Digital - A Coming of Age

Within any generation there is always someone who is a link between the old order of things and the new.

We’ve just commemorated 100 years since the First World War started, and for me it feels remote, but real.  I didn’t know anyone who served, but my grandparents did who I knew, so I feel a connection.  With the Second World War, things are different.  When I was 10, I remember celebrating at school 40 years since the end of the war.  At 10 that seemed a long way past, but my grandparents served in it and could bring it to life with stories and artefacts.  For my kids though, all of this is a fading memory - stories we tell, but it may as well be like the Battle of Waterloo.

This connection between the old order and the new is explored in a book I’m currently reading called The End of Absence by Michael Harris.  In it, he discusses the time we’re in now and how anyone born after 1985 is essentially a digital native - someone who has never experienced a world without the internet; a world without always on connectivity.  For us others - those born before this time - we’re essentially digital immigrants.  Describing this group, Harris says:-

“For those of us who have lived both with and without the vast, crowded connectivity the Internet provides, these are the few days when we can still notice the difference between Before and After […] there’s a single difference that we feel most keenly; and it’s also the difference that future generations find hardest to grasp.  That is the end of absence - the loss of lack.  The day dreaming silences in our lives are filled; the burning solitudes are extinguished."

This is thought provoking stuff.  Realising that my kids (and a lot of those I now work with), just simply think differently.  They’ve never experienced a time when there was genuinely nothing there.  No kids telly on, nothing on demand, no chat, no connectedness.  When I tell my son to get off his computer, I turn around to see him on his phone.  Kick him off his phone and he’s flicked the telly on.  It takes real effort to switch everything off so he’ll actually consider walking out the door to call for friends… and then they sit around their house playing Xbox.  I tried.

So this got me thinking about the implication of this within the working environment.

For many of us, we work in companies established pre-1985 or staffed with management from before this time.  We have computers, tablets and smartphones; intranets, instant messaging and email.  We even have social networks for staff, with “friends” and wall posts and “status updates”. We’re thoroughly modern and fill every piece of time, every empty space within some activity.  Responding to a ping on the phone, an email arrived - we sit in meetings only half listening as we type on our laptops and then check our phones.  This is a state Harris references and one that writer Linda Stone referred to back in 1998 as “continuous partial attention”.

Yet despite this, we’re not as modern as we like to think.  

Many companies still have a Digital department of some kind or a Head of Digital role - as if all things digital is somehow separate to what we do.  It’s as if we’re in both the Before and the After - one part of the company in the pre-1985, pre-digital age and the other ring-fenced in the digital age.  This does some ludicrous and you can’t imagine a company such as Facebook or Google having a Head of Digital role - they are simply digital companies (although strangely they do).  The point is, the world has changed, people have changed, but the way we do business seems to still be a mismatch of old and new.

This point was brought to life in an article I was reading about airlines entitled Passengers Become Data Mines as Ryanair to Emirates Hone Offers.  In it, Ryanair CEO Michael O’Leary is quoted as saying:-

"I used to say that my ideal customer had a pulse and a credit card, but I’ve revised that view radically. […] In the next five years, with each of my 90 million customers, I’ll know when you’re traveling, where you’re traveling, and I can send you a direct offer.”

This shocked me.  

We’re in 2014, this is a relatively new airline (setup in the 1980’s) and yet it seemed a surprise to them that there may be value in the data they hold and process for 90m customers.  This is though also understandable because companies still aren’t digital natives - they still have their digital marketing and data analysis functions somehow separate to their older, more established traditional sales and marketing functions.  They’re an add on or an extension rather just being one single company.

If we go back to Marketing 101 and the 4Ps of the marketing mix we have Product, Place, Price and Promotion - this was something created in the 1960s by marketer Edmund Jerome McCarthy - a set of marketing tools based on the age but which is still taught today.  

A company like Ryanair has really focused on these 4P’s - it’s “Price” has been refined by pairing back its “Product".  By choosing carefully the airports it uses to get the best rate for a given destination even if it’s not quite the best airport in terms of distance, it has truly honed “Place”.  Promotion you could argue has been a mixed affair, but there probably isn’t a person alive in the UK who doesn’t know the airline, it’s CEO and the kind of message he had long stood for (such as removing toilets from planes).

But within this 4Ps mix, there is nothing about the customer.  It’s the old world order of making a product people want, at a price they are willing to pay - and then shouting about it loudly in the right places.  It’s all push.

Take a look at the new world however through a different lens.

Freemium models support many of the latests products/services, with apps (and some products) giving away their product in the knowledge that they can monetise customers either through targeted advertising or in-app purchases - and this is where data comes into play as a key part of the marketing mix.  Even airlines have a form of this with their ancillary services - the basic service is paired right back and then customers are encouraged to top this up with ancillary services as they need - a kind of pick and mix of products.  This is all pull.  

Speaking of this, CEO O’Leary is quoted as saying:-

"Ryanair’s data will let the carrier know how often travelers head to particular destinations, whether they travel alone or as a couple or group, if they routinely book insurance or car rental, and be able to customize its offers accordingly and target the passengers with special offers […] We know who you are [and] the clever airlines are going to make a fortune in the next 10 years”

This thing which will make a fortune is the missing piece - it’s the digital native addition to the marketing mix.  It’s the bit about the customer, about what they do and about what they want.  

It’s personalisation and it is truly the 5th “P” of the marketing mix.  I’m not the first to point this out, but it really is the difference between the Before and the After.  The increased connectivity and the computing power, scale and flexibility this has afforded, as well as the increased expectation of a customer base in “continuous partial attention” mode means that personalisation is critical to success.

As we transition from companies and people born of this pre-digital age to the next generation of digital natives, there will be change, there will be new ways of doing things.  We cannot stop it but for many of us, and for many of the companies we work for, we’ve yet to embrace it.  In the book End of Absence, Harris says of this:-

“Technology is neither good nor evil.  The most we can say about it is this: It has come. […] We can only judge, only really profit from judging, the decisions we each make in our interactions with those technologies.  How shall we live now?  How will you?"

New Frontier:Unhosted Loyalty - Less big data, more my data

There's an intriguing new application available called Forever.

