Thinks 160

How technological innovation spreads

Daniel Kahneman: “Noise in general is unwanted variability. That is, when there is a judgment or a measurement or a decision, and there is variability, and the variability can be across occasions. When the same person judges the same object many times and reaches different conclusions, that’s one kind of noise. And the other kind of noise is what we call system noise.”

Shane Parish: “What seems like a difference in talent often comes down to a difference in focus. Focus turns good performers into great performers. Two keys to focus are saying no to distractions and working on the same problem for an uncommonly long time. Both are simple but not easy.”

Microns and Loyalty: Gamifying and Rewarding Attention (Part 8)

My Wishlist

I asked myself: as an email subscriber of many brand newsletters and a loyal customer of many brands, what would an interesting microns loyalty program look like?

  • Identify microns and points clearly: the Subject line should tell me that the email I have received is a micron, and the number of points I will get by reading it
  • Points for opening microns: I would like this; it makes it fun; we like rewards, even though these are small
  • Points for actions: clicks, providing some info about my preferences should get me some more points. Actions can be made easier by using AMP – such that the responses and interactions can be done within the micron itself.
  • Points should work across brand microns in my inbox: I should not have to be enrolled into separate loyalty programs
  • Points visible in every micron: I should be able to see in real-time the aggregate points I have earned
  • Points to ensure I read microns daily: this is the idea of a “streak”. Let’s say I get 1 point for reading on day 1, 2 points for day 2, and so on till I get 5 points for day 5. After that, every micron that I read daily should get me 5 points. If for some reason the streak breaks, I get reset to 1.
  • Points to encourage me to refer microns to others: a multi-level marketing program for microns would be cool!
  • Points as currency: I should be able to make the points I earn as my primary storage; so whenever I give my email to a brand, they should be able to connect their loyalty program to this microns program. This is because I expect to be earning a lot more points through my Inbox than other activities.
  • Rewards: what kind of rewards would I like? Perhaps, points which allow me to pay for firewalled content for sites that I have not subscribed for (eg. Nikkei Asia where I would perhaps read 4-5 articles a month and therefore don’t see the need to subscribe). Digital content could be a good starting example of rewards – something which does not have a high cost for the micron provider.
  • Levels and Leaderboards: These can be used to drive greater participation and unlock more valuable rewards.

Do all this and the email inbox itself becomes a game! And gaming companies have done wonders in hooking their consumers. Marketing has a lot to learn from games.

The gamification idea is echoed in this excerpt from Game-based Marketing: Inspire Customer Loyalty Through Rewards, Challenges, and Contests: “In this socially networked, choice-driven world, the old methods of reaching consumers with advertising messages have simply stopped working as well as they need to. Game mechanics, on the other hand, are steadily rising to the surface. In everything from the airline you fly to the ATM card you use, savvy marketers are turning to the power of games to increase their return on investment, provide essential predictability, and—above all else—engender the kind of customer loyalty that wasn’t before possible… The future of marketing is games.”

Thinks 159

“What’s bigger than a megacity? China’s planned city clusters…Five regions with as many as 100 million people each aim to deliver the benefits of urbanization without the headaches.” [Technology Review]

David Perell: “The best way to understand an idea is to pull it apart and put it back together again, which you do by writing.”

Rita McGrath on scorecards to simplify strategy: “One simple antidote to this is to translate the grand strategy statement into scorecards that spell out what good looks like for your strategy, and conversely what it doesn’t look. A scorecard lets people see the logic behind your strategic choices throughout the organization and act in accordance. The screening statements implicit in the scorecard make it crystal clear which opportunities are desirable and which aren’t and allow ideas to be mapped against the same set of criteria. The magic is not the scores – the magic is the thought process behind them.”

Microns and Loyalty: Gamifying and Rewarding Attention (Part 7)

Rewards and Redemption

The next question to discuss is: will consumers be excited with the points they earn opening microns? (Of course, there is high content value in microns so the points work as the icing – that extra nudge.) Let’s look at it from the consumers point of view.

