Archive for April, 2017

Uber Creates Loyalty To The Deal But Not For The Brand

Friday, April 28th, 2017

In his book Loyalty 3.0, author Rajat Paharia, Founder of gamification solution provider Bunchball, says that loyalty programs of most brands generate loyalty to the deal but completely fail at their fundamental purpose of fostering loyalty for the brand.

Uber is a great example of such a brand.

In Mastering Targeted Offers – The Uber Way, we saw how Uber uses targeted offers to generate loyalty for its deals.

Ironically, it’s another type of targeted offer – or, more precisely, the way in which Uber runs it – and a few other practices followed by Uber that hamper fostering loyalty for the brand.

#1. SHADY WAY OF RUNNING SURGE PRICING

Surge pricing is the culpable targeted offer I’m referring to.

For the uninitiated, surge refers to the multiple of normal fares charged by Uber from time to time. For example, 1.25X surge means the fare is 25% more than the normal fare and 8X surge means the fare is eight times the normal fare (Don’t flinch, Uber has reportedly run trials of 50X surge in Sweden).

Surge is a form of dynamic pricing practised by airlines, hotels and ecommerce for ages. While these industries have seemingly gotten away with the practice, Uber has attracted a lot of bad press for it. That’s probably because cab riders are hard-pressed in a way that vacationers or online shoppers are not. But I digress.

Uber uses fancy verbiage to spin surge pricing. According to its website, “surge helps ensure that pickup is available quickly and reliably”. But virtually no customer likes surge. As HBR says, “surge pricing has a major image problem. Hardly anyone has a good thing to say about it, and far too many people equate it with price gouging.”

That includes me. I abandon my booking whenever I suspect a surge price. Which, according to personal experience and anecdotal evidence, is switched on quite regularly:

  1. 3X surge the moment it starts raining in Mumbai or snowing in New York City
  2. 2X surge when phone battery goes below 20% and 4X surge when it goes below 8%
  3. 5X surge if you enter a hospital in the “Where to?” box.

The second and third instances of surge pricing belie Uber’s claim that it uses surge solely to match demand and supply.

But Uber is a for-profit company operating in a free market and it’s well within its rights to seek whatever premium it wants whenever it wants. Just as I’m well within my rights to take an Uber ride or not.

So surge pricing per se does not sully Uber’s brand image (although it does crimp repeat purchase).

What does tarnish Uber’s brand in my mind is the way it communicates – or does not communicate – surge pricing. When it introduced surge a couple of years ago, Uber had committed that it’d provide warning of surge pricing before passengers confirmed their booking. That’s not happening lately.

After I updated to the latest version of Uber’s app, I don’t see any surge warning. If I want to avoid getting ripped off, I need to find out my trip distance and time, calculate Uber’s normal fare for the trip, compare the figure with the estimated fare displayed by Uber, and then infer whether surge pricing is on or not. Every booking has become a painful, mini-R&D project. As a result, I think twice before I fire up the Uber app.

#2. AMBIGUOUS RECEIPTS

Uber displays the receipt summary on the app and sends the detailed receipt by email. Receipts have become ambiguous of late. My wife’s receipts show distance and time fares separately. Mine only show the overall fare. When Targeted Offer #4 (25% off for next three rides. No Promo Code required) was on, I booked a ride from her app and got the promised 25% discount. I happened to book another ride on the same day from my app. I expected either 25% off (assuming I was eligible for the offer but hadn’t received Uber’s communication about it) or no discount (if I wasn’t eligible for the offer). As you can see from the receipts for these two trips, something else happened:

On this occasion, I got a gift horse that I shouldn’t look in the mouth. But, on another occasion, I might get a 4X surge slap on my face. Scary!

#3. OSCILLATING BUTTONS ON ORDER PANEL

The UberGO button normally comes before the UberX button on the ordering panel of the app, as shown below.

For the uninitiated, the cheapest private cab offering of Uber is UberGO, which is a hatchback. The next higher offering is UberX, which is a sedan.

One day, I was going to travel to a frequent destination. I got a fare estimate, which was almost double the usual fare to that destination. I was wondering if surge was on. It wasn’t. Just that, by habit, I’d tapped the second button on the panel to order an UberGO but, on this occasion, Uber had placed the UberX button on the second place. Had I taken a screenshot, the order panel would’ve looked as follows:

In short, Uber had tried to trick me into ordering the costlier UberX cab when I wanted the cheaper UberGO option. Sneaky!

