Can Chatbots Replace Humans?

May 26th, 2017

If you think bots will never replace human agents, you’re amongst the lucky few who has been served by intelligent human agents.

I admit that I’ve also been among the lucky few at times. But more often than not, I come across fairly dumb human agents. And, lately, I’ve started experiencing fairly intelligent chatbots.

Let me give you three recent examples.

#1. MNO (HUMAN AGENT)

I sent an email to this leading mobile network operator in July last year inquiring about its 3G plans. I get its quote in November! Although he – yes, it was a he – took four months to respond, the human agent hadn’t found the time to check my customer record in his CRM. Had he done so, he’d have found out that I already had a 3G connection by then! (Which I got by connecting with the MNO on social media after waiting in vain for a reply to my email)

#2. PUBLISHER (HUMAN AGENT)

I recently renewed the subscription of a reputed global business magazine. From the date of the last issue mentioned on the magazine’s jacket, I got a feeling that my subscription period was calculated wrongly. I decided to take this up with the Indian distributor of this global media giant. I sent the following email to this company:

Dear Fortune Subscription Department:

My newly renewed subscription is for 30 issues. I opted for Special Gift of “10 Bonus Issues”.

Therefore, my subscription should cover a total of 40 issues (being 30 + 10).

According to the cover sheet received along with the first issue dated 15 Dec 2016, my new subscription apparently expires in JUNE 2018.

This covers only 25 issues, calculated as follows:

December 2016: 1 issue

2017: 16 issues (being 12 + 4, given that frequency is monthly plus 4 extra issues per year).

Jan-Jun 2018: 8 issues (50% of full year figure of 16 issues)

TOTAL: 25 ISSUES

So there is a discrepancy of 15 issues (being 40 – 25) between what my subscription should include and what your cover sheet states it includes.

Please arrange to resolve this discrepancy and restate my correct last issue date – it can’t be June 2018.

Thanks in advance.

Thanks and Regards / Ketharaman S

I got the following reply:

Dear Mr Ketharaman,

Greetings from Business Media Pvt Ltd !

This is further to your appended mail regarding FORTUNE ASIA magazine.

Please be informed that FORTUNE is a monthly magazine with 4 Quarterly double issues which counts as 20 issues in a year.

Please feel free to contact incase of any further information is required.

Looking forward to your continued readership.

Best Regards,

Dhanpreet   |   Fortune Asia

Chief Manager – Consumer Marketing Services

As you can see, the reply – from the head honcho of the Indian distributor’s consumer marketing – was extremely casual and didn’t come anywhere close to answering my question.

I gave up on this company and finally got my issue resolved by escalating it to the parent company’s Asia Pacific headquarters in Hong Kong.

#3. BANK (CHATBOT)

I recently tested out Eva, the chatbot deployed by a Top 3 private sector bank in India.

I first raised a straightforward query:

Eva passed this test with flying colors.

I then logged a complaint related to the discrepancy in the length of the narration field between the bank’s IMPS and NEFT payment methods:

Eva failed this test.

But so did the human agent handling the bank’s Twitter account. Despite explaining the problem by attaching a screenshot to my tweet, I didn’t even get the bank’s customary auto-response.


When I wrote about chatbots here and here seven years ago, I found many of them to be quite human-like. I thought virtual agents – as chatbots were called at the time – showed tremendous potential and predicted that they could replace lower-end human call center staff within the forseeable future.

Well, that future is already here. Even a simple chatbot like Eva can match or outdo the two human agents described above.

From this, can we conclude that chatbots can replace all human agents?

NO.

Because there have been other situations where I’ve received a much better level of response from human agents that can’t be matched by chatbots available today.

This got me wondering when a chatbot can replace humans and when it can’t.

To answer this question, I’d a look at the so-called QRC model. According to this popular model used in customer service, customer missives to brands fall under Query, Request or Complaint e.g.:

  • Query: What 3G plans do you offer?
  • Request: Please send me a paper bill ASAP.
  • Complaint: My printer has stopped working.

When we think of Customer Service, we tend to think only of complaints. However, that’s not an accurate representation of what happens in contact centers. According to several CX leaders I’ve spoken to in the course of executing some of my company’s engagements, only 60% of support tickets are complaints, with the balance 40% split evenly between queries and requests.

From personal experience and anecdotal evidence, chatbots can outperform human agents for answering virtually all customer queries.

