Archive for December, 2017

Feature Or Bug – Facebook & Tideplus

Friday, December 22nd, 2017

Uber has been making targeted offers for a long time. As I highlighted in my post titled Mastering Targeted Offers – The Uber Way, some people get an offer, others don’t. As a result, two cohorts of riders can see two different prices for the same ride. In the early days, the price difference was attributed to a bug. But, as customers learned that Uber makes targeted offers at the level of individual riders, they began to recognize the disparity for the feature that it really is.

As brands increasingly adopt personalization in their communications, what you see is not what I see. At first blush, it might seem that the difference is caused by a bug in brand websites, apps or messages. But, if we dig deep, we might start getting the feeling that the discrepancy is perhaps driven by a conscious action taken by the brand i.e. feature.

This post is about “what you see is not what I see” or what I call #FeatureOrBug.

Since #FeatureOrBug is introduced by the brand owner, it obviously favors the brand. As we’ll soon see, it increases engagement, decreases cost, pumps up sales and delivers other benefits to the brand owner.

As for the consumer, there are three degrees of #FeatureOrBug:

  1. Favorable
  2. Neutral
  3. Unfavorable

Consumers will probably like a first degree #FeatureOrBug. Therefore, it boosts customer loyalty.

Consumers are indifferent to a second degree #FeatureOrBug. In the worst case, they may be somewhat ticked off by it. But it still won’t affect their engagement with the brand in the future. Accordingly, a second degree #FeatureOrBug is neutral to customer loyalty.

Consumers are antagonized by a third degree #FeatureOrBug. As a result, it adversely impacts customer loyalty.

In this post, I’ll illustrate the three degrees of #FeatureOrBug with one example of each.

#1. FACEBOOK CHECKIN – Favorable #FeatureOrBug

I saw the following update on my Facebook Feed.

If you notice the text carefully, it reads “Vikesh Mehta was drinking having breakfast…”.

Wot? Drinking breakfast?

Tongue in cheek, I replied, “I’ve heard of “liquid lunch”. Now “liquid” has started from breakfast itself, eh?:)”.

My friend thought it was a bug, reasoning that FB had tagged the said eatery as a coffee shop, thus forcing the status to begin with “drinking”.

I wasn’t so sure.

I’ve seen many such Facebook updates in the past. I didn’t know they were called FB Checkin and I’ve never reacted to one before. Both of that changed after I read this update. By displaying it in the manner that it did on this occasion, Facebook created awareness and generated engagement for Checkin. Ergo, it was probably a feature rather than a bug. Since I was happy to learn about a new Facebook “product”, this #FeatureOrBug was favorable to me.

#2. TIDEPLUS – Neutral #FeatureOrBug

The leading detergent brand TIDEplus recently ran a promo. You had to locate a code on the product’s pouch and enter it on PayTM’s website to earn a cashback on your PayTM wallet.

It was hard to find the code. But I located it finally on the inner surface of the detergent’s pouch.

I entered the code on PayTM’s website, only to be informed that the offer had already expired.

I naturally felt shortchanged.

I inferred one of the following two things from this exercise:

  • TIDEplus expected to sell a certain number of products on offer (“offer packs”) during the offer period and shipped that quantity to the trade. But actual sales were lower than expected. As a result, many offer packs were still left on the shelves – one of which was the one I’d purchased. In an ideal world, a company would go back to the trade and recall all unsold offer packs. But, in the real world, I don’t know a single corporate paragon of virtue that does that and I don’t expect P&G, the owner of TIDEplus, to be the exception.

OR

  • TIDEplus deliberately dumped more offer packs than it expected to sell during the offer period, hoping to capitalize on the strong possibility that the offer would attract a lot of additional consumers out of which only a few would bother to redeem it and fewer still would complain when they found out that the offer had expired by then. This is a shady practice. Notwithstanding the number of brands who follow it – and there are many – this practice tarnishes the brand image.

Since I’d no way of knowing which of the two things had really happened, I gave the benefit of doubt to the brand. While I’m now a little wary of TIDEplus, I’m not upset that badly that I’ll stop buying the product in future.

On a side note, sophisticated CEM solutions are now available that help brands estimate in advance how much sales uplift they can get by running a certain customer engagement program. One of our customers has such a solution. Brand managers who need help in this space can feel free to contact us.


The next installment of this post will feature a third degree #FeatureOrBug.

Spoiler Alert: Some #FeatureOrBug shenanigans can turn a brand advocate to an ex-customer.

Watch this space!

Lessons For Marketing From Spectacular Comeback Of QR Codes Via Mobile Payments

Friday, December 15th, 2017

It’s still raining QR codes!

