Archive for June, 2014

Frictionless Loyalty Programs – MakeUseOf Case Study

Friday, June 27th, 2014

lpfe02The leading British technology and Internet apps blog Make Use Of recently launched a loyalty-cum-rewards program where readers earn points for sharing its articles on social networks.

In the past, I’ve come across rewards for filling forms, completing surveys and taking other actions but this is the first time I’m seeing a website rewarding social sharing in such a direct and explicit manner. (A whitepaper received by sharing a vendor’s web page on a social network is NOT a reward, even if I say so myself!).

Some might argue that if people find content truly worthy of sharing, they’ll share it without any incentive. Others might justify rewards on the ground that “a little something” always helps. Therefore, only time will tell whether this is a harebrained idea or portends the future of content marketing.

Moving on to the program mechanics, which is the real crux of this blog post:

I heard about its loyalty program from Make Use Of’s email, so the publisher already knows me. When I perform the required CTA, I’d authenticate myself via my preferred social network. Therefore, Make Use Of’s has more than one way to know my identity. Against that backdrop, I couldn’t understand why it wanted me to “open an account” as though I were a total stranger. Ticked off by this silly step, I didn’t bother to join the program.

Ironically, instead of delighting its customers, Make Use Of’s loyalty program can potentially put them off.

Is there a lesson for publishers and others who’re planning a similar loyalty program?


Companies can use technology to credit reward points in the background by self-enrolling customers, the way banks do. Credit card holders don’t need to enroll for any reward program or take any action to accrue points. As long as they keep making purchases on their eligible cards, reward points are automatically credited to their account.

Going one step further, companies can notify customers only when they’re eligible for a gift. While I couldn’t find any example of this in the loyalty industry, the success of PayPal proves how such an approach can stimulate greater usage and help acquire new customers: The leading PSP lets its customers send money to people who don’t have a PayPal account. (PayPal alerts beneficiaries that they’ve received money and lets them cash out their receipts only after they sign up for PayPal).

By following similar approaches, companies can reduce friction from their loyalty programs and gain more bang for their rewards buck.

Credit Where Credit Is Due – HSBC Case Study

Friday, June 20th, 2014

In over two decades of using credit cards, I missed a payment for the first time a couple of months ago. This happened on my HSBC credit card, which I’ve been holding for nearly 10 years.

I’m blaming eStatements for my slip up.

I typically receive the printed statement for this credit card around the first week of a month for the payment that’s due by the third week. After having a quick glance at the statement, I place it in a folder along with my other bills. For one reason or the other, I look at this folder at least once a day, which serves as a reminder for bills that are due. Even if it this practice might seem a bit old-fashioned, it has always worked for me.

Until last month.

I didn’t receive the printed statement from the bank – yet again. In the past, if I didn’t get the statement by the tenth of a month, I’d tweet a reminder to the bank and receive a copy by an alternative courier. I forgot to do this last month and faced the consequence.

This experience reinforces my oft-expressed preference for printed bills and statements (click here and here for my rants about electronic bills and statements).

When I found my card getting declined around the end of the month, I realized that I’d missed the payment. Despite making the payment shortly thereafter, my card continued to get rejected. When I wrote to the bank, I got the standard “we will get back to you in 7 working days” autoresponder message. Finally, after 20 days of non-response, I wrote back and threatened to cancel my card.  That worked – maybe because my annual spend on the card has consistently exceeded the national average in almost every year during the past decade.

I got an immediate reply from the bank saying I should start using my new credit card to make all problems go away. Declining my existing card was unjustified since it was valid at the time I was trying to use it. When I received the new card, I’d assumed that I should start using it only when the old card expired a few weeks thereafter. Anyway, I didn’t argue the point and started using the new card. I was relieved to find it working. This signaled the end of a long and painful experience.

hsbc-new-tokenI accept responsibility for my mistake and have coughed up a fairly big sum as financing charges without demur. I didn’t even ask the bank to reverse the late payment fees, which it did on its own. However, during the period that the bank was declining my card, I was charging certain expenses to another credit card that I would’ve otherwise charged to HSBC. On these transactions, the bank lost an amount in interchange fees that was about the same as what it gained by way of financing charges. Besides, it lost goodwill, which, as we all know, is priceless!

That said, I must give credit where credit is due.

Several years ago, HSBC had introduced a security token for Internet Banking access in India. As I’d highlighted at the time in How Remote Outposts Can Leapfrog Their Global HQs!, this happened many years before the bank’s global HQ caught up with this device. In the eight-odd years that I’ve been using the token in India and overseas, I have not faced a single problem with it.

This is in sharp contrast with “Mobile OTP”, an alternative 2FA mechanism that has given me enough trouble already in the one year for which it has been around (more on that in Mobile OTP: Cyanide Or Caffeine For Online Payments?).