(#ProTip: When you book an UberGO, more often than not you end up getting the more spacious UberX cab. That’s because UberX drivers tend to accept UberGO orders. Therefore, savvy riders never book an UberX – they just enjoy it without paying anything extra!).

#4. CASUAL SOCIAL MEDIA SUPPORT

After I updated to the latest version of the Uber app, I noticed that the UberHIRE button was missing. Like I do with all brands as my first port of call, I tweeted to Uber.

Let me reproduce the thread below:

Then, there was radio silence from @UberINSupport. I still don’t see the UberHIRE button on my app.

On top of that, they didn’t even spell my name right! So, I’m a bit outraged. I’ll recuse myself and leave it to you to judge whether I used the right language for the heading of this point.

#5. VANISHING EMAIL SUPPORT

I’ve never cancelled an Uber ride. But a few drivers have bailed out after accepting the ride. Uber has always billed me a cancellation charge of INR 60. I’ve never understood why I should be penalized for no fault of mine. Without digging too deep, I’ve simply forwarded Uber’s receipt for this charge to support@uber.com and sought a refund. I’ve gotten it promptly in the past.

But not any more.

When this happened most recently, my email to Uber bounced back. I found out that Uber has stopped email support. AFAIK, Uber never offered telephone support.

I gave up trying to recover this amount. Which is probably what Uber wanted me to do for the welfare of its P&L.

But this is a cheap tactic and leaves a bad taste. The way I see it, for all its prowess for raising billions of dollars of funds and its distinction as the world’s most valuable privately held company yada yada yada, it’s extremely sad if the only way Uber knows how to make a profit is to snooker customers for a paltry sixty bucks (which is less than a dollar).


Caveat emptor or “buyer beware” is a universal warning while dealing with any brand. But, even by that standard, it’s hard to be loyal to a brand you find Shady, Painful, Scary, Sneaky, Casual and Cheap.

That said, I’d be remiss if I missed out a recent update: Uber named me Top Rider of the Week a couple of weeks ago.

Called “reputation badge” in gamification, it’s a technique advocated by CEM gurus to go beyond generating loyalty to deals to fostering loyalty for brand.

 

Looks like Uber has taken the first step in that direction. I just hope it doesn’t die a premature death amidst the other questionable practices followed by the company.

Why COD Still Rules Ecommerce In India

Friday, April 21st, 2017

Contrary to popular belief, ecommerce began in India way before Flipkart came into existence in circa 2007. I remember placing orders from a dial-up modem on Fabmall, Rediff and a couple of other Indian ecommerce pioneers in the late 1990s. The only mode of payment supported was online by credit card.

That said, Flipkart did pioneer COD in 2010, which gave a huge fillip to ecommerce in India. For the uninitiated, “Cash on Delivery” is a mode of payment whereby a customer buys online from the ecommerce website but pays offline to the person who delivers the goods at their doorstep. The actual payment is made typically by cash but also increasingly with credit card, debit card or mobile wallet nowadays. So COD could equally well stand for “Card on Delivery” or “Wallet on Delivery”. Given the variety of payment instruments actually used in a COD transaction, “offline payment” is perhaps a more accurate term for this method of payment. But that’s a post for another day.

In this post’s context, there’s another characteristic of COD that plays a more important role: In this mode of payment, the customer does not pay at the time of order placement but only against receipt of goods.

Initially, Flipkart and other ecommerce companies ascribed the runaway success of COD to low card penetration in India. Even the mainstream media went along with their claim that there were very few cards in India. This claim was highly patronizing at the time – I used to pay for my online purchases in the late 1990s by credit card. Today, it’s total BS: There are more than 600 million cards and only 40 million online shoppers in India, so an average Indian shopper has a choice of 15 different cards with which to pay for an ecommerce order.

If card penetration is not the reason for the overwhelming popularity of COD, what is?

Going by personal experience and anecdotal evidence, it could be friction and failed payments caused by two factor authentication. For the uninitiated, 2FA became mandatory for all online payments in India in 2009. For reasons explained in the below exhibit, 2FA mucked up online payments and drove many long time credit card users like me to COD for online purchases.

Cue to the present.

The Government of India demonetized high value currency notes in November 2016. On the back of the “Note Ban”, the government began pushing cashless payments. Trending as #CashlessIndia, the drive has resulted in the proliferation of several new digital payments such as UPI, BHIM, BharatQR and, most recently, Aadhaar Pay.