Assume I get about 30 brand messages a day. Let’s say 10 of these become microns. For opening these, I get 10 points. (I could get additional points for specific actions in the microns – clicks, answering some questions, providing feedback.) So, in a month, I can potentially earn 300 points if I open all the microns. Is that good? What can I do with these points?

This is where the second half of the loyalty program needs to be set up correctly – rewards and redemption. What can be the notional value of each point? It could range from 1 paisa to 10 paise to a rupee. If we assume the value of a point to be the cost that brands typically pay for an email, it will be in the range of 1 paisa. This may not be exciting for consumers to act on the points incentive – their earning over a month will be Rs 3. The way to make the points more valuable would be to offer exclusive digital products not available anywhere else – thus increasing their value for consumers.

Brands could actually pay a lot more for the opens and clicks – after all the return they get on an action performed by a recipient can be substantial. What a loyalty program using microns does for them is help them set up a direct attention relationship with their customers. Brands thus need to think of microns as helping them with top-of-mind recall – increasing mental availability. Therefore, to make microns loyalty a success, the points, rewards and redemption story needs to be made compelling by brands. That is what the best loyalty programs – especially the airline frequent flyer programs – do so well.

Where the micron service provider comes in is as a coalition builder. It does not make sense to have each brand operating its own loyalty program. A program across all brands can make it very exciting for customers – much like how airlines miles can be earned across various partners (hotels, car rentals, credit card spending). Designing this loyalty program right and combining it with the power of microns can be the next big innovation in transforming how brands interact with their customers.

Thinks 158

Founding vs Inheriting by Balaji Srinivasan: “When an heir inherits an institution, it’s like inheriting a factory. During normal times the factory continues to operate, the widgets keep coming out, and the career managers appointed by the original founder appear to have everything in hand. Nothing seems amiss. But something important has been silently lost, which is the founder’s ability to invent the institution from scratch – or reinvent it in the face of a crisis, like COVID-19. We can also think of this as read-only culture, the ability to repeat what an ancestor has handed down – but not recreate it from first principles.” [via Arnold Kling]

The power of personal: “Make both customers and workers feel that there is a person on the other side of the transaction. You’ll increase satisfaction, sales, and product quality.” [Thomas McKinlay]

How to forget something: “Memory relies on what cognitive scientists call retrieval cues…Rather than total retrieval-cue avoidance, try a technique called thought substitution. If you had a bitter argument with your sister and think of it every time you see her, work to focus on other, more positive associations. Practice until your brain sees her face and surfaces those better memories first and not the fight. You can also work on what cognitive scientists call direct suppression. ” [from NYTimes]

 

Microns and Loyalty: Gamifying and Rewarding Attention (Part 6)

Emails, Microns, Opens, Points

If one looks at the open rate of 15%, it would seem that brands have trained customers to ignore their emails. Microns offer a fresh start for brand-customer communications. Previously, we have discussed how microns can drive more opens and engagement. The use of rewards can be an additional layer which can improve performance. What is needed is an intermediary who can bridge both sides of the market – brands and customers.

The intermediary (in this case, Netcore’s MyToday) can offer 1 point to the customer for every opened micron. The points earned could be higher for a streak (continuous daily opens). A click could be worth much more. The points earned could be shown at the bottom of every micron. Brands would pay Netcore to transfer points to customers. Brands could start by offering points to everyone. Later, specific customer segments could be incentivised with more points for every opened micron. The key is to gamify the interaction and do it across brands so that microns as a category become the vehicle to earn points.

The only way this will work is if brands see better performance to justify the additional spend for points. (Remember that brands are already paying for creating and delivering the microns.) My belief is that given the low open rates that emails have, there is plenty of room for improving RoI for brands:

  • Let’s say a brand pays 1 unit for every email that they send
  • For 100 emails, the brand spends 100 units for email delivery
  • 15 emails get opened, so they are spending 6.7 units for each open
  • Assume microns have an open rate of 50% and are priced based on opens
  • Also assume 1 unit is paid to the customer (email recipient for every email)
  • Thus: 100 microns will cost 100 units – 50 going to the email service provider (for the 50 opens), and 50 as reward points to the end customer
  • The brand spends the same, but sees 50 opens of microns as against 15 of emails – definitely a better RoI
  • And there are delighted customers who now have 50 reward points to spend

To complete the analysis, let’s understand the economic analysis for the service provider.

