Category: Marketing

Velvet Rope Marketing

VRM is at the centre of SHUVAM and one of the most important drivers for ProfitXL. It can be called by various names – customer-centricity in Wharton professor Peter Fader’s books, red carpet marketing as some have termed it, or simply loyalty marketing. The big idea behind VRM: that a small fraction of customers account for an outsized chunk of revenues and more than 100% of profits. (The latter happens because the long tail is lossy thanks to acquisition and servicing costs.) And yet, most marketers treat all customers the same. We have all been at the receiving end of such undifferentiated ‘equalising’ experiences! Little wonder then that brand loyalty appears a thing of the past – which in turn pushes marketers back into the embrace of Badtech in the eternal quest for more revenues.

An effective VRM program needs three elements: a customer-base audit to better understand buying behaviour of existing customers with a systematic review of transactions, the twin combo of customer lifetime value (CLV) and Best Customer Genome (BCG) to identify the most valuable customers and their characteristics, and the creation of a separate business unit to provide differentiated experiences for the Best customers.

A customer-base audit helps marketers understand how customers differ in their buying behavior and how their buying behaviour evolves over time. As Peter Fader, Bruce G.S. Hardie and Michael Ross explain: “The starting point is a list of transactions for each customer (date, time, products purchased, total spend, etc.)…Traditional reports will summarize performance by product. Think of an Excel worksheet where the rows correspond to individual products and the columns correspond to time (e.g., quarter). Now, imagine an alternative summary table — again, think of an Excel worksheet — where the rows now correspond to individual customers and the columns correspond to time (e.g., quarter). The entries in the table report each customer’s total spend with the firm in that particular time period. Another table tells us how many transactions each customer made with the firm. (For most firms, these tables will contain lots of zeros.) If you’re lucky, you’ll also have an equivalent table that summarizes the profit associated with each customer in each period.”

The next step is to calculate forward-looking CLV based on data from the audit. This will help in segmenting customers into Best, Rest and Test. The 20% Best customers are the most valuable, while the Test customers are least important. And in the middle are the Rest, who could go into either one of the other segments based on their experiences with the brand. Once the Best customers are identified, the next step is to understand what’s common to them and their buying behaviour (customer journey) – this is the BCG.

Armed with a knowledge of the Best customers at an individual level, marketers need to craft unique experiences for them to ensure they achieve their CLV threshold. An XRT (eXtreme Retention Token) can help identify Best customers when they enter an offline store. Exclusivity, ease and access are three dimensions for enthralling such customers – like airlines do for their first- and business-class customers. An SBU for Best customers is what marketers need to create to ensure that their Best customers are treated like royalty, rather than numbers in a loyalty program.

A good VRM program will go a long way in ensuring consistent revenue growth. Best customers, nurtured through differentiated experiences, can also help get others like them from their network. That’s the next step in the ProfitXL journey.

Unistack

Over the past few years, marketers have combined multiple point solutions to create their martech stack to collect data from websites and apps, automate customers, segment customers, and run push and personalisation cross-channel campaigns. The problem? The fragmentation of data caused by the use of multiple solutions and the inherent difficulties in integrating software from different vendors. While CDPs and APIs have tried to alleviate the problem to some extent, marketers are still unable to get a single unified view of their customers. Also, siloed databases limit the efficacy of AI-ML systems to push the next best actions. So, while the first-generation of martech solutions brought in much-needed digital aggregation and automation, it also created new headaches for marketers.

It is time for marketers to upgrade the martech stack with second-generation all-in-one solutions. This “Unistack” which combines customer data, engagement and experience management with complete channel control will enable marketers to dramatically improve the efficiency of their customer relationships and take big steps towards the nirvana of frictionless omnichannel personalisation.

The second big improvement in outcomes will come from improving the search experience for shoppers. Most marketers tend to use the default search software which comes with their ecommerce platform or pick up an open-source utility to keep the spend low. This is a big mistake. Search has been the most powerful application on the Internet. On websites, customers have been trained to use search as a last resort option because the results lack relevance; a product may be in the catalog but between the inability of the merchandising team to describe it right and the imprecision in using words to type in the search bar, the product is never shown and thus doesn’t get sold. A powerful site search engine can do wonders for revenue growth. AI engines can widen product descriptions beyond what humans can, and match products to a consumer’s intent ensuring a happier shopping experience.

