Thinks 155

The Economist on the creator economy: “Social-media platforms used to get most of their content for free. That dynamic is changing…Though there is more content than ever, platforms are competing harder than ever to get it. “There’s an arms race to acquire creators,” says Li Jin, founder of Atelier Ventures, a venture-capital firm. Startups are developing new ways for creators to monetise their work. Substack gives writers 90% of the subscription fees they charge for newsletters; together its top ten authors earn more than $15m a year. Twitch gives its game streamers more than half of its subscription fees, plus a cut of ad revenue and the money paid to “cheer” their performance. Cameo, a platform on which 40,000 celebrities sell personalised videos to fans, passes 75% of the spoils to contributors.” More from Subscribed.com.

Art Carden in WSJ: “…People vote for capitalism and against socialism in droves by trying to move to freer and more prosperous countries. Socialists might have laudable goals like feeding, clothing, and sheltering everyone–and I agree with these–but I would no more suggest socialism to treat poverty and inequality than I would prescribe leeches, mercury, and bloodletting to treat cancer.”

George Will on turning 80: “To be 80 years old in this republic is to have lived through almost exactly one-third of its life. And to have seen so many ephemeral excitements come and go that one knows how few events are memorable beyond their day. (Try to remember the things that had you in a lather during, say, the George H.W. Bush administration.) This makes an American 80-year-old’s finishing sprint especially fun, because it can be focused on this fact: To live a long life braided with the life of a nation conceived in liberty and dedicated to an imperishable proposition is simply delightful.”

Microns and Loyalty: Gamifying and Rewarding Attention (Part 3)

Loyalty Programs – 3

A 1995 HBR article had this to say about loyalty programs and rewards: “A rewards program can accelerate the loyalty life cycle, encouraging first-or second-year customers to behave like a company’s most profitable tenth-year customers—but only if it is planned and implemented as part of a larger loyalty-management strategy. A company must find ways to share value with customers in proportion to the value the customers’ loyalty creates for the company. The goal must be to develop a system through which customers are continually educated about the rewards of loyalty and motivated to earn them. Achieving sustainable loyalty, measured in years, requires a strategic sustainable approach.”

From a recent HBR article: “Customer loyalty programs are ubiquitous, accounting for more than 3.3 billion memberships in the United States alone. And they can confer tremendous advantage: Members are more likely than others to buy from a retailer whose program they belong to, they visit the website or store more frequently, and they are more likely to download the retailer’s app, follow or otherwise engage with the retailer on social media, and recommend it to family and friends.”

Payback India’s then CEO Gautam Kaushik spoke about multi-brand loyalty programs in early 2020 in a Business Standard interview: “Multi-brand loyalty is a very successful concept as it works for the customers and the partners beautifully. Let’s talk about the customers first. They can join the programme with any one partner and use their membership across all participating brands (more than 100 in the case of Payback) to earn or redeem loyalty points and to avail of all other privileges. It offers them a lot more value for a very small effort and that keeps their engagement high. For the participating brands in the network, it is great as they have access to a diverse set of customers, the cost burden of point issuance is lower vis-à-vis standalone programmes as they get a ready set of customers who hold points, which are earned from multiple brands within the loyalty network.”

During the pandemic, airlines were saved by their loyalty programs! From HBR: “When the bottom fell out of air travel, loyalty programs stood out for their resilience. Although people had stopped flying, they continued to spend with program partners, specifically the co-branded credit cards. Accrual from non-air sources (activities other than flying) now account for more than half of all miles earned in major programs. This type of spending has proven to provide a natural hedge during downturns… At $24 billion and $22 billion, respectively, the disclosed pro-forma valuations of AAdvantage and MileagePlus exceeded the airlines’ own market capitalizations at the time ($6.5 billion and $10 billion as of July 1, 2020).”

Who would have thought that the loyalty programs of the airlines would be worth more than the airlines themselves! And yet, for many of us who were members of JetPrivilege (now Intermiles), that should have come as no surprise. It had 10 million members as of 2019.

