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!

Thinks 582

Ming-Chi Kuo writes on the structural changes coming in the VR/headset industry: “Meta’s slowdown in VR hardware investment is beneficial to other existing VR headset brands. China’s VR industry started slower than overseas markets, but the hardware and content/service markets are growing rapidly. The establishment of the Metaverse Standards Forum favors the industry’s growth. Apple is a game-changer for the headset industry.”

Shane Parish: “You can’t predict what will happen tomorrow, but you can improve your position by sleeping, eating healthy, and working out. You can’t predict what the stock market will do tomorrow, but you can improve your position by ensuring you are never a forced seller. You can’t predict what will happen in your job or life, but you can improve your position by always having a little bit of money on the side. You can’t predict if you will get a promotion, but you can put yourself in a position to get it by acquiring the skills you need before it becomes available. Good positioning lets you control your circumstances. Poor positioning lets your circumstances control you.”

NYTimes on how China is policing its people via an “invisible cage” of technology: “The more than 1.4 billion people living in China are constantly watched. They are recorded by police cameras that are everywhere, on street corners and subway ceilings, in hotel lobbies and apartment buildings. Their phones are tracked, their purchases are monitored, and their online chats are censored. Now, even their future is under surveillance. The latest generation of technology digs through the vast amounts of data collected on their daily activities to find patterns and aberrations, promising to predict crimes or protests before they happen.”

Building the Hotline Right (Part 11)

Getting Started

How can a brand get started on the hotline (and bottom line) journey? Here are the first three steps in building hotlines with customers:

  1. AMP: Make every email AMP. Make AMP a mindset and think “Living Email” – how each email can become not just a broadcast or a blast, but interesting and interactive. The good thing about this is that if the mail client does not support AMP, it will simply show the alternative HTML email. So, there is no downside.
  2. Atomic Rewards: Create a time-based rewards program that incentivizes the non-monetary assets customers have: attention, data, network and voice. Gamification must become central to all communications; it is the best way to nudge behaviour and create habits.
  3. Progency: Instead of burdening internal teams with yet another thing to do, work with an external partner who brings in right- and left-brain skills to deliver “Performance Email” which creates a win-win partnership.

Once the Email 2.0 program has delivered on its hotline promise, brands can start expanding the Atomic Rewards to other channels. The Micronbox is an idea which will come – it needs a WhatsApp-like entrepreneur to challenge the status quo of the existing inbox providers.

**

A few weeks ago, I wrote in my essay on profit-centric marketing: “The path to exponential forever profitable growth comes down to something as basic as solving the problems of attention and data. In a world of digital and direct relationships, these are the two things that matter most. If a brand’s customers are not listening and if a brand does not have adequate data, it becomes hard to build a hotline to customers. Without the hotline, it becomes difficult to bring customers back to the properties for transactions … Email is not what it once was – 1-way broadcast and semi-spam. Email is now ready in its new avatar: Email 2.0. This email can be interactive, informative, gamified, fun and exciting. It is email like customers and marketers have not seen or imagined. Email 2.0 is a way to convert the delete mindset into delight. It can become a powerful channel for getting customers to volunteer data about themselves. For this, Email 2.0 needs to be combined with Loyalty 2.0. Tokens for attention and data with a new spam-free inbox which delivers surprises and rewards can bring brands and customers closer in a win-win relationship.”

If brands can build their hotlines right, especially with their Best customers, they will find that they no longer need to keep spending big bucks on wasteful and cash-guzzling new customer acquisition. That money freed up can power better relationships with existing customers – and help with the bottom line. Profits don’t come from newly acquired customers; they come from existing customers coming back for more and bringing along their friends. In a world where capital is no longer free and investors are demanding clear paths of (growing) profitably, the hotline can become the marketer’s best friend in delivering customer delight – it not only bridges the chasm between acquisition and retention but is also the crux of the profitable growth challenge CEOs and CMOs must solve for.

