Archive for May, 2015

Winning A Customer For Life – The Mast Kalandar Way

Friday, May 29th, 2015

mastk12Ever since I pointed out the yawning gaps in its disloyalty – er loyalty – program in Mast Kalandar Shows How Not To Run A Loyalty Program, Mast Kalandar has thoroughly revamped the way in which the program operates. Diners no longer need to struggle with their plastic cards in front of flaky card readers to earn rewards. They simply quote their mobile phone number to the cashier and receive instant confirmation of credit via SMS. This has worked as advertised during every one of my subsequent 5-6 visits.

While it’s not a trailblazer of replacing plastic with an easy-to-remember PII like mobile #, the QSR deserves kudos for listening to its customers and streamlining its operations accordingly.

Where Mast Kalandar does blaze the trail – at least going by my personal experience – is by fostering loyalty outside of its loyalty program.

On a recent scorching afternoon, I selected the Mast Kalandar outlet near my office for lunch largely because it was air conditioned. After placing my order and taking a seat, I noticed that the AC wasn’t working. I complained about it to the cashier. He threw up his hands and confessed that they hadn’t been able to repair the AC for over two weeks. I asked him if he’d give me a discount to make up for the shortfall in service.

He laughed away my question. Which was hardly surprising going by my experience with un-empowered frontline staff at most other stores in India. Since I’m a big fan of using social media to receive customer service (click here and here), I tweeted to the company while I was still inside the restaurant.

Nothing happened until I finished my meal and left the restaurant around 30 minutes later. However, someone replied back to me later that day, asking me for my contact info. When I gave my mobile number, one Swetta Rao from the COO’s office called me, apologized for the inconvenience and promised that the AC would be fixed at the earliest.

I’ve seen many of these movies before and they typically end on that they-lived-happily-ever-after note.

But not this one. This customer service executive offered a free meal on my next visit. This came as a pleasant surprise: I’d asked for an inch and didn’t expect a mile in return!

mastk13I thanked her and inquired about the modalities of redeeming her offer. She told me that I simply had to give her a 30 minute notice whenever I next decided to visit a Mast Kalandar and she’d take care of everything else.

I was traveling and otherwise eating out at other restaurants until three weeks later when I decided to reach out to Ms. Rao to encash on my free meal. Despite the passage of time, she hadn’t forgotten me or her free meal offer and promptly texted me back within 15-20 minutes to confirm that she’d made all arrangements at the outlet.

As soon as I reached the restaurant, the store manager David knew who I was. I didn’t have to update him about my interactions with his colleagues, a ritual I go through regularly at banks and retailers. Without a word from me, he served my free meal. The entire experience was absolutely frictionless.

Mast Kalandar certainly deserves props for streamlining its loyalty program. But there’s a lot more than that. To put it in perspective, let me share the views of Rajat Paharia, Founder and Chief Product Officer of gamification company Bunchball. In his latest book titled Loyalty 3.0, Paharia argues that traditional loyalty programs merely encourage loyalty to offers and discounts rather than brand. In an apparent nod to this notion, Mast Kalandar has gone beyond the purview of its loyalty program to find ways to enhance the overall CX. For that the company merits a standing ovation.

If Mast Kalandar’s C-Suite keeps up its good work and progressively empowers its frontline staff a little more, Mast Kalandar might just crack the Holy Grail of winning a customer for life. Best wishes to Swetta Rao, COO Pallavi Gupta, Store Manager David and the rest of the team at Mast Kalandar in their journey to provide what Ms. Rao calls a “WOW Service” to every single customer on every single visit.

And, yes, when I went for my free meal, the AC was working!

Retail Is Still Barking Up The Wrong Tree Against Ecommerce

Friday, May 22nd, 2015

In Retail Is Barking Up The Wrong Tree Against Ecommerce, I’d listed three reasons why I’ve increasingly turned to ecommerce for my shopping needs. You might recall that none of them was related to price.

In the recent past, there were two more reasons why I went online.

Money Back Guarantee

I recently bought a car charger for my laptop from a physical store.