With the recent advances made in Artificial Intelligence / Machine Learning, chatbots may soon be able to match mid-level human agents for fulfilling most customer requests.

However, chatbots will lag high-end human agents for resolving complaints for the forseeable future. That said, sophisticated chatbots can already complement human agents in this area.

I saw a great example of this when I couldn’t access one of my websites recently. Like I usually do, I used Twitter as my first port of call to reach out to my hosting service provider. Involving SSL, domain redirects and a few other complicated issues, the problem soon went over the chatbot’s paygrade. At that stage, the chatbot handed me over to the company’s live chat channel handled by a human agent. Normally, whenever I switch channels – say from email to telephone or vice versa – I’d have to start all over again. That didn’t happen this time. The chatbot seamlessly passed on the transcript of the Twitter DM conversation to the human agent so I could continue from where I left the Twitter DM conversation.

Agreed that such examples of seamless “omnichannel customer service” are few and far between today but I expect the technology to go mainstream soon.

So, to return to the title of this post. As things stand, with my vast experience with human agents and limited experience with chatbots, I’d answer the question “Can Chatbots Replace Humans?” thus:

  • “Yes” for Query.
  • “Maybe” for Request.
  • “No” for Complaint.

Looks like I’m not the only one who is so optimistic about chatbots taking over many customer service activities from humans.

According to a MarketingCharts.com / PegaSystems survey of 6,000 adults in North America, EMEA and APAC, the largest segment of the surveyed audience (38%) felt that chatbots can provide better customer service than human agents in the future.

This is great news for service providers who suffer from severe attrition of human agents caused by the tedious nature of most customer service work. By taking over their mundane work, chatbots can free human agents to focus on cross-selling, upselling and other value-added areas of customer engagement.

How To Win A Deal By “Sharing An RFP Template”

May 19th, 2017

“Can you give us an RFP template to share with our client?”, asked one of my company’s customers recently. “We can Google it but you can save us the trouble if you have something readymade”.

Good they didn’t use Google – there’s lot more to sharing an RFP template than Googling, downloading and handing over a standard template. B2B technology providers can use the opportunity to “share an RFP template” as an opening for introducing specs favorable to their product or service in the evaluation process. By shaping the purchase process in this manner, they can substantially increase their win rates.

But they need to play this right. Most prospects are savvy enough to see through one-sided specs and throw the vendor’s RFP template – if not the vendor itself – out of the purchase process.

Shaping an RFP calls for “outside-in” thinking, where you start from the customer’s pain area, spec a solution that alleviates the pain and also happens to showcase your differentiators.

Let me illustrate this approach with the following case study:

—–

The prospect was a large company with multiple production facilities and a wide network of regional and zonal offices. The company wanted to purchase and implement an ERP solution and invited all leading ERP vendors for a pre-bid conference. One of them was the protagonist of this story – let’s call it ACME. Its sales manager had a good rapport with the prospect’s CIO and was invited to share a sample RFP template.

To give you a bit of background about the market: ACME implemented its own ERP. Whereas its competitors just sold their software and left it to the customer to get it implemented by a “third party implementation partner”. ACME touted self-implementation as a strong differentiator on the back of the logic that, since a product owner knows the product best, it should be the one to implement the product.

In line with its usual strategy of using self-implementation as its USP, ACME added the following spec into the RFP template:

“Self-implementation: ERP vendor should implement its package by itself.”

Like it happens often in sales, the logic that makes great sense for a vendor crumbles when competition enters the picture. That’s what happened here.

ACME’s competitors billed their third-party implementation partner network as a major benefit, saying this provided access to global best practices and brought superior program management skills to the implementation. They also thwarted ACME’s thrust on self-implementation by saying that ACME was too small to attract third party implementation partners, which is why it had to do its implementations by itself.

In effect, competitors persuaded the prospect that, by touting self-implementation, ACME  was merely trying to create a virtue out of a weakness. As a result, ACME’s attempt to stipulate self-implementation in the RFP went out the door.

This was a big blow to ACME because self-implementation was a major plank of ACME’s pitch. It was about to lose the golden opportunity to steer the purchase decision in its favor by spec’cing the RFP.

This is when ACME brought us in.

We dug deep and were able to spot a fundamental flaw in ACME’s tactic: “Self-implementation” was an “inside-out” attribute. While ACME did try to convert the feature into a benefit, competitors were able to counter it effectively by promising other benefits from their third-party implementation offering.

