Published November 6, 2022
In past essays [see Loyalty 2.0 section], I have discussed the need for MuCo to create the Muniverse ecosystem: Mu as the tokens for attention and data, MuApp combining a wallet and an inbox providing the consumer interface, and related elements like the Mu Shop, Mu Market and Mu Exchange. In this series, I will explore the financial impact of the various elements. How does MuCo make money? What are the benefits for brands and customers? Let’s begin with MuCo and summarise the problem it solves, which will lead us to the monetisation opportunities.
MuCo brings efficiency and effectiveness to the $400 billion adtech industry. The dirty secret is that half of the spending brands do on new customer acquisition is being wasted. In effect, marketers collude with the digital platforms to overlook the reacquisition and wrong acquisition that is leading to the AdWaste. Brands and their customers are the losers. Brands are not taking adequate care of their existing customers, and customers end up churning in search of better relationships. Even worse, brands end up sacrificing profits to feed the rising and ravenous CAC (customer acquisition cost) monster, while consumers end up sacrificing their privacy and are constantly surveilled by Big AdTech hungry for data. Consumers are also not receiving commercial messages that are geared to their interests, that they might be inclined to act upon.
It is this world that MuCo seeks to streamline. MuCo enables brands to build hotlines with existing customers in the upstream (attention and data) and downstream (network and voice) by offering a lubricant in the form of Atomic Rewards (Mu points and tokens), thus enabling exchanges which are not happening today. MuCo ends over-reliance by brands on new customers, and instead enables better and deeper relationships with the existing customers – whose acquisition costs have already been paid. MuCo gives marketers a lever in the form of micro-incentives to offer customers to influence their behaviour for non-monetary actions, just as traditional loyalty programs nudge repeat transactions. MuCo’s pitch to brands: pay customers, not Big Adtech.
MuCo’s platform creates two primary and two secondary monetisation opportunities. The primary opportunities are the sale of points and tokens either directly or indirectly (just like any other loyalty program) and enabling brands with an alternate form of customer acquisition via the hotline that MuCo will build to consumers. The two secondary opportunities are via the trading platform to enable brands and consumers to buy and sell Mu, and the minting of XRTs for brands to provide differentiated experiences to their customers.
The first TAM (total addressable market) for Mu sales is $200 billion – the AdWaste in today’s digital acquisition industry. Success in this will open up doors to newer opportunities over time. The good news is that there is no one working to disrupt the Big Adtech. Yes, Tiktok may take away some business from Facebook; while their approaches are different, their fundamental business model remains the same. They collect the data by stalking customers – data which they then sell to brands for new customer acquisition. This is the world that MuCo aims to transform with its Muniverse initiatives.
There are about 2 billion digital consumers. Brands spend $400 billion on digital acquisition each year. This comes to about $200 on average for each new customer. Half of this is being wasted – just gobbled up by Big Adtech for no returns. Imagine if this money ($100 per customer) can be returned to existing customers – making them more likely to come back to the brands for more and get their friends. MuCo is about facilitating these micro-transactions between brands and their customers; brands get attention and data, customers get incentives to spend more time (and money) with brands. AdWaste’s $200 billion (growing 30% annually) is the first big market opportunity for MuCo.
The pathway to making this happen is for MuCo to clearly demonstrate to brands that Mu works: rewards offered by brands result in greater conversion actions, ranging from greater engagement, higher transactions, and more referrals. Two metrics can measure outcomes (besides revenue growth from existing customers): Net Promoter Score (NPS) and Earned Growth Rate. Happier customers will improve NPS, while word-of-mouth from existing customers will increase “earned growth.”
In the early days, MuCo will need to incentivise partners to help build traction and success stories for Mu. ESPs like Netcore can make this happen. Email Service Providers (ESPs), who send mails and other push messages on behalf of brands, can be the right channel for kickstarting the distribution of Mu. Emails are the ideal carriers of Mu. 90% of emails are ignored and thus there is huge inefficiency. Mu can double or treble the open rates, thus allowing brands to create the hotlines they lack. Innovations like AMP and the Email Footer with its twin elements of Brand footer and MuCo footer are the ideal starting points for a brand to take Mu to its customers. With earning and redemption possible in the same email, Mu can become the magnet for increasing email consumption. Better data can enable brands to personalise the offers and messages, leading to a virtuous cycle of more relevance and therefore higher opens.
With the initial Mu coming via ESPs acting as distributors on behalf of MuCo, eventually brands will buy Mu directly from MuCo and later from consumers via the Mu Exchange once all the Mu have been minted and are in circulation. The Mu Exchange thus complements the sales of Mu as a future monetisation opportunity.
As consumers activate their Mu accounts, MuCo itself starts building hotlines. These can be used for providing regular updates on Mu activity to consumers as well as for brand offers. In fact, one of the most important use cases can be for reactivation of customers who have become dormant and thus unreceptive to brands. Messages sent via MuCo (or ads shown in the Email Footer) can both help reawaken the customer, thus reducing the spends on reacquisition of the same customer via Big AdTech. In the long-term, MuCo’s hotlines can offer a significant revenue stream.
Finally, MuApp can be the issuer and repository of XRTs (eXtreme Retention Tokens) offered by brands to their Best Customers. MuCo could collect a small fee for enabling this. 20% of brand relationships fall in this category. Multiply 2 billion customers with 25-50 brand relationships per customer and take a fifth of that – it comes to 10-20 billion XRTs which will need to be managed.