Thinks 154

WSJ on the NFT Origin Story: “A few years ago, it could be difficult to find someone to accept a free NFT; today, the same digital tchotchke might fetch tens of thousands…Cryptocurrencies such as bitcoin are fungible because one bitcoin won’t have a different value than another, whereas NFTs are designed to be unique. They came into widespread use with the cats, but they are now being applied to digital art, albums and even weapons in videogames and other virtual accessories.” More from NYT.

The Politics of Recognition in the Age of Social Media: by William Davies

Art Carden on the Bourgeois Deal: “…The Bourgeois Deal says “Physician, heal thyself.” The Bourgeois Deal, we argue, is the appropriate Deal for a society of masterless men and women: it says leave me, a fully-grown adult, alone to blaze my own trails and try new things. Especially don’t expect me to ask you or the American Consolidated Mousetrap Company for permission to produce, sell, and market what I think will be a much better mousetrap than anything they offer. I grudgingly admit that people will imitate my innovations or at least come up with innovations of their own that lead to better mouse-catching, and hence, I don’t expect my unusual profits to last very long before I’m grudgingly forced to accept a normal rate of return—though I’ll admit when looking at a lot of those other deals that they look pretty good once I’ve got mine. By the time I’m finished, I will have made you—my customers, my shareholders, my bondholders, and my business associates—rich.”

Microns and Loyalty: Gamifying and Rewarding Attention (Part 2)

Loyalty Programs – 2

A table from the book “Customer Relationship Management: Concept, Strategy, and Tools” summarises the key characteristics of loyalty programs (LPs):

An excellent new book, “Loyalty Programs: The Complete Guide” summarises the pros and cons of loyalty programs:

From a consumer perspective, the benefits a loyalty program can provide, include:

  • Value: members may be rewarded with points, miles, discounts, value-adds or other tangible benefits which non-members do not receive.
  • Exclusivity: members may be provided with exclusive benefits such as access to lounges, priority queues and VIP events.
  • Recognition: members may be shown appreciation through the delivery of surprise gifts or rewards.
  • Relevancy: members receive tailored communications, offers and rewards specific to their individual preferences, increasing the usefulness and appeal.

Core challenges consumers face when engaging with loyalty programs can include:

  • Value: the rewards provided by the program are not always adequate, compelling or accessible. For example, the member may not spend enough with the brand to earn access to a sufficiently desirable reward, or the reward they can access are not appealing.

  • Program saturation: consumers may be overwhelmed by the sheer volume of loyalty programs being promoted to them, with most consumer companies offering a program to their customers.

  • Marketing assault: many loyalty programs send large volumes of marketing materials to members via email, SMS, push notification, banner advertising and mail. For some members, the volume of marketing received may be perceived as excessive, while the content may not be relevant.

  • Data capture and control: a loyalty program may capture personal data in ways the member is not aware of, or does not approve of, and use it for purposes the member may not deem appropriate. The member may also feel they have a lack of control over how their data is captured and used by the program.

Loyalty programs done right can be a very powerful platform for customer retention and revenue maximisation.

Thinks 153

The Economist on digital coins issued by central banks: “Government or central-bank digital currencies are the next step but they come with a twist, because they would centralise power in the state rather than spread it through networks or give it to private monopolies. The idea behind them is simple. Instead of holding an account with a retail bank, you would do so direct with a central bank through an interface resembling apps such as Alipay or Venmo. Rather than writing cheques or paying online with a card, you could use the central bank’s cheap plumbing. And your money would be guaranteed by the full faith of the state, not a fallible bank. Want to buy a pizza or help a broke sibling? No need to deal with Citigroup’s call centre or pay Mastercard’s fees: the Bank of England and the Fed are at your service.”

Hayek: “The possibility of men living together in peace and to their mutual advantage without having to agree on common concrete aims, and bound only by abstract rules of conduct, was perhaps the greatest discovery mankind ever made.” [via CafeHayek]

The Age of Revolution: Five Books Expert Recommendations

Microns and Loyalty: Gamifying and Rewarding Attention (Part 1)

Loyalty Programs – 1

As consumers, we are part of many loyalty programs. Loyalty brands are a win-win for brands and consumers – brands get greater spends and additional data on their customers, and consumers get rewards and other benefits for their loyalty. Previously I wrote about loyalty programs (based on a LinkedIn series by Ajay Row) as part of a series on Velvet Rope Marketing.

