Posted by Ajay Kelkar on Fri, May 11, 2012
Can a company Market so effectively, that customers actually perceive it as a service..."Marketing as a Service"? Today when consumers get innundated with so many junk messages, wouldn't this be way too aspirational!
Consumers are leaving their "data" behind as footprints for companies to unravel not at "leisure" but in "real time". When I buy a high value item at a jeweler using my credit card & my bank calls me,just to check if it is really me !! That's an example of data equity driving brand equity at that point in time! There are many more opportunities like these for myriad set of businesses! And this intersection of the "correct data insight" with "marketing action" transforms marketing into a service! Analytics captures this but at a later time, so the challenge is to respond to the customer at the "time" which they are "ready" to "recieve" your mesage! Banks & Telecom companies are so well positioned to do this!
Can Marketers read that data so effectively that they reach out to customers just when they are ready! And isn't that a service!! But to do this effectively you need the coming together of IT, Marketing & Customer service!
I spoke at an INSEAD forum a while back & shared some thoughts on this. You can download the presentation at the link below
http://blog.hansacequity.com/listening-to-customers--making-marketing-a-service/Default.aspx
Posted by Ajay Kelkar on Sun, May 06, 2012
It’s quite amazing that companies who have the most data about you as the consumer find it particularly hard to create “Loyalty” basis that information.
Banks have truckloads of data! But banking is incredibly silo driven! This is coupled with the difficulty that consumers have in “switching” a banking relationship! So how do you leverage this data to be able to make a compelling proposition across the bank, is possibly a million dollar question!
I was looking at some data from the US & found the Temkin Loyalty Ratings. They are based on consumer feedback of companies with whom they’ve recently interacted. They asked consumers to rate three elements of their loyalty—willingness to buy more, reluctance to switch business away, and likelihood to recommend—on a 7-point scale. For each element, they take the percentage of consumers that gave a rating of 6 or 7 and subtract the percentage that gave a rating of 1, 2, or 3. This results in a “net loyalty” rating for each of the three elements. The overall Temkin Loyalty Rating is an average of the three “net loyalty” percentages.
As the scores below indicate, Banking has a problem! Customers are not "loyal"!!
Closer home, based on interviews with some 20,000 people across 13 Asian markets, McKinsey had some interesting conclusions. They found that since the survey was last conducted in 2007, Asians on the whole now have more banking relationships than before the crisis. For example, the mass affluent segment now banks with 3.3 banks on average compared to 2.7 in 2007, a 22% increase. McKinsey also found that on the whole, Asians are less likely to recommend their bank to others. They found a dramatic drop in willingness to recommend, from 91 percent in 2007 to just 71 percent in 2011.
Banks need to consider how they can create a Loyalty framework across the bank. Here are a few thoughts about Loyalty in banks:
- Bank wide loyalty is easier in concept but very hard to implement. Fundamentally it needs to be linked with the bank’s intention to grow Profitability per customer
- Important to create the concept of “lead products” while designing a bank wide loyalty initiative. Loyalty can be led by Credit/Debit cards & the Direct Banking channels ( ATM, Mobile & Internet). Important to navigate across product group to get buy in for them to see value in this strategy. Especially Assets(apart from credit card) businesses which by nature will be cautious about an incentive to a customer before a valid assessment of his risk profile.
- Critical to not depend only on a card based program. Rather use the Mobile as the primary instrument for driving bank wide loyalty
- Profitability Analytics per customer can be measured & can form the basis of creating an evaluation framework. Customers can be classified in bands basis profitability & a structured series of Campaign experiments can be run to devise an appropriate program framework. This analytics is at the heart of any new Bank wide Loyalty initiative. Without this, you will end up constantly trying to defend whether the program is working or not.
Posted by Ajay Kelkar on Tue, May 01, 2012
Since setting up their crack personalization team in 2009, clicks on Yahoo’s “Today” box have increased 270%.So personalization makes us four more times likely to click on a link. Internet companies are way,way ahead of the game when it comes to using algorithms to power personalization. When was the last time you got a personal experience when you called in a company’s “help line”? Possibly never!
But can analytics lead a company astray with “too much personalization”. I wrote earlier about how analytics can be done in ways which are not ethical. Increasingly, with consumers becoming far more conscious about their data, the analytics community will need to understand how to respond to these real fears!