From a functional perspective it's not ground breaking - it simply provides address book functionality.  What is interesting however is that it does this without actually holding any data.

Of course it manages personal data - it has to so it can bring up a friends address details - but it doesn't persist it.  It keeps your address book in sync and up to date -  but it doesn't change anything.

Forever is a new breed of application known as an unhosted app and this has been defined by unhosted.org as:-

"Also known as "serverless", "client-side", or "static" web apps, unhosted web apps do not send your user data to their server. Either you connect your own server at runtime, or your data stays within the browser"

The application provides a service and works upon your own data, but it never actually "owns" the data.  Instead, you connect your own data store, such as that provided by a personal cloud, which the application can then work with.

In a world where everyone is talking about big data, this really is a breath of fresh air.

Rather than gathering data in bigger and bigger corporate repositories, the data is essentially always owned by the the customer.  Sure, it's probably still going to be hosted by a 3rd party for most people - the average consumer is not going to want to spin up their own homebrew hosting solution.
However, these 3rd party personal cloud suppliers are more akin to the 4th party concept spoken about within VRM - they work for the consumer.

Now, I'm a marketing technologist at heart, so I like customer data because I want to be able to market relevant products and services to that customer - and to be relevant, I need to know something about them - I need their data. However, I don't think that the 4th party personal cloud as utilised by the unhosted app concept precludes this from happening.

We just need to think differently.

If the data belongs to the customer, then we essentially need permission from the customer to access it.  This permission will be granted if the customer sees a worthwhile value exchange for their data and also feels in control of it.  They can grant access and they can revoke it - which side of the fence we're on will depend on what we provide back.

In reality though, as corporates, we don't need huge repositories of personal data despite our quest to build them.

Increasingly the battle field for relevant communications is real-time.  As I spoke about in my last post, technologies like Complex Event Processing and other solutions like collaborative filtering (people who bought x also bought y) are executing at the time a customer is carrying out a behaviour - on that behaviour.  At this point of interaction, we're working with the customer and will have access to their personal data and can use this within the application to make decisions.  Of course, we'll also need large amounts of historical data to support recommendations, but this doesn't need to be "a single customers data", it just needs to be aggregates of behaviours.

Imagine this within a loyalty programme context - one of the biggest aggregators and users of consumer behavioural data.

In an "unhosted loyalty app" context, when I swipe my identity card (4th party identity provider), the retailer would send my purchase information about the transaction to my 4th party personal cloud.  At this point, that data is mine to do with as I wish - it's basically an electronic till receipt.

• I could then choose to connect this data to a 3rd party application that analyses my nutritional intake
• I could connect it to the retailers loyalty programme which would then recognise my purchases and update my connected bank provider (cash or points)
• I could connect it to one or more FMCG/CPG manufacturers who could choose to recognise my purchase of their products (or my purchase of their competitors), and respond to me with relevant offers or rewards
• I could simply connect it to my shopping list app to tick off what I'd already purchased

It's my data, I get to choose who I let see it and for how long - but they don't need to hold it, process it, sell it or bombard me using it.

While this may seem like a step back for companies currently designing big data solutions which will increasingly sweep wider and wider customer interactions into larger and larger repositories, it's actually a giant leap forward.  I'm betting that Walmart would love to see detail on the transactions I've made with Costco.  Or Visa would love to see my spend with MasterCard.  Presently this data will never be shared between these competitors.

However, when it's my data, I can choose to share it with whom I like - my supermarket can have access to my credit card spend (and see who else I spend with) if I feel this provides value back to me.

Why though would a retailer simply give this data away in a format I can use electronically?

Well, ignoring the fact that this will likely be mandated soon by governments, it's also a customer retention mechanic.  When my data has value to me, then I'm more likely to frequent a retailer that can actually provide it.

In the last century, I gave my loyalty to a retailer so they could have my data; in this centuary I'll be giving my loyalty to the retailer so I can have my data back.

In my professional role I design and build loyalty solutions for clients including the backend systems to support these - I'm part of the machine that is gathering big data across wider interactions to help engage and retain customers.  I'm positive about this and it's an exciting place to be, both as a marketer and as a consumer.

I also understand however that consumer attitudes are shifting, government approaches are changing and technology is democratising data - looking out 5 to 10 years, I'm betting it's "My Data", not "Big Data" thats going to be the new frontier.

Rallying cry for innovation - and faith

I've spoken about VRM - Vendor Relationship Management before on this blog and it's one of the topics that I feel is currently mis-understood and undervalued in terms of its future impact on customer relationships and loyalty.  Like many new things, people think it irrelevant, unworkable or simply solving a problem that doesn't exist.  It was great then to see today on the ProjectVRM mailing list, Doc Searls, author, journalist, blogger and VRM evangalist, discuss these challenges and to put them into context.

I've repeated the majority of Doc's post here for those without access to the ProjectVRM list:-

[..] Nobody is ever interested in a new category before it is given shape by applications people want once they see them. Personal computing, starting in '76, was positioned as "a way to do your checkbook and keep recipes." Really. None of the early hardware makers were especially successful, with the conditional exception of Apple, thanks to Visicalc. IBM took a look at Visicalc and introduced the PC in '82. But even then the PC succeeded in business in part because Attachmate and other companies sold micro-to-mainframe cards that turned $2500 PCs into $1000 IBM 3270  and DEC VT-100 and -200 "dumb terminals." But by then Visicalc had a foothold, as did Wordstar and DOS. Lotus 123 picked up where Visicalc left off, and a wave of applications followed. The Mac succeeded in part because of Quicken, which really did, finally, eight years after PCs were born, make balancing a checkbook easy. Quicken was an invention that mothered necessity, as were the rest of the early programs. Still, business dismissed PCs from '76 to '82, and ordinary people dismissed them until at least '84.