  • Seemingly, the loser is the email service provider whose revenues have halved
  • In the emails case, the ESP makes 100 units of revenue
  • Emails have a 90% gross margin (GM) so the ESP makes 90 units of GM when sending emails
  • Microns cost lower to send because of their smaller size, so let’s assume 95% GM
  • The micron service provider (MSP) will make 47.5 units margin (95% of 50 units paid for opens)
  • While this looks like a significant loss of GM, given that brands see a 3.3X better performance with microns as compared to emails, they could be persuaded to double their spend which would even the score for the MSP

In a nutshell, the economics can work very well for brands, customers and the micron service providers.

Thinks 157

Shopify’s president Harley Finkelstein: “The big shift that is happening that will exist long after the pandemic and, frankly, will be the future of retail, will be that consumers will simply say, “I want to buy however is most convenient for me.” And if you’re a really forward-thinking merchant like Allbirds, for example, and you know that it’s all about consumer choice, then you’re going to have a great physical store in San Francisco and New York City and a whole bunch of other places, you’re going to have a great online store, you’re going to cross-sell on things like Instagram and Facebook, you may also activate the TikTok ad channel because that’s when you can reach new potential customers. But what Shopify’s role in all that is, is that we want to integrate all of it into a centralized retail operating system.”

Zeynep Tufekci: “The problem is that when we encounter opposing views in the age and context of social media, it’s not like reading them in a newspaper while sitting alone. It’s like hearing them from the opposing team while sitting with our fellow fans in a football stadium. Online, we’re connected with our communities, and we seek approval from our like-minded peers. We bond with our team by yelling at the fans of the other one. Belonging is stronger than facts.” [via NYT]

Watched: The Iron Lady (on Margaret Thatcher, played brilliantly by Meryl Streep)

Microns and Loyalty: Gamifying and Rewarding Attention (Part 5)

Email Inbox and Attention

Here are some statistics from Netcore’s Email Benchmark Report 2020 which analysed over 50 billion emails sent by brands to consumers:

  • 77% of the users prefer email as the channel to reach out to them
  • 38% of users don’t check their promotional emails anymore
  • Gmail dominates the email volume globally with a whopping 72% of the total volume share; Yahoo had 15% and Microsoft Outlook 8%
  • The average Open Rate is 12%. The average Click Rate is 0.5%.
  • Media and Publishing brands deployed the best campaigns which received the highest engagement with 75% open rate
  • The optimum subject line length which has received the highest open rates is between 30-40 characters and 7-8 words
  • With 36 campaigns, Deals/E-coupons brands have the highest monthly frequency of campaigns sent

Email is the best channel for brand communications and 88% emails (7 out of 8) are not opened. And despite all this, email is seen to have the best RoI across all channels

So the big takeaway is: the email inbox is one of the most powerful marketing platforms. Hundreds of billions of emails make their way to inboxes each month, all competing for our attention. And yet, most emails are ignored by the recipients. Imagine the multiplier impact if more emails could be read by their recipients.

This was my thinking behind microns – short, informational and identified emails that can be consumed in 15-30 seconds. This itself should take open rates higher. What more could be done to make microns even better – towards a 100% open rate? That is where the idea of a loyalty program comes in. And as I studied both email and loyalty, it became clear that these two worlds had never intersected.

I started thinking about a few questions. What if brands could incentivise their customers to open and click on emails? (Of course, this could be easily abused but that can be addressed by monitoring the time taken for actions after opening an email, or what happens after the click. And incentives could be offered on a differential basis to the best customers versus the others.) Why has a multi-brand email loyalty program never been created? (This could be because no single email service provider has a large enough market share to get the critical mass for making such a program successful.) Would consumers respond to such a program or just ignore it? (The only way to know would be to actually do it and find out!) Is paying for attention a good thing? (Of course, it is – all advertising is about paying for attention. The difference is that brands pay intermediaries rather than their consumers.)