The third solution lies in the creation of a “Progency” – a new-gen martech services entity where product (unistack) meets agency. A progency can work like a performance marketing entity taking on KPIs and delivering the outcomes marketers want. For this, a progency will need to combine software and analytical skills with traditional creative skills, uniting left-brain and right-brain resources. It can work as an extension of the marketing department taking on specific tasks with success-linked compensation.

The Unistack embedded with quality search and propelled by the progency is the second success pillar after Hotlines, delivering the personalisation that customers want to fast-track purchases of products they desire.

Hotlines

Marketers spend money acquiring customers, and then hope to monetise them on their properties (website and app). This is easier said than done because unless marketers are able to imprint their brand on the consumers subconscious, they face a continuous battle to bring them back for transactions. This is done through a process called engagement: messages pushed to our already flooded inboxes, along with nudges and recommendations when consumers clickthrough. The problem is that as consumers we are numb to all these exhortations and ignore the incoming offers. This “attention recession” has serious consequences for marketers – because if we don’t open and act on their emails, SMSes, and push notifications, they have little choice but to retarget us on the Badtech auction platforms spending even more money to reactivate their relationship with us.

For the past decade or so, almost nothing has changed in the push channels. And now, almost suddenly, a triad of innovations is creating excitement: emails can become interactive thanks to a technology called AMP, WhatsApp (popular in many countries) has allowed for brands to interact with customers, and Atomic Rewards can offer gamified micro-incentives to encourage attention and the sharing of personal information (also called zero-party data). AMP, WhatsApp and Atomic Rewards can thus drive inbox engagement and action funnels closer to consumers. AMP and WhatsApp can even replace apps – and combined with the advantage of ‘push’ give marketers control to initiate conversations which can lead to conversions.

AMP, because of its underlying email base, costs a fraction of that of WhatsApp (which is controlled by Meta). While still in its infancy in terms of use cases being deployed, AMP will enable what I call “All-in-Mails”. From filling forms to lead generation, from spinning wheels for offers to using calculators for answers, from getting additional product information to acting on abandoned shopping carts, from searching to paying – AMP is the future of email. Think of it as Email 2.0 – email without the need for clickthroughs and landing pages, a world without redirects.

Atomic Rewards is the icing on the cake. Instead of paying Badtech, brands can pay their customers. This is Loyalty 2.0, moving beyond the transaction to incentivising and gamifying the upstream (attention and data) and the downstream (ratings, reviews and referrals). This manifestation as Web3 tokens will ensure no single entity will be able to devalue the points earned. Atomic Rewards can drive a circular economy between brands and customers: more actions lead to more tokens for customers, which in turn makes brands value them even more. These rewards can then be exchanged for unique experiences or fiat currency.

AMP in email, WhatsApp and Atomic Rewards convert the unidirectional push channels into two-way rich interactive hotlines, thus finally enabling marketers to bridge the chasm between new customer acquisition and attracting traffic to their properties. Hotlines are thus the gateways to building deep and lasting relationships, a win-win for both brands and customers.

Story

The journey to ProfitXL begins with an understanding of marketing’s polycrisis and a marketer’s determination to shift the mindset from adtech to martech, and from new customers to existing customers. Part of the problem for marketers is self-inflicted because they ignore existing customers; then even among existing customers, they do not create differentiated experiences for Best customers; and then when it comes to new acquisition, they disregard the power of referrals, reactivation, and smarter acquisitions based on data from existing customers. Little surprise then that more and more money keeps getting poured into the new customer funnel which in turn leads existing customers to become exiting customers.

The three slides below lay out the story that marketers need to understand to embark on the ProfitXL journey.