Likewise the Internet was nowhere until graphical browsers showed up. We forget that Bill Gates saw no way the Net could make money for itself, or anybody, until it was clear that Netscape's browsers and Web servers would threaten Microsoft to the core. That was in '95, when the Net's protocols, which we still use today, were up to decades old. Smartphones were Palm's idea, but not many people took advantage of the apps on them, because they were too hard to get and use. Once Apple showed how it could be done, the market exploded. That was more than a decade after Palm began. I remember an early VRM meeting at Berkman where Paul Trevithick said "Nothing that requires a user install will succeed." That was true, then. But not long after that, Apple made user-install easy, Google followed, and now all of us install apps with ease all the time. Yet it would be easy to say there was no appetite for the Internet in '93, or smartphones in '05. All we needed were inventions to mother necessity.

So, likewise, it's easy to say nobody cares about managing relationships with vendors, because, obviously, they don't. Or, do they?

What about the stacks of loyalty cards people keep on keychains, in their wallets and purses, or in the armrests of their cars? That's a crude form of management. What about clipping and carrying coupons, or spending hours or days adding up "points" from credit cards to trade in for miles on airlines? (I have a friend who is obsessed with doing that.) What about going over stacks of receipts and trying to match them up with credit card bills — arduously reviewing old calendars to see what we did and when, so we can minimize our tax hit? Is there no management in that?

Think of all the pain points any one of us deals with in relating to vendors — or anybody. All those pain points are potential business opportunities. Not all of them will be pursued, but none of them are worth dismissing because nobody seems interested in dealing with them now. As Henry Ford said, "If I'd asked people what they wanted, they'd have said 'faster horses.'" To my Irish grandmother growing up in The Bronx, the biggest problems were horse manure piling up in the streets and the danger of fire from gas light. Neither problems were relieved by the industries of the time. Yet both horse-drawn wagons and gas light were obsoleted by new inventions. 

[..]Everybody manages data today already.

We do it with folders on our hard drives, with bookmarks and tabs in our browsers, with boxes in our mail programs, and with every online service that organizes files for us. Are all these in such a complete and final state that they are un-improvable? Or is there opportunity here for many kinds of new approaches? Again, it's easy to say "nobody is interested." But it's not wise to bet against relieving whatever causes people pain. Or what opens up new opportunity where almost nobody is looking.

[..]

And most of us don't care about advertising. (Though some do, and we respect that.)

Fixing advertising's problems, or pursuing its opportunities, is almost entirely a vendor-side issue. My own attitude toward advertising is kind of like Ford's toward horses and trains: those things will keep doing what they're best for, and we'll go invent something else. My guess is that, if VRM succeeds, it will help brand advertising and hurt adtech or alter it for the better. But VRM's purpose has nothing to do with any of that.

Still, business senses that we are on to something here, so we can't help talking about it, and, in some cases, getting invited to conclaves where advertising is a big issue.

For example, yesterday I attended one of those things here in New York. The word "intention" was used a lot. The context was using "big data" to "intuit" what customers "intend," without ever having to listen to what those customers want to say, directly, to the "brands" doing the advertising. So the talk was about "listening in" on "conversations" among "consumers" in "social spaces" so those consumers could be "delivered" a "better experience." It was the sound of one hand slapping, not two hands clapping. A few voices  from within the business were raised, saying "Are we listening to ourselves? Do we not realize that we're abusing people's privacy, and that this will have consequences?" As usual those voices were mostly not heard. But the wilderness from which those voices were raised is called the marketplace. 

Are those voices pointing toward actual requirements, as you suggest? Well, let's look at what the market is already doing.

Today the most popular browser extensions are ones that block advertising and turn off tracking. Governments (especially in Europe) want to switch off tracking altogether, because their citizens are tired of it. These are significant trends. Look up "privacy" on Google or Bing and see how many results you get, and the order in which they are prioritized. Is there no market for solutions here?

Personally, I don't want legislative relief. Anti-adtech laws today will protect yesterday from last Thursday with legal code that won't change for decades, or perhaps ever. On the whole that's not good in a vital and fast-changing marketplace. I'd rather come up with technic fixes that will take care of business without new laws. (Though perhaps with legal decisions based on standing laws. Those are likely to happen in any case.)

Finally, just because a glass is 1/Nth full doesn't mean that it's X/Nths empty, or can't be filled. Faith, St. Paul tells us, is "the evidence of things unseen." Without it we wouldn't have civilizations, or markets. There would be demand only for the hides of animals and sharpened rocks.

VRM isn't complicated. It's only about giving customers means toward two things: independence and engagement. To see how that can be done, one needs to stand on the side of the customer. So that's what we're doing. 

Tesco ClubcardTV part of a new trend?

When it comes to innovative ways of going to market, airlines have traditionally been the bellwether.  From basically creating the modern day, database driven loyalty programme through to their innovative yield management for maximising profits, the airline industry typically sets the standard that all other industries follow.

So when someone like Jeff Katz, (Currently CEO of Nextag, a global digital shopping network and former VP at AA/CEO of Swissair/CEO of Orbitz) highlights another trend in the airline industry that's likely to cross-over into retail, it's worth paying attention.  

In a recent article for Fast Company entitled "Fasten Your Seatbelts: The Future of Shopping Looks a Lot Like Airline Travel", Jeff describes how over the last few years, airlines have basically deconstructed their product offering to provide the cheapest price for the base commodity - an airline seat.  All the value add elements such as luggage allowance, in-flight meals and seat selection have been stripped back and then re-purposed as benefits which can either be montised to those customers who value them, or used as recognition rewards for valuable customers like frequent flyers.

Discussing this, Jeff says:-

Airlines have taken a commodity (a seat on a plane) and caused us to change our view about what we’re buying and how we’re buying it. It’s no longer about buying a product at the cheapest price, it’s about selecting and paying for a package of services that we value most--from an aisle seat, to a faster security lines, in-flight meals, rewards for frequent patronage, or in-flight Wi-Fi connectivity

He then goes on to discuss how retail may actually start to follow this trend.  Deconstructing the retail experience and then rebuilding it with additional, value add options that customers can either buy into if they value them or be provided with for free if they are frequent shoppers.  

It's hard to imagine right now how this may look as you can't really see a clothing retailer "unbundling" their changing room or a supermarket "unbundling" their late night opening hours.  However, as technology improves and customers are able to shop using their own smart phones such as in the new Sainsbury's "Mobile Scan & Go" initiative, you can see how this suddenly changes the landscape.

