Category: Marketing

Published November 4, 2022

1

CEO Persuasion, Email

I had just finished a presentation on Email 2.0 and Loyalty 2.0 to a group of marketers. I spoke about the changing paradigm of marketing from an excessive focus on new customer acquisition to a bigger emphasis on deepening existing relationships. I encouraged the marketers to think about profit by ensuring that existing customers come back for more and bring their family and friends, rather than relying on a steady stream of expensive and wasteful spending on the Big Tech platforms. I then discussed how new innovations like interactivity and micro-incentives can help marketers build a hotline to their customers with a focus beyond the transaction on the upstream of attention and data. I ended with a 90-day action plan for the marketers: take 10% of your customer base, split into test and control groups, use the ideas of AMP and Atomic Rewards to recraft the email program, and measure the uplift through the customer journey from opens to in-mail actions to transactions.

I then opened the floor for Q&A. I knew many of the ideas I had proposed were contrarian, but I also knew that the challenges brands faced (attention recession, data poverty, rising CAC, AdWaste) could not be solved by conventional thinking. So, I expected a lot of pushback. I was not disappointed.

The first question came from my left. A marketer asked, “Within my company, the CEO wants to see new growth. Everyone else is spending money acquiring new customers. How can I persuade my boss to reduce acquisition budgets when every competitor of ours is bidding furiously to keep the new customer pipeline moving aggressively?”

I replied, “Start by showing the AdWaste. My guess is that half of your spending on new acquisition is being wasted because of reacquisition and wrong acquisition. Both are easy to demonstrate by digging deeper into your customer database and seeing which acquired customers were already in the database (reacquisition) and which ones exited website without purchasing or uninstalled the app in days (wrong acquisition). Next, show the CAC has been increasing over the past year or so. My guess is that CAC would be up 40-50% as compared to a year ago. Then, you could tell your CEO that you are not asking for additional budgets. In fact, you will spend less and deliver better outcomes! What you need to show is not just growth but profitable growth – in both cases, there is no compromise on growth. What you need to persuade your CEO is that the plan that you have will create happier customers, drive more revenues from them, and get more referrals from them. Finally, ask for a quarter’s time to run a pilot and show the results. Take 10-20% of your customer base and run the new marketing program with them.”

The next question came from a marketer at the back of the room. “What you are proposing is impractical. No one cares about email. WhatsApp is what’s working for us. Why do you want us to go back to yesterday’s channel?”

I decided the best answer would be to actually show what Email 2.0 could do. I opened by Gmail inbox and showed what Email 2.0 looks like through multiple examples covering two broad themes – how actions could be completed within the email itself without clicking through to a landing page thus removing friction (via AMP) and providing micro-incentives (Atomic Rewards) in the form of Mu for data and allowing the redemption in the same email. I had the audience in awe with the possibilities opened up by email apps: filling forms, gathering feedback, asking for zero-party data, getting additional product information, adding to cart, scheduling appointments, getting real-time news and stock updates, searching, chatting, even making payments. All without ever clicking out of the email.

I then added, “Some of what I have shown can be done in WhatsApp, but at a price which is 25-50 times higher. $15 billion has been spent on email acquisitions in the past 18 months – definitely not the signs of a dying channel! Email still delivers the best RoI compared to every other channel.”

2

AMP, Rewards, Mu

The marketer responded, “This is email like we have never seen before! If it is so good, then why haven’t others done it? You said AMP has been around for three years. What about the US marketers – why have they not gone overboard with Email 2.0 in their email-first market?”

I answered, “That’s a very pertinent question. There have been two challenges with AMP. The first is that AMP email creation requires some software development. Most agencies have creative talent, but not software skills. So, AMP emails take longer to create. This is becoming easier now with the launch of AMP Editors with drag-and-drop capabilities. Just for your information, Netcore has an AMP Editor. Over time, customisable AMPlets accessible via an AMP Store will make it trivially easy for most use cases. Second, AMP is only supported on Gmail and Yahoo, and that too only in their apps. In the US, about half of the consumers use Apple’s iOS mail client to view their emails and AMP is not supported by Apple. This is the reason why adoption in the US has been slow because only a third or so of the recipients will be able to view the AMP email. Of course, for those who cannot view the AMP email, they will see the regular email so there is no downside to using AMP. In India, the situation is very different. 90% of consumers use Gmail and almost all of them do so on Android devices using the Gmail app. So, India could actually be the global leader in AMP adoption.”

The next question followed immediately. “What about security in AMP? How is data safeguarded?”

I replied, “AMP is a secure channel. When AMP emails are forwarded, they show up as ordinary emails – so the AMP elements are only available to the recipient who is directly emailed to. Interaction between the mail client and the enterprise servers use the best encryption protocols. So, AMP can in fact be used without hesitation of fear for payments and every use case that needs security.”

A marketer to my right stood up and asked, “You are asking us to pay our customers for their actions. Would that not create perverse incentives? They will do the actions just for the rewards rather than out of genuine interest. And you really believe a few rupees a month will get them to change their behaviour?”

I was happy that there was a question about Atomic Rewards. I replied, “Incentives work. We can see that with loyalty programs. Airlines, hotels and credit cards have demonstrated how loyalty can be fostered with their rewards programs. What I am suggesting is to extend the same logic to the upstream for attention and data. Because the cost of NOT doing it is perhaps 10-50X higher – a lost customer reacquired via Google or Meta. The point here is not the quantum of the reward but the gamification and fun element. Actions in emails earn Mu which can be redeemed right away. In fact, my suggestion is to not take my word but try it out. Run an A/B test and see for yourself. Atomic Rewards will indeed change behaviour through its twin benefits of gamification in the short-term and asset appreciation via Web3 tokens in the long-term.”

I added: “With respect to the provision of incremental data about oneself in return for micro-incentives, doing so isn’t just beneficial because of the micro-rewards received.  It is beneficial because both the brand AND the customer have an interest in an unimpeded, direct hotline between them.  We wish to receive marketing messages about shoes that are our size.  We wish to be identified correctly based on our gender.  We would like messages addressed to us that match our hobbies, interests, passions.  I believe that we as consumers are willing to reveal more of ourselves in return for effective communication that serves us.  What we have now isn’t working as well as it can, because that two-way bridge between brands and consumers is absent.”

3

Switching, Mu, Atomic Rewards

A marketer in the front row stood up and commented: “We know acquisition works. Yes, it is getting more expensive. Our own CAC is up 45% from a year ago. But we really don’t have a choice. If we don’t acquire these customers, someone else will. And then switching a customer later from a competitor will be even more expensive.”

I replied, “I agree with you that switching customers is expensive. The question to ask is: which customers should you be switching? What is the best way to reach them? And also remember that just as you are targeting customers of other brands, they too are targeting your customers to switch! So, what is the best way you can retain customers? And which customers should you retain? Here, you should segment your customers based on CLV (customer lifetime value) and focus on the Best Customers which will be 20% of your base and will account for 60% of revenue and probably more than 100% of profits if you factor in acquisition and servicing costs. These are customers you absolutely don’t want to lose. The problem today is that you have a tenuous relationship with many of them because they are probably ignoring a majority of the messages you send.

“This is what the ideas I have proposed can change. Email 2.0 and Loyalty 2.0 with AMP and Atomic Rewards can help you build the hotline which will reduce the likelihood of churn. And then you can ask your customers for referrals – Best Customers will likely get you more Best Customers like them. Also,      their data can help you better target the acquisition you do – more like using a rifle than spraying wide. So short answer: think of the 5 Rs – Retention, Repetition, Reactivation, Referrals and Replenishment, and you will spend less and get more.”

The conversation continued. “You spoke earlier about Mu for rewarding actions. Where do we get the Mu from?”

I was glad that people had started thinking deeper about the ideas. I replied, “There will be two ways to get Mu. First, customers of Netcore will get Mu free as part of Netcore’s B2B loyalty program. This will be linked to your spend with Netcore. Over time, other partners will be able to offer Mu by buying the points and tokens from MuCo, the entity that issues them and manages their operations.  Think of the big advertising companies.  They will be able to partner with MuCo, buy Mu from it, and work with MuCo and their clients to craft marketing programs that serve both the client brands and consumers. Second, Mu can also be bought directly from MuCo. MuCo is independent of Netcore, and has a special partnership with Netcore, among others. And if you don’t want to use Mu, you could consider offering rewards linked with your own loyalty program, in case you have one. The key point: offer incentives for attention and data to your existing customers.”

Another hand went up. “The idea you spoke about – Atomic Rewards – will work across brands. Why should I share my customer data with other brands? Also, won’t the same problem of rising payouts to customers happen here too after some time? All we are doing is training our customers to do for money what they are currently doing for free.”

So, back to Atomic Rewards. I replied, “The Loyalty 2.0 ideas I spoke about are built around MuCo and Mu envisions a pan-brand program. This is because the incentives a single brand can give out for the actions are small. They need to be aggregated across multiple brands to create something substantial for the consumer. Also, managing multiple small loyalty programs will be too much – we all know this. How many points do we let go unredeemed across various brands?! With this context, let’s first address the question of customer data. Consumers will need to explicitly opt-in to the Mu program with MuCo. Only then does MuCo start interacting with them. There is no data sharing across brands. The value of rewards will be linked with how you and consumers themselves value their attention and data; in fact, you may want to reward your Best Customers with substantially higher Mu than say the Rest or Test Customers. You have the choice – whom to reward and how much. On the question of rising payouts, it all depends on the value being seen by both sides. Also, MuCo will have a Marketplace where you as a brand can also sell products and services to earn Mu. And to your last point: you are not getting much for free now. A 10% open rate of emails means a 90% ignore rate. Imagine the benefits of taking that to 30-40%. That is where you start building hotlines. Also, as I explained earlier, you should measure RoI at every step and only then move forward. Start small and expand the program based on the success you see.”