AdWaste to Profipoly

$200 billion a year, growing at 25-30%. That’s the AdWaste that eats away at brand profits. Caused by completely avoidable wrong acquisition and reacquisition, AdWaste is the biggest of many profit-killers. Big Adtech (henceforth called Badtech) is the primary beneficiary of this largesse. This ‘handout’ has also shifted the marketing industry’s balance of power away from brands and agencies to the likes of Google and Meta. The massive reduction in profits has been caused by an escalating new customer acquisition race which wastes half of budgets has created a polycrisis in marketing: a leaky bucket of customer additions which take up 85-90% of spending and whose lifetime value cannot be fully extracted because they churn and thus force marketers to reacquire them or acquire other new ones via even more adtech spending. Attention recession and data poverty hurt the marketer’s ability to build hotlines and deliver omnichannel personalisation. In other words, marketers are facing the perfect storm: in a slowing market, revenues and profits are being hurt even more because of their inability to escape Badtech’s web.

The time has come for a mindset shift from acquisition-centric marketing to profit-centric marketing; this is a journey every business will need to make because it is the only way to build an enduring, great business. The easy money era of the past years is behind us and will not be coming back anytime soon. Badtech benefited greatly from money transfers from pension funds (via VCs and Pes through new age startups); in the years just gone by, a third to half of capital raised by B2C companies was spent on the likes of Google and Meta. Fuelled by a FOMO (fear of missing out) in the battle for the next new customer, brands and marketers ceded their sovereignty and lost sight of a business’s soul which is to ensure existing customers come back for more and bring along their family and friends. We as consumers lost our privacy and the warmth of brand relationships. We became data points in CDPs (customer data platforms), not distinct individuals in search of brand love and frictionless experiences.

Luckily, help is at hand. A set of innovations and well-planned actions can end AdWaste and supersize brand profits: a 25% shift of budgets away from Badtech can deliver more than a 50% increase in profits, while a 50% shift can more than double profits. This is what I call ProfitXL: a strategy to supersize (eXtra Large as denoted by XL) profits by breaking with badtech, a flipping of the funnel of brand-customer relationships to solve marketing’s polycrisis.

ProfitXL is built around five themes which I have covered extensively over the past three years on my blog: the need for one-way push channels to become two-way conversational pathways thus bridging the chasm between acquisition and conversion, the transition from point solutions on the brand’s properties (website and app) to a unified martech stack, the identification of Best customers and creating differentiated experiences for them, getting  close to zero CAC (customer acquisition cost) for new customers, and measuring growth based not on paid marketing spends but on repeat purchases from existing customers and revenues from referrals. This is ProfitXL’s SHUVAM framework: Story, Hotlines, Unistack, Velvet Rope Marketing (VRM), Acquisition (done right), and a new set of Metrics to measure progress.  SHUVAM is the path for exponential forever profitable growth. If followed rigorously, it can help a brand create the ultimate endgame and moat in a business – a profits monopoly (“profipoly”).

The ProfitXL mindset and SHUVAM strategy will help marketer’s increase revenues, reduce spends and improve shopper experiences. After almost two decades of digging the AdWaste hole, marketers can climb the profits mountain and aspire to reach the profipoly pinnacle.

QuizMails

I have written many essays about email and innovations like Ems (short emails), AMP (interactive emails) and Atomic Rewards (incentivised emails). We can combine all these ideas to create an interactive quiz email sent daily. The good thing about using AMP is that all the actions can be done right inside the email – eliminating the need for clickthroughs and landing pages. Think of the AMP email as an app (software) inside an email. It is a gamechanger for driving greater engagement within email. Combined with the push feature of emails, we can imagine a new service – let’s call it QuizMails – where quiz emails are delivered daily to our inbox.

Here is an outline of the features of QuizMails:

• An email is sent daily with three quiz questions. Each question has a timer (few seconds) to ensure that there is not adequate time to do a Google search for the right answer. The questions are custom for every recipient – chosen from a large question bank.
• Each question is multiple choice with four options – and a fifth “Skip” one. A right answer gets +4, a wrong answer -2, while a skip gets 0. These points can be given in the form of Mu.
• As soon as one question is answered, the next question shows up in its place. Thus, answering the three questions would take no more than 20-30 seconds.
• Mu can become the mechanism to unlock additional features: an additional question, an additional email daily, the ability to eliminate one of the wrong options to increase the probability of getting the right answer, and the option to increase the difficulty level of the questions for additional Mu.
• A leaderboard can bring social recognition. The daily score (Mu earned) and leaderboard position can be shared on social media – and could help QuizMails with virality.
• The QuizMails platform could then also be used for specialised questions: for test prep, specific verticals, on material read, and so on.

