Monday 30 July 2007

“We have to strengthen primary education.”

Every time I hear someone say that we need to strengthen primary education to solve the reservation issue, or develop sports at the grassroots level to get an Olympic medal, or rewrite the law books to get justice, I’m reminded of the sales manager who keeps asking for more leads to improve sales.

Of course, more leads will help. But so will more conversions. Better bookkeeping. Salesmen who know something about what they are trying to sell.

Getting leads is hugely dependent on the market, converting them to sales has a lot to do with our efforts. Why don’t we work on what is difficult to improve, instead of waiting for that impossible day when the fundamentals will change?

3 problems with multiparty loyalty programmes

The future may well belong to networks. But multi-party loyalty programmes need to solve three problems before they get there.

First, and the most obvious one, is the technology hurdle. How will these programmes ensure that the software that runs the unified loyalty programme smoothly links with the separate transactional, sales and marketing software and CRM databases (I assume that all participating companies will not equate ‘giving points’ with ‘taking care of customers.’)

Second, sooner or later, the programme will need to play the role similar to a points market. This will entail ensuring that points accounts (members’ and marketers’) are properly settled and points-to-purchase ratios are commonly acceptable. For example, the trade in points (which are, to all intents and purposes, deferred discounts) is bound to lead to deficits and surpluses, and problems within individual companies.

Even if these two are solved by importing experts from other fields, there remains a third problem: A multiparty loyalty programme lessens choice, for both customers and marketers.

Let’s take customers first.

With single-party loyalty programmes, as a customer, I will not be penalised for buying petrol from my favourite brand and staying at my favoured hotel: I get points on both counts.

On the other hand, if petrol companies and hotel chains tie up, I lose if my favoured hotelier is not my petrol brand’s (loyalty) partner.

I may, though, reason that I’ll reach the loyalty rewards faster by pooling points from different sources; decide that the hotelier’s petrol partner is not so bad after all; and switch.

(For sure, the number of rewards redeemed will go up [as compared to stand-alone programmes], but this shouldn’t hurt marketers very much if they pool their rewards budgets. Unfortunately, we don’t know how much the redemption rates and amounts will increase.)

It may be argued that since consumers usually buy from a number of brands, there is no conflict of interest between consumers’ need for choice and multiparty programmes rewarding only purchases within a set of brands.

I suppose the matter is somewhat more complicated in real life. While customers may well buy from a number of brands, in frequently bought categories like groceries, credit cards, air travel, and telecommunications the basket is not equally split: A particular (favoured) brand takes the lion’s share. And it is inconceivable that any multiparty programme should have all or most of any member’s favoured brands.

Rationally, that may not be horrible. The consumer just needs to enrol in multiple (multiparty?) programmes and get his fill of points from multiple sources. Now, if only consumers were that rational.

Let’s take the marketer’s point of view. Suppose he wanted to run a sales promotion. As long as he didn’t tie up with other brands, the whole paying population was his market.

Once he gets into partnerships, he limits his choice, at any rate, his first choice, to his partners. There is perhaps little to suggest that his partners’ customers will be his best prospects. (It’s like some direct mail companies agreeing to exchange lists exclusively - an arrangement that is extremely unlikely to benefit any.)

There will certainly be some overlap, but what else can one expect with promiscuous consumers and markets dominated by a few major brands. (The drivers of any multiparty loyalty programme will have to major brands, though many small ones, and even single outlets, may join it… with limited rights, and even more limited powers… primarily to rent loyalty infrastructure and services.)

I don’t think there is any empirical evidence that shows this fear to be misplaced. There are, of course, quite a few multiparty loyalty programmes. There was, of course, the USSR.

Why Indians don’t read

Why can’t you do any direct mail or, for that matter, long copy ads in India? Simple. Indians don’t read.

But opening your eyes shows you that there are more papers, magazines and books than ever before, and more bookshops. And there is the www. While much of what is written in the world, for work or pleasure, is never read, surely enough is read to sustain the writing, financially and physiologically (Almost all sperms don’t make it, but enough do to make 9 billion of us).

So what’s going on?

While I haven’t got any surveys to refer to except this one, I suppose a simple and possible answer may be obtained if we look at a family’s reading. The calculations are here: (The logic is not different from the explanation to the GMAT paradox.)