4

Email Design, Other Channels, Reactivation

The next question followed. “Your ideas make sense, but who will do it? How do we get Email 2.0 emails designed? Our current agency knows how to do the creative but from what you are saying these emails also need software elements. This will just increase the complexity and time needed.”

I answered, “Three options: you can use the AMP editor from email service providers (ESPs) like Netcore. Second, very soon, various AMPlets will be available in the AMP Store that you can customise. Third, I see a new type of agency coming up – Progency (a product-led agency), which will do the design and management of Email 2.0 programs on a performance basis. Think of this as Performance Marketing – just like the Performance Advertising agencies that are there today. The two elements which bring in an element of complexity in AMP are the interfacing to your CRM system and storage of data that is being collected. Both of these will require some support from your internal product teams. Given the upside that can be delivered, I don’t think that should be a problem.”

A voice rose from the centre of the room. “Can we do what you are suggesting on SMS and WhatsApp? We don’t have as many email IDs as mobile numbers.”

I was glad that someone was thinking of new applications for Atomic Rewards. I said, “Of course. The principles of micro-incentives are format-agnostic. The idea of Atomic Rewards with Mu can be applied to any other push channel, and later perhaps even on your website and app. The interactivity of AMP is not possible on SMS but can be done on WhatsApp through a chatbot-like interface – think of it as conversational messaging.”

The next question was on a topic I had only briefly touched on. “You mentioned the same ideas of Email 2.0 and Loyalty 2.0 can be used for reactivation. Can you explain? We have 2.5 million email IDs but we do campaigns for about a third of that base because our ESP tells us to focus only on those who have interacted with our email in the past 120 days.”

Reactivation! I was waiting for this question. “The good news is that you have a right of way to the inactive customers via their email IDs; the bad news is that they are ignoring your emails. The first step would be to do a check on which of those email IDs are active – that is, they are opening emails from other senders. There are external service providers who can help with this. My guess is that you will get at least half of your inactive database that you should be able to send emails to without a bounce. The second step would be to use Email 2.0 with its Mu signal in the Subject and the AMPlets in the footer to generate interest. Start small – mix some of these email IDs with the good database you have and work to “wake” up the consumers. Perhaps, some past data that you have on what their interests are can also help. The third step would be to run a reactivation campaign using Email 2.0 Footer Ads – this is not yet launched, but I do expect this will be available in the coming months. Across these three initiatives, you should be able to start building hotlines with many of the dormant consumers.”

5

Loyalty Program, Web3 Tokens, North Star Metric

Another marketer stood up and said, “We have our own loyalty program. Can we integrate and reward them with our points rather than the Mu that you mentioned? This way we have better control on their earning and redemption.”

An easy one. I replied, “Of course, you can. The only challenge I have seen from past conversations with marketing teams is that internal engineering projects take much longer than integration with external APIs. So, if you can get the bandwidth and already have a loyalty program, go ahead. My hunch though is that your customers may find Mu much more rewarding and exciting because of the easy earning and redemption options. Again, the best way to decide would be to run A/B tests.”

This was followed by a question I had only said in passing. “You talked about the Mu points becoming Web3 crypto tokens. What are the tax implications of that? Will these be classified as cryptocurrency? We don’t want to get into trouble with the authorities.”

I was expecting this. I answered, “Good question. In India, the government has defined something called a ‘virtual digital asset’ which would be taxable. Our belief is that when Mu points become Mu tokens they would still be classified as “loyalty points”. They are not cryptocurrencies by any stretch of imagination. However, from what I know, MuCo plans to have both points and tokens coexisting. So, in countries where there are tax issues, brands and consumers could simply stick to the Web2 world of points rather than migrate to Web3 tokens.”

As the organisers called for time, a marketer stood up with the last question. “I like what you have suggested and am keen to start a pilot in my company. What according to you is the crux of the challenge? What is the one thing that will determine the success of such a program? And what should be the North Star Metric that we should be focused on?”

I was ready with my answer. “I like the ‘crux’ in your question. In this case, the crux is where Atomic Rewards can change user behaviour. I am betting that micro-incentives can. But these are new ideas, and we will only learn with experiments that we conduct. We know transaction-based rewards to foster loyalty, so I think time-based rewards should also work. This applies to the Loyalty 2.0 part of your question. On AMP, there are now plenty of case studies that it is working very well – brands are seeing big uplifts. Not 20-30%, but 3-5X. The last part of your question was about the North Star Metric. I think the best metric is what has been proposed by Fred Reichheld and his co-authors in “Winning on Purpose” – a metric called Earned Growth Rate. It measures the revenue growth because of existing customers who return, and the referrals they generate. Because the ideas of Email 2.0 and Loyalty 2.0 are exactly about that: how to bring back existing customers for more, and ensure they bring their family and friends.”

**

As the session ended, I wondered if I had done enough to persuade marketers to think differently and consider implementing the ideas I had proposed. I had a hint of the future when a marketer came up to me and said, “For the first time in many years, I have heard a genuinely new set of ideas. My colleagues have forgotten the basics of marketing and just become vassals of Google and Meta. CAC increases are hurting us. I am glad you have shown us an alternate roadmap. I am going to discuss these ideas with my CEO tomorrow and push for the 90-day action plan you suggested. Thank you.” I smiled. The process of changing the minds of marketers had begun.

Published November 3, 2022

1

Missing Hotline

Marketing has historically been considered a cost centre. Its role is to build consumer awareness, drive interest and desire, and push towards action – captured in the AIDA model. With consumers becoming increasingly digital, marketing too has had to adapt. With precision targeting available through the likes of Google and Meta, marketing’s focus has shifted to new customer acquisition. With the rise of programmatic advertising and performance marketing, marketers can finely control their acquisition budgets.

There are two problems in this paradise: the lack of a hotline and AdWaste. For the most part, marketers have been unable to build relationships with existing customers. As a result, customers largely ignore the push messages sent by brands on email, SMS, push notifications and increasingly, WhatsApp. This results in a relationship which can be easily broken; customers become inactive or churn, attracted by other brands constantly targeting them. This pushes marketers to acquire even more new customers causing a spiraling increase in acquisition budgets.

To put it in numerical terms: a brand with 100 customers which sees 30% of its customers become inactive will need to acquire 55 new customers in the year to demonstrate 25% growth. (The churn will bring its total down to 70, with the target being 125 customers at the end of the year.)

AdWaste worsens the situation because half of the spending is being wasted by marketers ending up reacquiring churned customers and new customers churning within days of being acquired. The latter is especially true for app installs, with 30-day retention being just 25% for most brands.

The problem is compounded by rapidly rising customer acquisition cost (CAC). With brands competing aggressively to demonstrate growth, CAC has been increasing 40-50% annually. This leaves less money for building relationships with existing customers. Marketers deploy martech platforms to engagement and retention, but do not devote adequate resources to fully leverage their power. After all, 90% of their budgets and time is spent on new customers.

The crux of the problem is the inability of marketers to build relationships with existing customers. Without getting more revenue and referrals from existing customers, marketers are trapped in a vicious cycle of wasteful digital ad spends.

Marketers need a new paradigm – one which prioritises profits. Profits will only come when existing customers come back for more and bring their family and friends. While the product and digital experience are both important for repeat purchases and referrals, marketers also need to ensure that their messages are not ignored by customers. The hotline constructed via push messages which are opened and acted on is the only solution for marketers. So far, they have had very limited plays to make this happen. A series of innovations can empower marketers to build a better hotline and thus lay the foundation for crafting profits.

2

Innovations

Push messages are a marketer’s best ally for bringing existing customers to the brand’s properties (website or app) for transactions (either in terms of money for ecommerce platforms or time for publishers). Without push messages, marketers have to rely on their branding efforts to ensure customers remember to come on their own. Push messages are thus very important – with the result that billions of such pushes happen each day. In India, about 500 million emails and over a billion SMSes are sent daily to a few hundred million consumers, along with zillions of push notifications. We have also started seeing WhatsApp emerge as an engagement channel for brands in the past few months.

Email and SMS have remained the same from a capabilities standpoint over the past decade. Most marketing emails now have an attractive image with the brand message and an invitation to clickthrough to a landing page. SMSes are still limited to text. Both are 1-way push, with consumers unable to reply or interact in any other way than a clickthrough. (Incidentally, a long time ago, brand SMSes were two-way before TRAI regulations forced brands to send SMSes with an alphanumeric code in an attempt to counter spam – killing off a very useful interactive channel.)

While SMS remains stuck in the past, WhatsApp has emerged as a useful alternative for brands wanting to engage with customers on their mobile. Until recently, WhatsApp did not allow brand messaging. That has now changed. While it is much more expensive than an SMS, there is much promise with the conversational capabilities that WhatsApp is bringing to its interactions.

The innovations which I believe will be the gamechangers for creating hotlines focus on email. Along with a mobile number, an email address is the other digital identity we all have. Email is the channel with the highest RoI, and new ideas can make it even better – AMP brings interactivity and Atomic Rewards adds micro-incentives. Taken together, they can help reinvent email – Email 2.0 as I have written in previous essays. The Email Footer can bring in gamification, Mu offers tokens for attention and data, Hooked Score brings in a new way to measure higher order engagement beyond just opens and clicks, Progency brings in pay-for-performance, Micronbox can do for brand communications what WhatsApp did for person-to-person messaging, and Email Ads could create a revenue source for brands potentially even making B2C emailing free.

