Thinks 567

David Sax: “Engagement with strangers is at the core of our social contract. Most religious faiths instruct us to welcome the strangers we encounter, and there’s good reason for this. If we engaged only with the people we knew, our world would be small. That leap of faith toward the unknown other is what allows us to grow beyond the family unit, tribe or nation. Everyone you converse with who is not a biological relative — your best friend, neighbor, lover, spouse or even that chatty taxi driver from last weekend — was a stranger before you spoke to that person. Anytime we ignore strangers in our vicinity, whether because of fear, bigotry or the everyday convenience and efficiency of digital technology, we weaken that contract. Far from random human inconveniences, strangers are actually one of the richest and most important resources we have. They connect us to the community, teach us empathy, build civility and are full of surprise and potentially wonder.”

Matthew Hennessey: “Life is not determined by what you want. Life is determined by the choices you make.” [via CafeHayek]

Sangeet Paul Choudary on ecosystem business models: “In an ecosystem, we typically see three types of horizontal business models emerge – Aggregators, Integrators, and Infrastructures – which may be distinguished based on their position in the value chain. Additionally, firms may specialise and act as capability providers.”

Hotline: The Crux of the Brand-Customer Relationship (Part 14)

Making it Happen

Building the hotline with existing customers is the only way brands can get their attention and solve for data. It is one of two ways to bring customers back to the properties (app and website) – the second method being big spends on branding. The hotline is the trick marketers have missed in the two other obsessions – new customer acquisition and adding bells and whistles to the app and website. In hindsight, the idea of a hotline seems so obvious and yet it is ignored. Marketers seem to have resigned themselves to 80-90% of their emails and SMSes being ignored, and most of their push notifications being undelivered. This is where the opportunity for smart marketers. The coming downturn and push for self-sustainability and profitability offers an inflection point to change the foundation in the brand-customer relationship.

The good news is that there are many innovations which can support a push by marketers to build the hotline with their customers. Email 2.0 offers interactivity in emails via AMP, daily habit-forming content via Ems, micro-incentives in the form of Mu tokens as Atomic Rewards, a new metric to track engagement intensity via Hooked Score, and a new type of product-led agency (Progency) to do it all. Email 2.0 is the best way to build the hotline – better than 2-way SMS or even WhatsApp. Everything that can be done in other push channels can be done via Email 2.0 – and at a fraction of the price. The good news is that marketers are already sending out emails daily to their customers. What needs to change is the underlying tech and the mindset.

The combination of AMP and Atomic Rewards offers a very powerful combo to build the hotline. AMP offers an “All-in-Email” approach – Shop in Email, Search in Email, Play in Email, Browse in Email, Earn in Email, Chat in Email, and so on. There is no need to leave the email at all – no need for click-throughs and landing pages! Atomic Rewards offers the foundation for Loyalty 2.0 – incentives for marketers to nudge customer actions. Mu tokens can be used to get attention and zero-party data; they can also be used to drive referrals and reviews because every customer also has a network and voice. Think of Mu tokens as the non-monetary equivalent of loyalty points which are linked to money and transactions.

A hotline also means a greater frequency of communication. Ems powered by informational microcontent are a great way to keep the relationship alive. Every email doesn’t have to be just an offer to buy. Stories can drive the emotional connect and help build community. What brands are doing on the social channels can be replicated within Ems.

Over time, the same underlying themes of Email 2.0 (interactivity, in-place actions, incentives, insights) can be replicated on the other push channels – making for a true omnichannel hotline relationship with customers. Every interaction is an opportunity to collect volunteered data that enriches the customer profile – and helps increase personalisation on not just the push channels but also the brand properties. This will become even more important in a world where privacy has taken centre stage and the efficacy of using cookies is diminishing.

So, the message to marketers: make the Hotline via Email 2.0 as the crux for customer relationships. It will not only improve customer experience but also drive profitable growth. In an uncertain tomorrow, the Email 2.0 Hotline offers comfort and certainty for brands and their (Best) customers.