As is apparent, each member’s reading goes up, yet the average, dependent on the number of members, keeps fluctuating – and in two cases, goes down.

It can easily be that, in the larger market, readership is going up, as is each individual’s reading; yet the average reading is going down because neo-literates form larger and larger fractions of the population (while the bibliophiles’ fraction, and their power to influence the average, keeps getting smaller [though their numbers increase]).

In short, simply asking where an average came from could have led to a very different explanation, and decision!

Friday 20 July 2007

A possible list business?

My previous rant notwithstanding, the paucity of reliable lists is the biggest hurdle to sensible direct marketing here.

So where are the Decision Makers (B2B) and High Net-worth Individuals (B2C)? Besides credit card companies and loyalty programmes, ‘VPP’ (Very Probable Prospect) contacts should, logically, be available with:

  • Builders and housing societies
  • Business associations
  • DRTV companies (anyone who can buy a Rs 2,999 magic tummy-trimmer over the phone may not be in the Ambani and Big B league - in all probability he makes far less than the assistant brand manager does - nevertheless he is, sorry to say, somewhere near the top of our unfortunate country’s income pyramid)
  • Organisations and trusts (based on charitable cause, religion, and language-based)
  • Private colleges, MBA institutes and education companies (get the students’ parents)
  • Sports and fitness clubs
  • Trade magazine subscription departments (e.g., magazine’s for, say, the film trade, for CAs, for doctors and engineers) and
  • Tour operators.

While none of the lists would be very large, together they should be sizable. Besides, the list is far from exhaustive.

This much is obvious. Yet, we don’t know of list brokers who maintain and market these lists. Worse, the owners of these lists are not known to approach direct marketing agencies. (If they approached brands directly, the latter wouldn’t keep asking us for lists.)

Demand exists, but little supply.

Why? Perhaps because the demand isn’t big enough. Yet.

Perhaps the grey market forbids legitimate trade.

Perhaps because it’s the ‘Indians-cannot-read’ syndrome.

Perhaps it’s because of the cold calling disease that infects brand managers. Which club secretary would want to be responsible for members receiving bizarre sales calls in the middle of meetings?

But what if someone went to these list owners with this proposition: “I will update (“I am calling from the club. May I please confirm your address? Is it 123 ABC Street?” “Oh, no, my dear, that’s where great-grandfather lived during the Sepoy Mutiny.” and so on.), clean and standardise your lists; I’ll obtain consents from the people on the list (Give permission to mail for an x% reduction in membership/maintenance/subscription fee, which I will make up); and
I’ll market these lists. (Profiling may not be required. One doesn’t need to know the annual household income of a club member when the membership fee is a quarter of a lakh a year.)

My only conditions are that I will have the exclusive contract for marketing your lists; I will get a commission on every deal; and if I can prove that somebody other than me has traded the data, you will have to pay a fine.”

This will undoubtedly take a good deal of time and money. It’ll probably fail a few times before taking off.

On the other hand, investors are supposed to be waiting with money to throw on India’s emergent economy.

Why doesn’t someone import a list expert from the US and start this business here?

Tuesday 17 July 2007

Demented Dialogue

Prospective Client: What databases can you get me? I have a 5,000-seater call centre, which I’m ramping up to 7,500 next week, and 10,000 by the end of the month. I need to give the girls and boys leads to call up.

Anxious Agency Executive: We do five loyalty programmes, for X, Y and Z… and P and Q. That should give you, let’s see… X has 1½ lakh ‘active’ members, Y has 3,000 members, we have some 2,000 odd in P…

PC: Thousands and all my people will finish in a day. I need lakhs.

AAE: I’m afraid then you’ll have to advertise.

PC: Why am I talking to you then? Ultimately, that’s what you guys bring to the table.

AAE: We could help in taking forward the communication with the people who respond to the ads.

PC: So what will you do? All you guys want to do is mailers. That my ad agency can also do. But who has time to read these days. I throw away everything I get. Honestly, when was the last time you read something? Only copywriters read what they write. In India, nobody reads.

AAE: What about your own database? Surely you have a house list, now that you have been in this market for a couple of years.

PC: That you don’t worry about. Tell me what lists you have? Actually, you guys have got your priorities all wrong. Some agencies have understood databases and focussed there. You people just want to do mailers. I’m telling you mailers are dead. Just call and sell.