Email reinvented – Email 2.0 – is the key that can help brands on their path to profitability by bridging the chasm in their relationship with customers. This hotline can enable brands to reach customers and get heard. More actions and transactions from existing customers can reduce churn and drive higher revenues, and also reduce the need for increasingly expensive new customer acquisition. Email 2.0 can also power Loyalty 2.0 – tokens to solve the twin problems of attention recession and data poverty. By adding gamification and asset appreciation, Email 2.0’s innovations can also appeal to Gen-Z and millennials. In fact, like Starbucks has become the third place in our offline lives, Email 2.0 can become the third place in our online lives beyond the app and the website. Combining push, permission and payments, email apps can become the marketer’s new best friend.

A new world awaits pioneering and pragmatic marketers, a world that takes email’s purposeful past and connects it to a fantastic future. This roadmap to crafting profits entails six steps: cobwebs removal, conversion acceleration, catchment expansion, “CommAdWaste” reduction, consistent compounding, and CMO-CEO partnership.

3

Cobwebs Removal

The first step that marketers need to do is to get rid of the fuzzy motions that blur decision-making. There are three specific ‘cobwebs’ that need to be removed: marketing is all about new customers, and martech’s focus is engagement and retention, and email is yesterday’s medium.

While new acquisition is important, the essence of marketing is about building relationships, driving revenues, and ensuring referrals from existing customers. It is easy to acquire new customers: all one has to do is to win the Google and Meta auctions for the clicks. The question is: what happens after that? While much of the focus has to be on the products matching the customer needs, there is a lot that marketing can do once a customer has entered the portal or downloaded the app. This is hard work compared to the ease of pay-per-click for acquisition. Until marketers are tasked with driving profitable growth (as opposed to ‘growth at all costs’), the mindset shift towards building better relationships with existing customers will not happen.

In the event that marketers do turn their attention to existing customers, the approach is to install a martech solution and echo the buzzwords of engagement and retention. This is not good enough. Should all customers be retained? They are not the same; Best Customers are many times more valuable than Test Customers. Yet, lazy marketing becomes sending similar campaigns to everyone on the pretext of engagement. Martech companies do not take up responsibility for outcomes and are complicit in the communications that go out – their billing models are based on monthly active users (MAUs) and volumes of messages (emails and SMS) sent. And yet, there is much more to a relationship than just a journey or the next best action. Collecting more data by asking can help personalise better than just trying to decipher signals from clicks. Yet, very few marketers do it. Automation platforms help with segments and journeys, and that’s as far as most marketers go – because 90% of time, energy and money is on new customer acquisition.

The third cobweb that marketers need to remove is that email is dying or dead, and that today’s customer is all over social media. Email marketing is the lowest amongst priorities and excitement. Even those who join as email marketers aspire to be in the social or acquisition teams. The perception is that email is just about a graphic to be created and sent to various segments. A double digit open rate is seen as excellent – without the realisation that this probably means 9 of 10 recipients did not act on the email. Marketers are therefore not able to comprehend the newness that Email 2.0 can bring.

Once marketers open their eyes and decide that Email 2.0 can take them beyond the lip service of retention and engagement to conversion and maximising lifetime value, which in turn can reduce AdWaste and take them off the CAC treadmill, they will have a taken a big step towards creating a profits machine for their brand.

4

Conversion Acceleration

Once the cobwebs are removed, marketers can get down to the task at hand: how to make the most of the customers on hand rather than chasing new ones in the bush. Email 2.0 is the secret sauce that can accelerate conversions with its two innovations of AMP and Atomic Rewards. AMP is about making emails interactive; Atomic Rewards (AR) is about adding micro-incentives for the in-mail actions. For example, marketers can offer customers small rewards (in the form of Mu) for providing feedback or zero-party data. Together, they can dramatically increase “conversion actions.” The problems that AMP and AR solve are that actions in push messages are very low and most brands don’t have enough data on their customers to personalise the messages.

I have a Gmail ID created many years ago which is not in use. But the email ID receives hundreds of brand marketing messages daily because the email ID has perhaps been mistakenly given on websites and forms. I decided to spend an afternoon going through my inbox. Tens of messages come daily. What struck me was that most messages look the same – there is one image which can be clicked through. It is almost as if the creative team took a print ad, sent it via email, and then added a click to a landing page. There is no thinking about varying the content – perhaps using some good copywriting to get the recipient interested. Subject lines are drab and unexciting. Even the transactional messages are templatised with little or no variations. It is almost as if someone created these messages a few years ago and they have been left untouched since then!

AMP and AR can transform the message by adding in-place actions and eliminating the clickthrough and need for a landing page. From form filling to gathering feedback, from searching to chatting, from showing the items in the shopping cart to the latest news – AMP can do it all. Think of it as a way to create mini-websites or apps right inside the email. Instead of asking people to come to the brand property, take a micro-catalog to them. The friction of the clickthrough is removed, which can lead to 3-5X increase in actions as we have seen in AMP campaigns done for brands. AR can add the incentives for the actions to create habits. It is about changing behaviour – from “delete” to “delight” in the inbox. Rewards can help this shift.

AMP and AR are the first steps in bringing in dynamism into the email, and thus accelerating the conversions that marketers want. They transform what we think of as an email. It is the creativity of the marketing department which will decide how much of an uplift brands get. A possible future idea to work on is to collect payments right inside the email – via UPI or cards. Imagine the opportunities for fast-tracking transactions!

5

Catchment Expansion

Once the existing email engagers have been looked after, the next step is to look at those who are ignoring the emails. Two ideas can change the relationship with them: a rewards signal in the Subject to create curiosity, and the Email Footer which can create a few seconds of fun and thrill which reactivates the dormant relationship. Together, these ideas can multiply the active customer base without resorting to expensive new customer acquisition.

Every brand has lists of their customers. In most cases, at least a third (and in some cases as high as two-thirds) of the database is probably not being communicated to. This is because email inbox providers like Gmail and Yahoo impose a reputation penalty for emails sent and not opened. This results in less emails making their way into the inbox, which reduces open rates. As a result, most brands tend to stick to what they call 60- or 90-day actives – emailing only those who have opened or acted on an email in the past two or three months. In recent times, the “open” signal has also become weak because Apple and Gmail have started proxying images.

So, what can a brand do to expand the email database? The answer lies in reactivating the dormant customers. These are customers who, for various reasons, are not reacting to the emails being sent and yet have not unsubscribed. Thus, there is a channel still open to them. Here again, the combination of AMP and Atomic Rewards (AR) can help. We previously discussed how to use AMP and AR in the email Body for conversion acceleration; for catchment expansion, we will use the email Subject and Footer.

The change in the email needs to start with a signal in the Subject which shows that this is an email with rewards. Prefixing µ.<MuCount> can help tell the recipient that this is a genuine rewards email. The Email Footer can combine a brand footer (collecting feedback and data to earn Mu) with another “MuCo” footer which enables the redemption of Mu. AMPlets which offer 6-second games and content can bring emails to life. Because of these elements in the footer of the email, the customer needs to scan through the Body – hopefully triggering some interest. Also, by offering incentives for data, future emails could be personalised to increase the prospects for viewing of the content.

These ideas can thus increase open rates from 10% to perhaps 30-40%. Combined with the in-mail transformation of the email body with AMP and AR, brands can improve response rates by 10X or higher. With attention and data, transactions will follow. Also, the inactive base reduction is almost like adding new customers – with a fraction of the spending.

6

CommAdWaste Reduction

The budget for the new set of marketing activities is hiding in plain sight – the wasteful spending on excessive new customer acquisition and the incessant messaging which is being ignored. By redirecting these spends to engaging better with existing customers (interactivity and incentives), the RoI on marketing spends can be dramatically altered.

Brands spend a lot of money on acquiring new customers but very little on existing customers. In fact, put differently, after spending money on new customer acquisition, they have very little left for deepening relationships with existing customers. So, marketers will do the right things in the name of engagement and retention – collect as much data as possible, install martech platforms, do the campaigns, and so on. It is more like a ‘checkbox’ – rather than something done to drive better outcomes and increased profitability. (Most marketers do not consider increasing profits as a KPI.)

What most marketers are unable to see is the waste in the ad spending and messages being sent. AdWaste happens because of reacquisition and wrong acquisition; my estimate is that half of adtech spends end up in these two buckets. CommWaste is about the wasteful spending in sending messages to customers who are ignoring them. Email and SMS open rates are in single digits; while the majority of customers now tend to turn off push notifications. As a result, the hotline is not there between brands and customers.

This spending needs to be re-channelised into more productive approaches. This is where the idea of using incentives for attention and data comes in. Akin to loyalty programs which offer points for transactions, Email 2.0 brings in the idea of using Atomic Rewards for existing customers. (The same idea of rewards can also be offered on other channels.) The focus is on non-monetary transactions – linked with time rather than money.

Instead of spending 100 units on a new customer acquisition, brands can spend 1 unit a month to build and sustain the hotline with an existing customer – thus reducing the possibility of churn, and in fact, with the upside of additional transactions. To attract Gen-Z and millennials to email, the incentives could be linked to games – with every interaction adding to the pool of customer data that brands aggregate for personalising the offers. The reduction of the waste will thus go a long way in improving business profitability.