In our experience, an “outside-in” perspective has a much better chance of working – not just in an RFP but in all stages of the sales process. Here, the spotlight is on the prospect’s pain area. All benefits and enabling features are shaped by alleviation of the pain. Not the other way round as is the case with an “inside-out” approach.

After a round of brainstorming with ACME’s team, we came up with a different spec:

“ERP product vendor must take responsibility for the success of implementation”.

Now the RFP didn’t forbid use of third party implementors. It just asserted that the product should work for the customer – a very logical ask from customer’s point of view. It also sought to mitigate the risk of failure, which was – and still is – is a clear and present danger in any enterprise software implementation. No prospect in its right mind could argue against this stipulation. And so the spec was inserted into the RFP and circulated to all the vendors.

Since ACME was doing the implementation by itself, it was a no-brainer that it took the onus for its success. That was not the case for competitors who wouldn’t / couldn’t underwrite implementations done by third parties.

This gave ACME the winning edge.

Let me hasten to add that we need to be careful while writing specs like these so that they don’t pose an undue risk to the vendor, especially when it comes to implementation of enterprise-grade software with hundreds of locations, thousands of employees and countless moving parts. We mitigated the risk for ACME by specifying a set of success criteria and multiparty roles and responsibilities.

—–

I highlighted the importance of spec’cing an RFP in What Happens Before A Prospect Contacts Sales?. Getting ahead of the RFP is the only way for sales to escape the blindzone caused by the modern Buyer 2.0 purchase behavior.

Like a veteran B2B sales manager used to say, “if you get an RFP without working on it in advance, you’ve already lost the order”. Although his statement is two decades old, his words ring more true today than ever before. As McKinsey highlighted in a recent report, “two-thirds of B2B deals are lost before a formal RFP process even begins.”

Vendors can shape an RFP on several dimensions including core product features, company stature and attributes of the total ownership experience. While we’ve used the example of ERP to illustrate how to do this right, the basic principle contained in this post can be adapted for any kind of B2B technology product or service. If you need any help with this, we’re always there!

Why Gmail When Hosting Provider Gives Free Mail Boxes?

May 12th, 2017

After trying out a half-dozen hosting providers, I settled on one that I’ll call ACME. Among other things, I selected ACME for its following two features:

  1. Hosting for virtually unlimited domains on a single hosting plan
  2. Free unlimited number of mail boxes, each with virtually unlimited storage (subject only to the overage storage limit under the selected hosting plan)

These two features were strong differentiators for ACME when I signed up for it. Apparently, they’re not widely available from other hosting providers even now because, whenever I talk about them, many people find them unique to ACME.

I also use these features extensively – as you can see from the following screengab of the Mail section of ACME’s control panel, I’ve over 70 mail boxes.

The above USPs that attracted me to ACME have made me loyal to ACME – a decade after I selected ACME, I still host all my personal and business websites on ACME.

Not only that, I keep talking about them to many people. Ironically, without any explicit loyalty program, ACME has cracked the Holy Grail of modern loyalty programs.

While the first USP of ACME will only appeal to people who own multiple domain names and websites, the second USP is more broadly useful because everyone – individual or company – needs email, typically one mail box per employee. And many people whom I’ve recommended ACME to have signed up for it, primarily attracted by its offer of free mail boxes.

That’s why I was stunned to see the following “banner ad” on the email section of ACME’s control panel recently.

“Upgrade to Professional Gmail”, proclaimed the ad.

I thought, what the heck, people are choosing ACME because of its offer of free mail boxes, why would they want to move to Gmail.

Turns out the operative term in the ad copy is “Professional”.

While ACME provides mail boxes, its three web apps for viewing emails  – horde, roundcube and SquirrelMail – are a bit scrappy.

I noticed their poor UI right in the beginning and never used them. Instead, I’ve been using Microsoft Outlook as my email client from Day One of signing up with ACME. You can’t get more professional than that. Therefore, I’ve never felt the need for Gmail or any other email service provider.

However, that’s only me.

Outlook is de riguer in the enterprise world but many startups don’t have much love for Microsoft Windows in general and MS Office in particular. Many of them prefer the open-source Linux / Ubuntu and Libre Office, which are free. They don’t have Outlook and, in its absence, they’re compelled to use frontends like horde, which do look unprofessional. Ergo, the relatively more professional-looking Gmail will appeal to them.

Ergo upgrading to Gmail is worth it for the market segment that doesn’t have Outlook or a another professional email client.