Here is a good overview from Wikipedia:

A loyalty program is a marketing strategy designed to encourage customers to continue to shop at or use the services of a business associated with the program. Today, such programs cover most types of commerce, each having varying features and rewards schemes, including in banking, entertainment, hospitality, retailing and travel.

A loyalty program typically involves the operator of a particular program setting up an account for a customer of a business associated with the scheme, and then issuing to the customer a loyalty card (variously called rewards card, points card, advantage card, club card, or some other name)…By presenting a card, customers typically receive either a discount on the current purchase, or an allotment of points that they can use for future purchases…Loyalty programs have been described as a form of centralized virtual currency, one with unidirectional cash flow, since reward points can be exchanged into a good or service but not into cash.

Investopedia has more: “Loyalty programs are offered by retailers and other corporations as a way to attract and retain customers.  [They] offer rewards, discounts or other special incentives and are designed as a reward for brand loyalty. The programs benefit companies not only by developing customer loyalty but by providing crucial information on how customers are spending and what products or types of offers are most appealing… Loyalty programs provide two key functions: They reward customers for brand loyalty, and they provide the issuing company with a wealth of consumer information… Once a customer becomes comfortable with the app, they begin to trust the company will deliver a consistent experience at each time. At this point, customers will stick to a hotel, restaurant, airline, etc., because of points more than anything else.”

Zaius outlines the benefits of a loyalty program: “For growing brands, the biggest appeal of loyalty programs is that they can help generate revenue faster than a marketing strategy that focuses on recruiting brand new customers. Repeat and loyal customers make up 8% of a typical ecommerce site’s traffic but drive 41% of its revenue, and loyal customers spend 5x more than first-time buyers. So, while it might sound scary to turn marketing attention away from new customers and toward existing ones, tapping into your returning customers and converting them into loyalty members is worth the investment…72% of adults in the U.S. belong to at least one loyalty program, and a typical U.S. household actively uses five to 12 of them.”

Clarus Commerce discusses various types of loyalty programs: points, cash back, punch card, tiered, coalition, premium (fee-based) and hybrid.

The most popular ones are typically those of airlines. In fact, airline miles have become a sort of tradeable currency – where we can earn miles for various activities outside of flying (hotel stays, car rentals, spending via co-branded credit cards) and spend miles on various purchases besides airline tickets. In India, the largest free loyalty program is Payback (owned by American Express) which has 100 million members.

Thinks 152

Bloomberg on the rise of social commerce in SE Asia: “Throughout Southeast Asia, consumers’ affection for haggling and interacting with businesses is fueling a boom in social commerce. Unlike the U.S. or China, where most consumers do their internet shopping with established platforms run by companies like Amazon.com Inc. and Alibaba Group Holding Ltd., in Thailand almost half of all e-commerce takes place through social media or chat rooms on Facebook, WhatsApp or Line’s app. Social commerce accounted for about 44% of Southeast Asia’s $109 billion e-commerce market last year, according to Bain & Co.”

James Scott: “For almost all of human history, one has been dealing with a quite different state whose objective was to extract as much wealth, grain, taxes, and manpower from the population as possible, and to help support forms of bonded labor or slavery.”

Reading: Phase Six

The Alternative India Needs (Part 3)

The Choice

While everyone is looking at the leadership question and seeking that single magical mythical being to take on Modi, the question we should be really asking is: what does India really need? A continuation of the 250-year-old odyssey that has kept us away from liberty and wealth creation or a new direction that transforms our nation by giving people civic, economic and political freedoms and dismantling the anti-prosperity machine that has been fine-tuned by every leader to maximise power and control over the people? There is no leader in India who would free us and let Lakshmi into our homes.

Once they ascend the throne of Delhi, all leaders in colonial and Independent India have done their bit to increase controls on our personal and business lives, deny us our rightful share in the wealth of the nation, interfere with education and agriculture, discover new ways to tax us to increase the size and scope of the government, divide us even more along new fault lines, and put ever greater constraints on our freedom of speech – in other words, exercise the power to rule, not change the rules.