When I connected the product to my car’s cigarette lighter charger, it didn’t come on. No amount of twiddling with the cable and connector would get the charger to work. I went back to the store to claim a replacement but it didn’t have any. I then asked for my money back. They refused, saying they could only issue store credit for equivalent value. Now, the charger cost four figures and this store primarily sells books and DVDs costing two to three figures. It was terribly difficult to buy enough books of my taste to exhaust the credit. I somehow managed the feat on the occasion but I’ve never bought a single item from this store after this experience (although I keep visiting it regularly since it’s my “showrooming” store of choice!).

Contrast this with my experience of buying a universal power adapter from a leading ecommerce website. When I opened the package, I realized that the product wasn’t suitable for my needs. I went to the website and clicked the Return button. Within three days, the company arranged to pick up the product from my home and within two more days, I had the money back in my credit card account.

moneybackI guess return policy in modern retail is still shaped by its traditional distrustful mindset. I’m not suggesting that consumers are saints: I’ve seen many people who buy things, use them and return them without compunction. But not just in India. This is a reasonably universal trait of consumer behavior. I’ve personally witnessed it in USA, UK and Germany. But that hasn’t stopped the Best Buys, Currys and Kaufhofs of the Western world from offering moneyback guarantees. In my experience, customers initially try to game the system but the cheap thrill of doing so fades away after a couple of attempts.

So, Indian retailers should seriously consider introducing moneyback in order to compete with ecommerce. I’m not the only one saying this: In his book Supermarketwala, the doyen of Indian retail industry, Damodar Mall, considers myopic returns policy as a major friction hotspot in Indian retail. Those who introduce the practice will start enjoying a major upside by way of increased sales when, assured of being able to return an item if they don’t like it, more consumers will coax themselves to make the purchase.

I can say this with some personal experience: My company offers a moneyback guarantee for our SAP Mailing List product. The policy readily addresses the eternal list buyer’s concern about list quality. It also helps us to enrich the list by implementing a crowdsourced refresh process (More on that in another post.). And, in its five year tenure, not a single customer has sought a refund.

Lack of Internet Connectivity

I wanted to buy a leather bag recently and checked for various options online. The product I liked had a sticker price of INR 15K (US$ 250). Now, that’s a lot of money to pay for an old-fashioned utility item. But I was still willing to go ahead – old habits die hard! – if I could be sure that I could stuff all my things into it. I couldn’t get a feel for the physical dimensions of the product from its pictures on the website and decided to check it out physically. I went to the nearby store of this leading leather goods brand. Despite searching all over the place, I couldn’t spot the bag anywhere. I asked the salesman – yes, it was a man – if he could find it for me. He shook his head and told me to check it online.

internetmonitoring01Under normal circumstances, I’d have walked out of the store, concluding to myself that this guy didn’t know how to sell. However, I’ve been loyal to his company for nearly 20 years and took the trouble of asking him what was the guarantee that I’d return to his store / brand after going online. Realizing the folly of his approach, he told me that his company had a catalog of 285 items and that it was impossible to stock each and every one of them in store. I conceded the point and asked them why he couldn’t show it to me online while I was still inside the store.

He then confessed that his company didn’t provide Internet access inside the stores, fearing that their staff would misuse it. Well, doing personal stuff on company’s Internet is not unique to this company. Denying it on that ground is like throwing the baby out with the bathwater. Not only does it show distrust of staff but it turns away customers. I hope retailers realize the stupidity of implementing a blanket ban on Internet at their stores, especially when they themselves need it to make the sale and can easily prevent its misuse by implementing readily-available central monitoring software.

*****

Price continued to play no role in my decision to ditch brick-and-mortar on the above two occasions. In a month or two, I’m sure I’ll find a few more reasons for shopping online but I’m sure you already get my drift: Retail is still barking up the wrong tree against ecommerce.

The More ERP Changes, The More It Remains The Same

Friday, May 15th, 2015

erpctw03I was recently talking to an SAP consultant who has been in this field for close to a decade and is currently employed with one of the world’s largest SAP partners.