All leading mobile payment products in the world use QR codes. This includes Alipay and WeChat Pay in China, PayTM and PayZapp in India and Starbucks App in the United States.

QR code has been popular in China for the last 4-5 years.

In India, the nineties-era technology has become very visible in the last one year, driven by its use in leading digital payment products that got a huge stimulus on the back of the demonetization of high value currency notes a little over a year ago.

I often joke that QR code would easily qualify for “Graphic of the Year Award”, if such a category existed.

As regular readers of this blog would know, I’ve been tracking QR codes in advertising and allied areas for many years. The caption of the above picture is an obvious reference to this post I wrote four years ago on the ubiquity of QR codes in newspapers, magazines, posters and billboards.

I continued with that pursuit by checking out around ten QR codes in print and outdoor ads over the last twelve months.

Each of them ticked the following three basic boxes:

  1. Scans on a wide range of smartphone cameras
  2. Drives a natural transition from print / online / TV to mobile
  3. Microsite is mobile-optimized

A couple of them went further and supported the following advanced features:

  1. CTA can be conveniently performed on a smartphone
  2. CTA exploits the power of the smartphone

This is a huge improvement over QR codes of the past that would fail to scan or lead to non mobile-optimized websites.

I wish I could say the same thing about their engagement levels. Let me explain that with the following three examples.

#1. BAJAJALLIANZ (Print Ad)

The leading private sector insurer of India published a QR code in a newspaper ad that occupied a prominent spot at the top of the page.

The CTA for the QR code was “Scan this QR code to know why term plans are a must have”.

The ad was dated 12 December 2016, which was four days after #CurrencySwitch happened. The visibility of QR code had already jumped up.

However, the QR code on this ad received only one scan (probably mine!).

#2. SAP (Print Ad)

The world’s largest enterprise software company gave a gentle reminder about GST in a newspaper ad and added a QR code for more information. For the uninitiated, GST stands for “Goods and Services Tax”, which was introduced in India last July.

Despite the fact that the ad occupied a full page, the QR code in it received only one scan (again probably mine!).

#3. SPLASH (Outdoor Sign)

Splash, the Zara of Middle East, has a floor-to-ceiling QR code at the entrance to its store in a large mall.

Despite the fact that this huge QR code has been around for several years in a high footfall area, it has received only double-digit scans.


Scan volumes of QR codes are low uniformly across print and outdoor ads in both B2C and B2B realms.

Traditionally, the tepid response to QR code has been attributed to low awareness of the technology. That factor is no longer applicable. Thanks to the widespread use of the technology in digital payments, QR code has virtually become a household name in the last 1-2 years.

Why, then, are QR codes still receiving lukewarm reception in advertising?

IMO, it’s because of the context in which they’re used.

QR code works very well when it forms an integral part of a workflow i.e. it’s used to do something, like completing a mobile payment transaction. However, it does not work so well when it’s used as the source of advertising information.

Does it mean marketers should stop using QR codes?

Not at all.

But it does suggest that they should find ways to use them differently. Instead of attaching them to ads, posters and billboards as a passive information resource, marketers can multiply the effectiveness of QR codes by inserting them into advertising and marketing CTAs. The sweepstake workflow is one case in point. There are other compelling use cases of QR codes in our QR360 Framework (PDF 730KB).

The spectacular comeback of QR code via mobile payments has validated the basic value proposition of the technology and pointed the way to where it works best. Advertisers and marketers are now well set to deploy them in the right context in order to drive engagement, improve conversion rates and get more bang for the marketing buck.

A Killer Feature For PFM On The Eve Of PSD2

Friday, December 8th, 2017

Personal Finance Managers and Mobile Money Management Apps (herewith “PFM”) have been around for over a decade. So far, PFM has focused on budgeting by offering tips to save money on everyday expenses such as the proverbial $5 coffee. For reasons highlighted in Innovative Fintechs Don’t Need No Open Banking Regulation, PFM’s value proposition has so far been disproportionate to the level of account access it has demanded. On top of that, it has called for change in behavior.

Changing consumer behavior is hard in any product category. But it’s virtually impossible in PFM because consumers think the category can add a lot of value on top of their existing behavior. IMO, this explains the lukewarm reception received by PFM so far.

Will PSD 2 / Open Banking change this?

That depends on how well PFM uses the new regulation to enhance its value proposition.

I can think of at least two ways for PFM to do that.

First, do what customers are asking for.

Second, exceed customer’s expectations.