None of us has seen the combo of quizzes that can be answered in our emails. This will be a novelty, and with continuous innovation, has the opportunity to be a game that many of us would like to play. It can also work as a showcase for the richness and immense possibilities of what AMP and Atomic Rewards can do to bring to life the new worlds of Email 2.0 and Loyalty 2.0. A consumer success could encourage more brands to adopt these technologies to build better relationships with their existing customers, cut back on AdWaste, and supersize their profits.

Maybe QuizMails will help us rediscover the joy we experienced as kids and teens. One is never too old to be challenged by a quiz – especially if technology can help remove the friction in the experience.

Backgrounder – 2

In a 2000 column, Amelia Hill explained our love of quizzes. A short answer: “Because they fulfil a need for knowledge in society and they’re fun.” 98thpercentile adds: “Quizzes are a great way to have fun, but they can also be used as a tool for self-improvement. They can help you learn more about yourself and how others view you.” With the internet, quizzes have moved online. In a 2014 article, Wired wrote: “The reason quizzes have proliferated, of course, is the same reason they have any social relevance at all: We share our results with each other. As quizzes have become a lucrative option for online publishers, they’ve also a signifier of self, as indicative of who we are as the profile pictures we choose, the music we publicly listen to on Spotify, or even what kind of bath towels we just bought on Amazon. The fun isn’t taking the quiz—it’s showing the result to others.” The article quotes Sherry Turkle: “[Quizzes are] specifically for performance. Here, part of the point is to share it, to feel ‘who you are’ by how you share who you are. [It’s] the conflation of who you are and who thinks you’re okay.”

To a specific question on the problems that quizzes solve in our lives, here is the answer I got from ChatGPT:

1. Education: Quizzes can be used to assess students’ knowledge and understanding of a particular subject or topic. They can also be used to test students’ retention of information and as a tool to improve learning.
2. Entertainment: Quizzes can be used as a form of entertainment, whether in a live setting or on a television or online show. They can be used to engage audiences and create a sense of competition.
3. Recruitment and selection: Quizzes can be used to assess the knowledge and skills of job candidates. They can also be used to test the cognitive abilities, logical reasoning and problem-solving skills and personality traits.
4. Marketing and advertising: Quizzes can be used as a marketing tool to generate leads and engage with potential customers. They can also be used to promote a brand or product.
5. Knowledge assessment: Quizzes can be used to test people’s knowledge on different topics, whether in a formal or informal context. They can also be used to identify areas for improvement and to provide feedback to the quiz takers.
6. Memory retention: Quizzes can be used to test people’s memory retention and can help them to recall important information.

A Scientific American article from 2015 uses research to show that frequent tests can boost learning: “According to [Jeffrey] Karpicke, a professor of cognitive psychology at Purdue University, retrieving is the principal way learning happens. “Recalling information we’ve already stored in memory is a more powerful learning event than storing that information in the first place,” he says. “Retrieval is ultimately the process that makes new memories stick.” Not only does retrieval practice help students remember the specific information they retrieved, it also improves retention for related information that was not directly tested. Researchers theorize that while sifting through our mind for the particular piece of information we are trying to recollect, we call up associated memories and in so doing strengthen them as well.”

Quizzes have had some part in our lives – and for some, they probably still do. They educate and entertain, are teaching and learning moments, bring social recognition, and work as filters in recruitment. How can we bring them into our inboxes daily – to fill life’s empty moments and also the know-now ones?