**

Additional Reading

Thinks 566

Matthew Green: “Legacy industry and regulators have smothered two generations of technological improvement, largely (I suspect) by building a (mostly) closed and permissioned financial system. And this is a big deal: payments are too important to our economy to entrust them to 1970s-era technology and an extractive industry. We don’t even know what novel applications — Googles, Facebooks, Wikipedias, Instagrams — we’re missing out on because the industry simply won’t allow them to exist. I don’t know if blockchains are the solution to this problem. I see indications that the technology is finally starting to grow up in ways that seem like a harbinger of major positive changes on the horizon. Progress here is slow, though in some cases because the regulatory apparatus is throwing sand in the gears of cooperative products, and/or utterly failing to move expeditiously to uncover possible fraud. And maybe the result won’t even be a success for blockchain solutions: perhaps we’ll simply get more and better offerings from “traditional finance” industry as they start to wake up to the fact that more open systems can compete with their closed offerings. So while I don’t know if cryptocurrency will be the answer, I’m just hopeful that something will be.”

Shane Parish: “There is a constant battle in all of us between our today-self and our tomorrow-self. Today-self is like our inner child. Today-self cares only about today. It wants to focus on things that offer an immediate payoff. Whether that’s kicking back with a few too many glasses of wine, spending money on status symbols, or avoiding doing things that can be done tomorrow. Tomorrow-self is like our inner adult. Tomorrow-self cares about things that take time to get results — like working on your relationship, saving money, or consistently moving the project forward one inch at a time.,,The wisdom of tomorrow-self is this: Focus on one thing you can do today to make tomorrow easier. Repeat.”

David Perell: “Philosophers are the most rigorous thinkers I know. Like intellectual boxers; they come to understand ideas by making them fight with each other. Their style of analysis is effective because it’s so bloody. One friend calls his style “violent thinking.” He talks about thinking like a soldier talks about interrogation. He subjects ideas to ruthless torture, shaking them and grabbing them by the throat until they can no longer breathe and, eventually, reveal their true nature…Good philosophers are like my friend from middle school. But instead of playing with computers, they play with ideas. Writing takes them a long time not because they’re finger-happy keyboard warriors, but because they rip ideas apart until they’re left with only the atomic elements. Once the idea has been sufficiently deconstructed, they put it back together. Usually, in new ways.”

Hotline: The Crux of the Brand-Customer Relationship (Part 13)

If there was a Hotline

If Target had a hotline to me, they could have engaged me and offered a replacement “Classic Fit” pant instead of simply refunding the money. They would have realised that of the two pants I bought, I had only returned one.

If Pongal (an Indian vegetarian restaurant in New York) had a hotline to me, they would have recognised me as a visitor who came every third day – and offered me an incentive to come every second day, and thus grow their wallet share from me by 50%.

If Gap had a hotline to me, they would have recognised me as having bought a shirt from them a few years ago and offered me more of the same when I entered their store.

If Barnes & Noble had a hotline to me, they would have realised that my email ID had been incorrectly entered and would have corrected it the next time I did a purchase. And then linked my in-store book requests to offering to send me the book within 24 hours if it wasn’t available in the store.

If Macy’s had a hotline to me, they would have offered me add-ons to the Perry Ellis belt I bought – rather than telling me that their rewards program was only open to New York residents (not realising that faking a NY address is so easy.)

If Aeropostale had a hotline to me, they would have wondered why I returned a couple of clothes within an hour of purchase. (Answer: Abhishek found better and cheaper in a store next door.)

If ASIC had a hotline to me, they could have asked me how many members are in my family and which shoes they would be interested in. In this case, ASIC doesn’t even know me since I bought the shoes from Kohl’s.

If book publishers had a hotline to me, they could cross-sell me other books in a similar genre. Again, they don’t even know I have bought a book. As an example, I have recommended “The Crux” to a dozen friends in the past week, and they have no clue.

If Air India had a hotline to me (rather than the contact info of my assistant), they would have asked me how my flight was and what could be done better in the future. (I would have told them maybe they need to do an upgrade to their interiors in the non-stop US flights which have been unchanged after 15 years!)

If Amazon had a hotline to me, they would have offered me free Amazon Prime while in the US – rather than blocking my account (which was using a different email address – the only way to get 30-day free Prime) and wasting an hour of my time in trying to get it unblocked.

If Nike had a hotline to Bhavana, she would have told them how silly it was for the sales executive to refuse to offer laces so Abhishek could try on the shoes and walk around to get a proper feel. (She eventually got the laces by escalating.)

And so it goes on. Billions of customer engagements daily. And so many missed opportunities for cross-sell, upsell or future-sell. It is little wonder that many brands lose out to faceless marketplaces – they not only lose margins, but also the customer relationship. It is the hotline which is indeed the crux – the one thing marketers should look at solving for, at least with their Best customers if not for everyone.