Here’s a partial wishlist of what customers and prospective customers are expecting from PFM:

  1. Earn $$$ by sweeping X amount from a checking account to a savings product – My blog post Innovative Fintechs Don’t Need No Open Banking Regulation
  2. “Moven are not telling me that, by moving credit card with provider X to provider Y, I would be Z pounds a year better off based upon my usual behaviour. That would really add some value.” – Comment from anonymous Finextra Member on “HSBC moves into open banking
  3. “Not generic offers, but ones that use your data to *show* you how much a service saves (or makes) you.” – Bradley Leimer via Twitter.

As you can see, the common theme is, make money by capitalizing upon external factors.

If PFM can uncover ways to help consumers to do this without needing them to change their behavior, its value proposition will go up one level.

With the kind of banking information that would be available under PSD2, it should be easy for PFM to deliver personalized offers that make (or save) money for its users.

Until recently, I thought that was all PFM could do.

But I changed my mind after a recent experience with my Mobile Network Operator.

My current mobile phone connection was given to me by my then employer 15 years ago. When I quit that company, I transferred the connection to my personal name for the sake of continuity. I use it now exclusively for business and charge it to my company’s account. The bills started attracting 18% Goods and Service Tax from 1 July 2017. As a B2C connection, the tax was a net cost. I heard that B2B connections were eligible to reclaim the tax by way of Input Tax Credit. In other words, I’d be able to earn a few $$ by transferring the connection to my company’s name.

I approached the MNO for the transfer. I was asked to cancel the connection on my personal name, place a purchase order for the same number from my company’s name, and fulfill KYC for my company. The entire process took three visits to the MNO’s store, two visits of its representative to my office for doing physical verification and tons of documentation.

Long story short, the transfer proved to be far more cumbersome than I’d anticipated.

I’ve one more connection in my personal name but I’ve decided to forego the money-making opportunity because it’s not worth the hassle of transferring it to my company name.

This is when it struck me that PFM-like technology could help execute the transfer.

I had a repeat of this epiphany moment a few days later when my credit card issuing bank called me to offer a free upgrade to another credit card that provided more rewards. This mirrors #2 in the above wishlist, just that the opportunity to make money was surfaced by a bank and not PFM. I’ve placed my existing credit card on file with my website hosting provider and many other merchants who follow recurring billing for the services they provide to me on an ongoing basis. If I change my credit card, I’d have to update my card on file with all of them. I thought that’s too much trouble and declined my bank’s offer.

If only PFM changed my card on file with all those merchants. I’d accept my bank’s personalized offer in a jiffy.

It’s not just this MNO or this bank.

With the constant closure of branches and dumbing down of remote channel staff, changing plans and service providers has become very painful.

I’m sure many readers regularly come across opportunities to make / save $-$$ by switching from one product / plan to another or $$-$$$ by switching from one service provider. I’m equally sure that they let many of those opportunities pass because of inertia, lack of time or the disproportionate amount of efforts required to actually effect the switch – remember the old saying about switching banks being more painful than root canal surgery?

If only PFM does the heavy lifting by switching the product, plan, and service provider on our behalf.

This would surely be a killer feature.

By executing its recommendations automatically, PFM can take its value proposition to a totally different league.

I’m not sure whether the access provided by PSD2 will be sufficient for PFM to execute all of its recommendations entirely automatically. To that extent, I may just be eating my own dog food by being aspirational.

But I do believe there are many recommendations that could be executed by PFM with little or no user intervention. Take the one about switching credit cards described above. With the account access provided by PSD2, it can’t be rocket science for PFM to parse through my transaction history, figure out who are the merchants automatically charging my existing credit card, and update my new card on file with them.

By delivering this killer feature, PFM should be able to charge a fees equivalent to a certain percentage of the gain it delivers to its customers. This would provide PFM providers with a sustainable business model.

How Much Should You Charge For Lifetime Access Of Your SAAS Software?

Friday, December 1st, 2017

As I highlighted in my blog post titled SAAS – What’s In It For Vendors?, the total recurring costs of a SAAS software often exceeds the upfront cost of an equivalent onpremise software after 2-3 years from date of purchase of the software. Many buyers are cottoning on to this lately.

Charging SAAS subscriptions to credit cards and expensing them has become a thing of the past. According to Ben Horowitz, cofounder and general partner of the venture capital firm Andreessen Horowitz, the formerly rampant practice has actually become a firing offence in many companies nowadays. SAAS has become like any other item bought by a company and subject to the cumbersome invoice approval process.

The combination of these two factors is driving many prospects to demand a onetime fee for lifetime access of  SAAS software.

