Archive for January, 2015

Banks Have Nothing To Fear From Neobanks

Friday, January 23rd, 2015

STOCK-300x300According to the Economic Times article Brokerages’ Retail Pain Is Banks’ Gain, banks have stolen a march over neobanks in the e-brokerage space in India. Cheaper access to funds and greater trust – “no one lost money with a bank” – are two major factors that have gone in favor of banks.

Based on personal experience, I’d add better CX as one more factor.

I’d signed up for an e-trading account with a leading private sector bank back in the late ’90s. I continue to use it over 15 years later – although not as often as my RM would like me to, but that’s another story! My e-trading account is connected to both my bank and DEMAT accounts. (For the uninitated, DEMAT is what an electronic security repository is called in India.) As a result, movement of money and shares between my three accounts is seamless. So much so that:

  • I’ve never written / received a single cheque for any of my stock purchases / sales after onboarding this platform
  • I’ve forgotten the name of those paper slips I used to fill for depositing and transferring shares in my pre e-trading days!
  • I don’t recall having to visit the bank’s branch even once after opening the account there more than 15 years ago.

In contrast, the new crop of nonbank e-brokerages that came into existence in the early 2000s are isolated from funding sources and security repositories. Their customers have to deal in cheques for sale / purchase of stock. They need to make frequent visits to their bank branch and the e-brokerage’s office to drop and pickup cheques and other paper instruments.

CXDespite all that friction, nonbank e-brokerages were able to gain a foothold in the initial days. I attribute their early success to a growing market, their cheaper brokerage rates, more aggressive advertising and, above all, the modest user experience expectation of the Indian consumer who had just then started dabbling with Internet and ecommerce.

In the last 5-7 years, Indian consumers have gained exposure to many e-tailers and online travel agencies that deliver a highly frictionless experience. As a result, they expect superior UX in all their online interactions. Unfortunately, the e-brokerages’ convoluted operating model fails to fulfill their heightened expectations. It was a matter of time before customers spurned the lousy CX offered by nonbank e-brokerages. Seems like that day has finally come.

In the end, friction has precipitated the rapid decline of retail e-brokerages.

I’ve been complaining about friction in Internet Banking and other digital banking processes for a long time. It’s so ironic that banks should actually trump neobanks with superior Customer Experience – at least in this one category of financial services.

3 Secrets To Uncovering Business Pain Areas

Friday, January 16th, 2015

There’s a growing realization among B2B technology marketers that positioning their products and services around technology is a fool’s errand. Even compared to a year or two ago, there’s a massive rise in vendors recasting technology offerings around alleviation of business pain areas.

This is a great development. We’d like to take some credit for it since we’ve incessantly advocated this approach from Day One and used Marketable Items to realize it.


Whether we’re justified in patting our backs for this change in thinking from “inside-out” to “outside-in” is peripheral to the primary purpose of this blog post, which is to address the following challenge found by many tech vendors in executing it:

What if there are no pain areas?

Well, every company has hiccups. Even a casual glance at any company’s public announcements would prove that, regardless of it’s located or which industry it belongs to, no company is immune to pain points. The real challenge is in finding them.

While crafting Marketable Items for various tech companies, we’ve found at least three ways that work very well in uncovering pain areas.

  1. Drill down to SBUs
  2. Surface the pain
  3. Look sideways

Let me explain each method in detail.

Drill down to SBUs

Everything might look hunky dory at the overall company level. However, scratch the surface, you might find that not all SBUs of the company are in the same boat. By drilling down to various businesses, you can find pain areas unique to that business. They probably need addressing only for that SBU but that could still present a sizable opportunity for your product or service.

Surface the pain

tyre-manufacturing-process1Company insiders might be oblivious to various issues. But, when seen from the outside, these issues may be one step away from becoming problems. Tech vendors should go beyond what the prospect aritculates and bring latent pain points to the surface. Let me illustrate this with the following real life example.

One of our customers was pitching its ERP solution to a tire manufacturer. Every time we visited the prospect for demos and presales meetings, we saw long queues of trucks parked outside the factory gate. At the time, this didn’t seem relevant to us. However, it started ringing alarm bells in our heads when we started discussing the production process. We learned that the company had multiple factories, with each being responsible for one of the many stages involved in a tire-manufacuturing process. For example, the plant we visited carried out the first stage of the process, namely “Compounding”, which “is the operation of bringing together all the ingredients required to mix a batch of rubber compound.” (Source: Wikipedia)

After compounding, the work-in-progress material would be transported to the second factory in the chain which would do “Mixing”, which “is the process of applying mechanical work to the ingredients in order to blend them into a homogeneous substance.”