I wrote about this earlier here: "The dark side of Analytics"
http://blog.hansacequity.com/customer-management-blog/bid/13406/the-dark-side-of-customer-analytics
A few weeks ago, the New York Times published an article that revealed how Target uses consumer data to identify shoppers who are going through major life changes like pregnancy. Target then sends out tailored coupons to encourage these shoppers to buy more products—stuff that they may not have bought there—such as groceries, vitamins and clothes!
Eli Pariser, author of “The Filter Bubble” delivers a compelling TEDTalk on the dangerous unintended consequences of web companies personalizing “news” basis an analysis of our data! He argues that: this personalization is the internet showing us what it “thinks” we should see, as opposed to what we should or need to see.
http://www.ted.com/talks/lang/en/eli_pariser_beware_online_filter_bubbles.html
What are the lessons here for us?
- With the responsibility of carrying customer data comes "accountability" for all companies. Urgent need for being conscious about consumer privacy!
- Analytics can help drive personalization that improves the "customer experience". Focus on measuring that value & make changes!
Posted by Ajay Kelkar on Sat, Apr 28, 2012
Innovators aren't exceptional as much as they are confident. So says David Kelley, the founder of the venerable Palo Alto, Calif., design firm IDEO.
Analytics has for long been considered a strategic tool but its use has been mastered only by few industries & a few companies within those industries. One hears about Capital One, Harrah’s casino & others who have dramatically impacted their business through use of analytics. But analytics is not new! Some of the statistical underpinnings of analytics are more than 40 years old (like the Logistic regression algorithm)
But innovation is much more about how you use analytics & so you need the “integrators”! These are people who understand the intersection of “data, technology, business & statistics”. And you have integrators who exist all across the company, not only in one department. And of course they need to have the courage to "fail" because without that "innovation" does not happen!
The increasing footprint of digital data is allowing such integrators to truly make an impact! The media business is one which is being impacted by changing reading habits & so the need to innovate is possibly far more urgent!
“The New York Times Company announced today the launch of Ricochet, a new approach to digital marketing. SAP, along with media agency Mindshare, is the first company to utilize this new marketing solution.
Developed in The New York Times Company’s Research & Development lab, and commercialized by the Times Company’s newly formed R&D Ventures group, Ricochet is a new model of digital marketing that blends media buying with a brand’s social media and owned media strategies. R&D Ventures evolved out of the R&D lab and brings promising new product concepts to market”
An example of one of the SAP-selected articles can be viewed here: http://r-i.co/ve. Here is that same article, as it appears to anyone who navigates to the page without using the Ricochet link:http://bits.blogs.nytimes.com/2012/04/19/supercomputing-rented-by-the-hour/.
So “Push” is being replaced by “Pull”. Earlier brands reached advertising through content now content is reaching the audience through the brand!
Think about it, would you expect the Times of India or Hindustan Times to deploy cutting edge analytics! Look at the forwarding looking investments that the New York Times seems to have made! http://bit.ly/pFvJB
And stuff like this is being supported by an Analytics tool:
“Ricochet operates in conjunction with Cascade, a proprietary data visualization tool that can monitor the sharing of content on Twitter. Cascade, which was also developed by the Times Company’s R&D lab, allows the brand to visualize the Ricochet links as they are shared on Twitter and thereby gain additional insights such as which key influencers are driving traffic to the content, what those influencers are saying, and which hashtags, if any, they use”
So there are ways to bring analytics into mainline business, it's just that it needs the "integrators" to step in!!
Posted by Ajay Kelkar on Fri, Apr 20, 2012
Recently in a discussion with INSEAD students I wondered why more companies are not using analytics to make decisions. I saw the Banking world as having adopted analytics but for many other businesses analytics still was about “sexy insight” & not a “better decision”.
Making Analytics sexy doesn’t make it easier to implement! And this is where the challenge lies in Analytics. Striking headlines make for easy copy but don’t do wonders for executing analytic intent within a corporation.
I had written about this earlier here:
http://bit.ly/IGhozJ
http://bit.ly/JlNcO4
Analytics doesn’t need you to solve a technical problem but a “social” one. Embedding analytics into the fabric of the company is critical. How do you demystify it & how do you link it to practical stuff.
Start with a decision in mind & work backwards, not with the data in mind & working forward. Link Analytics to “the last mile”. Analytics should not be expected to deliver an “Aha moment”-instead it is a factory approach to improved decisions.
So analytics is not a planning tool as much as it is an Execution tool. So who should staff Analytical positions-a Marketing person or a statistician or a creative integrator! Many companies have opened out new positions called Data scientists. But a new breed of people is also needed, the integrators, people who understand the intersection of data, technology, business & statistics. Too ambitious, perhaps! Superwomen needed, Maybe!