This in turn is making SAAS vendors wonder whether to agree to their prospect’s demand and, if yes, how much to charge for lifetime access. The OP of the following question on Quora is a case in point.

How much should I charge for a lifetime access to my SaaS that costs $100 per month?

The natural reaction of many SAAS vendors is to reject the prospect’s request: After all, who’d want to provide unlimited service for a limited fee?

Not surprisingly, many people have encouraged this reaction in their answers.

I’m going to go against the tide. In this post, I’ll be making the case for SAAS vendors – especially those in the growth phase – to accept their prospect’s demand.

Not only because it’s inevitable but also because, if you don’t, your prospect might find another vendor who does.

Ditto even if your existing customers make a similar demand. If you decline, you’d be running the risk that they’d churn out to a competitor once their contract with you ends at the end of the month, or at most, year.

Of course, in this same post, I’m also going to tell you how to make money by providing lifetime access for a onetime fee.

Before doing that, let me take you back in time and tell you a small story.

Many years ago, 3M used to sell floppy diskettes under the brand name IMATION. Its USP was that it carried a “lifetime warranty”. It was only when someone approached 3M with a warranty claim that they learned that “lifetime” meant the lifetime of the diskette! The first time the diskette failed, its lifetime was deemed to have ended. Ergo the warranty had expired. Quite often, this happened within the first year of purchase of the diskette. Effectively, 3M’s so-called lifetime warranty covered a shorter duration than the standard one-year warranty provided by its competitors.

While sourcing the picture you see on the right, I was shocked to find out that brand new 3M floppy diskettes are still available for sale! Some things never seem to go away!! But I digress.

I’m not advocating 3M’s strategy to you but I made this short trip down memory lane just to open your eyes to the alternative ways in which your competitor might interpret your prospect’s request for “lifetime access”.

With that out of the way, let’s assume that “lifetime” means the lifetime of your prospect’s company.

The real issue for you is, what if the prospect-turned-customer lives forever and uses your software forever? You’re stuck with a finite fee for an infinite service.

While this poses a big risk, there are many other possibilities:

  1. Your prospect-turned-customer might fold up
  2. Someone may acquire your prospect-turned-customer and not wish to use your software for the merged entity
  3. Your prospect-turned-customer may junk your SAAS at the end of the current contract for extraneous reasons.

In these days of VUCA, any of these alternative scenarios is just as likely or unlikely as the “live forever use software forever” primary scenario.

If any of these alternative events occurs, your customer would stop using your software.

If you’d agreed for a onetime fee for lifetime access, you could be in the money.

On the other hand, if you’d declined, your monthly billing would stop when any one of the above three events transpires. What you bill until then might not even cover your Customer Acquisition Cost (in the worst case scenario).

Business is all about taking calculated risks.

So, you should accept your prospect’s demand for a onetime fee for lifetime access of your SAAS software.

Next, we come to the question of how much you should charge for providing that lifetime access.

The figure should be big enough for you to make money on the deal and small enough to be attractive to the prospect.

I suggest the following formula to arrive at the optimal figure:

Onetime Fee for Lifetime Access = $X + $Y + $Z, where:

  • $X = 7 years of Annual SAAS Subscription Fees
  • $Y = 1.4X, to cover 7 years’ AMC @ 20% per annum
  • $Z = Miscellaneous Fees

Most companies depreciate their investments in software fully in 5-7 years. Since the book value of your software would become nil at the end of that period, your prospect-turned-customer might buy a new software. Which means, they’d stop using your software anyway at that point. Ergo the figure of 7 years in the above formula. (Modify the number suitably to suit different depreciation policies but anything below 5 could be detrimental to your company’s financial well-being).

While working out the Annual SAAS Subscription Fees, an important parameter to be considered is the number of users. This is rarely constant over the lifetime of a software. In most cases, it begins with a conservative figure and rises progressively over the years. The actual figure at any given point in time depends upon the size of the company, nature of the software, and many other factors. As the vendor, you’ll want to set this figure at the peak number of users during the lifetime of the software. On the other hand, your customer will want to peg it at the number of users at present. Some haggling will be involved but, in most cases, you should be able to settle for the average of the two figures.

Hosting charges is one item I can think of under Miscellaneous Fees. To fulfill your commitment of lifetime access, your product’s SAAS architecture might require you to ringfence the version of your software for this prospect. In that case, we’re talking “private cloud” and you might want to add hosting charges for seven years to your upfront price.

Specific customer situations might involve complications – in fixing the user count, for example – and call for customized pricing of the lifetime access charge. Please contact us if you need any assistance.

Happy Selling!