Thinks 587

NYTimes on 10 years of CRISPR: “The gene-editing technology has led to innovations in medicine, evolution and agriculture — and raised profound ethical questions about altering human DNA.”

WSJ on hypercasual games: “Mobile games that require little brainpower to play are becoming more sophisticated as their publishers try to cling on to fickle—and monetizable—players…“Hypercasual is still in its genesis phase with so much runway to be innovated on around this wonderfully pure notion of essentially a single gameplay loop,” said Clive Downie, senior vice president and general manager at Unity Technologies Inc., a 3-D content development platform that is used by hypercasual game designers. “Developers are looking for additional ways to add complexity and challenge to games.” Hypercasual’s popularity has boomed in the past two years. The number of hypercasual game downloads in 2021 increased to 15.6 billion from 12.6 billion in 2020 and 7.51 billion in 2019, according to Data.AI.”

Adrian Wooldridge: “It’s time to recognize that a new world is here to stay: We are at an early stage of a revolution in the distribution of work, driven by the miniaturization of smart machines and the ubiquity of the internet, that is as fundamental as the one that occurred with the industrial revolution in the 19th century and the office revolution of the early 20th century…It’s also time to recognize that both sides in the debate have a claim to be heard. Workers are right to want to work wherever they can be most productive. Forcing someone to endure a morale-sapping (and sometimes dangerous) commute just to keep a row of office desks filled is counterproductive. But employers are also right to worry that flexible work brings new problems. We need to shift the focus of the debate from the ideological to the practical — from the desirability of a change that is probably inevitable to the question of how to manage a distributed organization.”

The MuCo Future (Part 4)

Clash of Clans

Well-designed games grab our attention for long periods of time. One such game is “Clash of Clans” (CoC). Thanks to my son, Abhishek, I have been playing it for a few minutes daily for the past many years. It is the only game I play. (I tell everyone who is willing to listen that they should pick a game and stick with it for many years; there are a lot of marketers and product managers who can learn from games on how to ‘hook’ customers.)

Recently, CoC introduced a whole new section, “Clan Capital”. After the Home Village and Builder Base, it is the third expansion.

Every weekend, there are “raids” (attacks) that need to be done on other Clan Capitals. In return, one earns “raid medals” which can then be redeemed for various goodies.

Through the years, I have not spent a rupee on buying the in-game digital/virtual goods. But the time adds up. It’s fun and one also learns about gamification through the various tricks and tweaks CoC does to keep the interest going. (For example, they recently removed all training costs on troops encouraging gamers to attack much more.)

Mu can be thought of as doing something similar. It removes the financial element from the brand-customer equation – that has its own Loyalty 1.0 equation. What Mu does is bring in the non-monetary aspects into the equation. Give time (like in CoC), get rewards (like gems and medals in CoC) and then use those to ‘buy’ experiences (gold, elixir, dark elixir and various “Magic Items” in CoC). If all of this had cost money, I would have probably stopped playing it a long time ago.

What Mu therefore enables is for customers to ‘earn’ rewards in the form of Mu which can then give them exciting experiences that money cannot buy. In that sense, it “gamifies” our real world. And as far as I can tell, no one has done that before. This is what is unique about MuCo and Loyalty 2.0.

Thinks 586

NYTimes on 10 years of CRISPR: “The gene-editing technology has led to innovations in medicine, evolution and agriculture — and raised profound ethical questions about altering human DNA.”

WSJ on hypercasual games: “Mobile games that require little brainpower to play are becoming more sophisticated as their publishers try to cling on to fickle—and monetizable—players…“Hypercasual is still in its genesis phase with so much runway to be innovated on around this wonderfully pure notion of essentially a single gameplay loop,” said Clive Downie, senior vice president and general manager at Unity Technologies Inc., a 3-D content development platform that is used by hypercasual game designers. “Developers are looking for additional ways to add complexity and challenge to games.” Hypercasual’s popularity has boomed in the past two years. The number of hypercasual game downloads in 2021 increased to 15.6 billion from 12.6 billion in 2020 and 7.51 billion in 2019, according to Data.AI.”