As for me, I’m happy with my free ACME mailboxes and perpetual-license of Outlook that I bought many years ago.

In this day and age of sophisticated audience targeting, ACME might want to check what email client its users use and then take a decision whether to target its banner ad to them or not – instead of showing it to all and sundry and shocking some of them like me!

Why Is Software Still Built From Scratch?

May 5th, 2017

A few months ago, I’d visited the South Indian temple town of Tirupati with my family. On the way, whenever the train stopped at a station, the engine was switched off. But the air-conditioning still worked because it was powered by huge battery packs installed in the AC coach. Coincidentally, the manufacturer of these battery packs is located close to Tirupati. I know this company from the time it purchased my employer’s ERP in the early 2000s. Through the years, I’ve stayed in touch with the ex-CEO of the unit, Rajesh Bapu.

I met Rajesh during my latest trip and introduced him to my family as the guy who “built the electronic circuit that manages the battery packs on AC coaches of Indian Railways trains”.

He corrected me, saying, “I assembled the circuit using available integrated circuits without building every part of it.”

12?F Capacitor (Source: Amazon.com)

Yes, indeed. Since times immemorial, automobiles, printed circuit boards and many other products are assembled from standard components, which can be sourced from catalogs.

But not software.

I joined the software industry two decades ago. From then to today, I’ve been hearing of technologies like SOA, CBSA and microservices that purportedly allow programmers to build systems by assembling prebuilt functionality.

But that vision has still not turned into reality.

Once upon a time, developers had to build software systems from scratch perhaps because there was no prebuilt functionality.

Then, it’s quite likely that developers built reusable components by using technologies like SOA. But, despite the existence of methodologies like CBSA, development teams still had to build software from scratch because they didn’t know about the existence of reusable components.

Then came innovations like open source repositories and open API marketplaces.

For the uninitiated, an open source repository (e.g GitHub) contains prebuilt source code for components that can be used by programmers to develop their own systems; and an open API marketplace (e.g. Algorithmia) expose readymade functionality that can be accessed by developers from their systems via application programming interfaces.

In theory, if you want to develop a new system, you should be able to review the catalog on these platforms, pick and choose the component or API you need, and integrate the prebuilt functionality into your new system.

In practice, this has worked reasonably well in building software pilots / proofs of concepts / MVPs.

However, when it comes to enterprise systems, these platforms haven’t made a big dent in the traditional way of building software systems from scratch. I’ll outline the key hurdles of changing the time-worn development methodology by continuing to use the PCB analogy:

  1. A 12?F (twelve microfarad) capacitor will work on any PCB. Whereas, since software is heterogeneous, a .NET component won’t work in a Java system.
  2. You can’t manufacture a capacitor ab initio even if you wanted to – at least not within the timescales of most PCB development projects. Whereas, most development teams believe that they can develop any piece of software from the ground-up within software project timescales.
  3. You use a capacitor as it is. Whereas developers inevitably need to make some changes to borrowed code before being able to integrate them into their systems. According to open source foundation rules, you’re required to share the enhanced / modified code back with the community. That can be tricky if it contains a company’s secret sauce. You either flout OSF rules – à la  the investment bank described in Michael Lewis’s book Flash Boys – or eschew open source code altogether.
  4. You can buy a capacitor. But you can only license an API, which is not the same as buying it. The license is subject to the Terms of Service of the API owner (“OEM”). Now, many of these TOS are ambiguous and easy to infringe without any wrongful intent. The deadpool is littered with startups that got on the wrong side of the TOS of an 800-pound gorilla’s API.
  5. Once you plug a capacitor into your PCB, it will work the same way throughout its lifetime. Whereas an API won’t. When its OEM releases its next version, you’ll need to modify your software such that it works with the updated API. We faced a costly change to our HEATMAP360 social intelligence platform when Twitter changed its API specs.
  6. If the manufacturer of a capacitor (also “OEM”) folds up, your PCB will still work. But, if the API’s OEM dies, your system will stop working and you’ll need to find an alternative source for the said functionality. As illustrated by the examples in Does Cloud Increase Vendor Risk?, the death of a few API OEMs has caused existential crises for many software systems and their owners.
  7. Then there’s the big elephant in the room that no one talks about: Programmers don’t like working on code written by anyone other than themselves.

As a result of these challenges, it has been hard to develop enterprise-grade software systems by assembling prebuilt functionality.

That’s not to say it can’t be done.