For this, as I had written earlier, marketers will need to change some basic assumptions and think differently. Email 2.0 promises to be very different from the email which we have all seen for the past 10-15 years in our boxes. A pan-brand rewards program linked to attention and data is a first-of-its-kind innovation. These offer a solution to the rising CAC problem faced by marketers. It will require boldness and an entrepreneurial mindset on the part of marketers to think differently and adopt these new ideas.

7

Consistent Compounding

Marketers need to learn what smart stock market investors know: the power of compounding. A 10% return annually doubles money in 7 years; while a 25% return can double it in just three years. By ensuring that each of the activities amplifies outcomes, marketers can aim for a 10X improvement on their activities with their existing customers. What marketers need to do is to shift focus from trying to optimise their ad spending and instead turn their attention to building hotlines with existing customers. New innovations are now opening up the possibility of building better and deeper relationships which were not possible earlier.

Marketers need to realise that they have underinvested in existing customers – and with rising CAC, the situation has worsened in recent years. Email 2.0 offers an opportunity to drive a transformation in digital marketing because of the interactivity that the channel brings. (WhatsApp is perhaps the only other alternative which comes close, but it is a ‘closed’ channel in the sense that control is exercised by a single large player – Meta – who can change the rules of the game. Something similar could be said about AMP also given its Gmail roots, but email as a channel has no controller.)

Marketers need to come up with a plan where their hotline program can become better daily. They need to run experiments to see what works, and build on the learnings. The RoI from such an initiative will be far greater than what they can get by trying to reduce CAC. The twin combination of AMP and Atomic Rewards (AR) offers marketers a vast playground for testing out new ideas. Which AMPlets work better for which segment of customers? What should be the quantum of rewards? Should there be differential rewards for different customers? And so on. Email 2.0 thus becomes a laboratory for marketers to listen and learn.

Done right, the multiplier effect from Email 2.0 can be substantial. Besides helping increase ratings and reviews, Atomic Rewards can boost referrals. Think of referrals as new customers with a CAC of zero. Referral programs today have had limited success; this can change with Email 2.0 and Atomic Rewards. Also: the more the zero-party data collected, the better the understanding that marketers will have of their customers. This in turn can help improve the quality of new customer acquisition.

Small improvements in the 5 Rs – retention, repetition, reactivation, referrals and replenishment – can all compound and deliver superior returns over time. What is needed is that marketers create a playbook and process for this – drive it in a Kaizen-like discipline of continuous daily improvement. Doing things 1% better each day leads to a 37X improvement in a year.

8

CMO-CEO Partnership

None of the steps we have discussed here is possible without a complete buy-in from the CEO. What is needed is a ‘jugalbandi’ (partnership) where the CMO also takes up ownerships for driving exponential forever profitable growth, rather than just asking for a spending budget each year. The CEO needs to shift focus away from measuring new customer additions and instead look at how existing customers can deliver more value.

In the digital stampede and with easy money available over the past few years, the focus for most consumer-facing brands has been to do a land grab. The ease of digital advertising and getting clicks has made new acquisition a numbers game. There has been little regard to the quality or longevity. From CEOs to investors, everyone wants to see new numbers being stacked up. CMOs have been only keen to oblige. Channeling money to Big Tech for showing big numbers is like buying IBM in the early days of computing – no questions are asked.

There has been little focus on how to make the most from customers after acquisition because this is hard work. It means gathering data about customers, understanding and anticipating their interests, figuring out the effectiveness of channels, creating personalised content, and crafting customer journeys that work. Much of this has to be done internally because there are not any martech agencies to outsource work to – unlike ad campaigns.

To make the shift towards profitable growth from existing customers, CEOs will need to instruct CMOs appropriately. They will need to work in tandem to ensure that marketing leads the way. While there are many other departments that need to work together for eventual success, marketing’s role is crucial in B2C and D2C companies because they are the ones who are driving the customer engagement and experience.

For their part, CMOs need to think like Chief Profitability Officers. They need to make the hard call to switch budgets from adtech to martech, from new customers to existing customers, from acquisition to customer lifetime value maximisation. Aiding CMOs are innovations like AMP and Atomic Rewards. CMOs will need to revisit their assumptions about email as a channel and think of the power of Email 2.0 and how to create a hotline such that customers listen when marketers speak.

If CEOs and CMOs can work together, a better future is possible for brands – one which puts profitable growth above everything else. In a way, it’s about taking marketing back to what it should always have been about: ensuring existing customers come back for more and they bring in their family and friends.

9

Getting Started

We have discussed the six steps brands need to do for crafting profits: cobwebs removal, conversion acceleration, catchment expansion, “CommAdWaste” reduction, consistent compounding, and CMO-CEO partnership. How do brands get started on this journey? Here are the four actionable initiatives that marketers need to do to get started on this new path.

First, CMOs should get a buy-in from the CEO. The ideas described here entail a major shift in business strategy. With everyone else touting new customer additions, brands which choose the profits first approach will need to get off the beaten track. A looming slowdown is a good time to make the shift. Every recession creates a discontinuity and offers marketers the opportunity to try new things. With customers becoming more discerning in their purchases, with inflation upending buying decisions, with investors becoming wary of cash burn, marketers can now come up with new ideas to create a better business model – based not on external capital infusion, but on internally generated profits. This is where the ideas of Martech 2.0 come in.

Second, marketers should adopt Email 2.0 to construct the hotline. Every email sent should be AMP-ified and have rewards. The aim should be to ensure no email is ever ignored by a customer. The mix of ideas discussed – Mu in the Subject, AMP in the Body, and AMPlets in the footer – can together transform email open and response rates. Once existing customers start interacting with the messaging sent by marketers, half the battle is won.

Third, marketers should differentiate between their customers. At the extremes are the Best and Test Customers, with the Rest Customers making up the middle. Best Customers – the 20% will typically account for 60% of revenue and 200% of profits – need a separate business unit to interact with them. This is where Velvet Rope Marketing comes in.

Fourth, marketers should rethink their loyalty programs. Existing programs have serious limitations – the possibility of debasement, the difficulty of redemption, the worry about points expiry, and the lack of tradeability. This is where marketers need to think Loyalty 2.0 – go beyond transactions to attention and data, go beyond a single-brand program to participating in a pan-brand initiative, and go from points to tokens which have the added allure of asset appreciation.

**

The most important realisation for marketers needs to be that customers are not just numbers and metrics. They have needs for which they are willing to pay with their time and money. In fact, the non-monetary assets that customers have – attention, data, network and voice – can turn out to be as valuable as their ability to spend money. In the past, marketers could not do anything with these assets. Innovations like Email 2.0 enable the creation of hotlines which can now help marketers and customers build a win-win relationship and exchange, and thus build a profits pipeline. A new era of marketing awaits us – one that can deliver exponential forever profitable growth for brands.

Published November 2, 2022

1

Free!

About 25 years ago, the launch of free consumer email services from Hotmail and Yahoo changed the way we communicate with each other. Until then, getting an email address meant the need for an institutional affiliation or buying a domain and setting up one’s own email server. Both offered an email address free for life with a service that could be accessed via a web browser. Anyone with an internet connection could now get a personal email address. Personal communications grew exponentially in the coming years, accelerated further with the launch of Gmail a few years later which removed storage constraints for the email inbox.

WhatsApp did something similar with the launch of its app just over a decade ago. Its target was P2P (person-to-person) SMS. The mobile phone was rapidly becoming the primary device in our lives. Yet, SMS was tethered to operator plans and each 160-character SMS cost money. By using the Internet rather than the telecom network, WhatsApp freed personal communications from the control of the telecom operators. Family and friends across geographies came together via WhatsApp.

“Free” is different from cheap. A free service removes consumption constraints. Free services delivered digitally have changed the way we communicate, consume content and media, and get entertained. Of course, there is a cost to every free service. If we are not paying with our money, we are paying with our attention and data – which then get monetised by service providers via ads. Digital advertising has become a nearly $450 billion industry globally, dominated by Google and Facebook.

I recently started wondering if B2C email services could become free – and if free, would businesses be interested. Most small (and some mid-sized) businesses use services like Mailchimp, whose standard offers a $17 monthly plan (for 500 contacts and upto 12 emails per contact). A contact list of 100,000 would cost $605 per month. Of course, Mailchimp offers a lot more than just emailing – bundling in automation, segmentation, and tools for content creation. Klaviyo’s equivalent pricing is $20 (for 500 contacts) and $1,380 (100,000 contacts).

Most businesses would not move to save $15-20 a month. But at $1,000 monthly savings, they could be interested. So, I started wondering: what would it take to offer businesses a million free emails monthly (100,000 contacts x 10 emails a month)? How disruptive could that be? And what if the emails sent could be made more engaging – more opens, more in-mail actions, more engagement? Would such a free service work? Or would it be too good to be true?! What else could be added to make it a compelling switching proposition? From a service provider’s view, what would it take to offer such a free service – and do so profitably? Could it be scaled to every business irrespective of email volumes and database size? These are the questions we will explore in this series.

2

Email, Netcore and Me

Netcore has been in the email business for 25 years. It began by offering Linux-based email servers to Indian businesses (as an alternative to Microsoft Exchange and Lotus Notes) in the late 1990s and early 2000s. That business continues to date – with cloud email having been added. Netcore also resells Google and Microsoft’s cloud services, thus offering enterprise customers multiple choices.

Netcore’s ESP business started 15 years ago – appropriately for that era, we called it EMM (Email Mass Mailing). That business has grown remarkably well – Netcore delivers 20 billion emails monthly for its mid- and large-sized enterprises globally. Netcore is very strong in India and emerging markets, while the US-UK-EU footprint is still small (though growing fast). Given that most of the larger competitors have been acquired or consolidated, Netcore today ranks among one of the largest independent email service providers globally. (Netcore too has moved into other channels such as SMS and WhatsApp, and also up the stack into martech to meet the marketer’s need for omnichannel engagement and personalisation.)