Adrian Wooldridge: “It’s time to recognize that a new world is here to stay: We are at an early stage of a revolution in the distribution of work, driven by the miniaturization of smart machines and the ubiquity of the internet, that is as fundamental as the one that occurred with the industrial revolution in the 19th century and the office revolution of the early 20th century…It’s also time to recognize that both sides in the debate have a claim to be heard. Workers are right to want to work wherever they can be most productive. Forcing someone to endure a morale-sapping (and sometimes dangerous) commute just to keep a row of office desks filled is counterproductive. But employers are also right to worry that flexible work brings new problems. We need to shift the focus of the debate from the ideological to the practical — from the desirability of a change that is probably inevitable to the question of how to manage a distributed organization.”

The MuCo Future (Part 3)

Examples

I asked myself: which experiences would be costless for the brands I engage and transact with, and at the same time be priceless for me as a customer? In loyalty parlance, these are 1:100 rewards – cost is 1 for the brand and value is 100 for the customer. Airline miles are the best and most successful example. The incremental cost for an airline is just providing free meals (assuming the seat was anyway going empty), while the perceived value for the flyer is that of the actual cost of the ticket.

  • Daniel Silva is one of my favourite thriller authors. His new Gabriel Allon book, “Portrait of an Unknown Woman”, was published on July 19. I would have loved to get early access to the book by paying Mu (tokens).
  • A similar approach can be taken for releases on Netflix or other OTT platforms. I could have paid in Mu to get early access to the recent “Lincoln Lawyer” series on Amazon’s Prime Video.
  • We participate in many online webinars. Most of them have a chat box to type in the question; the moderator then picks a few for the presenter(s) to answer. I could use Mu to ensure my question is prioritised and answered.
  • Publishers could connect readers with authors. For example, I read Richard Rumelt’s book, “The Crux.” I would be keen to ask a few questions to the author – and Mu could be the passport for that conversation.
  • Influencers could do the same – offer their followers exclusive content in exchange for Mu.
  • Media companies could offer interactions with editors and journalists with payment by Mu as the entry (access) fee. Imagine being able to discuss the Ukraine crisis or the inflation scenario with the team at The Economist.
  • Content companies with paywalls could offer a Mu-based payment system for single articles (as an alternative to a full subscription package).
  • Samsung could offer early access to their new mobiles for Mu to long-standing Samsung mobile customers (like me).
  • Fashion companies could allow me to use Mu to unlock special features on their website (an Augmented Reality option, for example).
  • In a long queue at a shopping outlet, I could use Mu to get to the front of the line and checkout faster. A similar approach could be used at airports – not just for check-in but perhaps even at the security and immigration counters.

Most of these experiences do not happen today. It is because customers are reluctant to part with their money to pay for these and brands do not have an alternative ‘currency’ that they can accept. This is the friction that Mu can eliminate. Mu becomes the alternative – which customers earn with their actions delinked from spending. Because Mu is, in a sense, ‘free’, we would be more amenable to using it for optional and yet exclusive experiences. As customers start seeing value and utility for Mu, they will be keen to earn it – and that is where brands will benefit in the form of attention, data, referrals and reviews. Think of things that Mu can ‘buy’ as “digital goods” – akin to what happens in games.

Thinks 585

Siddharth Pai: “The point of a DAO is to act like a company in the blockchain world, one which is controlled directly by its stakeholders with no governance structures such as a board and executive management. DAOs have many of the same needs as today’s modern firms, but must deal with greater complexities, given their ‘virtual’ form of organization, fluidity and technical stack. DAOs are organized in a flat structure led by a group of core contributors. To make decisions, members submit proposals and vote on them using DAO “tokens” in full public view. Unlike in a corporation, where an employee needs to be vetted and interviewed before being hired and then promoted through to the company’s management, which governs the firm, some DAOs let anyone join while others require a minimum number of tokens (often cryptocurrency).”