When HSBC recently did a technology refresh, it didn’t fall for the flaky but cheaper Mobile OTP technology that so many other banks have. Instead, it reinforced its message “security should not come at the cost of convenience” by choosing an even more secure and convenient hardware token technology.

HSBC deserves props for that. Consider it given.

Fifty Beats Three Hundred At Tirumala-Tirupati

Wednesday, June 18th, 2014

I recently visited the famous Lord Balaji Temple in Tirumala and the Goddess Padmavati Temple in Tirupati. Here are a few highlights from my trip:

Money can’t buy you darshans

Crass commercialization can be avoided even if commercialization itself can’t. Tirumala Tirupati Devasthanam (TTD) – the government body that manages the aforementioned two temples and many others – proves this point in more ways than one. Take, for example, the ticketing system, which ensures that money can’t buy a darshan. With an INR 50 Sudarsanam ticket booked well in advance, I got a darshan in 2 hours 45 minutes whereas pilgrims who walked in and bought the so-called “Quick Darshan” ticket costing INR 300 went through an eight hour wait on the same day.

Centralized baggage reclaim

ttd02TTD has set up a new centralized facility from where pilgrims can collect back their footwear and electronic items, both of which are banned inside the temple premise. In the past, pilgrims would get into the temple via different queue complexes after checking in their sandals and mobile phones at the collection point closest to their point of entry and then find it difficult to locate the said collection point when they exited the temple situated far away. Now, while pilgrims can continue to hand over their belongings at various collection centers conveniently, they can reclaim them back from a central facility situated on the way to the bus stand / car park, with TTD picking up stuff from the distributed collection points and transferring them to the central facility. As a result, pilgrims are now saved the trouble of having to go back to the place where they handed in their items. This is a great move by TTD. That said, the new lift-and-shift process can do with some streamlining so that the reclaiming process takes a lot less time than it currently does. It would also help if the baggage receipt clearly showed the location of the new reclaim center. The cryptic reference to the “Old Annadhanam Complex” on the sign atop each collection point isn’t enough.

No fingerprint verification

Although pilgrims are fingerprinted while purchasing darshan and seva tickets, no verification of their fingerprints happens when they actually visit the temple. This is understandable considering that fingerprint matching is a very compute- and bandwidth-intensive process that’s simply not practical when dealing with the kind of high volumes – 20-50K pilgrims per day depending upon the season – handled by the temple’s queue complexes.

That said, it’s not as though ticketholders are let in without authentication. TTD’s inspection staff verifies the identity of each ticket holder using photographs that are captured during ticket purchase. Based on my personal experience, they do an exemplary job of this: Just ahead of me, a group of four people presented their ticket to the inspector. With a scan of of the barcode printed on the ticket and a quick look at the images displayed on the computer screen, the inspector immediately spotted that one of the four people in the group was not the one on whose name the ticket was booked. Since tickets are not transferable, the inspector rightly refused admission to the errant person, while offering to let the other three members of the group to proceed. In response, the head of the group hinted that he was willing to “take care” of the inspector if the latter was willing to let all four people pass. Shame on this guy who chose a temple, of all places, to attempt a bribe. The inspector didn’t succumb to the enticement since that was the last I saw of this group.

Better crowd control

Thanks to a new railing set up inside the sanctum sanctori, the flow of pilgrims in “the last mile” was more orderly. There was a lot less of the pushing and shoving this time than I’ve seen on my previous visits.

4:1 ratio of prasadam

There’s a 4X difference in the number of laddus between Tirumala Balaji and Tirupati Padmavati temples. An INR 50 ticket is eligible for two free laddus in Tirumala whereas the INR 100 ticket will get you only one free laddu in Tirupati.

Change is the only constant

The pursuit of improving safety and convenience for an ever-growing volume of pilgrims visiting Tirumala every day might call for constant evolution in temple operations. As a result, TTD makes frequent changes in procedures in and around the temple premises. The aforementioned centralization of baggage reclaim is an example of one such change. The shift in the bus terminal’s location – it’s now opposite Ram Bagicha Guest House – is another. Changes are fine but I wish TTD communicated them to pilgrims more proactively – via signs located onsite, banners on its website, and circulars on the notice boards of its centers spread all over India. While on the subject, I also fervently hope that TTD follows a multilingual policy in its communications and gives adequate weightage to English, Hindi, Tamil, Marathi and other regional languages in recognition of the fact that, while Tirumala is located in a state where Telugu is the local language, it attracts several pilgrims from many other states of India.

Best Practices For Reducing SaaS Churn

Friday, June 13th, 2014

In the good old days, an onpremise B2B software vendor would go through a long-drawn sales process but, at the end of it, when it bagged the deal, it’d lay its hands on a big pot of gold by way of upfront license fees.

The brave new world of cloud software affords no such luxury. Typically sold on the basis of pay-per-use or monthly subscription, SaaS delivers very little upfront revenue. Like we highlighted on our website’s SaaS Marketing section, SaaS vendors must ensure that their customers keep renewing subscriptions, month after month. Customer churn threatens their very survival.