So on and so forth until the fifth factory in the chain would “finish” the tire.

To us, it was obvious that there could  be delays in the handoff of WIP material from one factory to the other if their production processes weren’t perfectly in synch. This would mean that trucks would have to wait for 3-4 days to collect the material. This tallied with our sighting long queues of trucks outside the factory gate. It was obvious that the trucking company would seek compensation for idling of its trucks. A side discussion with the company’s finance department revealed that the pain area we divined was right: The company was indeed paying hefty demurrage charges to the trucker.

Long story short, the company bought the ERP and recovered its cost when its demurrage costs went down by half.

Look sideways

While this approach can be a bit politically sensitive, it always works.

After seeing the demo of the aforementioned ERP vendor’s financial accounting module, a prospect’s finance department fobbed off the vendor’s business analysts with the confident assertion that their accounting systems were perfect and took great pride that they’d slashed their quarterly closing period by half. However, the vendor’s business analysts heard a very different story from the company’s sales department: Even after they collected them, many invoices would still keep showing up as outstanding in the AR statements generated by the finance department’s accounting software – and circulated to the company’s C-Suite!

The vendor’s team then knew that this was yet another company suffering from one of the typical “before ERP” problems: Poor integration between invoicing and collection systems. When they presented the business case to the company’s C-Suite, they used alleviation of this pain point as a major benefit of their ERP.


Pain areas exist in all companies – even if they might not always be obvious. Uncovering them may call for domain expertise and the knack of probing beyond what is explicitly stated by a prospect. But, to sell any business software, uncovering pain points is vital. If you need any assistance in doing this, we’re there!

Going From Card To COD

Friday, January 9th, 2015

I’ve been buying stuff online since circa 1998 but a few recent events have taken the edge off my enthusiasm for ecommerce:

  • Driven by VCs braying for profits, many Indian ecommerce players have moved from the traditional inventory model to the asset-light marketplace alternative. Thanks to my exposure to this model via eBay India several years ago, I’m convinced that it poses an intrinsic delivery risk for customers.
  • Online credit card payments have become very painful as a result of overzealous security measures like two factor authentication and Mobile OTP.

As a result, I’ve become somewhat partial to brick-and-mortar stores during the past 2-3 years.

shopping-cart-520x245However, a combination of stock outs and store closures drove me back to ecommerce recently (See Retail Is Barking Up The Wrong Tree Against Ecommerce for more on that).

This coincided with the entry of Amazon to India. My consistently good experience with the ecommerce giant in Germany, UK and USA for over 10 years prompted me to check out Amazon India. I quickly noticed that, while Amazon stocks its own inventory in its overseas operations, it adopted the marketplace model from Day One in India.

I’ve been cagey about online marketplaces since my bad experience with eBay India.

But I found out that, while the items on Amazon India were listed under the name of third party sellers, Amazon handled the logistics by itself. This was reassuring since many of the ills of the marketplace model could be traced back to the sad state of logistics in India (See Will The Sad State Of Logistics Hurt Indian eCommerce? for more on this topic).

cod-fiThen there was Cash on Delivery, a payment type not offered by Amazon in any other country where I’ve ordered from it.

Accounting for over 60% of ecommerce volume in India, COD eliminates the friction of using credit cards online. Moreover, by letting me pay only upon receipt of goods, COD kept me insulated from disputes, if any, between the merchant and Amazon that came in the way of fulfillment of my order. Even in the worst case, if I didn’t get my order, I didn’t pay.

So, despite its marketplace risk, I took shelter in COD and went ahead and placed three orders on Amazon India.

I’m not regretting my decision.

I got all my consignments on time or slightly earlier than the promised 4-6 business days. This is not surprising considering COD would put a natural pressure on merchants to deliver earlier so that they can collect their money faster.

Interestingly, none of my consignments reached before 3 business days. This is a smart way of ensuring that customers will fork out the additional charges for expedited delivery – INR 99 for 1 day or INR 49 for 2 days.

As for receiving the wrong or defective item, it already happened with one of my three orders. COD can’t eliminate this clear and present danger with the marketplace model. That said, Amazon India’s simple and fair returns policy substantially mitigates this risk.