Steven Horwitz on Austrian economics: “For Austrians, the fundamental issue is not whether markets get it right. True, Austrians think markets are pretty good and governments quite bad in that respect. And even though Austrians might explain things differently from the mainstream, there are plenty of mainstream economists who would agree with those general conclusions. Note, though, that the question here is still about getting it right. Where the Austrian view differs, I would argue, is in understanding that markets are also really good at helping people to know when resources are not optimally allocated and providing the signals and incentives needed to correct the mistakes. Being adept at getting things right at a given point is of course a good thing. But it is probably more valuable — given that we aren’t likely to get things perfectly right on a regular basis — to be able both to know when we are wrong and to have an incentive to do better.”

Matthew Hennessey: “Everybody dreams of a free lunch. Everybody wants something for nothing. Economists remind us that we’ll have to pay eventually because resources are scarce and life is about trade-offs.” [via CafeHayek]

The MuCo Future (Part 2)

Experiences

In Part 13 of the Loyalty 2.0 essay, I discussed various ideas for brands and their customers to exchange value via MuCo. In a sense, MuCo could enable a barter system – not linked to the products and services offered by brands, and delinked from the money being spent by customers. This barter system would help drive many actions that brands want done and power experiences customers want – both of which are not possible today because the entire focus is on driving transactions.

Brands miss out on the upstream (attention and data) and downstream (referrals and reviews). As I had written: “Attention is critical for everything else that follows. In a world of too much information, individuals can be lost; messages find it hard to get through; connections cannot be easily established. To instill loyalty, brands must solve the attention problem. This means building a pipe, a hotline to their customers … After attention comes data. Brands need to understand their customers better. While they can decode actions of individual customers on the website and app, the better approach is to simply ask customers and incentivise their actions (in this case, the data being provided voluntarily) … Revealing ourselves is both an opportunity to earn points and to ensure future communications are targeted for our particular tastes.”

Customers miss out on the softer experiences that could create a richer relationship with the brands. Think of these as the equivalent of “Community Chest” cards in Monopoly! As I had written: “[Mu Tokens could be used for] paying for unique and differentiated experiences on the three axes of access, ease and exclusivity. These are “priceless” in that brands (or influencers) are not “selling them”. For example, a bookstore can provide me early access to a book for some of my Mu tokens. So could the OTT platforms. A new electric car company could offer me a priority test drive. Artistes (creators) could offer priority access to their works in exchange for Mu tokens.”

In an essay on Velvet Rope Marketing (Part 2), I had written about three dimensions for providing differentiated experiences for Best customers – exclusivity, ease and access:

Exclusivity

  • Get premium samples free – from wishlist and new launches
  • Get a special page designed based on preferences – likes, new season, offers
  • Get notifications on topics of interest
  • Participate in product co-development
  • Cancel tickets or orders without loss

Ease

  • Pre-book a slot based on visit patterns, etc; get an assigned concierge
  • Get free exchange opportunities
  • Pick their own seats in advance (flight, theatre etc.)
  • Order service/product before arriving on-premise
  • Preferential treatment from customer service; first-in-line always

Access

  • Get invited to media events celebrating the brand’s loyal customers, to get first-look at products
  • First opportunity to book an order for limited edition apparel
  • Offers for orders similar to previous purchases
  • An earlier opportunity to buy tickets for upcoming events

Similar ideas could be used to power Loyalty 2.0 experiences which can only be unlocked by Mu tokens, thus demonstrating the value and utility of Mu tokens. Ideally, these should be costless for a brand and priceless for a customer.

Thinks 584

NYTimes: “Sabyasachi is looking to become not just India’s pre-eminent designer but one of its most high-end exports. As he opens his New York store this fall, he will also be finalizing a beauty line and preparing for next year’s jewelry pop-up (his third) inside Bergdorf Goodman…If his global expansion takes off, Sabyasachi will establish himself as a sort of Indian Ralph Lauren. “He sold the idea of good American living to middle-class Americans,” Sabyasachi said of Lauren, “and I’ve sold the idea of good Indian living to middle-class Indians.” His West Village store will, he hopes, introduce Americans to the painstaking art and exuberance of Indian weaves, embroidery and craft. When a friend fretted to him about the location’s not being near a designer hub, Sabyasachi answered: “I’ll create my destination. When you build something very beautiful, people will find you.””