Posted by Ajay Kelkar on Sun, Apr 15, 2012
There is so much talk about Coalition loyalty nowadays. Almost every large global company in the loyalty space is here & batting hard! I have written earlier about this. But will a coalition loyalty company be able to run a better loyalty program?
Does Coalition loyalty work in India? Will marketers cooperate & align together or will multiple program partner interests be too complex to manage. Or will the Indian crab syndrome come in the way!
Here is more about the Indian crab syndrome: http://bit.ly/HKgMNK
But are people forgetting a few fundamentals. Loyalty programs, if they are to engage customers should allow them to see “value”. Discounts don’t have memory & so most programs come out with points. But according to the 2011 Colloquy Customer Loyalty Census, of the $48 billion worth of perceived value in reward points and miles distributed by American businesses annually, one-third goes unredeemed by consumers.
Companies lose money on time and effort, and customers get no more value from the businesses to which they are supposedly "loyal."
India is seeing a plethora of Coalition loyalty companies. Can they improve the quality of programs that exist? Payback has been the early coalition entrant. Transaction throughput via Payback is around $350 million (Rs 1,500 crore to Rs 1,600 crore) every month. In India, around 35 to 40 per cent of the loyalty points that are given by Payback to its members is redeemed, while in Germany, about 95 per cent of the points given by Payback are redeemed.
Breakage is simply the amount of points or credits that expire or never get redeemed. Along with gift cards and cash cards, it is widely associated with Loyalty and Rewards Programs. The biggest question is ‘How much breakage is optimal? If the breakage is low, does it mean that the program is a success, and if it is high, is it because members do not care about the program? This is not always easy to answer, as a certain percentage of points do naturally break and form a part of expected revenues. Studies have indicated that breakage in the retail loyalty programs hover around 25%. Some large airlines indicate a breakage between 13-25%.
It would be interesting to do analytics around the profile of customers who redeem regularly & get some insight into what customers find valuable in a loyalty program. Program design has a huge impact on breakage.
It is a myth that high breakage leads to a good loyalty program, it’s exactly the reverse! Marketers should go back to the basics of building a credible loyalty program & not get misled into shortcuts through only the coalition loyalty route. But this requires a serious conversation with the CFO & the CEO!
Posted by Ajay Kelkar on Sun, Mar 25, 2012
Information, as they say, is power. I wrote about this in an earlier post http://bit.ly/GZKdUT
The UK government is helping consumers to access, control and use data held about them by businesses through a radical new programme of work called ‘mydata’. Around 50 leading businesses, covering financial services, retail, utilities, telecoms and online platforms, have agreed to work with government on ‘mydata.
I am really amazed to find this study from the UK goverment. I had written about this earlier at: http://bit.ly/GZMrDG
Apparently the UK Government has a Behavioural insights team. ( I can imagine such a team with Nandan Nilekani in India). This team was created in the early months of the Coalition Government to make a reality of its pledge to find ‘intelligent ways to encourage, support and enable people to make better choices for themselves’. Imagine the scale of the effort. Making this kind of effort in the corporate world sounds difficult & the government is doing this in the UK. In fact just visiting the Cabinet office website can give us in India a huge complex.
https://update.cabinetoffice.gov.uk
Here is what the UK government is setting out to do. You can read the entire report here: Better choices, better deals!
Here are some excerpts:
By making it easier and simpler for consumers to access data held about them, intermediaries will be able to combine (or ‘mash’) data from different sources to enhance consumers’ understanding of their purchasing choices. This will drive improvements in consumer value and choice by promoting competition, and reducing problems with information, searching, and switching costs. It will therefore act as an important stepping stone towards a world where consumers make decisions on the basis of accurate information of their past usage of a service and competitive offers made by sellers. We are calling this ambitious programme of work ‘mydata’
There are signiicant disparities between – and within – sectors in the amount of personal data stored, and whether it is routinely shared with consumers. For example, in the banking, telecoms and online retail sectors it is increasingly common for consumers to be able to see their transaction history. However, often this can only be viewed onscreen, and is not downloadable in a common format. If it were, it could be easily reused by intermediaries and third parties to provide consumers with, for example, clear information on their spending habits or the best tariff given their personal usage
Richard Thaylor, a professor of economics and behavioural science at the Booth School of Business at the University of Chicago has this very interesting proposition.
