USA. In this FORTUNE interview, Scott Minerd of Guggenheim Partners says, “If you bought Treasuries and held them for the past 30 years, your returns have been quite attractive, probably in excess of the return you would have had if you’d invested in equities.”

UPDATE DATED 11-NOV-2016: Let alone index stocks, four years years after I wrote this post, it looks like even bluest of blue chips have underperformed bank FDs over the post 10 years (Source: Economic Times). I’m sure there are many more blue chips that failed to cross the FD hurdle rate than the eight stocks covered by ET.