Therefore, it’s imperative for SaaS vendors to find ways to increase stickiness and enhance usage of their software by their customers.

Their most obvious approach in this pursuit would be to insist on an upfront contract for 12 or more months. However, this strategy will backfire for most vendors who’ve gone to market with exactly the opposite approach of acquiring customers with a pay-per-use or month-by-month subscription model.

What, then, can a typical SaaS vendor do against this backdrop?

We’ve observed a few best practices in the market:

amazon01Amazon Prime: By providing free shipping for its subscribers, Amazon Prime removes one major friction in ecommerce, namely, extra freight cost. However, if you scratch beneath the surface, this approach does something more: It nudges people who cough up US$ 79 99 per year for Amazon Prime to buy as many things from Amazon as possible since such an approach would save them the trouble of searching for another e-tailer that provided free shipping for one-off orders.

li01LinkedIn InMail: Salespersons and marketers know that their cold emails to potential customers elicit poor response rates. LinkedIn offers them a powerful value proposition by promising a 30X higher likelihood of response for its proprietary InMail message. The professional network backs up its claim with an InMail credit if there’s no response in seven days. The catch is, customers can avail themselves of the free replacement InMail only if they stay subscribed to one of the social network’s premium plans.

GoDaddy: If you book a domain name via GoDaddy and, for whatever reason, decide not to renew it upon expiry, you should be prepared to face the brunt of the company’s high pressure carrot-and-stick tactics communicated via a series of RAG-coded emails. At first, GoDaddy will entice you with a green-coded special renewal price (typically 20% discount from full price). If you don’t bite at this stage, the company will send you an amber colored email threatening an $80 fine. Many people might find it easier to cough up the 10-odd dollar special price and renew the domain instead of risking a 80 dollar fine. However, if you take the trouble to comb through the fineprint, you’d find out that this so-called fine is only applicable for customers who actually wished to renew the domain name but inadvertently let it expire – in short, not for someone like you who took a conscious decision to not renew the domain. If you let this pass, you’ll finally get a red-coded expiration notice.

If you look around, you might find many more approaches by which SaaS companies try to minimize customer churn. Each approach has its own merits and demerits. Some of them might even appear unethical to a few of you.

It’s really down to each SaaS provider to work out by itself or with external assistance a suitable strategy that accomplishes its business goals while staying on the right side of its ethical compass.

How Security Can Actually Cause Vulnerability

Friday, June 6th, 2014

sv01Security increases friction. That’s not news. I’ve myself written many blog posts – click here, here and here – on this perennial tradeoff involved in payments.

However, I recently realized that security measures can actually cause new sources of vulnerability.

Ironic but true.

Since December 2013, India’s central bank RBI has made it mandatory for all debit and credit card transactions at the point of sale to require PIN. This is in addition to signature, which has always been required for card present transactions. So, while some other nations are debating about “PIN or Signature”, India has already enforced a “PIN and Signature” regime. But I digress.

In theory, PIN makes card transactions more secure. When implemented properly – as Europe did with EMV over a decade ago – PIN does reduce card fraud without a disproportionate increase in inconvenience.

However, when the same enhanced security measure is implemented in a half baked manner, it not only reduces convenience but increases vulnerability.

Friction from the RBI’s latest mandate arises from the fact that most credit cards have 6 digit PIN numbers, which are more difficult to remember than standard 4 digit PIN applicable for debit / ATM cards.

Now, on the ground:

  • PIN entered by payers in the existing POS machines is visible to everyone around them. Instead of changing their POS machines to higher models with hoods, banks are dishing out stupid advice like “Use your hand or body to shield your PIN”.

  • Because they can’t access the POS machine in multiplexes, pharmacies, restaurants and many other merchant establishments, customers are asked to speak out their PIN numbers aloud.


As a result, the purpose of PIN is defeated.

While things might improve in future, at this point the “PIN + Signature” regime has caused greater friction and increased vulnerability.

As an aside, the central bank apparently implemented this new security measure to provide more confidence to people to use their payment cards and thereby usher in a cashless society.

For more than one reason, we might be headed for exactly the opposite effect.

  • When people received their PIN mailers along with their credit card welcome kits several years ago, they didn’t bother with the PIN number since it was only required to make cash withdrawals from ATMs via credit cards, a feature that people used rarely since it was very costly. As a result, most people don’t know their credit card PIN numbers today and few would take the trouble to contact their banks to get their PINs reissued.
  • Not all POS machines are equipped to accept PIN for credit card transactions. As a result, many merchants, including two of my Mobile Network Operators, have stopped accepting credit cards.

Ergo, RBI’s recent mandate has rendered many credit cards unusable at the POS and it’s back to cash for many customers.

How’s that for “unintended consequence”?