Mike Novogratz: “You have to put things in perspective. If I told you at the beginning of the pandemic you could buy Zoom stock or bitcoin — today you would have doubled your money on bitcoin and you’d have made nothing on Zoom. So that’s what I think is hard for people to get their heads around. This has been a complete and total old-school ass-beating. But it’s important not to throw the baby out with the bathwater because we had a speculative mania in lots of asset classes. Bitcoin is not going away as a macro asset. Web3 is not going away. We’ll spend more time in the metaverse, therefore companies will sell digital assets, and for digital assets to have value, they have to be unique, and to be unique, they have to live in a blockchain.”

Ishan Bakshi: “There aren’t that many [Indian] consumers with significant discretionary spending capacity, and those with capacity aren’t increasing their spending…Take Zomato, for instance. In 2021-22, 535 million orders for food delivery were placed on the platform. Considering that the company has 50 million annual transacting consumers, this translates to just under 11 orders per customer for the entire year or less than one order per customer per month. Of these 50 million customers, only 15 million transacted at least once a month, while 1.8 million did so once a week. In the case of Nykaa, the average monthly unique visitors range from around 16 million for the fashion vertical to 21 million for the beauty and personal care products. However, the number of transacting customers is only 1.8 million and 8.4 million respectively. Similarly, while Policy Bazaar has around 59 million registered customers, only 11.8 million are unique purchasing customers.”

The MuCo Future (Part 1)

Loyalty 2.0

We are all members of various loyalty programs. We earn points proportionate to the spend we do with brands. Airlines, credit cards, hotels, restaurants, bookstores, high street fashion, ecommerce sites – many of them give us points linked to our transactions. This is what I call Loyalty 1.0.

Then there is Loyalty 2.0, a new idea I proposed in a recent essay. It is about rewarding our non-monetary assets in our engagement with brands: attention and data to begin with, and extending to our network (referrals) and voice (reviews). The common theme across these is time. The more time we spend with the brand, the greater the likelihood of present and future purchases. As I wrote:

Loyalty 1.0 programs are all around us; Loyalty 2.0 platform has yet to be created. To begin with, there is almost no overlap between the two types of programs. While the sole focus of Loyalty 1.0 is to drive and reward transactions, Loyalty 2.0 focuses on the upstream: attention, whether it is in push messages or later on the brand’s digital or physical properties.

Loyalty 1.0 aims for retention and repeat purchases in commoditised markets. It aims to influence behaviour with the prospect of a future reward. Loyalty 2.0 solves the problems of attention recession and customer data poverty, both of which are the priors in the customer journey. If a customer is not listening to a brand, it is hard to get them to the brand’s property for a transaction. In the pre-digital world, when it was not easy to know each individual customer, the only possibility of a loyalty program was based on transactions. The digital world has opened by the prospect of nurturing customer relationships via targeted messages, nudges and personalised recommendations.

… Loyalty 1.0 was built for the offline world; Loyalty 2.0 is made for the digital-first world. Loyalty 2.0 builds on the work done through the decades in loyalty. It moves loyalty higher in the funnel and earlier in the journey; attention retention is the first step in the customer relationship. Without attention, there is no retention; brands face churn and continuous high spending on acquisition and reacquisition which erodes profitability.

… Loyalty 2.0 is run by rules, not rulers. This is where the intersection with Web3 comes in. A DAO (decentralised autonomous organisation) is the right home for a pan-brand Loyalty 2.0 program.

… The economic opportunity is huge: $200 billion is being wasted annually in spending on the adtech platforms on reacquisition and wrong acquisition. This is money which should be split between customers and brands. To disintermediate Big Tech’s centralised monopolies needs the disruptive innovations of Web3: a decentralised blockchain-based DAO-managed Loyalty 2.0 platform.