Credit card, debit card, e-wallet, m-wallet, realtime A2A, biometric – you name it, India has it. I wouldn’t be bragging if I claimed that India has more types and brands of digital payments than any other country in the world today. Some of them (credit and debit cards, mobile wallets) involve incumbent banks and card networks (Visa, MasterCard and the indigenous RuPay) whereas others (UPI, BHIM and Aadhaar Pay) disintermediate card networks from the payment value chain. But I digress.

More important point is some of the recent digital payments have found innovative ways to enhance the CX of online payments and improve their success rates while still remaining compliant with the regulator’s two-factor authentication mandate. Think HDFC Bank’s PayZapp and PayTM.

The proliferation of frictionless digital payments has had an immediate and perceptible impact on brick-and-mortar retail, going by the direct attribution made by the doyen of India’s organized retail industry of digital payments to his company’s topline.

But ecommerce still remains stubbornly driven by cash. According to latest reports, nearly 70% of online purchases are paid by COD, with some reports putting the figure as high as 83%.

If that sounds puzzling, it is – but only if you think of payments in the isolated context of its operating model.

If, on the other hand, you look at the entire customer journey, payment plays another role: It acts as a seal of trust placed by the buyer on the seller. In simple terms, you pay someone only if you trust them to deliver. It’s this facet of payment, which is unrelated to the mechanics of its operating model, that determines the winners and losers among payment methods.

From personal experience and anecdotal evidence in the recent past, cash still rules ecommerce in India because of the following reasons related to trust:

#1. Delivery Address Ambiguity

While ordering a pizza on Pizza Hut’s mobile app, I reached the checkout page. I was asked to enter my building’s name. As soon as I finished typing in the first three characters of my building’ name (SAT), the app went into a tizzy. It recovered after 2-3 minutes and displayed a long list of buildings from which I had to select one. None of them matched mine. Ditto when I entered the first 3 characters of my street name on the next field of the checkout screen. Since I had to do something to move forward, I selected the option that came closest to my location. (No, the app didn’t allow freeform text entry of my building or street name). The app again went into a tizzy. When it came back, it displayed the delivery address the way it had reckoned it. This didn’t match my real address.

With so much ambiguity in the delivery address, I wasn’t sure if my order would ever reach me. No sensible customer under those circumstances would pay online by card in advance. Neither did I. I opted for Cash on Delivery.

#2. Delayed Deliveries 

Ashish Vyas articulates this problem very well on LinkedIn:

Order a Laptop on 7th April from Flipkart. Expect it to be delivered by 11th April. Delivery partner E-Kart’s phone is not reachable for the entire day on 11th April. The delivery person calls me in the evening to tell me that the delivery couldn’t be done on that day due to manpower shortage and would be done on 12th April 2017, 2.00 p.m. I explain to him that my work is suffering because of the delay in delivery. But he is not bothered and gives me more reasons why he couldn’t deliver on that day. 12th April – Entire day passes, again E-Kart’s telephone is switched off for the whole day. No way I can speak to any executive of Flipkart to understand by when the delivery will be made. Flipkart’s Customer Care only gives an automated response. Now that the money is already with them, they don’t give a damn.

No prizes for guessing what payment mode this guy would select the next time he orders something online.

#3. Fake / Wrong Deliveries

As I’d highlighted in Beware of Credit Card Reward Redemption Theft, fake / wrong delivery of documents, bills and magazines is a widespread problem. Looks like the epidemic is spreading to ecommerce packages now.

It’s easy for a courier company’s delivery boy – yes, they’re always boys – to log into his app that he has delivered a consignment successfully without even ringing the consumer’s doorbell. Ergo fake / wrong delivery is easily possible. If you pay upfront, you’d have to chase the courier. With COD, the courier will chase you. In this situation, any sensible customer would like to be chased rather than to have to do the chasing.

 


As the above incidents illustrate, many people who otherwise use credit cards extensively in their day-to-day lives – and have been doing so for ages – turn to Cash on Delivery when it comes to ecommerce (and then pay by card or m-wallets when they receive the goods!). In each example, the key issue is when the payment is made rather than how it is made. Lack of cards or fear of fraud risk – the go-to reasons given by online retail honchos – has had no role to play in the choice of COD in these three cases.

And it’s not only me.