Thinks 581

Marc Andreessen on the ABC of new tech areas: “Artificial intelligence [AI] is the A. There are all these amazing technologies around deep learning, machine learning, GPT-3 [generative pretrained transformer 3], DALL-E, this new, image-generation thing from open AI, and so forth. Biotech is the B, with genomics and now the mRNA revolution, and the revolution of bringing together the disciplines of biology and engineering. That’s a big hill to climb. And the third, the C, is crypto and Web3, which is a revolution around distributed consensus, building trusted networks on the internet, and all the things that follow from that.”

I recommend a book in Great summer reads: Books AI experts recommend by Mukul Pandya. My reco: Better Data Visualizations: A Guide for Scholars, Researchers and Wonks” by Jonathan Schwabish. “I bought it during my recent visit (to the U.S) and have been reading it; it’s very good,” he says. “While AI is all about data and learning, representing it visually is equally important for others to understand it and consume it for making decisions. This book does exactly that. It is a great complement for any AI data scientist.”

Read: Rising Tiger by Brad Thor. This one has much of its action taking place in India.

Building the Hotline Right (Part 10)

Brands in My Life

Here is a thought exercise with the brands that I engage with. How could they build hotlines to me and how could I engage with them?

Let’s start with the media brands. Most of them send out email newsletters. The goal is to bring us to their website or app so our attention can be monetised with ads. In recent years, they have also started subscriptions but the ads continue to remain a dominant revenue stream. The newsletters today offer a list of headlines to click on. The only change in the past decade or so is some degree of personalisation based on either what I have been reading or the preferences I set when I created my account. Three changes could make the newsletters come alive: a “top headlines” section which fetches the main stories dynamically when I open the email rather than being constructed when the newsletter was created, a “search” box within the email, and a “comments” box which lets me give feedback right inside the email. In fact, some new and interesting comments could even be surfaced with the story headline when I open the email.

The OTT brands could allow me to do a 1-click add right inside the email, and perhaps even edit my watchlist. In fact, some Indian OTT brands don’t even send emails – preferring push notifications. I think that’s a mistake because many of their subscribers may have switched off notifications in which case the brand has no communication channel.

Some brands like Raymond or ASIC where the purchase cycles are less frequent will need to figure out ways to make the hotline alive during the non-engagement zone. They could send out “Ems” (short informative emails which can be consumed in 15 seconds or so) with tips on their category. Or ask customers to share photographs with their products in return for rewards. The goal is to be top-of-mind when the time for the next purchase comes.

Hypercasual games would be fun to add as part of the hotlines to drive engagement. So, instead of me going to the Wordle page daily, could the Wordle play be done inside of the email? Could I create my own Wordle and share it with friends in groups to see who can guess it first?

Book publishers could also set up a hotline with me after I purchase a book. (They have no idea today – having always relied on intermediaries for sales.) They could send suggestions on new books, online events with the author, latest tweets by the author. I could send back some of my favourite passages from the book – in return for rewards or an opportunity to participate in an exclusive interaction with the author.

eGrocery marketplaces could make ordering trivially simple with the use of the hotline – almost as easy as me calling up the kirana store owner. Some of it is just the use of AMP within an email, but the comfort of having a 2-way relationship where someone is actually listening on the other side can be comforting.

On a personal note, as a WordPress blogger, I could add a comments “AMPlet” inside of the email that goes out to all who have subscribed to my updates. This is much better than having to go to my blog and login to control the spam.

These are just some starting ideas. It is up to each brand to creatively think of the possibilities. Listening to customers and readers is a great way to get feedback, engage and co-create new products. The Email 2.0 and omnichannel hotline is an important leap forward to bring that future to life.

Thinks 580

HBR on meeting unmet needs in a digital age: “Searching for unmet needs involves two main approaches: improving your vision of mainstream users and challenging your vision by looking at unconventional users. Within each you can adopt a narrow focus or take a wider view. You can zoom in on individual mainstream users and their everyday experiences (what we call the microscope strategy) or pull back to discover patterns in their aggregate behavior (the panorama strategy). Likewise, you can take a close-up look at users outside your core (the telescope strategy) or seek a broader view of the patterns they exhibit as a group (the kaleidoscope strategy).”