MuCo is thus enabling a new world – Muniverse, as I have mentioned previously. By shifting budgets from BigAdtech, it creates a revenue pool for itself as well as delivering higher profitability and benefits for brands and customers. Let’s next see how this happens.
The equation for a brand is simple. It needs to do two things: acquire new customers, and retain and grow existing customers. In the traditional world, advertising campaigns did the former, while loyalty programs helped with the latter. In the digital world, Adtech enables targeted acquisition, while Martech helps with retention, growth and cross-sell. Digital spending has eclipsed traditional spending with the rise of the Internet and mobile, with the most recent accelerant being the pandemic.
For most CEOs and CMOs, new trumps old. The likes of Google and Meta have made new customer acquisition so simple: link a credit card or bank account to the Big AdTech platform, and simply pay for programmatic performance. This removes limits on spending because ostensibly each acquisition pays for itself. Everything is measured and fancy dashboards show the impact of each dollar spent digitally. This is a far cry from the world of print and TV advertising where it is still hard to track what’s working and what’s not. Little surprise then that digital spends have become dominant in marketing budgets. Unfortunately, the 50% waste rule also applied to digital – but is ignored by the value chain because it is in no one’s interest to bring it up.
New cannot come at the cost of the old. The 90:10 skew between Adtech and Martech leaves little focus and funds for deepening relationships and maximising revenues from existing customers. Push messages are being ignored (“attention recession”) and marketers have limited info on their customers (“data poverty”). So far, there has been no easy way to solve these problems. This is where MuCo’s Atomic Rewards shine. By combining interactivity and incentives (Email 2.0), Atomic Rewards enable the gamification of time-based actions (Loyalty 2.0). Brands can now invest in their existing customers with the same ease and measurement possible with new customers.
For brands, the equation can be simple. If it costs $40 to acquire a new customer via Big AdTech, MuCo offers a solution which needs $10 annually to retain and $20 to reactivate. Retention is a big deal because research has shown that existing customers tend to spend much more than new customers. Reactivation halves the cost of new acquisition and eliminates a competitive bidding process by building on the right-of-way that brands already have to their customers. The bonus comes from leveraging the network and voice that customers have to enable referrals (zero cost acquisition) and reviews (which subtly influence future customers).
What brands need to do is create a more equitable distribution between adtech and martech spending. By paying existing customers a dollar a month for their attention and data, brands can avoid spending tens of dollars on BigAdtech to achieve the same growth outcomes. Therein lies the secret for exponential forever profitable growth.
Customers have a triple treat awaiting them: a next-gen rewards platform, gamification, and tokens which can appreciate in value over time. And this is in besides the more targeted recommendations they will receive on what to buy, read, view or do next. This is MuCo’s magic: creating value where none exists today.
We have all experienced frustration as customers from one or more of the drawbacks of traditional transaction-based rewards programs: often limited to a single brand, risk of devaluation, having redemption hurdles, expiration dates, and an inability to trade or transfer. I have lost many miles on Air India because reward tickets never seem to be available on the days I want to travel. I cannot easily redeem the Citibank and HDFC Bank points earned via my credit card spending. Crocs keeps reminding me that I have some points which will expire on the first anniversary of my previous purchase. MuCo, while focused on non-monetary transactions, does away with all of these problems. It is pan-brand, managed in a way where rules rather than ‘rulers’ power decisions, with instant redemptions, tokens that never expire, and tradability. MuCo modernises loyalty, routing it via attention and data, rather than money.
MuCo brings the fun element into its redemptions process. With the innovative use of AMPlets in emails, its 6-second games create the incentive to open every email – just like the comics pages in a newspaper that rarely go unread. Gamification works; we have all experienced this first-hand in goal setting in our personal and professional lives. Google Maps offers social status with its badges. Social networks offer multiple parameters to prod us to spend more time engaging, liking and sharing. Leaderboards in apps encourage us to constantly do better. MuCo builds on these ideas to provide Mu-earning via brand-desired behaviour (feedback, ratings, zero-party data, surveys, referrals), followed by Mu-burning via many “gamelets” (quizzes, word puzzles, roulette, live ‘clashes’ with others). A ‘µ’ in the Subject of an email is an invitation for thrill and excitement, education and entertainment, gaming and ‘gambling.’
The icing on the cake is the Web3 angle with Mu. As points convert to tokens, as Mu becomes coveted by brands, as supply is limited just like Bitcoin and other crypto currencies and tokens, the value of Mu can increase over time. Mu can also be used for exceptional experiences offered by brands. Thus, the ‘appreciation’ of Mu has two angles to it: an actual increase in its unit price based on supply and demand in the marketplace, and the purchasing power that Mu has as brands seek more of it. Think of Mu as treasure – taking even adults back to their childhood as they hunted for goodies in products!
MuCo opens up a new world – Muniverse – which solves real-world problems that both brands and consumers face. Its success lies in creating win-win economic models for all its participants. Just like Tolkein’s Middle-earth or the Marvel Cinematic Universe, a new future awaits us – bringing betterment to brand-customer relationships by eliminating the waste that has hurt profits and innovation. And it begins with a simple mantra: Pay customers, not Big Adtech.