But cracking the Holy Grail of software engineering will require structural changes in the way software is packaged and sold. The purchase process for software should mimic that of electronic components whereby customers can:

  • discover software components in an open catalog
  • find out their specifications and select which components they need to assemble their system with
  • buy the selected components outright without onerous licensing terms or dependency upon any form of first- or third-party IP
  • be assured of getting the same functionality throughout the life of the software, and
  • modify components without having to share the source code with external entities.

If you’re wondering “what’s in this” for a software product vendor, you’re not alone. Actually, this model is more closely aligned with IT services. More on that in a follow-on post.

Uber Creates Loyalty To The Deal But Not For The Brand

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

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

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

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.

Finding And Monetizing Innovation And IP In IT Services

March 24th, 2017

Mr. N Chandrasekharan, former CEO of India’s largest IT company Tata Consultancy Services and currently the Chairman of Tata Group from January this year, lashed out at detractors of the IT Services industry recently.

I totally agree that:

  • Indians should be celebrating an industry that has grown from nothing to US$ 150 billion in revenues in 30 years
  • India should be doing more in an industry that is clearly aligned with its strengths
  • There’s huge headroom for growth in IT Services.

That said, India’s IT Services industry faces growing competition from Brazil, Central Europe, China and other wannabe-offshore destinations. Therefore, it’s necessary for the industry to think of new ways to maintain its lead aka innovate and create Intellectual Property.

Normally, innovation and IP are associated with software product companies.

People assume that IT Services comprises of mundane work and offers little scope for innovation and IP.

The notion is further perpetuated by the following practices that are fairly common in the industry:

  • Programmers and Project Leads working on a project get excited about some new facet of technology or programming language they’ve used in their project. Automatically, they tout that as innovation. But, when viewed against the prism of market, most their claims fall flat
  • Project Managers / Delivery Managers responsible for the project are not very enthusiastic about uncovering innovation in their projects. Their apathy stems from the belief that, since source code developed in a services project belongs to the customer, they can’t do much with IP, even if they find it.

I totally disagree.

In my experience of over two decades in the IT Services industry:

  • I’ve found nuggets of true innovation in many projects. Just that they remained hidden because they didn’t float the project team’s technical boat
  • I’ve come across industry players who regularly packaged services innovations in ways that fully safeguarded their customers’ IP rights
  • I’ve seen the use of innovative business models like “co-visioning” to take service innovations to market in collaboration with customers.

But, because of the aforementioned industry practices, it’s hard to spot services innovation from the inside. Unlocking it often requires an “outside-in” perspective. We use the following structured methodology to help IT Services companies identify and monetize innovation and IP:

  • Discover capabilities by deep-diving into projects
  • Create marketable offerings that are centered around resolution of business pain areas related to revenues, costs, risks, and so on
  • Use our proprietary STRADOF framework to identify differentiators like domain expertise, dedicated practice groups, engagement models, optimum size, hosting infrastructure, etc.
  • Develop case studies and offering detail notes
  • Spec proof-of-concepts

You can find more details and success stories at GTM360 for Software Services Companies.

If you need help with identifying and monetizing your services innovation, we’re there!

Reliance Jio – All Good Things Don’t Come To An End, They Just Stop Being Free

March 17th, 2017

In Reliance JioFi First Impressions, I’d shared my experience of buying the Portable 4G Pocket WiFi Router and onboarding the 4G Internet connection from Reliance Jio in September 2016. I’d followed this up with another post a month later in which I’d recounted my first two months’ experience with Reliance Jio. At the time, the Internet service was free.

Reliance Jio recently announced the end of its free trial period by 31 March 2017 and launched a membership program called Jio Prime and a series of paid topup plans that will become effective from 1 April 2017. Fashioned after Amazon Prime, Jio Prime has a membership fee of INR 99 (US$ 1.5) for the first year. While Jio Prime members have a wide choice of topup plans, the most heavily promoted one offers 1GB data per day for 28 days at a price of INR 303 (US$ 4.7).

Just as Jio is transitioning from free to paid service, my other Internet connection started sucking big time. Apparently, the provider of this connection has a generic network issue in my neighborhood and no clue as to when it’d be able to resolve it. Therefore, I decided to cancel its connection and opted to continue with Jio.

In this third and final installment of my 3-post series, I describe my experience with Reliance Jio over the last three months and the process of signing up for Jio Prime recently.