Dan Shipper: “The basic idea of [the book] Seeing that Frees is that there are different ways of “seeing” yourself and the world, that some of those contribute to pain and some to growth and freedom. Its aim is to show us how we can learn through practice, play, and experimentation to free ourselves of the ways of seeing that create more pain, and learn to use more of the ones that are helpful for growth. If you’re at all interested in learning about what is underneath productivity—how your own mind works and how that ladders up into your experience of, and effectiveness in the world—this is a seminal book…The core thing you probably should know about the book is this: it’s basically a collection of ways to get insight.”

Anticipating the Unintended: “The tyranny of the well-organised minority in a democracy is real…Once you establish this ‘tyranny of minority’, you can override the silent majority. Because the benefits are concentrated with them while the costs are diffused among the majority.”

Building the Hotline Right (Part 9)

Micronbox

The customer endpoint of the hotline is an inbox – the email or SMS clients on the mobile or desktop, or WhatsApp. That’s where the brand messages come. The hotline is about making the messages interactive and incentivised to enable not just content consumption and conversation but commerce. The email and SMS inboxes are the repository for these messages. It has not changed much through the years when it comes to brand messages; the only innovation has been the creation of multiple folders to route messages algorithmically to reduce spam and clutter.

WhatsApp brought about a big change in our lives some years ago. Instead of texting or emailing each other and each new communication spawning a new message, it threaded conversations together based on individuals or groups. It made for a cleaner interface. Network effects took over and we all moved our person-to-person and communications to WhatsApp. The same has not happened with brands, even though some brands are now trying to shift engagement to WhatsApp. A big barrier is the cost of a WhatsApp session – 25-50 times that of an email and 4 times that of an SMS (in India). This doesn’t scale well. Besides, WhatsApp is the arbiter of what constitutes fair communications so there is always a ‘Big Brother’ fear of being blocked.

What is needed is a new kind of inbox for hotline-type engagement and interaction between brands and customers. This is the idea I call “Micronbox.” Here is what I wrote in a previous essay imagining a future where we are all using micronboxes. (Think of microns in the writing below as Email 2.0 messages – emails with support for AMP and Atomic Rewards.)

Each of us has a micronbox. It is built on email so it doesn’t necessarily need a new app or identity. This new inbox collates all the microns from our Gmail inbox and organises them better. No microns from a brand which we have not subscribed to make it through. Only a single email from a brand is present – older, unread mails get layered together into that single email. Thus, the micronbox only has as many emails as brands we subscribe to.

… Microns are interactive. So, instead of just a static one-way communication, microns become dynamic and engaging. One can buy a book right from the micron itself, expand a new story to read more, provide feedback or answer questions – right from the inbox, without having to click through to the website. (The magic which makes this possible with emails is AMP.)

… An element of gamification makes it fun. Customers/subscribers earn points for opening and engaging with microns. The more the continuing engagement, the better the rewards. (This is similar to what credit card companies offer – the more you spend, the more you earn. Basically, loyalty and discipline is being rewarded.) They also earn points by sharing information about themselves with brands so the communication they get is more personalised creating a mutual win-win. They can control what personal info they share with different brands. All this helps in increasing the signal-to-noise ratio in the inbox.

… The micronbox is clutter-free. Instead of a ‘delete’ mindset when dealing with emails, there is a ‘delight’ feeling as we scan it. Brands have become friends whose messages are never ignored, read promptly and always acted on. Brands provide us useful info which make daily life better. They offer us what we need rather than what they want. They learn from our actions to make the relationship better daily with every interaction.

Sounds familiar?! While I did not recognise it then, what I was really describing was the idea of a hotline between brands and customers.

The Micronbox completes the picture: a hotline is thus a 2-way connection between brands and customers, built using messages with AMP and Atomic Rewards, expanded to supporting omnichannel engagement. The micronbox becomes a repository of all these messages (microns) and conversations – just like WhatsApp today for our 1:1 and small group chats. Together, they can help drive brands to profitability by eliminating the AdWaste and enabling the 4 Rs of retention, repetition, referrals and reactivation.