Being able to scan goods and simply walk out of the store, bypassing tills is a real benefit.  Scanning products as you shop allows for personalised pricing, so elements of yield management can start to be introduced - scanning an item with a longer shelf life remaining could actually cost me more for example.  Tying this into the loyalty programme like the airlines do could allow for certain products or product ranges to only be available to loyalty card holders or to be bundled differently so that a "Silver Tier" customer gets a free bottle of wine with their ready-meal which a normal customer doesn't.

However this manifests itself, I agree with Jeff that this unbundling trend that airlines have started (and which Ryanair continues to push the boundaries on) will cross over into retail and some retailers are already putting a toe in the water today.

Online retailer Amazon for example is already doing something like this today with their Amazon Prime offering, providing customers with additional benefits, including free shipping, a free book rental per month and unlimited instant streaming of movies and TV shows.

In the UK, Tesco is trialling Clubcard TV, a service for its loyalty card holders which, like Prime, looks to provide free entertainment content in recognition of their customers continued loyalty.  The website describes it as:-

"Offer[ing] thousands of movies and TV shows for free. There are no schedules, no subscriptions, no fees – as long as you are a Tesco Clubcard customer and you have access to the internet, you’re free to enjoy Clubcard TV"

Also like Amazon Prime, Tesco "Delivery Saver" provides free delivery for online grocery orders for a single, upfront payment.

Whilst these offerings are more about bundling products to enhance the retail experience rather than unbundling them, it does demonstrate how the retail experience is being taken wider than the basic shopping experience.

It's clear that competition is increasing and retailers are always looking for more ways to deliver the right value to the right customers.  If unbundling/bundling can create a differentiated retail experience, catering to the price conscious consumer at one end and the convenience conscious consumer at the other, then it's a trend that's sure to continue.

Feast or Famine: The next move for Netflix?

Something interesting happened recently in entertainment; there was a slight shift in the balance of power.

Netflix, traditionally a channel for reaching the content of other networks  became a producer in their own right.

Their new production, "House of Cards" was a shot across the bow for the likes of HBO and more traditional networks and at the moment it seems their $100m gamble is paying off with generally positive reviews.

A Netflix spokesman is quoted as saying:-

"We’re not releasing any data, but we are happy with the reception the show has gotten in the media, on social media and from our members in reviews"

This is a big deal for Netflix and they know it.  Ted Sarandos, Chief Content Officer is quoted as saying:-

"The goal is to become HBO faster than HBO can become us."

While this is interesting for the entertainment market, what's more interesting for me is the potential impact this series will have on both customer acquisition and retention for Netflix.

Clearly, unique, exclusive content is a major acquisition tool for Netflix, helping them draw in both new and lapsed customers.  This is a tried and tested model used by the likes of BSkyB who would in many cases pay over the odds for subsequent series of shows like 24, Heros or more recently Mad Men that had previously aired on free-to-air channels, hoping to bring those hooked customers across in the process.

Indeed, customers such as respected blogger Dave Winer who had previously (and publicly) turned off his Netflix account then made an about turn and switched it back on specifically because of this new content.

So there is no question that exclusive content can be a big draw for new customers.  However with "House of Cards" Netflix is also chalking up another first.

They have launched the whole of the House of Cards series in one go.  Original programming made available like a box set from the get-go.

This is really significant as traditionally broadcasters would utilise a high profile series to draw in audiences regularly at an appointed time; keeping viewers restricted and waiting with baited breath for the next episode.  For commercial broadcasters these episodes would be timed to maximise the audience and hence the revenues from advertisers.  It would also provide the opportunity to gain from the halo effect of viewers staying tuned into the channel for longer pre/post airing.

For Netflix however, this doesn't matter;  their revenue comes from subscriptions, not advertisers.  Without this restriction they have provided a veritable feast of television, allowing subscribers to binge on the whole series in one sitting if they like.  Whilst figures aren't available from Netflix directly, it has been reported that a "significant portion of fans binged on the entire series in the first weekend".

It's worth contrasting this with another form of entertainment, that of social games.

I'm currently hooked on the popular social game "Clash of Clans" which uses all of the best gaming mechanics to keep me playing, progressing and in the flow.  The more I play the more I unlock.  If I had access to everything all at once - if I could feast on all it offered - then I'd tune out pretty quickly.  It would be fun, but there would be no challenge.  Instead, they try to balance the game play, including the strength of foes I have to battle based on my current experience and level achieved.

In discussing the winning formula of the game design, the blog Deconstructor of Fun highlights how the game supports different types of play, saying:-

"Not all of the parts of the core loop are equally important as the importance of each part is influenced by [the] player's ongoing goal in the game, which creates different style[s] [of] game play [,] from resource gathering and building, [to] heavy [and] active battling"

Creating this "flow" within social gaming that ensures players are hooked with a fun and entertaining experience takes data.  They need to constantly monitor usage of the game and adjust the mechanics as users progress or they see usage drop at certain points.

Now Netflix are not short of data but i'd argue they're not really getting the maximum value from it as game designers do.

They are well known for their detailed data analysis of their customers viewing habits in order to serve up better and more targeted content.  Currently, around 75% of Netflix customers select content to watch based on their recommendations and Netflix aim for this to be higher.  Mohammad Sabah, Netflix Senior Data Scientist is quoted as saying:-

"The ultimate goal is to show Netflix customers content they’ll view to completion and then recommend the next thing they’ll view to completion"

The problem Netflix have though is the classic situation all retailers face; the consumer has choice.

There is an increasing plethora of streaming services and so whilst recommendations are important and so is exclusive content, the real key is that consumers "value" Netflix.   The stickyness from content only lasts for as long as the content is "exclusive".  Letting customers essentially burn through that exclusive currency too quickly may in fact reduce the time period its effective for but also the extent to which customers actually value the content.

PSYBLOG recently reported on an interesting study that looked at how consumers valued chocolate based on how they consumed it.

In the study, the consumers were split into 3 groups with one told to give it up completely for 1 week, the next given a big bag and told to gorge and the final group, acting as a control, given no chocolate related instructions at all.  At the end of the study, the groups were given more chocolate and asked to rate the experience.