Flipkart’s first employee Ambur Iyyappa, spills the beans about the real reason why Flipkart introduced COD. Contrary to what the top brass at ecommerce companies say, he makes the following observation in Times of India:

By 2010, Flipkart was doing brisk business. But the challenge to scale up was that customers didn’t want to pay for something before getting it. And our delivery partners at that time lacked the infrastructure for cash on delivery. It would’ve been easy for Flipkart to wait for others to build the capability first. Instead, Ekart, Flipkart’s supply chain, launched cash on delivery.

So, it’s trust deficit, specifically related to delivery, that explains why COD still rules ecommerce in India. 2FA-related issues will continue to pose challenges to the mainstream adoption of online payments but, even if those issues were to be resolved over time, delivery risks would continue to ensure that COD remains the most popular method of payment for online shopping.

In Will The Sad State Of Logistics Hurt eCommerce?, I’d highlighted the growth challenges posed by core logistics (also called “3PL”) to ecommerce in India. It now appears as if the finance side of logistics (“4PL”) is posing existential threats to the industry. Just when the Flipkarts and Snapdeals of India are trying to turn profits, logistics is pushing their customers to COD (or keeping them there), which is by far the most costly method of payment for a merchant to service.

Mastering Targeted Offers – The Uber Way

Friday, April 14th, 2017

Uber makes extensive use of targeted offers as a key plank of its customer engagement management (CEM) strategy.

For the uninitiated, a targeted offer is a personalized deal for an individual customer segment – or even individual customer. It’s the antithesis of spam, where the same deal is sent to all customers. A simple example of a targeted offer is a gift coupon you get from a restaurant on your birthday.

Here are a few targeted offers received by me and my family from Uber in the recent past:

  1. 50% off for next two rides. Enter Promo Code HOLI17.
  2. Flat Fare Weekend. INR 49 for up to 5 kms; INR 99 for up to 10 kms and INR 149 for up to 15 kms. Enter Promo Code FFWKND.
  3. 33% off on five trips. Enter Promo Code PUNE833.
  4. 25% off for next three rides. No Promo Code required.
  5. 50% off for next two rides. Enter Promo Code PUNEGOLD.

Like all brands, Uber also tacks on some fineprint to its targeted offers e.g. validity period. But that’s where the similarity ends. The world’s largest taxi aggregator sets itself apart from the herd by following a few unique practices in the way it devises and fulfills its targeted offers.

#1. OFFERS VARY BY CITY

When Uber made the second targeted offer in the above list in my city (Pune), it had made an even sweeter Flat Fare Weekend offer in Ahmedabad. For one, the fare was lower: INR 50 for up to 8 kms and INR 100 up to 15 kms. For another, it ran through the whole week. (Last year, I’d visited this Gujarat city and had taken a couple of Uber rides there. Maybe because of that, I keep getting Uber’s targeted offers for Ahmedabad as well).

#2. OMNICHANNEL

I regularly receive Uber’s targeted offers via three channels viz. Email, SMS and in-app PUSH notifications. All of them work inside the Uber app. Which is a non-trivial statement because I can’t say the same of offers I receive from many other brands.

#3. TARGET AUDIENCE

As you can see from the exhibit on the right, some of Uber’s offers are available to all customers whereas others are narrowly targeted only at some customers. Most offers come with a promo code that needs to be entered at the time of booking the ride. Some of them don’t need a promo code. But even they’re not necessarily targeted at everyone. For example, only my wife got the fourth offer on the above list (my daughter and I didn’t).

#4. FRICTIONLESS REDEMPTION

I described a pet peeve about promo codes in Walking The Tightrope Between Driving Repeat Purchase And Rewarding Loyalty. A quick recap: Three years ago, I got a targeted offer from MERU Cabs, the pioneer of app cabs in India. It was for a discount of INR 100 on my next ride. To get the discount, I needed to enter the promo code FEELGOOD while booking my next ride. That happened a few weeks later and I’d forgotten the promo code by then. As a result, I forfeited the offer and had implored brands to automatically apply promo codes in future.

But I’d also predicted that they won’t. To know why, click through to the aforementioned post.

My prediction was right. Many years later, even Uber and Ola – the two main players in the aggregator cab market in India today – don’t apply promo codes automatically.