I was largely hands-off from Netcore during 2011-2018 as I worked at the periphery of politics. So, while I knew the numbers (financials), I did not spend much time on the business and innovation. All my life, I have tried to do new things – most end up failing, but a few do succeed. And so, when I returned to Netcore full-time in early 2019, I had to relearn the business we were in and understand the problems we were solving. I attended multiple conferences through 2019 to understand the email and martech industry. Then came the pandemic which ended all travel. I then began conversations with CMOs in India and SE Asia to understand the challenges they faced. I also started blogging daily after a gap of 7 years.

A blog which needs to be updated daily forces what I call an RLTW discipline – reading, listening, talking, writing. For the past year or so, I wrote a lot more about entrepreneurship and India than about email and marketing. That started changing a year ago – as the dots started connecting, new ideas started forming, and a clearer view of new ideas and opportunities emerged.

I didn’t know it when I started but I can now clearly see the four strands of my interests in marketing: it had begun with Velvet Rope Marketing, followed by Martech 2.0 and Email 2.0, and more recently, Loyalty 2.0. In each sub-area, each essay pushed the envelope a little further. What seemed like jigsaw puzzle pieces scattered around came together to form a clear picture.

And then came the realization: at the centre of all the ideas lay the new ideas around Email. Given email is Netcore’s “hedgehog” (hat tip: Jim Collins), could we use email to carve a larger place for ourselves globally?

3

ESPs

There are some technologies which survive the test of time. Email is one of them. It has been around for over 50 years, challenged throughout its existence by instant messaging, SMS, WhatsApp, and social platforms. Yet, it has stood firm. Although there is a belief that younger people don’t use email much, the reality is that the email address has become identity. It is the only communications platform not intermediated by someone else (a Big Tech platform or a mobile operator). Yes, an email box is typically hosted on a third-party server and law enforcement could get access to that, but there are secure alternatives available. Despite all the challengers, email still thrives.

Email has its share of problems and limitations: the ease of sending combined with its openness means that spam outnumbers genuine email (even though inbox providers have become better with their spam filters); zealous marketers also tend to overdo the broadcast mailings given the low unit cost of email; the in-mail experience has not changed much through the years with the only two primary actions being possible are open and clickthrough to a landing page.

B2C emailing has become a $7-8 billion annual business. For brands seeking ways to bring customers back to their digital properties (website or app), email offers the best RoI among all channels. The power of push messaging gives control to the brand to initiate a communication, rather than waiting for a consumer pull. In developed markets, it is the email address which serves as the login ID to most platforms. (In emerging markets, it tends to be the mobile number.)

Yet, there hasn’t been much innovation on the email front in the past 15 or so years – other than plain vanilla text emails becoming HTML-ised. There has been a lot of action around email – in its creation, sending (send time optimisation, triggers), personalisation and segmentation (as opposed to mass broadcast), automation (journeys), and AI-driven utilities like predictive segments, subject-line optimisation, and churn prediction. But the email itself – it has mostly remained the same.

The result? 9 out of 10 emails go unopened and links in 99 of 100 emails go unclicked.

The enterprise email service providers (ESPs) have also morphed through the years. The first-gen ESPs were bought a decade or so ago by the marketing cloud providers: SalesForce bought ExactTarget, Adobe bought Neolane, Oracle bought Responsys, IBM bought Silverpop. The large second-gen ESPs were all bought by CPaaS players in the past few years: Sendgrid was bought by Twilio, Sparkpost was bought by Message Bird, and Mailgun (Pathwire) was bought by Sinch. In one of the largest deals in the email space, Intuit (known for its accounting and financial software prowess) bought Mailchimp a year ago for $12 billion. There has also been some consolidation: CM group and Cheetah Digital merged.

My take is that innovation takes a backseat after founders sell to bigger entities, especially those not with an email background themselves. That’s what happened in email. The status quo continues: email (like SMS) generates plenty of cash, and there is good organic growth each year. Besides, what can be done within the email?

This is where I believe the entrepreneurs and acquirers have gone wrong. Email can be made much better. And the revenue opportunity that email can tap can be many times bigger.

4

ESPs’ Mistakes

ESPs positioned themselves as “competent communicators” – reliable senders of brand messages to their customers. Over time, this has become “commodity communicators” with the result that competition has ensured email prices stayed almost constant despite an array of increasing features as part of the wider martech stack. Also interesting in email is that prices are more or less the same globally – there is no “cheap” emerging market pricing option!

So, email gets about 1% of the total marketing spends – about $7-8 billion of the annual $750 billion. The $7-8 billion figure seems big until one realizes that in the $450 billion digital spend on adtech ($400 billion) and martech ($50 billion), there is about $200 billion (half of the adtech spend) that is being wasted on reacquisition and wrong acquisition.

The “AdWaste” opportunity is 25 times larger than the size of the Email Service Provider (ESP) market. The mistake made by ESPs is that they never looked at that as an opportunity – sticking instead to the role of message sending. It is a classic case of missing the forest for the trees.

What brands want is business growth. In a digital world where geographical boundaries disappear, the customer pool becomes larger even as competition becomes more intense. As a result, the focus is on the land-grab: acquire as many customers as quickly as possible. What brands don’t realise is that they have a leaky bucket – customers come in and then also churn out because they are not being looked after well. After all, only 10% of the marketing department’s budget is being spent on existing customers – the excitement is in splurging on new customer acquisition because that is what top management wants. Little wonder then that retention and engagement channels like email are given short shrift.

So, the first mistake ESPs made is that they did not position email as the “profit channel” – by investing more on existing customers, brands could actually reduce their dependence on new customer acquisition via Big Tech. This CAC (customer acquisition cost) has been compounding at 30-40% annually – more than the CAGR for most consumer-facing companies. Brands are running (spending) faster just to stay in place. ESPs missed the opportunity to reposition email as a channel because their businesses were being sold to new owners who did not really understand the power of email; and the ones who did (the founders) ended up exiting or reporting to voice-SMS managers.

The second mistake ESPs made was to not innovate inside the email. All the bells and whistles developed around email in the pursuit of ‘automation’ and ‘omnichannel’. The simplicity of email was touted as its advantage even as other channels like WhatsApp were pushing greater interactivity under their broader umbrella of ‘conversational messaging.’ The belief was that not much was possible within the email.

These two mistakes have been expensive for the email industry in terms of lost revenues, profits and influence. Email vendors do not have a seat at the table where marketing strategy decisions get made; they are not “in the room where it happens” (to borrow a phrase from a song in the “Hamilton” play). But email’s durability means the game is not yet over.

5

E-nnovations

Five innovations can transform email as we know it, open up a much larger TAM (total addressable market) for email service providers, and make email central to a brand’s marketing strategy. These innovations are: AMP, Atomic Rewards, Email Footer, Email Ads, and Micronbox. Most ESPs today are not even doing one of these, leave alone all five. I have discussed some of these innovations individually in my past writings under the theme of “Email 2.0”; it is time to bring them together.

AMP: AMP is a technology from Gmail that enables the creation of dynamic and interactive emails. Simply put: no clickthroughs, no landing pages. Various actions can now be done within the email itself: a form can be filled, feedback can be collected in-place, additional info can be viewed with an expandable widget, items can be added to the shopping cart, an interactive chat session can be initiated, and much more. AMP brings emails to life. The drawback (for now): it is only supported by Gmail and Yahoo. So, it works inside their mail apps, but not if one is using Apple’s iOS mail client. But for the emails where it works, it can lead to a significant uplift in conversion actions.

Atomic Rewards: Incentives work in our lives, so why not bring these to email actions? Atomic Rewards are micro-incentives to solve the twin problems of attention recession and data poverty. Think of this as a loyalty program – not for money and transactions, but for time. They bring in a touch of gamification within emails. Eventually, the reward points could become Web3 tokens and transcend the challenges of existing loyalty programs: centralised control, redemption hurdles, expiry of points, and lack of tradability. With tokenisation, asset appreciation can be an added advantage.

Email Footer: While AMP and Atomic Rewards can work within the body of the email (the main marketing messages and offers), I think they can really come into their own via the Email Footer, which has been largely ignored; it is time to change that. Footer AMPlets can collect data, drive engagement, and bring in gamification with the ability to earn and redeem the Atomic Rewards. In other words: the Email Footer aggregates AMPlets with Atomic Rewards. It can help make emails more fun, bringing convenience, information and gamification right into the inbox. Think of it as the attractor (like the Comics page in a newspaper) which drives the consumption of the main course (brand content).

Email Ads: AMP can also create a new ad format, where the interaction can be done in-place. Ads can be targeted because of the availability of identity information. These ads can provide a revenue stream for the brand. These ads can also be part of the Email Footer. From new acquisition to reactivation, email ads can get the job done.

Micronbox: Similar to how WhatsApp brought order to personal messaging, the Micronbox can do for brand messaging. Think of it as a new inbox is needed for emails which factors in all these innovations – an app which relies on recipient permission and prevents spam from getting through. It can also eliminate the dependency on the email client for AMP support.

Taken together, these five innovations usher in an upgrade to Email. They make email cool (again). The 1-way broadcast channel becomes a 2-way hotline with interactive, dynamic and real-time content. The promise of gamification and asset appreciation will also drive greater engagement, which should lead to better brand-customer relationships. The better the retention, the lesser will be the need for new acquisition to plug the gap – thus reducing AdWaste and helping improve profitability at brands.