This is what Richard provocatively suggests:
“If a business collects data on consumers electronically, it should provide them with a version of that data that is easy to download and export to another Web site. Think of it this way: you have lent the company your data, and you’d like a copy for your own use”.
I think this is a powerful idea & can have a huge impact on consumers & also create a huge number of intermediary companies who help consumers make sense of their data. The idea of using analytics as “personal power” will definitely be resisted by organized companies & governments, but it has the power to allow the customer to control & manage her relationships with Telecom, Retail & a myriad other companies.
Posted by Ajay Kelkar on Sat, Mar 24, 2012
It might be counterintuitive to think about loyalty programs for e commerce retailers given that they are at a stage where a huge aspect of their strategy is about price discounts. So do consumers need any other benefit apart from a clear & obvious price discount. The issue actually is that discounts don’t have a memory! So consumers forget discounts pretty fast & tend to not forget special privileges! So the goal of a loyalty program would be to deepen the relationship with the consumer on dimensions other than just price.
Groupon has recently launched a priced loyalty program. Program is called Groupon VIP & it will give members a preview of the discounts it negotiates with businesses, access to closed or sold-out deals, and a one-click anytime exchange for unused vouchers.
I am actually surprised that nothing significant in loyalty has yet appeared from Indian e-retailers. In the US, 9% of online buyers said they belonged to such a program, while in 2011- 12% of online shoppers confirmed that they were part of a loyalty program (stats from Forrester).
So in India, can we imagine that Flipkart may build a program that matches First Citizen of Shoppers Stop?
Posted by Ajay Kelkar on Sat, Mar 17, 2012
So a data scientist was “hot IT job No. 2” on a list of the six hottest new jobs in IT, according to CIO Magazine (@ciomagazine). The essential skill set needed for the enterprise of the 21st century is that of the “data scientist,” a role dedicated to understanding and making use of data to help a business or other organization.
A recent Forbes article describes Data scientists as “They are equal parts engineer, statistician and investigative journalist / forensic reporter”. Are these requirements unreal? I sure think they are!
And Business analyst was possibly the hot job in earlier years! And, what’s the difference between the Business analysts who actually have IT aspirations & those who want to actually do more “consulting”. And where do you slot the Web analysts, so they are yet another breed, right!! So you have Web analytics, Business Intelligence & good old analytics! Wow, it doesn’t get more interesting than this!
Isn’t it time analysts got their act together & thought about professional growth over a longer period! Should they be thinking about the quality of exposure they get along with what they are paid?
How do analysts grow professionally? Is the community getting "out priced"? Are they getting paid more without the requisite "richness in exposure"? End of the year, I see this ritual where I see junior analysts chasing “money” vs a strong “robust learning experience”.
I saw this interesting study on what motivates analysts. I have worked with quite a few over the last decade. I feel this is a community in "transition". At one end, technology is getting smarter & doing what an analyst could do earlier! At another end, analysts who work in pure “outsourcing” roles are not getting exposed to “what makes business tick?” But are analysts thinking 5 to 10 years ahead or is it only the $ that they are chasing!!
Posted by Ajay Kelkar on Sat, Mar 10, 2012
Consumers don’t use only one channel & they take time to migrate across channel. And yet one does not see as much innovation in driving this kind of behaviour change.
Banks want consumers to migrate to online banking. Retailers want consumers to do online commerce! Yet many Marketers stitch together the DM part of their campaigns in the most unimaginative way. Maybe, this is more about wanting to be visible above the line. Maybe, the creative guys don’t see the direct medium as a hotbed for creative innovation. Or more importantly the creative guys find it hard to connect the “idea to data”- which is what “one to one” marketing needs.
Here are two interesting examples:
- Wingstop, an interesting restaurant chain in the US, launched a local direct mail campaign that gave postcard recipients the ability to scan a QR code to get driveway-to-store driving directions on their mobile device. Since each QR code is unique and associated with a mail recipient, Wingstop can track when it was scanned and who scanned it (valuable information for organizing follow-up marketing campaigns).
2.
Word of mouth is what drives a lot of businesses. So, how can businesses tap into the word-of-mouth activity that’s already happening and impact the number of transactions within a localized area? Capture video testimonials from satisfied customers–in those neighborhoods–and use QR codes printed on postcards to deliver the personal recommendation directly to their neighbours–targeted prospects surrounding existing business. Include a relevant offer to further motivate trial and/or purchase.
This kind of marketing can have interesting implications & can also allow the marjeter to pick up data using analytics that can drive further targetted campaigns.