Backgrounder – 1

Let’s start with a history of the quiz. From Britannica: “The earliest known appearance of the word quiz in print, according to the Oxford English Dictionary (OED), is surprisingly recent—1782—and the word then referred to an odd-looking person… As a term that refers to a test of knowledge, the word quiz first appeared in print in 1867, according to the OED, when it applied specifically to a set of questions used to evaluate a person’s knowledge in an academic context. This specific sense of the word has survived and is still used by instructors to denote tests that are not long enough to qualify as examinations and are often not announced prior to being given to the surprised students. By the early 20th century, American newspapers were applying the word quiz to a form of amusement… The OED theorizes that [the change in meaning] may have occurred by way of association with the word inquisitive or question.”

A short answer from ChatGPT: “Quizzing has a long history, dating back to ancient civilizations where tests and competitions were used to measure knowledge and intelligence. In modern times, the first known quiz competition was held in the early 1700s in London, England. Quizzes became popular in the United States in the early 1900s, and were often used as a form of entertainment on radio and television shows. Today, quizzes are still used as a form of entertainment, but they also have many educational and professional uses. They are also widely used in online platforms and mobile apps for fun and for educational purposes.” It also explained the most popular formats:

1. Multiple-choice format: This is one of the most common quiz formats, where participants are presented with a question and multiple answer choices, and they have to select the correct answer. This format is easy to grade and score and can be used for a wide range of topics and difficulty levels.
2. True or False format: This format consists of statements that are either true or false, and participants have to indicate whether they believe the statement is true or false.
3. Matching format: In this format, participants are presented with a list of items or concepts and have to match them with the correct category or definition.
4. Fill-in-the-blank format: This format consists of questions or statements with one or more blank spaces that participants have to fill in with the correct word or phrase.
5. Open-ended format: This format consists of open-ended questions that require participants to provide a written or verbal response. This format is often used for more in-depth or subjective questions.
6. Team format: This format is where participants form teams and compete against other teams in answering questions, usually in a buzzer system.

Quizzes satiate our curiosity to learn and be tested – either individually or against others. As Britannica explains: “Curiosity is why most quiz events take place away from the spotlight, in dingy basements and rented halls on weekends. What drives serious quizzers is a combination of the desire to know more and more about the things they see and read about and the joy of retaining and recalling these unrelated facts in the heat of the moment to answer a question.”

Quizzes and Me

I love quizzes. Being able to answer a question creates an inner sense of joy and triumph. My earliest memory of experiencing this thrill was as a 10-year-old at Poona Club. I remember being asked a question about the profession of an individual whose name I cannot now recollect. I correctly answered (more like guessed), “Dancing.” It was right! I won a cash prize. I then had the option of answering a second question. If I guessed right, I could double my winnings. If I guessed wrong, I would lose what I won. Or I could choose to walk away with the cash – which is what I did. I figured the odds of me guessing correctly twice in a row were quite slim!

As a school-going kid, I remember listening to Bournvita Quiz Contest which was an inter-school quiz contest broadcast on radio every Sunday. I would then buy their annual book which had all the questions (and answers). I memorised many of them. I would ask my friends to ask me a question at random and more often than not I answered correctly. In the ninth standard at school, I was part of the four-member team that participated in the inter-school Nehru Science Centre quiz. One of the happiest moments of my childhood was winning the trophy – and getting a small segment shown on Doordarshan’s Marathi News (called Batmya).

In IIT, I realized there were many better quizzers than me! So, as hostel and Institute Literary Secretary, I switched to conducting quizzes. The ones I liked the most were the specialized ones – on PG Wodehouse and Sherlock Holmes. The esoteric knowledge that the winners had never ceased to amaze me!

Among my childhood memories is listening to BBC Mastermind on radio. (I used to watch the TV version later on.) The questions were tough – and I was happy if I managed to answer two or three questions before the participants. My “General Knowledge” had a long way to go. In India, a program that did very well in India was Siddharth Basu’s Quiz Time, an inter-collegiate contest broadcast on TV. In the early 2000s, I was captivated by KBC (Kaun Banega Crorepati, an Indian adaptation of “Who Wants to be a Millionaire?”). Watching “Jeopardy” reruns during the early pandemic months was also something I enjoyed.