Those who abstained reported getting more pleasure from the chocolate than either the gorging group or the control group.  Not only that, but they also savoured it more - in essence they valued it much more because they'd been restricted.

Getting the balance between feast and famine is key to keeping customers involved and ensuring they continue to value your product/service.  

It's early days for the Netflix experiment but it will be interesting to see if they start to introduce some of these restrictions on consumption to gain additional loyalty; managing the flow of their customers.  You could easily see top rated Netflix consumers - those who watch more shows, over more hours and engage more with other viewers via social media - being given the ability to watch new exclusive content more quickly than others.  This would then provide social currency into the mix, ensuring those customers stay loyal longer and encouraging others to strive to level up.

If you want to stop your brand falling down like a House of Cards, it's worth looking at how game mechanics can strengthen those bonds.

Game mechanics are not just for games.

Whats next for loyalty in 2013

What's my prediction for the big thing in loyalty in 2013? Two words...

User Experience

Increasingly the way we do things has changed.  Smartphones have enabled us to find "an app for that" and those apps are getting better and more easy to use with every release.

This is not just about design or how it looks - it's truly about the overall interaction.

Yahoo get this.  When recently hiring ex-Google team member Marissa Mayer, Yahoo! co-founder David Filo said

"Marissa is a well-known, visionary leader in user experience and product design and one of Silicon Valley's most exciting strategists in technology development" going on to say "[the appointment] signals a renewed focus on product innovation to drive user experience and advertising revenue for one of the world's largest consumer Internet brands"

Microsoft also get this with the recent release of their Metro interface across platforms for Windows 8 showing how user experience is now front and centre of their operating systems.

Although Apple is lauded for it's hardware design, any user of it's software knows that this design doesn't always flow through everything they do.  Indeed, Bill Flora, one of the designers on the early prototypes for the Microsoft Metro interface is quoted as saying:-

"I have found their hardware to be amazing and sophisticated, and I have found their software to be kind of old school"

Apple know this and with the recent shake-up, Jony Ive, the man behind the iMac, iPhone and IPad hardware will now also be looking after human interface design and you can bet that's going to give a real shake-up to the overall iOS user experience.

A designer working at apple is quoted as saying:-

"You can be sure that the next generation of iOS and OS X will have Jony’s industrial design aesthetic all over them"

User experience is important in all interactions, it's not just about online or digital experiences.  Take a look at the humble POS receipt below and how this has been reimagined both visually and for the enhancements it makes to the overall user experience:-

 

Created by design consultancy BERG, this is a great example of how an everyday customer interaction can be completely transformed.

Earlier in 2012, Kickstarter project Mail Pilot successfully secured their funding from over 1,600 backers for their redesign of email claiming "Email is in need of a fresh start.  A redesign from the ground up.. [Mail Pilot] intuitively works the way you've always wanted to use email"

This is the real essence of user experience design, creating interactions and user experiences based on what users and customers want to do and making that easier for them.

Within loyalty, when we talk about terms like gamification and how these are changing the face of loyalty, most commentary is about the mechanics.  However what gamification is really doing is improving the user experience.  It's making loyalty programmes more responsive, giving users feedback on what they've done, what other users like them have done and providing easy to interpret pointers about what to do next.

We increasingly rely on real-time feedback to understand when something has happened,  whether thats a button depressing when clicked or a screen moving when dragged.  If we didn't see things change in real-time with our actions and gestures we'd be unsure as to whether the application had interpreted our request and may try again.  Either way, if we didn't get feedback we'd eventually just give up.

The same is true within our marketing programmes.  Increasingly the user experience is what sets us apart from competitors.  Making things easy, engaging, responsive, fun and useful is critical.  

This is something i'd previously spoken about back in September when looking at how Pinterest was creating loyalty and longer engagement through immersive discovery and basically, a great user experience.  It's also something that we're increasingly seeing creep into B2B interactions as evidenced by CBA with their Pi payments solution.

One of the clear leaders in this area last year however has to be PayPal and their re-imagining of how customers interact with money and the development of a solution for the PayPal Digital Wallet that works the way customers think, not the way banks do. 

I think 2013 is when we'll see the real battle lines being drawn based on user experience and how this sets the leaders apart from the laggards.

Curiosity = Loyalty3

cu·ri·os·i·ty - noun
1. A strong desire to know or learn something.
2. A strange or unusual object or fact
3. An app that has hooked over 500k people

That last point is strongly linked to points 1 & 2 and also provides some interesting lessons for loyalty programme design.

In case you missed it, Curiosity is a new iOS and Android app in which people slowly destroy layers of a huge cube with the mission to reveal what's inside.  It's like a multi-player pass the parcel in which there can only be one winner.


The cube is apparently made up of 64 billion tiny blocks which users have to destroy one block at a time until a single layer is completely removed and then they begin on the next layer.

Thats it - In terms of gameplay, it could be argued that it's a little lacking.

However, if thats all you got from it - a Zen like feeling from destroying blocks and making patterns in them - then I can't imagine it would be anywhere near as popular as it is.  Instead, the game locks onto some powerful gaming mechanics employed by more complex ecosystems like Farmville to provide a rewarding and addictive experience.

These can be summarised as:-

• Social - Everyone taking part - like a shared experience.  Connect it with your Facebook account and you can see how your friends are doing.
• Reward - There is something to aim for even though no one knows what that something is.
• Gamified - There is skill involved and you can "level up" to get a perceived advantage.  Destroying more blocks earns coins and these in turn can be traded for tools to destroy even more blocks.

It's these 3 points combined that make Curiosity both an interesting take of gameplay as well as a great model for Social Loyalty.

People will download and play with the app for different reasons, either because they've heard about it and are curious (social element) or are intrigued by the possibility of the final prize (reward).

Whichever path brings them into the app, both then play a part in retaining them.

The "gamified" element though is also very important in keeping people playing - essentially keeping them loyal.  Users will very quickly tire of simply destroying blocks one at a time.  Instead, by recognising their activity and rewarding this with coins that in turn can be used to purchase tools to increase their activity, Curiosity is looking to maintain "flow" in the gameplay.  Keeping users somewhere between boredom and anxiety.