In that essay, I went on to describe an entity called MuDAO, a pan-brand blockchain-based decentralised platform for earning and redeeming loyalty tokens not necessarily linked to spending. In this essay, I will dig deeper into the MuDAO entity – I call it MuCo in this series because it could have some parts which exist in the Web 2.0 world also.

In the context of MuCo, the one question that has come up in multiple conversations is: how will we demonstrate the utility and value of Mu tokens? Why will brands want to give them? Why will consumers want them? This is what I will dig deeper into in this series because only if it’s an exchange that both sides want will we be able to build a profitable business.

Thinks 583

Eric Johnson of JSR on the first leadership lesson he learnt: “Decisiveness is important. But it needs to come at the end of the process, after enabling real and open information flow. Good news is always fun to hear, but it’s much more important to enable bad news and criticism to flow freely and quickly.”

Seth Klarman: “A very significant part of my philosophy has to do with managing your psychology. Markets are about the psychology of others. When are they panicking? When are they greedy? But you have those same flaws or those same potential flaws, and managing your portfolio in a way that doesn’t leave you where you’re panicking or overexposed to greed. If you can rule those extremes out, you’ll navigate the markets well.””

Macro Ops has distilled wisdom from Bill Gurley’s writings over 25 years: part 1 and part 2. This is from 1998: “The lifetime value of the customer is equal to the future cash flows (not revenue!) expected over the life cycle of the customer, discounted back by a reasonable discount rate. What we are really doing is treating the customer acquisition as an investment and the lifetime cash flows of the customer as the yield on that investment.”

Building the Hotline Right (Part 12)

Short Takes

As I was writing this series, there were many ideas which came up but were not fully baked for me to write a longer note on each of them. These are possible threads for future thinking and discussion. So, here goes.

Many years ago, we needed to physically go to stores. The Internet brought these stores to us. Today, we go to the brand properties. New channels (Email 2.0, WhatsApp) are bringing these properties to us.

We have discussed the hotline in the context of a relationship between brands and customers. What about relationships between customers of a brand or product? I would love to connect with those who have read “The Crux” – could the book publisher or author enable that via their hotline to me?

Marketers spend a lot of time discussing funnels and journeys, but not enough on hotlines. This needs to change.

How can brands use the first connect (a visit to the website, an app download) to build the hotline? Many times, they miss the opportunity to get any of my credentials to enable a follow-up relationship.

What is the cost of not having a hotline? Existing customers, expensively acquired, churn or go dormant. And that leads to the doom loop of ad spending, cutting into profits.

How can hotlines be differentiated based on the lifetime value of customers? How can hotlines with Best customers provide exclusivity, ease and access? How can this be connected with the theme of extreme retention that I recently wrote about?

Look at hotlines around us. Friends and (some) family members have a hotline to each other. Pilots have a hotline to air traffic controllers. A manager has a hotline to the direct reports. Which brands would we as customers want hotlines with in our life? What would be our expectations from the hotline?

Recently, my 3-month old Samsung A52 stopped working. It just went dark. I took it to Croma where I had purchased it from. They said I could leave it with them and they would send it to the Samsung service centre the next day – or I could take it to that service centre myself, thus saving a day. I opted for the latter. It took 24 hours to get my phone back – apparently something had happened to put it into a “deep sleep” mode and there was nothing wrong with the phone. If Samsung had a hotline with me, could they have apologised for the inconvenience caused to me – knowing how many Samsung products (Smart TVs, other phones) I use? So far, not a word from Samsung even though I know they have my email address.

What would hotlines look like in a Web3 world?

How can brands measure the efficacy of the hotline? Perhaps, the Hooked Score can help.

Can the hotline with its 2-way interactivity and gamification increase interest in millennials and GenZ in email?

Could we see interactive ads in emails?

How would the hotline idea apply to B2B companies?

Can political parties and governments build hotlines with their voters and citizens, respectively?

So, to end, there are many questions and comments to ponder in our hotline future!