Every once in a while, I will come across a quiz and I am willing to be challenged. There is something about the format which instantly attracts, challenges, educates, and tests. In schools and colleges, tests are called “quizzes”. It is a word that is never far away from even our adult lives – books, websites and apps abound.

As I was thinking of interesting AMP use cases, I thought of quizzes. None of us has seen a quiz in an email because emails have not been interactive. Clicking through to a landing page and then answering questions creates inertia and we just let the moment pass. Remembering to open an app daily and participate leaves quizzing to the most passionate. I asked myself: what if we combined the power of AMP in email with the attraction of quizzing? Imagine getting a few questions daily in the inbox and answering them – all in a matter of seconds. Could it bring back the excitement we all felt as casual quizzers in the early years of our lives?

ORC #10: Multi-channel or Omnichannel

As customers, our touchpoints with brands have exploded: from in-store to website to app, from the push channel like email, SMS, app notifications, WhatsApp to social media platforms like Facebook, Instagram and Tiktok. Then there are the marketplaces where we can also buy products from our favourite brands. For a brand, the traditional approach of building demand through print and TV ads and then using distribution excellence to ensure availability to a retailer near us – that’s a world long gone. This is the multi-channel world: brands have to be present where we as consumers are. In fact, shoppers don’t think of distinctive channels. For them, it is a continuum: a search on Google followed by a website visit and then perhaps a purchase in a nearby store. This is the omnichannel world – the same customer across multiple touchpoints. How does a marketer deal with the modern customer?

A post on Talkative explains: “Multichannel refers to the use of more than one channel to market and communicate information about a brand. These multiple channels are not integrated with one another. A billboard, for example, is not directly connected to a business’ website – they are separate channels used to increase awareness of a brand. Omnichannel also refers to the use of more than one channel to communicate with customers. However, in this case the multiple channels are integrated to create a seamless experience for the customer. In other words, a customer can pick up on one channel where they left off on another.”

I wrote in Building the Hotline Right: “Gone are the days when there was a single channel that brands used to engage with customers. The digital customer of today is omnichannel. While each of us may have our preferred channels, interaction goes across channels. Brand properties now encompass not just websites and apps, but also the social media channels. From Facebook to WhatsApp to Twitter to Instagram to YouTube, all are creating ways to enable commerce. Communications are leading to conversations which in turn shows the way to commerce. The primary push channels are also becoming 2-way: email to Email 2.0 and SMS to RCS. WhatsApp is opening up rapidly for business enablement. Push notifications are being enriched with media. Across all these channels, brands need to create a unified view of each customer by feeding data into a CDP (customer data platform) and then building AI-powered journeys and next best actions for segments (of one).”

The future of marketing is omnichannel personalisation. Success means creating a unified customer view and then making predictions on next best actions and providing continuity in experiences across channels. This will need marketers to shift from point solutions focused on specific channels to a unified martech stack – a transition from Martech 1.0 to Martech 2.0. As I wrote in Digital Marketing and its Discontents and Disruptions: “The past few years have seen marketers implement various opportunistic point solutions on their website and in their apps for marketing automation and journey orchestration. The multitude of solutions has created a suboptimal customer experience. It has fragmented data, rendered AI less effective and limited the availability of a unified customer view. What marketers now need to upgrade to is a Martech 2.0 solution which provides a single stack to do it all and provide a superior customer experience with differentiation for Best customers and thus drive more stickiness – and eventually transactions.”

While some brands will seek out best-of-breed solutions, for most brands the future lies in having a single integrated stack which extends from offering hotlines to automation to improved site search (like the kind that Netcore does). Every single customer’s needs can only be met with a platform that combines data from all touchpoints, uses hotlines to move conversions funnels to the inbox, and creates differentiated experiences in-store and online. At its heart needs to be the thinking that a customer’s lifetime value is what should become the revenue stream for a brand. Only then can marketers become supersize profits rather than leading the loss brigade in transferring good money to “Badtech”.

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Conundrum: customers today have a choice of multiple touchpoints – how does the marketer get a single view across all the channels

Insight: siloed point solutions of Martech 1.0 fragment the customer experience

Solution: the need for a unified Martech 2.0 stack to create frictionless shopper experiences