That said, Uber strikes a great balance between customer experience and its business goal of driving repeat purchase. In a novel approach to achieving this, Uber requires you to enter the promo code – where applicable – only once. Uber applies the code automatically for all subsequent rides during the offer’s validity period. Let me illustrate this with the third targeted offer listed above. By entering PUNE833 only once, you get the discounted fare for five rides without doing anything while booking the second through fifth rides.


Going by my personal experience, Uber’s targeted offers are very effective. There have been times when I’ve gotten an offer from Uber and decided against using my car as I’d originally planned.

The Holy Grail of targeted offers is to create a need solely via targeted offer. In Does CX Really Drive Sales?, I’d wondered if Ola, Uber’s main competitor, would crack it. I now tend to believe that it won’t – once I switched to Uber, I’ve hardly used Ola. I’m convinced that, if there’s a brand that will crack this Holy Grail, it’s Uber.

There’s no doubt that Uber has mastered the use of targeted offers to create loyalty for its deals.

Is it also creating loyalty for its brand?

That will be the topic of my follow on blog post. Watch this space. (Spoiler Alert: Ironically, another type of targeted offer comes in the way of Uber’s achieving the ultimate reward of CEM).

Unschackling Inside Sales To Make It More Aggressive

Friday, April 7th, 2017

As SAAS software gains traction, software companies are making greater use of inside sales. According to Salesforce, inside sales is growing 300% faster than outside sales. With an increasing number of  sales development representatives operating in the same market, it’s not surprising that inside sales is finding it more and more difficult to get through to prospects.

Some vendors take the bull by the horns by using Marketable Items and Account Specific Point Offerings to transform their messaging from product-out to business pain area-in mode whereas others leave it to their SDRs to stumble through the challenge.

In the latter scenario, it’s no unheard-of for SDRs to adopt immature and questionable tactics. According The Pathetic State of B2B Market and Sales Development Tactics, these include guilt trips, impatience, strong-arm shaming, feigned concern, and so on.

We’d never permit any of our SDRs to use the shady tactics described this article. We also agree with the author of this piece about the need for professionalism in Inside Sales (like in any other profession).

However, we felt that the follow on objections raised later in the article were somewhat pedantic in the context of inside sales in the B2B technology space. Any veteran sales or marketing leader would be able to easily rebut them with the following replies:

Q1. Are these tactics really the first impression B2B managers want to create with customers?

A1: When a SDR writes “reason we haven’t responded”, s/he is obviously doing a follow up. The first interaction is over by then. Therefore, this tactic doesn’t create the first impression.

Q2. Are these “hacking” techniques worth damaging a potential relationship?

A2: There’s no relationship worth talking about with a prospect who hasn’t replied to your emails or taken your calls. Ergo, your SDRs won’t damage anything by doing a bit of hacking.

Q3. Do these tactics identify the customers that are ready to engage? Or do they deter people from even wanting to talk?

A3. Yes and no. Prospects are tired of the same approach followed by all vendors. A slightly different approach does work more often than you’d think. A customer of ours in the USA told us that he receives at least five cold emails and two cold calls a day pitching some technology service or the other. He averred that he reads past the first paragraph of a cold email or listens past the first ten seconds of a cold call only if he sees / hears a new approach in them.


Inside Sales is a tough job. The function faces a few unique challenges that are not faced by any other function in a typical software products or services company viz. high rejection rates, need for twenty-something SDRs to connect with CxOs of FORTUNE 500 companies, need to work in night shifts, and so on. To that we shouldn’t be tacking on imaginary concerns. Instead, we should look for ways to unshackle inside sales and make it more aggressive. One way to do that is to look at the advantages enjoyed by inside sales such as ephemeral nature of funnel top interactions and fleeting memory of suspects and use them to empower SDRs to try out some unconventional tactics.

We must hasten to add that these concerns become real once a lead reaches the middle of the funnel and becomes an SQL (Sales Qualified Lead). It would then be owned by field sales, account managers, and relationship managers and would need kid-gloves treatment. Unconventional tactics should be kept out at this stage. As Sabrina Ferraioli points out in B2B Phone Sales Tips: Beating the Voicemail Gatekeeper, “If you have 25 to 50 highly targeted, marketing qualified leads (MQL), inside sales can turn prospects into sales qualified leads (SQL). And if you turn even two or three SQLs into clients, you can have a substantial impact on your bottom line. So treat each one like gold.”

At the same time, we also need to unshackle SDRs working at the top of the funnel to be more aggressive.