We need to reframe the question. The alternative India seeks is not to Narendra Modi, and the alternative is not Rahul Gandhi, Sharad Pawar, Mamata Banerjee, Nitish Kumar, Arvind Kejriwal, Akhilesh Yadav, or one of that ilk. Each of the others would continue what Modi did once in power just as Modi continued the lineage that had begun with Robert Clive and continued with the Governor Generals of the British Crown, Nehru and Indira Gandhi – deny the people of India the freedom to live their lives the way they want.

The alternative we should be seeking in India is freedom from our politicians and political parties. The alternative we should be wanting is liberty and prosperity. Unfortunately, there is no leader who will do that – they are all the same. So, if it’s a choice amongst one of them, it really doesn’t matter whom we choose. But if we really want to craft a new future for ourselves and our children, we need to create a new alternative which draws its power from the people – a national movement to free every Lok Sabha seat from the politicians and their parties to form a new government of prosperity which breaks the 250-year-old curse of poverty, which turns ‘caged and poor India’ to ‘free and rich India.’ This is the Nayi Disha Indians need. This is the real alternative India needs.

Thinks 151

Bill Janeway on Who Should Be in Control: A veteran venture capitalist’s insights on why a founder’s control shouldn’t be entrenched.

Thomas Sowell: “A crucial fact about the theories and social visions of intellectuals is that the intelligentsia pay no price for being wrong.” [via CafeHayek]

David Perell: “The best writing is so well-edited that it doesn’t look well-edited at all. In that way, it’s kind of like makeup.”

The Alternative India Needs (Part 2)

Talking 2024 – 2

Shankkar Aiyar: “The buzz about a meaningful challenge to the BJP and Modi is ambition in the quest of affiliation, a plot in search of screenplay, or charitably speaking a narrative in search of evidence. There isn’t an individual or a party close to be being characterised as a real challenger… The failures of a flailing opposition though are not a cause for celebration for the BJP. It is instructive to remember that the absence of a challenger or political entity did not detain the defeat of the Atal Bihari Vajpayee government… Modi arrived in 2014 with the promise of transformative change. The motto of minimum government, maximum governance awaits reclamation.”

Swapan Dasgupta offers a pro-Modi counterpoint: “By empowering culturally rooted Indians, reducing corruption, and redefining the nationalist consensus, the PM has changed India… On the face of it, the country displays outward continuity. Yet, it is striking that most of Modi’s critics — particularly those located in the Left-liberal bubble overseas —invariably preface their indictment of India’s public life or governance with the label “Modi’s India”. This gratuitous tag indicates a belief that India has changed unrecognisably and for the worse…[The change] is still work in progress. To endure, Modi’s India will have to define the new heights to scale in 2024.

Jagannathan adds: “BJP Will Win If It Chooses The Right Battlefield: The Fight Is For Dharma, Not Secular Bunkum…In its first tenure, the major Modi government initiatives were streamlining of the subsidy system (through Aadhaar), demonetisation, the drive against black money, goods and services tax, Insolvency and Bankruptcy Code, and the Uri and Balakot strikes against Pakistan-based terror groups… For far too long, Modi has chosen to fight on battlefields chosen by his enemies, who include the Left-liberal caucus, the Western deep states, and assorted evangelical and jihadi groups. The conversion mafia must be confronted and defeated, especially by choking their fund sources. The battlefield on which Modi is fighting them is called “secularism” or “liberalism”. The battlefield he must shift the fight to is dharma and pluralism. And he should not be apologetic about it. And dharma is not about targeting the so-called minorities, nor it is about religion. It is about levelling the playing field for the forces that fight for dharma. This means ending the discrimination against Hindus baked into the Constitution through articles 25-30, freedom to temples, and autonomy for all Hindu institutions.”

The chorus continues. Some fulminating against Modi, some rooting for him, and a few ambivalent; each wrestling with the 2024 question. In the BJP camp, there is no alternative needed for Modi. In the non-BJP camp, there is no visible alternative to Modi but hope springs eternal. What’s common to both camps, despite evidence to the contrary, is that India’s leaders will transform the nation with their decisions. [I have written about this in the past: Nations, Leaders and their Decisions.]