The point about disintermediating the attention intermediaries (Google, Facebook, media platforms, publishers) looked especially interesting and needed further thinking. If one were to craft a multi-brand email rewards program, what would it look like?

Previously I wrote in the micron-verse series: “Our objective with microns is to eliminate waste (unopened emails). Gamifying the process wherein every micron is opened and each action earns points which can then be encashed for rewards is a way to incentivise the right customer behaviour (from a brand’s perspective). Additional points can be given for ‘streaks’ – consistently opening brand mails daily without a break.”

Thinks 156

Elon Musk’s 7 Rules To Increase Productivity (via Gabriel Gruber). Among them:  “Excessive meetings are the blight of big companies and almost always get worse over time. Please get [rid] of all large meetings, unless you’re certain they are providing value to the whole audience in which case keep them very short.” And: “Also get rid of frequent meetings, unless you are dealing with an extremely urgent matter. Meeting frequency should drop rapidly once the urgent matter is resolved.”

Katy Milkman on How to Change (Econlib): “The willpower problem is a really big one. I think too often we know from evidence people think Nike is right and I can just do it. And that’s just garbage. We aren’t good at pushing through…But, we ourselves have some ability to set systems up that also support success, individually. And, we can take a hint from what works when someone else is trying to help and use those same tools.”

Reason on the era of big government in the US: “Even if nothing truly terrible happens—no interest rate hikes, no runaway inflation, no major catastrophes or recessions demanding that we tap into a nonexistent rainy-day fund—the current projections show that, within a few decades, half of all tax revenue will be used just to pay the interest on the debt. By the time a child born today is old enough to be nostalgic for the 2020s, half of his annual tax burden will go toward paying off the debt—a debt that includes myriad benefits his parents received without paying for. Maybe his generation will come to care about fiscal responsibility. Maybe things will change even sooner than that: Perhaps Biden, once the fog of the pandemic has lifted and the cost of its response becomes clear, will rediscover the importance of balancing budgets. Until then, it’s clear that the era of small government is over.”

Microns and Loyalty: Gamifying and Rewarding Attention (Part 4)

Loyalty Programs and Me

My first brush with a loyalty program was Pan Am’s frequent flyer program when I was in the US in the late 1980s. I remember making an India trip and earning triple points and some more – enough to get another round-trip for free. What an introduction to the world of airline miles!! I then became part of every airline I flew – signing up was free. Over time, the one I have benefited most from has been the Star Alliance one – especially because of the US trips. It is never easy to get the free tickets because it is hard to sync business travel with seat availability.

The other loyalty (membership) program that has been useful has been Amazon Prime in India. It’s a no-brainer to sign-up for. One thing I do when I travel to the US is to create a new email ID and sign-up for free for Amazon Prime for 30 days so I get their free shipping while I am in the US. A bit cheeky, but offers good savings!

There are of course the credit card loyalty programs where points keep adding up. I had an interesting redemption recently – Citibank offered me an opportunity to use my points to pay for a Swiggy order (which I accepted).

There are a lot of bespoke loyalty programs. The one I have used is the one which gives points for dining at Quattro and SpiceKlub (in Lower Parel near my office). I wonder how I can redeem my points in a Swiggy-Zomato delivery-centric world! Most of the others (Raymond, Baskin Robbins, Bata are the ones I can remember) are linked with my mobile number and tend to just add the points and send a reminder periodically, but there typically aren’t enough points to redeem. Maybe I should try a multi-brand program like Payback just to explore how it works.

As I think about it, none of the loyalty programs has been really exciting (except Amazon Prime with its free shipping, video, music). There is much that can be done to improve loyalty programs. Indian brands have not fully exploited their power.

As I explored the world of loyalty programs, I also wondered what it would take to create a loyalty program for emails (microns). After all, the email inbox is where many of us spend a lot of time and brands spend a lot of money delivering content to us. This is the story we will take up next.