Thinks 565

Shruti Rajagopalan in conversation with Lant Pritchett. “PRITCHETT: I think this is maybe the deep problem about state capability in India is that—and Arvind Subramanian just had an interesting interview in which he was pointing out that what the government’s done is not try and fix the hard-implementation things like health and education. They’ve improved the direct targetable here. You’re getting gas here. You’re getting concrete benefits of cash or in-kind transfers that are logistically simple. That, again, it’s not going to re-create a coalition about fixing the core problems of the Indian state. RAJAGOPALAN: I call it the upside-down Indian state. They don’t provide public goods and quasi-public goods. But what they provide is private transfers and private entitlements, which could be done very well by the private sector, except now it’s the government in the business of—it’s a little bit upside down if we think of it from a development point of view. It might still be better than nothing. PRITCHETT: Yes, it is worrisome if you’re providing subsidized gas but you don’t have a police force that’s reliable.”

Jack Dorsey’s tdb’s presentation on Web5. “Web5 brings decentralized identity and data storage to your applications. It lets devs focus on creating delightful user experiences, while returning ownership of data and identity to individuals.” Namcios: “Web5 is based on the assumption that Web3, the idea of building a decentralized web with blockchain technology and cryptocurrencies, has the right intentions but is using the wrong tools. Web5 leverages Bitcoin, the decentralized monetary network, and a plethora of sound computer science technologies to create a new ecosystem of decentralized identities, data storage and applications in which the users are in control of their personal information. Fairly decentralized developments in the internet over the past couple of decades such as BitTorrent and Tor have shown that blockchain technology is not a necessary component for decentralization. Rather, the blockchain has only proven to be needed for a very specific purpose – mitigate the double-spend problem to successfully bring peer-to-peer money to the digital realm with Bitcoin. TBD’s Web5 is made up of software components and services such as decentralized identifiers (DIDs), decentralized web node (DWNs), self-sovereign identity service (SSIS) and a self-sovereign identity software development kit (ssi-sdk). These components let developers focus on building user experiences while more easily enabling decentralized identity and data storage in applications.”

Dan Shipper and Casey Rosengren: “Peer coaching is a structured way to learn, grow, and share with a close friend. It’s a deep commitment to creating a supportive environment where you and a friend can develop as individuals. The bare bones structure of it is to meet weekly for an hour, with one person as the “coach” and the other as the “focus person,” and to alternate each week who is in each role. The focus person shares whatever questions or challenges they’re sitting with, and the coach’s job is to listen, and at times, reflect or share their own experience.”

Hotline: The Crux of the Brand-Customer Relationship (Part 12)

The One Problem

I realised that the real problem is that most marketers have no way to engage with me after I have shown interest or done the first purchase or even a few transactions. While the brand’s properties are there and the focus of their martech investments, what they lack is a definitive approach to getting me back to their site. The one problem, the gnarly challenge, the crux that had to be solved was that brands did not have a “hotline” to me as a customer.

Sure, they had my email address or phone number – so they could mail, SMS or WhatsApp me. In some cases, I also had the app installed, so technically they could send me notifications (as long as I did not block them). But the reality is that most of their messages do not get to me. Many emails end up in the Gmail promotions folder rather than the primary Inbox. SMSes – at least in India – are only OTPs and spam. More than half of the consumers block most push notifications. WhatsApp is growing as a business channel but is no longer free; in India it can cost 25-50 times more than an email and 4 times that of an SMS.

I started thinking more about the “hotline” idea. I remember in the early 1990s using the word a lot. We had two offices in South Mumbai. (This was in the pre-mobile era.) Rather than dial the number each time, we had set up a “hotline” – a direct communication link between the two offices. When I picked up the phone at one end, it would automatically ring at the other end. No dialling needed! It was a time-saver.

What brands lacked was a “hotline” to their customers. When a brand spoke, a customer would respond. And of course, it had to work the other way also. The hotline was the prerequisite to bringing customers to the brand’s properties. In my previous writings, I have used the word “pipe” to describe this. But the word “hotline” is much more appropriate. A push pipe is important for sending messages – like a regular phone line is for making calls. A hotline is special – because it is always answered.

The hotline was the crux that brands had to solve for. Get the hotline right, and you have a 2-way relationship going with the customer. They could begin with their Best customers. And Best customers could in turn respond by ensuring they did not ignore the brand’s communications. It would be a win-win for both.

More than a shiny, new feature of the website or app, what brands need to realise is that it is the hotline that is the crux for their customer relationships. If they can shift the mindset from “delete” to “delight” in their messaging, it would solve every other problem for them.