This is enhanced further, as these additional tools give users an advantage over others, something expressed within the social element by being able to compare your stats to friends.  Solo gameplay is rarely as rewarding as that played against others.

Just using these 3 simple mechanics, Curiosity shows us in a stripped back, minimalist way how to engage and harness peoples attention.  There's no fields to plough, crops to plant or farms to build - it's as basic as it gets, and yet it still works.

The lesson for us in loyalty is that it's not about how complex your programme is or how many rewards it has - it's all about the design and how this too can engage and harness the customers attention.

Many loyalty programmes today are one dimensional - simply using rewards as the mechanic to drive people forward.  Increasingly though Social Loyalty programmes look to harness the power of social currency as expressed and magnified through a gamified experience to add depth to the programme and turn into into a more rounded, 3-dimensional experience.

It's Loyalty³.

Intent casting shifts balance of power (and Facebook dips a toe)

Back in 1980, Prof. Allan Schnaiberg wrote about a theory he'd developed called "The Treadmill of Production" which was in part used to explain the drastic changes in US production quantities and/or qualities after the second World War.  It suggested how advances in technology, driven mainly by producers seeking increased profits allowed them to invest in new technologies which further increased production which was necessarily then matched by an increase in consumption.  This created an ever growing cycle as more efficient production required further economic growth to offset unemployment created by the previous mechanisation.

At a simple level it suggested that it is not demand from the consumer that drives supply but rather supply that creates the desire for demand.  In the paper "Interrogating the treadmill of Production" it went on to discuss  the focus of the theory on the production side rather than consumption side and the fact that consumers can only consume what is produced saying:-

"Consumers may opt not to consume specific produced items.  But they are not empowered by market processes to determine how such items will and will not be produced."

Ignoring the environmental aspects of this (as the ToP theory was focused on how this impacted the environment), it's interesting how this power play between producers and consumers may be changing in the sense that consumers are increasingly being given control of production.

Traditionally there was no way to access consumer needs in any formal way and so producers would create mass-market products based on limited market research studies.  However, technology is changing that allows consumers to provide feedback on products that don't yet exist, create demand for new product ideas and even to create their own products.

The concept of "Intent Casting" is one way this is manifesting itselt, with consumers able to create and issue their own personal RFP for a product or service they want and for producers/suppliers to be able to respond to this.  The website AskForIt for example allows consumers to ask for anything and through social sharing, to gain support for this from others.  Another website called OffersByMe allows you to indicate what activity/service you want and how much you're prepared to pay for it - offers are then shown/sourced based on this request.

It is probably home services which is the biggest growth area for intent casting however with services like Thumbtack allowing the consumer to indicate the service they want (plumber / electrician / etc.) and to then receive quotes from local tradesmen for the request.

Facebook has recently extended into the area of intent casting by extending it's "Like It" button to include a "Want It" button.  This allows consumers to indicate products they want which are then added to collections.  They, or more importantly friends can then reviews these and click through to actually buy then.  While at the moment this is more of a wish list function, I suspect it won't be long before Facebook are mining these "wants" (or essentially consumer intents) to provide relevant offers from other service providers.

Intent casting for existing products and services is just the start of it though.

Crowdfunding website Kickstarter is opening up to UK projects at the end of this month, allowing anyone with an idea to sell it to consumers before they've even produced it.  In this model, intent casting actually starts to drive production as users on Kickstarter essentially help to bring the product to the market through demand (and donations).

Consumers can also now take a step back even further and become producers in their own right.

CreateSpace by Amazon is one of a number of companies that allows consumers to create their own books and to have these professionally printed on demand.  Website Ponoko takes this even further, allowing consumers to become producers with physical materials.  The user submits 2D and 3D designs and can then have these custom manufactured in over 80 different materials.  These products can then be listed and sold via the Ponoko website and custom manufactured on demand based on each individual order.

Brands such as Nike have also experimented in this area, allowing consumers to design their own trainers and have these uniquely produced.

Finally, new technologies are letting the consumers actually manufacture their own uniques goods on demand, in their home.

3D printers are now becoming commercialised to the extent that early adopter consumers can now purchase them, with brands like MakerBot and Cubify leading the charge.  The BBC recently reported how Disney Research is looking into how toys can be designed that can only be produced with a 3D printer due to their unique characteristics and controversial file-sharing website Pirate Bay is starting to host what it terms "Physibiles", or 3D printable designs.

It doesn't take much to see how all of these trends may ultimately come together, allowing the consumer to find products that don't yet exist and express a preference for them to direct what ultimately gets produced or is simply produced on-demand, whether by a 3rd party or at home.

This won't slow down the treadmill of production (and it's environmental impact), but it may change the economics and dynamics of it.  Given that "a key dimension of power is the ability to influence, if not dictate, the choices of those less powerful.", giving consumers more direct choice and the ability to state their intent is certainly a step forward.

5 Reasons why Evian "Smart Object" creates a new CPG loyalty solution

Apple basically invented the phrase "There's an app for that" and promptly trademarked it.

Whilst a catchy advertising line however, what it neatly demonstrates is how Apple popularised the concept of small, situationally specific applications that do a single job very well.  Whether it's a mapping app, a camera app or a Scrabble app, people now have on average 41 different apps installed on their smartphones.

This trend though may not just be limited to smartphones and tablets.  There seems to be an emerging trend of "smart objects" or essentially real world apps.  Situationally specific devices which perform just one task and are starting to be used by brands to connect customers directly from the point of need to the point of supply.

Start-ups like Green Goose have been creating ways of connecting the physical world to the online world through their smart sensors and this is part of trend known as the internet of things, something i wrote about 12 months ago.

The world moves on however and so it was interesting to see that Evian in France has just launched their own real world app in the form of a fridge magnet that will place an order for a water delivery when pressed, simply using a wifi connection to do it.  Developed by French company Joshfire, the device was developed from scratch to provide this unique proposition - and potentially a new loyalty solution.

 
A previous example was launched by a pizza company in Dubai who had a fridge magnet that would automatically order your faviourite pizza when pressed and I suspect at the time was seen more as a novelty.  However, a major global brand like Evian changes the playing field a little.