AAE: You mean you can sell your complicated B2B/financial/health/whatever product over the phone? Without reading anything? Or seeing a website?

Incidentally, when was the last time you called the number on your ad? I called a fortnight ago. It took me three calls to get through. And I am yet to receive the brochure I requested for.

And who told you that direct marketing agencies do lists anywhere? Lists are a separate business in the West. Do you have any idea how many people you need to maintain lists? Do you ask a film director to make film? Or a doctor to make drugs? So why should a direct marketer bring his own list?

And how many times a list has to be rented to recover costs? Do you think any list in India gets hired often enough to make it worthwhile for the list owner to keep it updated?

And how many lists are stolen and sold every day, to the biggest brands? How shamelessly brand managers boast about having other brands’ lists? And how much it’d cost to run a call centre in a legit way?

PC: Throw out this idiot!

Kahan kahan se chale ate hain…

Man vs. computer

My brother was in town to get married and had an interesting observation to make about local train ticketing. According to him the old method of punching cardboard tickets was much than the computerised ticketing we have now. Also, it’s difficult to understand how the railways gain by computerising local train ticketing.

I suppose one needs an Occam’s razor for technology, at least in a poor country like ours: “All things being equal, the solution that uses the least and cheapest technology is the best.”

It also recalls an old joke about NASA spending millions of dollars developing a pen that would write in space (zero-gravity) while the Russians simply used pencils. The story is apparently false, but the lesson is most pertinent.

Wednesday 11 July 2007

Outbound Pizza

How many times has a take-out joint called you and offered to take an order? None has ever asked us. On the other hand, food service is supposed to be among the worst paying professions around. Those delivery boys need every order and tip they can get. Yet they don’t try.

Why not? Why doesn’t the neighbourhood grocer pay a courtesy call when you move into your new home? Or the dubbawala, when you take a new office? Why don’t desperately poor people market their services? Beats me. Something ‘wrong’ with our national character?

Do we find selling dishonourable? Otherwise why do we look down on BTL so? The leaflet is the last thing the customer sees before he parts with his money.

‘It needs to cut the clutter’

Umm, what clutter?

I can’t remember the last time I got a snail mail solicitation, for anything. I get, at an average, two tele-sales calls a week. From the time when I switched to a post-paid subscription, almost the only sales SMS I get is from my service provider, trying to sell me tunes. (Which I never buy. Why they don’t stop trying? A mystery.)

I do get piles of spam in my inbox, but let’s ignore that for a moment (Why? Because spam is so easy to ignore and chuck out).

Fact is, clutter is not the problem at all. If you want proof, just call a relative or friend in the US or UK and ask how much direct marketing material he gets every day.

The points I’m trying to make here are: (a) We should quit bothering about clutter and (b) maybe all that direct marketing needs to do to get attention here is exist.

Decision makers’ list

Is there a business in just listing the names of key people from companies’ annual reports and websites?

Sawai stupid

Sawai means 1¼. So Sawai Man Singh meant Raja Man Singh was 1¼ times as intelligent as ordinary mortals.

A recent episode finds me keen to confer the ‘honour’ on the people who maintain records for a certain mutual fund.

We got four almost identical letters assuring us that the change of address that we had asked for had been made. To reassure us the old and new addresses were printed side by side.

The trouble was (a) not only had we never asked for address to be changed; but also that (b) the two addresses, old and new, were identical. The old ended with ‘Maharashtra India’, the new, with ‘Maharashtra’ - otherwise, the address was unchanged!

What made matters worse was their sending two of the letters to the old address, not that in our case it made any difference at all.

Why did they send the same address-change communication in quadruplicate? Well, one reason was that we have two accounts, and they don’t seem to have bothered to note that.

This miniature misadventure in CRM points to graver problems. First, are we worth half as much as we actually are in their eyes? They do treat the two accounts quite separately.

Second, is it possible that they are over-quoting, among themselves and to the world, the number of investors? If yes, then by how much? We are small fry, but there are surely many big fish, with numerous accounts. What if these accounts are counted as unique investors?

And if this is how things are, how long before they end up misreading the market (reality: I sell off three units; perception: three investors sold their units)?

Perhaps I’m too naive to understand these matters of high finance. Yet, one comes across plenty of such nonsense every day in marketing. Is it impossible that they are absent in more serious matters.