I was tickled by a few things he told me about the current state-of-affairs in the SAP world:

  1. As an FI lead, he must be on call 24/7 during his customer’s month closings
  2. The customer starts their payroll run only after the HR consultant reaches onsite
  3. Focus is on implementing the core modules SD, MM, FI and PP. CO still gets postponed to the elusive “next phase”
  4. Process-oriented, cross-module groupings like Order-to-Cash, Procure-to-Pay and Hire-to-Retire are only used for marketing and presales. Actual implementation happens module-wise
  5. Consultant affiliation – and allocation – are still based on modules. Requests for cross-module expertise are rare. If and when they do arise, they’re fobbed off with the standard response, “that’s not how SAP Practice works”
  6. Core modules still use Windows – not browser – GUIs and support remote user access via Citrix Metaframe.

For all the changes that ERP drives in a customer organization, it looks like the world of ERP itself hasn’t changed much since I entered it two decades ago!

If you’re wondering why this is the case, Dilbert may have the answer:

erpctw02

On a more serious note, let me simply repeat what the aforementioned consultant told me: “SAP is a business enabler. It can’t change much when the underlying business dynamics continue to be complicated”.

Personally, I’m pleased with #3 and #6 because:

And a little disappointed with # 4 because, when I was exposed to ARIS and a couple of other business process modeling tools in circa 2000, I was excited about the innovative implementation methodology supported by them. It’s a shame that, 15 years later, they haven’t gone mainstream.

Don’t Let Your Product Scuttle Your Marketing

Friday, May 8th, 2015

Separating product from marketing is never a great idea for any type of technology but, for Software-as-a-Service, it can be a recipe for disaster. That’s because SaaS functionality is a double-edged sword: Get it right and it can aid your marketing; but copy it blindly from your onpremise version – or otherwise get it wrong – and it could wreck your marketing.

Let me provide some background on SaaS marketing before deep diving into this subject.

As leaders of tech companies know, unlike onpremise software, there’s no “pot of gold” at the end of the SaaS sales cycle rainbow. With their pay-per-use or subscription-based revenue model, SaaS vendors are always in a “sales mode” and must ensure that their marketing runs like a well-oiled engine.

The key goals of SaaS marketing are:

  • Upgrade trial / freemium users to paid plans
  • Increase user count
  • Push customers to select / upgrade to higher plans.

A product’s basic feature set can play a major role in enabling – or retarding – the accomplishment of these marketing outcomes.

Let me explain this with the help of the following real-life examples.

PRODUCT 1: SOCIAL MEDIA DASHBOARD

sbp02

One of the many ways in which Hootsuite tempts users to upgrade

For onpremise software, it’s considered good UX design practice to show only relevant menus and options in order to reduce clutter and focus the user’s attention on their everyday tasks. As and when upgrades happened – typically once in 12-18 months – their screens would be reconfigured with the new features.

Under SaaS, the traditional UX paradigm poses a major challenge: If users never knew what features they could get on a higher plan, why’d they upgrade to it?

To overcome this challenge, best-in-class SaaS products provide visibility of every feature to every user, whether their current plan supported it or not. By tickling their curiosity about the excluded features, the product can gently prod users to explore upgrades to higher plans. Hootsuite does this well in its social media management dashboard cloud solution by:

  1. Automatically displaying the Pro upgrade screen whenever the user wishes to link his sixth social media profile (the freemium version supports up to five profiles)
  2. Giving a snapshot of what’s available in its premium Analytics module
  3. Amplifying visibility for upgrade by placing a “Upgrade to Pro” button just next to the Search bar, which is one of the most frequently features in the software.

I must hasten to add at this stage that Hootsuite doesn’t stop with the above product-related tactics. It executes several marketing  campaigns on a regular basis to trigger upgrades by offering deep discounts on its premium plans.

PRODUCT 2: LEARNING MANAGEMENT SYSTEM

Initially developed for onpremise deployment, the developer of this LMS software wanted to port the software to the cloud. Its engineering team treated the migration as a mere change in deployment method and left all product features unchanged.