There are 5 main reasons why this more than just a sales promotion novelty and has the potential instead to be a powerful loyalty mechanic.

1. Direct Channel - It allows Evian to build a direct connection between the customer and the brand, disintermediating the retailer from the solution who would normally "own" this relationship.

2. Reduces Price Sensitivity - For some CPG categories, as much as 88% of all sales can be while the product is on promotion so anything that takes price out of the equation will be welcomed.  This solution provides a simple way for a consumer to just make a purchase without comparison of competitor/promotional pricing.

3. Reduces Paradox of Choice - It's no surprise that consumers find it hard to stay loyal.  In the water category alone, a top UK supermarket has 55 still water options and 25 sparkling.  Having just one decision and one button to press makes that choice simple (and you don't need to carry it home!).  This "one-click" decision works for Amazon online and has served them well; it's almost as frictionless as you can get for a purchase process.

4. Point of Need - As marketers we're always trying to get to the consumer at the point of purchase.  This is why mobile and location are such hot topics - if I know when you're out shopping and near my store I can remind you I exist and send you an offer.  How about being there though when the customer first gets a need - when they run out of something, before they even head to the shops?
This is what the Evian solution provides.

When I've poured my last glass (or better still opened my last bottle), I just press a button to get another supply.  This potentially provides a direct dialogue with customers at a key point of need and a customer who has just consumed something is going to be much more open to a re-purchase (assuming they were satisfied).

5. Reward and Recognition - Although not part of the Evian solution at the moment, this is potentially the most powerful opportunity that this kind of solution opens up.  Being able to simply say to customers "this ones on us" is a really strong loyalty mechanic and would be very simple to implement.  Better still, there is no need for customers to enter on pack codes, collect labels or send in receipts - you have all the data you need, immediately.

Loyalty is all about reducing friction in a customer relationship and I think this Evian smart object is a fantastic example of how to do this well.  It won't work for every brand, but whether its a button for nappies in the nursery, toiler paper in the bathroom or beer in the games room, the opportunity for this solution is potentially massive.

To infinity and beyond - Engaging consumers through immersive discovery

Have you noticed a subtle change in how you browse some content online?

For many sites, you no longer have pages of content that you need to navigate with "next" and "previous" buttons.  Instead as you browse the content and start to reach the end, new content is simply loaded in underneath.  Social networks like Twitter and Facebook are big users of this technique, as is Google if you're searching for images.

Infinite scrolling as it's technically known is also being used by some commercial sites.  Amazon for example is trialling a version of it with it's Windowshop offering which is still in beta.  Although it works on standard PC browsers, it comes into its own on a touch based tablet such as the iPad where the Windowshop app allows you to simply explore the store by navigating what appears to be a borderless page jammed full of visual eye candy.

And it's this eye candy that really works well, enabling us to scan through hundreds of images until something catches the eye.  There is no purpose to it - sure you can search, but that kinda misses the point.  This is all about the browse experience.  You're supposed to just sit back and window shop, literally.

Amazon describe this as "[a] new experience [..] designed to make exploring everything from books and toys, to video games and gym equipment easy, fun, fast and convenient for iPad owners"

It would be wrong though to see this as simply another way to view content; instead, this immersive discovery moves the user experience from a functional activity to a leisure activity.

Whereas you would normally go to Amazon to make a purchase and would use it's search functions to find the item you were looking for, the Windowshop is instead  something you do with almost no purpose - like watching TV, browsing a magazine or watching the sun set - it's about filling time with something enjoyable.

This is a really interesting difference and something I think could be leveraged by anyone with a large amount of content, whether retailers, publishers or even loyalty programmes with rewards.  Moving the users mindset from "doing" to "enjoying" has the opportunity to create greater engagement and give you a slice of if that finite resource - attention.

One of the leaders in this area has to be Pinterest.  It has turned immersive discovery through its infinite scrolling from a convenience feature into a real engagement mechanic.

At over 97 minutes on average per month spent on the site by each visitor, Pinterest is a highly sticky user experience - and all it does is let you browse images.  This compares to just 21 minutes for users on twitter and 3 minutes for those on google. Only the behemouth that is Facebook exceeds this  time - by a mile -at 405 minutes per month per visitor.  When viewed per visit though, Pinterest does even better, clocking up 15.8 minutes per visitor on average compared with just 12.3 minutes for Facebook.

So what's different?

Well Pinterest have taken infinite scrolling to the next level by using different image heights and laying these out with what is known as the masonry layout.  This essentially allows them to show images in a more natural, engaging layout that doesn't feel like a fixed grid.  The real benefit though of the masonry layout is the fact that there is no clean cut line - no easy place for the user to abandon from.  By showing the following images just peaking out from below the fold, the user is more likely to be intrigued by something they can't quite see and will scroll down a little more - and so the process repeats.

Another thing that works for Pinterest is the fact that there is essentially no ordering from good to bad.  In a traditional search result, the returned set is ordered by something such as ratings, value, recency, etc.  This means that after a few pages, if you see results that you're not sure about you'll feel like you've hit the bottom, even if there is more content to go.  With Pinterest however, the pictures are all mixed, some good, some bad, some intriguing, some boring.

You don't know what you'll find on the next page, but you get a peak of it thanks to the masonary layout.

This is the difference between searching and browsing; between doing and enjoying.

With search, you want to bring back the minimum amount of results matching the search criteria - it's about pinpointing exactly what the user is looking for.  With browsing however, the user experience is very different.  The user is simply looking for something that catches their attention and so if you put all the good stuff at the top, they are unlikely to keep browsing.  However, if you seed the good stuff, the most popular items throughout the browsing set then the user will continue to be surprised.  They won't know what's coming next but they'll want to find out more, to browse more - to engage more.

Sure, let the customer find exactly what they want when they want it - but also just let them explore and have fun.  Its the immersive discovery experience you're looking for and it fills a different need for consumers.

I think Pinterest has set the bar high on immersive discovery using its clean design, masonry layout and infinite scrolling - but it has also shown a new way engaging people and engaging with content.  Changing the user experience from one of "doing" to one of "enjoying" and gaining a greater share of attention makes this something really worth exploring more.