To this, it is time to add a sixth innovation: Free B2C Email. It is the unifier and the enabler for the other five innovations.

6

Costs

The interesting question to ask is: in a world where so many digital products and services have become free, why has B2C email not become free? ESPs have no incentives to make emails free since there is no alternate source of revenue for them. There is a cost for maintaining the email infrastructure and someone or something has to pay for it. Traditionally, ads have paid for free services. In emails, ESPs would need to carry ads to cover the cost of sending emails. These ads would be no different from the ones that appear on web pages or in apps, thus offering no special benefit. There is another possible big negative of free B2C email – the possibility that spam may just explode, and that would cause a big deterioration in the inbox experience. Spam could also come from brands themselves – today since each email costs something, marketing budgets serve as a constraint on the number of messages being sent.

Each of these three issues have solutions. In the first case, an ESP could generate revenues from ads which could be split with the brand to cover the cost of sending emails. The spam issue could be addressed via the Micronbox with inbox access only available to brands the consumer explicitly opt-in for. Also, WhatsApp has to a large extent addressed the issue when it comes to mobile numbers – so similar methods could be applied to the Microbox. On brands overdoing messaging, the eventual control is with customers with their power of disconnecting the hotline with the “unsubscribe” option. This will ensure brands keep their messaging relevant and limited.

We still have to address the first issue – how to create the economic incentives for ESPs for delivering free B2C email?

Let’s take some examples. In the pricing we saw earlier, Mailchimp and Klaviyo make about $34-40 for 1000 contacts at the lower end (extrapolated from their pricing for 500 contacts) and about $ 6-14 for 1000 contacts at the higher end (based on their pricing for 100,000 contacts). Assuming 10 emails sent monthly, the price for 100 contacts or 1000 emails comes to $0.6-4. Let’s take $2 as the average so we just need a single number to work with.

So: the revenue for an ESP focused on SMBs is about $2 for every 100 contacts (=1000 emails). Of course, there is much more being offered than just email sending. If anything, email sending accounts for just a fraction of this. At the developer level, Amazon’s pricing for its API access is 10 cents for every 1000 emails. Quite clearly, the cost of sending emails is a fractional part of 10 cents. Thus the markup on the cost of sending an email to the revenue from selling the platform is very large for ESPs like Mailchimp and Klaviyo.

So, what would it take for an ESP to offer free B2C emails funded entirely by ads?

7

Revenue

Let’s see the revenue possibilities via Email 2.0. We have so far looked at the sending side; let’s now look at it from the recipient’s viewpoint.

A typical recipient engages with about 20-30 brands and thus gets about 100-300 emails (assuming a range of 5-10 emails each month for a brand). Assuming open rates with the new email ideas we have discussed go up from 10% to 40%, about 40-120 emails are being opened. Can we expect a 10% response rate to ads in these emails – given that the ads are highly personalised, and do not require a click? If so, a single user is expected to respond to 4-12 ads in a month. Even here, let’s take the mid-point of the threshold – say 8 ads, or 2 ads per week. Can just 10 cents in revenue be generated from each interaction? If so, the revenue possibility is 80 cents per user per month, or about $10 per user per year.

With 2 billion email users, this comes to about $20 billion annually, about 2.5X of the global ESP market.

Seen from a different perspective, 100-300 emails can generate 80 cents in revenue. This comes to about $3-8 CPM in revenue from email ads, compared to the $2 in revenue being generated today by SMB-focused ESPs.

**

We have only looked at ad revenues here. Brands finding greater engagement would also be willing to invest more in Atomic Rewards as incentives to their existing customers, thus creating an additional revenue opportunity for intermediaries. Whichever way we look at it, there is a plausible case for offering free B2C email. Perhaps, what it needs is a next-generation ESP who thinks Email 2.0 and is willing to take a very different view of email – not just as a communications channel but as a hotline between brands and their existing customers. If such an ESP can persuade brands that they are better off using Email 2.0 as a core plank of their retention, growth and cross-sell strategy to drive higher revenues and profitability as opposed to simply using new customer acquisition spending to show topline growth, then there is a huge opportunity that can be opened up creating a positive sum scenario for brands, customers and the next-gen ESP. Who will bell the cat?

One point to note: an email delivery service funded by ads will probably be more relevant to SMBs; the mid and large brands will probably not be excited with the possibility of their email sending costs being defrayed with ads. Nevertheless, the SMB market in email is very large: Mailchimp alone generates over $1 billion in annual revenue.

8

Who and How?

An existing ESP will be very reluctant to offer free B2C email. It will be putting at risk most or all of its current revenues. The transition away from SaaS revenues will not be an easy one for an ESP to make. Only a challenger ESP will consider doing it; it has no existing revenues to lose and only new ones to gain. But it will need deep pockets to fund the email infrastructure costs until the non-SaaS revenue streams hit their stride. Let’s look at it from the point of view of a challenger ESP. How would it enter the market with its new free B2C email revenue model?

First, the focus will need to be on the developed markets. Email volumes and revenues in emerging markets are not large enough to build a big business. As comparison, the Indian ESP market is a hundredth that of the US ($35 million vs $3.5 billion). Second, the challenger ESP will need to have significant skills in handling large email volumes. Building a new ESP from scratch is not an easy task and will take time. Third, the SMB market will probably make a good starting point; enterprise customers will be reluctant to switch just because something is free. Fourth, there are two possibilities: offering an email API alternative or a full-stack martech solution. Email API works well for developers but marketers need an easy-to-use automation platform. Enterprises like the former, but SMBs will need the latter.

In short, a challenger ESP’s first target segment will be developed market SMBs sending a million emails or less and spending upto $1,000 a month on their ESP. It will need to offer not just an email API solution but also a complete marketing automation platform, with the ability to migrate easily from competitors. It will need to be completely self-service since providing customer support and onboarding to SMBs will not scale cost-effectively.

What will be the switch pitch to SMBs? A mix of cheaper, better and more — cheaper as in free, better in terms of performance (more opens, more in-mail actions), and more meaning the potential to actually generate revenues via the email ads. While the free angle will get initial interest, what SMBs will want to see before switching is better RoI. The challenger ESP should be able to deliver 3-10X superior performance with the mix of AMPlets and Atomic Rewards. This will be the real reason for switching, with the free offer making the decision easier. What the SMB will need to agree to is to carry the Email Footer in every email – along with an indicator in the Subject that the email has rewards.

Admittedly, it is not going to be an easy sell – the ESP business model hasn’t changed much even as some of the players have. So, what are the prospects of such a challenge to existing ESPs succeeding?

9

ESPs

The challenger ESP with its free B2C email proposition can be thought of as the fifth generation of ESPs. The first generation ESPs focused on large enterprises and offered a basic campaign management platform for mass mailing. The second generation ESPs brought in APIs for developers and also self-service to attract the smaller businesses with lists. The third generation combined elements from the first two generations (APIs and campaign management) and added marketing automation features (journey orchestration, segmentation, and more). Fourth generation ESPs are now expanding the capabilities of the stack by adding support for a CDP (customer data platform) and omnichannel (SMS, push notifications, WhatsApp, social). Pricing was never a factor in any of the first four generations; the core business model remained unchanged. SMBs paid based on number of contacts while enterprises were billed based on volume slabs (effectively per email).

So why would any ESP consider making email free? There are three reasons. First, as a market entry strategy. Hotmail, Yahoo and then Gmail used free to transform the consumer email market and drive massive adoption. Google built one of the most valuable franchises in business with its free search. Media companies used free content to attract readers and then monetise them via ads. Social media companies did the same – our attention and social graph working as attractors for advertisers. All of this has helped grow digital advertising to nearly half a trillion dollars in revenue and trillions in market cap for the Big Tech platforms. A free service removes friction in getting started.

Second, there is a huge market opportunity which is many times bigger that can be tapped. The largest ESPs today are probably at the scale of a billion dollars or so in a market which is under $10 billion. In contrast, AdWaste is estimated at $200 billion. The importance of existing customers and push messaging can help tap into a large chunk of the AdWaste that’s happening. Brands realise that a big part of their ad spending is not effective, but there are no solutions being offered to change that. This is where free B2C email can stand out – by enabling a 2-way hotline between brands and customers with the removal of the cost constraint in messaging.

Finally, email needs innovation. The entire existing ecosystem has conspired to keep email as it is for a very long time. While email has survived many challenges, the shrinking attention span of millennials and Gen-Z customers along with better and more interactive channels like WhatsApp may just relegate it to a limited role in the future. Email needs to change and none of the existing ESPs are leading it because the big ones are owned either by the marketing cloud companies or CPaaS companies, and have very little incentives to think long-term and fix what doesn’t seem broken.

It is in this context that a challenger ESP thinking Email 2.0 innovations can make a mark. Simply offering a new product may not be enough to get adoption in change-resistant marketers. Hence, the need for a breakthrough business model. Throughout history, ‘free’ has been a magnet for attention. This is what a challenger ESP will need to get the industry transition started.

10

Trillions

Email is the crucial link in the global media and ecommerce industries. Imagine a world without email, and many industries will collapse. Without the power of push messaging via email, how will they bring customers back to their properties (website or app)? Brands with apps can send push notifications, but even these are now blocked by many. Utility brands have an advantage because their apps become a habit. But for most others, either they have to spend a lot of money connecting a category with their brand name, or its push messaging. And that is what has kept email alive through the years; there simply is no better push channel in terms of RoI than email. It is the humble email that still works as the lynchpin for trillions in consumer spending decisions.