Thinks 564

Evan Armstrong: “Software is consuming industries but it is also consuming individuals. What it means to be human is shifting. We are becoming what I call “embedded humans.” Our interactions with the world are determined by the software that we use. Software is being embedded into our identity and individuality… up to this point in human history, almost all of these goods have been centered around physical augmentation. The vast majority of products were meant to increase the labor capacity of a person’s hands. Now though, most technology is doing mental automation. Rather than increase the strength of an arm, we are directly embedding software into our cognitive processes to automate away mental labor…This arguably makes the creation of thoughtful software the most important task facing the technology sector today.”

Bikram Gupta Sarma: “A technology CEO constantly faces these five anxieties or challenges. The first is dealing with increasing individual and team performance. Technology moves at such a rapid pace that it is difficult to keep up with evolving new concepts. The second is with doing more with less – either with resources (people and budgets) or time to meet the company goals. Most technology organizations have developed specializations over the years and the CEO experiences the third anxiety of leveraging with partner organizations as specializations are all over. Often, either the organization, the investors or the board has a new vision, and the CEO now needs to deal with a fourth anxiety of how to synchronize one’s execution with a new vision. Finally, the technology world has grown global and technology teams take the job to where the talent is. This now means managing and leading global workforce, the fifth anxiety.”

From Common Sense Economics: “Competition is a disciplinary force. In the marketplace, businesses must compete for the loyalty of customers. When firms serve their customers poorly, they generally lose business to rivals offering a better deal. Competition provides consumers with protection against high prices, shoddy merchandise, poor service, and/or rude behavior. Almost everyone recognizes this point with regard to the private sector. Unfortunately, the importance of competition in the public sector is often overlooked.” [via CafeHayek]

Hotline: The Crux of the Brand-Customer Relationship (Part 11)

Gnarly Challenges

I realised that the challenge had to be linked to the retention and engagement side of the relationship, rather than the acquisition side. Marketers had little or no control on the spends for new acquisition – there was a bidding process for attracting digital customers via the Big Tech platforms. While they could search for more esoteric keywords or sites, other brands could also do the same. It was almost as if a driver discovered a new road to get to a destination faster in traffic, and before one realises it, even that road gets congested as Google Maps re-routes others on that path.

The next possible approach could be to make it attractive for first-time app users or website visitors to transact. Brands already offered discounts for this. When Bhavana ordered shoes from ASIC’s website, they offered her a 10% discount on her first order if she signed up with her email address to receive regular updates. Brands now even offer small incentives to collect email addresses and mobile numbers in-store for new buyers. The challenge remains in converting the one-time buyer into a repeat customer. A friend I spoke to said that 80% of first-time buyers do not return for a transaction – meaning only one in five make a second purchase. Driving a second transaction could be a good candidate for a gnarly challenge marketers needed to address.

On the retention side, the problem could be to improve the omnichannel customer experience. This begins with search on the brand’s properties. As we have seen, most search results suck. The item may be in the catalog but it doesn’t show up when a prospect is searching. This could be a gnarly problem to fix. Then come the actual recommendations – how personalised and relevant they are. Another gnarly challenge. For existing customers, what is the next best product to pitch could also be a problem worth addressing.

I started thinking about some of my own experiences as a buyer. When I wanted to book a hotel room for the vacation, I would have liked to see a floor plan rather than just a list of amenities and a few pictures. Most hotel sites are still stuck in the early 2000s when providing detailed info about the rooms – which becomes especially important for long stays. I had bought two pants from Target and realised that one of them was a bit too tight – there was a “classic fit” (which was good) and a “straight fit” (which was not). So, I decided to return the latter. When I went to the store (a different one from where I had bought), could the cashier engage me with my reason for the return and the possibility of sending me the right fitting pants rather than just refunding the cash with their no-questions-asked returns policy? Could Gap have asked me for my email address and then offered to send me more suggestions for T-shirts with pockets? Could every book that I inquired about and which wasn’t in the store at Strand and Barnes & Noble triggered an email with an offer to deliver it in two days from their warehouse? Could the Hamilton play company offer me some cross-sells after the play – the book by Ron Chernow, the sound-track with the songs, and perhaps other memorabilia? In fact, since I booked via Ticketmaster, do they even know me?

As I was thinking about all these experiences and imagined wish lists of what marketers could have done differently to get more from me, I got that insight – the Aha moment – about the one gnarly problem which if solved could help address many others and unlock a better customer relationship.