#1. SPEED HAS TANKED BUT EXPERIENCE IS BETTER

Gone are the speeds in the 20-30Mbps range I got during the first two months of using JioFi. Of late, I’m lucky to get even 10Mbps. For the record, the fastest speed I got in the last three months was 11.59Mbps and the slowest, 3.09Mbps.

However, I’m more happy with my experience with JioFi now.

That’s because its uptime has improved considerably and ping times have dropped a bit.

In my update dated 10-Oct-2016, I’d reported that my JioFi connection suffered from >50% outage. These days, I get upwards of 90% uptime. Average ping time has dropped from 75ms then to 65ms now. Knock on wood!

Although downloads take longer, bulk of my Internet use is for surfing and content marketing. High uptime and low ping time play a much bigger role in delivering a superior user experience in my usage scenarios.

Image credit: Radhika Iyer*

I also take this opportunity to give props to Reliance Jio for providing reasonably good quality of service during my recent trip to Tirupati and back via Bangalore. For the uninitiated, these routes pass through many small towns and villages. My experience with quality of Internet connection from other Internet Service Providers at these remote places is not great.

#2. ONE EXTRA PAYMENT PER YEAR

As against the industry standard of 30 days, I noticed that Jio’s INR 303 topup plan had a validity period of 28 days. When I signed up for it, I didn’t think much of this. It was only after I came home and did a little math that I realized what Reliance Jio has done here: By trimming the validity period slightly – so slightly that most customers probably won’t notice it – Reliance Jio has created 13 payment periods per year (365 / 28 = 13.03) unlike other ISPs who get only 12 payments a year with their 30 day plans.

Well played Reliance Jio! Wonder if the company picked up this hack from Western Europe, where employees typically receive a 13th month salary as bonus each year.

#3. ONBOARDING IS STILL FORMLESS…

In my previous post, I’d felt that Reliance Jio was able to roll out a formless, paperless and signatureless onboarding process because it was giving out free connections. At the time, I’d wondered what’d happen when Jio eventually started charging for its service.

Well, Jio just launched a paid plan. I signed up for it and paid up for three months. There’s still no form, document to submit or wet ink signature. I was pleasantly surprised to learn from the salesperson at the store that the Aadhaar e-KYC done when I enrolled for the service in September 2016 continues to be valid now.

Kudos once again to Reliance Jio for reiterating its commitment to formless onboarding. Hope other service providers follow suit.

#4. …BUT SCRAPPY

That said, there’s still a lot of scope for improvement as regards confirmations and notifications. After signing up for a plan and paying up for three months in advance with my credit card, I was expecting to get details of my entitlement under the selected plan and a receipt for my purchase. But all I got is this piece of paper:

The image on the left is the credit card chargeslip. On the reverse of it, the salesperson scrawled the order numbers for my four orders (one order each for membership plus topups for three months). I doubt if I’d have gotten even this much if I’d paid by cash.

I asked for a more formal confirmation of my plan and payment. The sales guy kept saying “it’s all in the system”. Normally, I don’t accept such vague assurances but, on this occasion, I let it pass because I did have the credit card chargeslip to prove my payment.

I left the store, quite sure that the sales guy couldn’t do anything more and hoping that everything would work out fine.

#5. HOPE THERE ARE NO BILLING ISSUES

That was not to be.

A few hours later, I got an SMS from Reliance Jio. I thought it was the plan and payment confirmation that I’d sought at the store. But it turned out to be a pitch for Jio Prime and a missive for me to join the membership program at the earliest! Either this was the result of a channel disconnect or, worse, a sign that Jio’s system had no record of my instore transaction.

I no longer sat tight hoping for the best and decided to initiate action. I tweeted @RelianceJio with a subtle reference to the notorious billing problems faced by millions of Reliance mobile phone subscribers a decade ago:

I got a prompt reply asking me to submit my Jio # and alternate mobile phone number.

I’ll spare you the details but my request for proof of purchase – and registration on jio.com website – face a challenge: Unlike the vast majority of Jio’s 100 million customers who bought its SIM card for their mobile handsets on which they can receive notifications, I bought a router that can’t receive SMSs.

When I began this post, Reliance Jio’s social media support agent and I were going around in circles. However, by the time I finished it, I got a written confirmation of my purchase on Twitter.

All’s well now.


On that upbeat note, I conclude my third and final post on my impressions of Reliance Jio’s free trial period, but not before observing that:

All good things don’t come to an end. They just stop being free!

*: Radhika Iyer is my niece and a final year student at MIT Institute of Design. She runs her blog called Design for X.