The problem in email has been a lack of innovation. Because it is an open standard, different entities have to build the components to create the end user experience. So, there are ESPs which ensure the sending of emails. There are mailbox providers like Gmail and Yahoo which provide the identity (name@MailboxProviderDomain). Then there are the email clients which help with the consumption of email. In the past, it was either the browser (for web mail) or the mailbox provider apps. Apple’s device dominance changed it all. In countries like the US, half of the emails are opened on the native iOS apps. So, even if a consumer has a gmail.com address, the odds are that they are using the default mail app on their iPhone or iPad to read their emails.

This has given Apple great control over the email experience. Apple’s decision a year ago to prevent tracking of email opens in the name of privacy disrupted tracking parameters used by brands. Apple caches images so all emails sent to Apple mail clients end up showing as ‘opened.’ Apple also does not support AMP (a standard from Google) which means emails cannot be made interactive and dynamic.

The good news about an open standard is that anyone else can build a better mousetrap. This is what the email industry should be focused on. But everyone is seemingly happy with the status quo. The mailbox providers get their content to scan and enrich their personal data. Apple gets to show its customer-first face. ESPs are not measured on outcomes so don’t really worry about the low open rates because the RoI is still fantastic for emails. Marketers also haven’t been overly concerned since their primary focus is the 90% money spent on new customer acquisition. And thus email innovation has languished even though a better email solution can save brands hundreds of billions in wasteful spending.

This is why I believe the time is right for reimagining email. The ideas I have discussed previously under the Email 2.0 theme (AMP, Atomic Rewards, Email Footer, Email Ads, Micronbox) combined with free B2C email can lay the foundation for a better brand-customer hotline and profit-centric marketing. All it needs are entrepreneurs and innovators willing to challenge the status quo!

Market Opportunity

Let’s do some back-of-the-envelope calculations to estimate the market opportunity for Email 2.0 ads. The valuable targetable Internet base is about 2 billion users. Each user engages with about 20-30 brands across categories. Let’s assume that each brand sends about 10-15 marketing emails in a month to each user. This comes to about 400-900 billion emails a month. Each of these emails can be a placeholder for an Email 2.0 Ad.

Current email open rates are at about 10%. Let’s assume that the Email 2.0 ideas increase open rates to 30-40%. (Who would want to say No to gamification and asset appreciation by engaging inside emails?)

So, that gives us the monetisable inventory: about 120-360 billion ads each month. Let’s just take the midpoint with some rounding off to make calculations easy – about 250 billion.

To summarise: 2 billion users, 250 billion emails which are opened (that is, they are not ignored) each month. The big question that comes next: in how many of these emails would users scroll down to the email footer and actually look at the ad? Let’s be very conservative. Maybe 5 to 10%? (Perhaps there could be an incentive to scroll down to the footer and just see the ad for a few seconds?) That gives us about 12.5-25 billion emails. Let’s go with the round figure of 20 billion emails where the recipient is opening the email and seeing the ad in the footer.

Next question: what percentage of users will engage and respond to the ad? Since the ads here are likely to be much more relevant and personalised, perhaps we can expect a 10% response rate – meaning that 1 in 10 ads is found interesting enough for a monetisation opportunity. That makes it about 2 billion ads a month, or 1 ad per user per month. That sounds quite reasonable: each of us engages with at least 1 Email 2.0 ad in a month.

What would such an engagement be worth? This would depend on many factors like the value of the user and the type of engagement. For example, a reactivated user could be worth tens of dollars. A lead for a credit card would be worth much more. If we estimate that each ad could generate at least $1-10 in revenue, the opportunity for email ads could be about $25 billion annually – 3 times the size of the email service provider market. In fact, ESPs could let brands send emails for free in return for a cut of the ad revenue generated!

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To summarise: email advertising, like email itself, has been caught in a time warp. There has been little or no innovation in the past many years. A trio of new ideas – AMP, Atomic Rewards and Email Footer – promise to transform the space by powering Email 2.0 ads, bringing relevance and revenue for the brand-customer relationship.

Email 2.0 Ads

Search: The Search box remains one of the most powerful tools on the Internet. Be it on Google or commerce sites, it has become the starting point for research and purchases. It has never made its way into emails. With AMP, now it can. So, what would the Email 2.0 Search Ad experience be like? The Search box ad from a brand in the email footer would show the results in place. Since the email ID of the person searching would be known, the results could be personalised. This experience is only possible on a brand property today. Each item in the results could come with an “Add to Cart” option. The convenience of such an ad could be extremely rewarding for all the parties involved – the brand whose email right-of-way is being used to show the ad, the brand whose ad is being shown, and the consumer who is acting on the ad.

Sale: The next step beyond Search and adding to the cart is the Sale. Completing the transaction could also be done within the AMPlet itself. In markets where credit cards can be stored on file, a 1-click checkout is possible. In markets like India where two-factor authentication is in place, the process becomes a bit more complex and depending on the payment option, a clickthrough to a page outside the email may be needed. Either way, the AMPlet can fast-track the purchase. In fact, brands could even offer impulse purchase items where the sale could be consummated right from inside the email.

Say Yes: AMPlets can make taking a confirmation a breeze. No clickthrough, no landing page, no re-entry of the email ID. This could thus be used for lead generation or a subscription acceptance. Targeting of ads could greatly increase acceptance rates.

Survey: Brands could also do surveys easily with the interactivity possible via AMPlets. This idea could be used to take feedback, opinions or simply zero-data collection. The use of Atomic Rewards could provide the extra nudge to increase completion rates.

Second Life: Reactivation of existing customers is a big challenge for most brands. Customers become inactive after some time. In fact, most brands would probably have a third or more of their database as dormant. The lack of a hotline forces brands into spending many times more money on adtech platforms to reconstruct the relationship. A targeted ad with an incentive could bring the relationship back to life.

These five use cases are just the start. Many more possibilities are there. A bank could show an EMI or SIP calculator. OTT platforms could enable a single click addition to the watchlist for future viewing. A real estate company could show a carousel of possible options. A book seller could offer more details to accelerate the sale. A media company’s ad could show the latest headlines. The point to note is that Email 2.0 Ads become much more engaging and exciting – going beyond the standard banner or text option. It is up to the creativity of advertisers to push the envelope on possibilities combining identity and interactivity to reimagine email advertising.

Three Innovations

While programmatic has been the big breakthrough in advertising, there are three innovations in email which can enable a big leap in email advertising – AMP, Atomic Rewards and the Email Footer. AMP, a technology introduced by Google, is about making emails dynamic and interactive. It enables the creation of mini-websites and apps within the email itself, thus reducing the need for clickthroughs and landing pages. Atomic Rewards brings in micro-incentives to nudge actions. [Both these ideas have been discussed in Email 2.0: Making Email Cool Again.]

While AMP and Atomic Rewards (in the form of Mu, a pan-brand token for attention and data) can be used within the email body, the footer is where the possibilities can be widened. As I wrote in “Reimagining the Email Footer”: “Just 10% of marketing emails are opened; that means 90% of the emails are being ignored. Brands need a hotline to engage with their customers and email can be the best channel given. But if the Subject and Email Body are not persuading people to open emails, can something else do that job? That alternative can only be the Email Footer. In which case, there is a need to reimagine it. This is where Email 2.0 comes in … The time has come to reinvent email. The only real innovation in the past 10-15 years has been the conversion of text emails to HTML. While email continues to be the channel delivering the highest RoI, it can be made even better without compromising the user experience. In fact, the trio of footers (Brand, MuCo, Ads) can help make emails more fun, bringing convenience, information and gamification right into the inbox. Email 2.0 combined with a reimagining of the Email Footer can create a powerful hotline that can help create better brand-customer relationships.”

To rethink email advertising, we need to bring these three ideas together: consider email ads as AMPlets with Mu in the email footer. Here are some of the possibilities:

• A Search ad can display results in-place (within the email itself), with the ability to add to the cart and perhaps even make the payment – all without leaving the email.
• A Subscription ad for a newsletter would require just a simple click on a checkbox rather than clicking through to a landing page and entering one’s email address again. The same idea can apply for lead generation.
• An inactive customer of a brand who has stopped opening emails from a brand could be ‘awoken’ via an engaging ad with an incentive. The alternative for the brand is paying many times more to retarget the same customer via the Big Tech platforms.
• A brand can do surveys to collate opinions via AMPlets. These could be more than a single question, all done in-place in the email.
• Two brands can share lists in a “data clean room” and do better targeting for new customer acquisition. For example, an ad from Netflix in a Citibank mail could only be shown to those Citibank users who are not already Netflix customers. In fact, a login account offering a free period could be created in-place.

For brands and consumers, Email 2.0 ads can be the next leap beyond programmatic. With billions of daily emails already being sent, the traffic and attention is there. What is needed is innovative thinking to reimagine the power of email ads. There are five possible use cases: Search, Sale, Say Yes, Survey and Second Life.

Programmatic

Ioana Dulcu writes:

There are two kinds of ads that you can place in your newsletter: display ads and native ads. Display ads (also called “banner ads”) are salesy, brand-forward ads that display at the top, bottom, or sidebar of your newsletter copy. To most readers, display ads are annoying. That factor plays out in their clickthrough rate — less than one-tenth of one percent.

Native ads, though, appear in the body of your newsletter itself. Usually, they include images and intriguing headlines that promise information that your readers need to deal with the challenges they face. Unlike banner ads that yield little more than an eye roll, native ads entice rather than annoy.