Thinks 563

Economist on AI foundation models: “Earlier generations of ai systems were good for only one purpose, often a pretty specific one. The new models can be reassigned from one type of problem to another with relative ease by means of fine tuning. It is a measure of the importance of this trait that, within the industry, they are often called “foundation models”. This ability to base a range of different tools on a single model is changing not just what ai can do but also how ai works as a business. “ai models used to be very speculative and artisanal, but now they have become predictable to develop,” explains Jack Clark, a co-founder of Anthropic, an ai startup, and author of a widely read newsletter. “ai is moving into its industrial age.””

Eric Ashman: “In the search for new customers, you increase spending on sales and marketing. You launch new products and services, hoping to extract more value from existing customers while also unlocking new customer segments. You know that all of this growth work is fraught with peril. Many of the things you try won’t work. New products may not be as desirable or viable as your original idea. Marketing channels don’t scale infinitely at your target efficiency. New sales channels can prove to be inefficient paths to new customers.This is why growth must be built on a constant cycle of testing, measurement, and iteration.”

From a JM Financial report: “Quick Commerce platforms are essentially trying to disrupt the unorganised grocery market (mainly the neighbourhood kirana stores) in large cities. Their broader strategy seems to focus on driving the message that shopping for groceries through their online platforms is far more convenient than having to take physical trips to the neighbourhood grocery/convenience stores. By leveraging their scale, platforms can also extract better margins from brands/manufacturers/distributors, a percentage of which then can be shared with the customers to create top-of the-mind awareness or improve customer stickiness. Moreover, some platforms are providing more flexibility to consumers by giving them the option to decide their own delivery schedule. This messaging of speed and convenience essentially addresses the pain-points of urban families having busy lifestyles and nuclear families. High NPS scores for Quick Commerce players compared to offline channel and scheduled delivery players are indicative of the growing consumer satisfaction with the channel.“

Hotline: The Crux of the Brand-Customer Relationship (Part 10)

Marketer’s Challenges

I have been thinking and writing about brand-customer relationships for the past couple of years. My key theses have been along two tracks. First, that a small percentage of customers deliver a large percentage of revenues and an even greater quantum of profits, and brands need to create a separate internal business unit to deliver exceptional experiences to these customers. This is an idea I have termed as “Velvet Rope Marketing” and more recently “Extreme Retention”. Second, brands are guilty of “Adwaste” – half of their marketing spends are being wasted because of reacquisition and wrong acquisition. A more balanced approach is needed between adtech spending for new acquisition and martech spending to build deeper engagement with existing customers – what I have termed as “profit-centric marketing”. Martech 2.0 is about focusing on the 4 Ps (pipe, partitioning, properties, prospecting) and 5 Rs (retention, repetition, referrals, reactivation, replenishment). This is also where the ideas of Email 2.0 (Hooked Score, AMP, Ems, Atomic Rewards, Progency) and Loyalty 2.0 (tokens for attention and data) come into play.

This is a long list of ToDos for a modern marketer who is caught between the demand for continuing growth in revenue at all costs (which can be brought in easily via spending on Google, Meta, Amazon and increasingly Tiktok) and the need to deepen relationships with existing customers (which needs CDPs, marketing automation, personalisation, analytics, omnichannel engagement, and more). The latter is more effective but takes time, while the former delivers results instantly. The conundrum is that the cost of new acquisition (CAC) has been rising rapidly – in many cases, at 40-50% year-on-year. This is sucking away marketing dollars into adtech when the right thing would be to grow the engagement with existing customers. With a slowdown and possible recession likely in the next 12-24 months, belt tightening has begun. There are only two paths to profitability in such a scenario – cut employee costs or cut marketing costs. This is the difficult choice for CEOs and CMOs.

It was against this backdrop that Rumelt’s new book made me ask the question: What is the crux of the brand-customer relationship? Among all the challenges faced by a modern marketer, what is the gnarly problem to tackle which can unlock profitable growth? The candidates were many: optimise return on ad spending (ROAS) on Big Tech platforms for new customer acquisition, offer bigger discounts to drive more revenues from existing customers, to invest in more martech solutions for omnichannel engagement and personalisation, and so on. In fact, there are many profit killers [Parts 3 and 4 in my Extreme Retention = Profit-centric Marketing essay] in a business which can be addressed and converted into profit creators. But there had to be that one thing which could be the gamechanger – the crux faced by marketers, a challenge that was critical and solvable. This is what I was thinking about while immersed in Rumelt’s book on the flight back from Newark to Mumbai.