A year after the SaaS version went live, less than 5% of the customer’s staff strength had signed up for it. This was disturbing since every employee of the customer company was considered a potential user when the deal was finalized. Needless to say, revenue trailed expectation by a wide margin.

We were called in at this stage. After a quick review of the software and a site visit to the customer’s office, we could identify the culprit: The cumbersome process of onboarding new users to the SaaS version.

To give a little bit of the background, under the older onpremise regime, the vendor would contract for a certain number of user licenses in advance and collect the License Fee upfront. Any increase in user count would go through a formal license upgrade process. Therefore, it made sense for the vendor to design the software in such a way that it either didn’t allow new users to be added automatically or, if it did, it was only after a detailed registration process. Our customer opted for the latter option.

However, under the SaaS regime, there was no offline contracting process for addition of new users. As the word spread, new users expected to simply click a button to start using the software. However, since the registration form – and all other features of the onpremise software – were left unchanged in the SaaS version, users saw a long blank form. This proved to be a major friction hotspot. Many users got frustrated and abandoned their attempt to onboard the software. This explained the slow growth in user count of the SaaS version.

silos

After completing our root cause analysis, we recommended a total revamp of the new user onboarding functionality for the SaaS version. According to the features we specified, new users would only need to enter their email address to seek access to the software. Their name, department, location, telephone extension, cost center and all other required information were automatically fetched from the company’s Active Directory and seamlessly forwarded to the respective SBU head for authorizing the new user addition.

The new feature led to a sharp increase in user count and subscription revenues.

*****

As is clear from the above examples, a well-spec’ced SaaS product can advance marketing and a poorly-spec’ced one can impede it. That’s one of the reasons we caution cloud-computing software companies against delinking their product from their marketing.

Sales-Marketing alignment is passé. It’s time to embrace Product-Marketing alignment as the new credo in the world of SAAS.

When Does Correlation Equal Causation?

Friday, May 1st, 2015

Data purists would rap my knuckles for asking this question and reply, “Never”.

On the other hand, “data sophists” who’re accustomed to lying with Big Data in even more crude ways would wonder, “Duh, they’re the same, no?”

If you don’t belong to either camp, you might pause and wonder if there’s a golden mean between the two extremes. Like me.

Let me use these two examples to get a feel of when correlation can equal causation and when it can’t.

EXAMPLE 1

Correlation: US spending on science, space and technology goes up or down in tandem with suicides by hanging, strangulation and suffocation.

cec01

Source: Spurious Correlations (http://tylervigen.com/)

Causation: If suicides by hanging etc. go up, US spending on science etc. will also go up.

Action: Monitor suicide rate by hanging. If it goes up, release more budget for R&D. If it goes down, downsize R&D.

Even a diehard Data Sophist would intuitively accept that correlation does not equal causation in this case.

EXAMPLE 2

Correlation: Compared to other zip codes, there’s a significantly higher attach rate of business loans with home loans in 23508.

Causation: If home loan goes up in Zip Code 23508, business loans will also go up.

Action: Monitor home loan volume. If it goes up, source additional funds for business loans. If it goes down, release funds earmarked for business loans.

As we saw in What The Obama Credit Card Decline Means For The Future Of Analytics, the correlation made business sense when the bank in question discovered that its business banking and retail banking sales people sat at the same office in Norfolk (zip code 23508), a practice that led to better exchange of market information. Therefore, intuitively, we can agree that correlation could mean causation in this case.

(Notice my frequent use of intuition. It’s intentional: When all the numbers are collected, crunched and visualized, many business decisions are guided by the gut to some extent. At least the heuristic ones like developing a marketing plan, writing a book or recruiting a sales rep.)

*****

To summarize, correlation does not equal causation in the first example and may equal causation in the second one.

By abstracting the basic differences between the two examples, I propose that correlation can equal causation if the following three conditions are met:

  1. The measured variables belong to the same domain
  2. The correlation makes some business sense in itself
  3. The causation can be validated by backtesting with past data.

So, to answer the question posed in the title of this post,

Correlation can equal causation – sometimes!