When you advertise with programmatic email ads, you never have to pay a dime until someone buys your product or service. That’s just the tip of the ROI iceberg. However, you can be confident that your ads will only appear in newsletters with a readership that has a keen interest in your products and services. Not only that, but your ads will appear within the body of the newsletter copy…Programmatic email advertising, therefore, is likely the best bet for both publishers and advertisers during the coming years.

Business2Community writes:

The biggest publishers already have a native ads program for their print publications or for their websites. Generally, these native ads are labeled as “sponsored content.” Furthermore, these ads blend seamlessly into the editorial content. As a publisher, you get paid to publish them, sure – but they are less jarring to readers than a random display ad. All those things can be done with native ads in email newsletters, too.

Your email list monetization will get kicked up a notch again when you add in the power of programmatic advertising. The AI-driven algorithms that serve up programmatic ads can match each reader’s individual interests. So different readers will see different ads based on their online behaviors and preferences. That means more relevant, targeted ads for your subscribers and much less work for you. That time efficiency can be especially attractive for publishers who need to maintain the leanest staff they can. Programmatic native ads let you put a piece of code into the template of your newsletter and then step back as the ad revenue rolls in. They are an ideal way to monetize an email list.

Jeeng offers an overview of programmatic email:

Say a retail brand wants to promote its new line of workout clothes. The brand can buy programmatic ad placements in the email newsletters of sports publications. This way, the brand reaches readers who’ve opted in to receive industry-related content and will most be likely to engage with its ads.

Programmatic email advertising offers a range of benefits, including:

• Enhanced targeting capabilities thanks to data-driven ad placements
• Increased scale across newsletters without the headache of manual ad buying
• Automatic budget optimization since you’re only paying for the most relevant inventory

Advertisers can buy programmatic email placements in different ways, including:

• Real-time bidding on demand-side platforms

• Direct deals with publisher partners

• Private programmatic marketplaces

From SalesLovesMarketing: “Email is an effective vehicle for programmatic campaigns because it scales across multiple devices—people access email on smartphones, tablets, and laptops, as well as desktop computers. Safety is another issue, both for publishers and advertisers. Email tends to offer a more secure environment, where a login is usually required. This makes fraud less likely, meaning that programmatic email delivers more authentic clicks from actual people than other channels. The data that newsletter publishers are able to provide based on their audiences’ interests, behaviors, and demographics can get incredibly deep, offering marketers the ability to track individuals based on purchases, engagement, or sign-ups.”

Basics

Sendpulse: “An example of permission email advertising is an email newsletter sent to customers of a particular brand. Newsletters usually inform subscribers about new products, upcoming events, or promotions. Marketers tell prospects what they will receive after leaving their email address in a subscription form. This way, the leads are aware of what they subscribe to.” It lists the advantages of email advertising: cost-effective and fast, allows to reach targeted audiences through segmentation, permission-based, higher ROI, easy to measure and compare, and instant and shareable.

Jeeng gives an example: “Say a fashion publisher runs a weekly email newsletter of content roundups. They can sell display ad inventory within those newsletters, offering fashion related-brands an opportunity to advertise to their subscribers. The publisher can then earn money for each ad impression, click, or conversion.” It adds: “For publishers, email advertising can be a strong revenue channel, in addition to others like website ads, paywalls, and paid subscription programs. With the right monetization strategies and partners, publishers can fund their entire email newsletter operations with ads. For brands, email advertising offers a way to reach built-in audiences of readers who are more likely to trust and engage with ad content from publishers they’ve already subscribed to.”

Paved: “The reason why email advertising works is simple—email subscribers are engaged. Many users have gone ad blind to display ads, and passively scroll past social media ads…The content that users allow into their inbox reflects topics that they are truly passionate about—not just whatever random Facebook page they liked 10 years ago. If a customer signs up for a newsletter about photography, you can assume they are very interested in photography, making them a phenomenal audience to target.”

LiveIntent adds: “[Email advertising] is a subset of paid advertising. It allows brands to reach targeted audiences in addition to or outside of their existing CRM database. With email newsletter advertising, advertisers can access premium ad inventory in reputable publisher newsletters…and target new and existing audiences in high-trust, high-attention environments.” It lists the benefits of email newsletter advertising: real, logged-in audiences, engaged subscribers, highly visible inventory, and privacy-safe advertising. More from LiveIntent:

Email advertising has a lot to offer brands. Firstly, there’s no need to worry about bots or ad fraud with email advertising. You can rest assured you’re reaching real, logged-in audiences in email newsletters. Email is also a less noisy, less cluttered environment than other channels — like social media feeds for instance — which enables email ads to truly stand out. Furthermore, by partnering with premium newsletters you align your brand with reputable and trusted publishers. And, that’s not all, either.

Given that subscribers have opted into the emails they receive, they’re already more engaged with the newsletter, the content in it, and — subsequently — the ads within that newsletter. Say, ‘Hi captive audience!’

Another major benefit to email advertising is email’s ability to help brands grow their first-party footprint — a critical component to surviving a cookieless world. And, because email newsletters don’t use third-party cookies to enable targeting but rather hashed emails, email advertising is privacy-safe advertising.

Programmatic is the way to think about email advertising.

Overview

Billions of emails are sent daily, and yet very few emails have ads. (I am ignoring the spam emails we get and the promotional messages in emails. I am also ignoring the affiliate emails sent by brands. By email ads, I primarily mean third-party ads embedded within the marketing or transactional emails.) Unlike other digital spaces where ads are shown which need to be “pulled” via consumer action, emails are “pushed” by brands to their opt-in database. Also, the identity of the recipient is known and so there is the possibility of targeting ads more sharply than just the use of cookies. Ads have emerged as a very powerful and lucrative business model on the Internet, and so it is surprising that they haven’t been more successful on emails.

I can think of a few reasons. Firstly, marketing email open rates tend to be low (10% or so), so the waste on ads would be high. But in a performance marketing world, this probably doesn’t matter – advertisers would only pay for what is acted on. Secondly, brands could be reluctant to show third-party ads in their emails. If targeted well, this resistance could also be broken. Some brands have already started showing third-party ads on pages after a transaction has been completed. Third, the ads would not have much context. Search has intent and hence the ads work. The marketing messages lack additional information which could make ads more effective. Fourth, brands could be worried that consumers may unsubscribe if they start seeing ads in emails. Finally, another reason could be that across search and social, there is no shortage of advertising space!

Digital advertising is a huge industry. Businesses spend over $400 billion annually to target a few billion digital users. It is an industry in need of efficiency since by my estimate, half of that spend is being wasted on reacquisition and wrong acquisition. Email ads could help improve the efficacy of new customer acquisition and reactivation. It could be a good revenue generator for brands. The question therefore is: what can be done to make email advertising work?

In this series, I will discuss how two new innovations (AMP and Atomic Rewards) could help reinvigorate email advertising by leveraging the email footer. A natural question is: who cares about the email footer? I had discussed a few ideas in an earlier series “Reimagining the Email Footer”: “Ad AMPlets could maintain that revenue stream but do it much better by eliminating the need for the click. They could offer a form fill for additional information in-place and thus improve the efficacy of lead generation… The Ads Footer is thus a win-win for both brands: the cost of an ad via Big Tech platforms is reduced and the brand whose email carries the ad makes some additional revenue (which could potentially be reinvested for providing additional Mu).”

Let’s start by understanding the basics of email advertising.

Web3 Scale-up

With Web3, the stage is set for the global expansion of MuCo. There would not be any constraints on the uses of Mu. This will also mean a change in the governance model with rules rather than rulers determining the future – more like a DAO (decentralised autonomous organisation) rather than a corporate entity.

This is the phase which fulfills the original and true potential of MuCo: to eliminate AdWaste by enabling brands to build better relationships with existing customers. It undoes the original ‘sin’ of an excessive focus on new customers and an extreme perversion of marketing budgets brought about by lazy marketers betting blindly on the adtech platforms. Marketing has always been about bringing existing customers back for more and getting them to bring their family and friends. This truth was forgotten in the first decades of the 21^st century by brands. The result has been an arms race of acquisition spending which has shifted profits from brands to Big Tech.

MuCo undoes this by enabling brands to build the relationship upstream of transactions with a focus on attention and data. It also powers the downstream of referrals and reviews, which serve as the upstream for future transactions. MuCo thus solves a coordination problem between brands and customers. It also brings excitement and fun in the relationship. Brands spend a lot of time crafting their communications to customers; it is a tragedy when most of those messages are ignored. The loss for brands is that they lose out on mechanisms to bring customers back to their own properties, while customers miss out on offers that could be useful for them. Atomic Rewards in the form of Mu bridges this chasm.

As it grows, MuCo would have multiple revenue streams set up: sales of points/tokens, subscription fees for brand utilities, and transaction fees from the MuMarket and MuExchange. Another significant stream could be from enabling targeted new customer acquisition for brands by virtue of MuCo having a hotline to its base.

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The opportunity for MuCo is vast. There are a few billion consumers in the world, each with 20-30 brand relationships across multiple categories. Today, tens of dollars are spent for each new acquisition only to see many of them becoming inactive and dormant. MuCo’s oxygen-like Mu can sustain life in these relationships with its twin benefits of gamification and asset appreciation for consumers. MuCo’s ultimate success lies in how well consumers respond to Mu. First-gen loyalty programs have changed customer behaviour: which airline we fly, which credit card is ‘top of wallet’, which hotels we stay at, and so on. MuCo’s hope with its next-gen loyalty and rewards platform is that consumers will do the same with their time – thus opening a closed door for marketers, converting a barren desert into a thriving ecosystem, maximising customer lifetime value, and driving exponential forever profitable growth for brands.