3 reasons why CBA Pi pivots retail

Commonwealth Bank of Australia have just launched a video showing their new merchant payments solution called Pi.



This is truly interesting for a number of reasons:-

1.  As with previous innovators in this space such as Square, they are bringing together a number of different parts of the value chain within a single platform.  Watch out if you currently make money out of ePOS, stock control or loyalty!

2. They are creating a platform which is both open and closed - just like Apple.  It's open in that developers can build custom applications that add value (it's based on Android), but closed in the sense that CBA own it and will ultimately control it.  This is not something I've seen before from Square or PayPal.

3. The platform blurs the boundary between the user (the retailer) and the customer.  Any payment terminal allows interaction with the customer, but normally only in the sense of identifying themselves or possible picking their chosen payment type (check / credit account).  With Pi though the customer can truly interact, chosing for example how to pay amongst friends and I would assume select how they want to receive receipts.

The increasing use of tablets within the retail space is opening up more and more opportunities to create engaging customer interactions.  Unlike dedicated terminals or tills, with a tablet the scope is limited only by the imagination of the developers.  By CBA providing a platform like Pi that allows developers to create new functionality they benefit by having a constantly evolving merchant solution which they control.

CBA say on their website, "Pi is the future of business".  I'd argue it's also possibly the future of ePOS, e-receipts, acquiring, stock management, loyalty and anything else the merchant may think of or need.

Loyalty design - Treat it "lean" keep them keen

I was on a training course the other week learning about Agile Scrum which is a "lean" software development methodology that looks to develop software people actually want and need.

The traditional approach to software development (known as waterfall) requires users to provide their input up front. This is then used develop requirements that are passed to developers who write the software. The written software is then passed to testers to make sure it works.  The completed, tested software is then installed and unveiled to users - possibly 12-18 months later... who then say "that's not what I wanted".

Using Scrum changes this in a number of ways.

Firstly, it mandates that the business (as represented by the Product Owner) and developers work closely together (daily) on the development of the product.  Next, it stipulates that software is developed in chunks or sprints (no more than 4 weeks long).  This short time frame allows for a small number of important features to be developed, but ensures that if anything is going in the wrong direction it is caught early.

After the sprint is finished, there is a review which allows the team to show off what they have built so far as a releasable product to the wider business/users.  This then allows for comments and feedback so that subsequent sprints/releases can incorporate this.

Using this methodology allows us to ensure that what we build is always based on something useful and allows us to fail fast - and learn from this.  Most importantly though, it allows us to build something the users actually want and need in shorter timescales.

This approach though shouldn't just be limited to software development.

Within loyalty programme development the approach can be the same.  We speak with users initially; carrying out research studies and focus groups to understand what they want (or think they want).  Programmes are then designed, developed, implemented and launched - at which point we involve the users again, hoping they might actually participate.

The problem with this approach is the same as with waterfall software development - the potential for an incorrect perception of what consumers actually want and an inability to separate out what they say from what they do.

For example, a recent WorldPay Report entitled Perfect Passenger Payments highlighted the misalignment between what factors airlines think are important to consumers and what consumers feel are important.

Within the report, airlines stated that the #1 factor for customers was the "Overall speed of the online booking process" (96%), closely followed by the "Website functionality" (80%).

Customer however sited "Ease of finding flights" (89%), "Clear, upfront pricing" (88%) and "Confirmation/After-Sales support" (85%).  Overall, "Speed" ranked 7th and "Website Design" was down at 12th position.  Worryingly, while 85% of customers said after-sales support was important, only 18% of airlines felt this was important to customers.

This disparity between what customers want and what airlines think they want is reflected in how customers are consulted.  Within the research, less than 40% of the airlines spoken to said they consulted customers on the booking experience - and even then, only "periodically".

Sometimes we think we know what's best for our customers when really, we're simply thinking about what's best for our business.  Using "lean" methods is one way to join these two requirements together.  Building and launching a small number of features and functions, quickly and cheaply provides a way to test and learn with customers.

In a recent article on Tech Crunch called "How to create a minimum viable product", Emre Sokullu, founder and Chief Architect of GROUP.PS said:-

"Perhaps the biggest mistake I’ve made at GROU.PS at its initial phase was to add way too many features onto it. [..] The result? An unstable product which was trying to do too much and poor user experiences due to an overwhelming set of functionalities."

Whether you have an mature loyalty programme or are just starting out, using "lean" methods to develop, deploy and decide on features and functions will help your programme become innovative and forward thinking; letting you learn quickly, fail fast and keep customers keen.

Balancing big data with a big voice

Back in the day, loyalty communications were pretty simple.

You got a Welcome Pack when you joined and then periodic points statements after that.  The statements may have contained some offers, and if you were really lucky, these may have been personalised in some way.  Some people really pushed the boat out and sent individual mailings with specific offers, normally in response to a lack of behaviour, trying to get you back in-store.

Then email arrived and it became much cheaper to be relevant - or so we thought.  In practice it just became much cheaper.  Emails were sent, even if there wasn't anything particularly relevant to say and if you didn't like it... well you could always opt-out.  So what happened to that dream of 1-2-1 marketing?


Quite simply, it's actually pretty hard to be relevant all the time.

Sure you can use analytical techniques to target customers who you think have a propensity to do something.  Or you can respond to customers with trigger marketing based on their behaviours (i.e. not purchased in a little while) and send an email to encourage them back.  However, for regular communications it's much harder to create customised content for each member based on their exhibited behaviours - for many programmes it's just too hard (or costly) to be relevant.


But there is a simpler way - just ask the customer what they'd like through the use of a preference centre.

With an increasing number of channels and ways of interacting with customers, a simple opt-in/out marketing permission doesn't really cut it any more.  Customers are being trained by social networks like Facebook that allow them to manage who can access their data and for what purpose.

For example, with a simple Facebook wall post I can choose whether to hide that post or not, increase or decrease further posts from that friend, unsubscribe from further communications from that friend or unfriend them completely.  With apps, I get further choices - deciding whether that app/partner can for example access my personal information, access my friends or post on my wall.

LinkedIn go one better and intelligently look to help you control preference.  If you subscribe to a group on LinkedIn and opt in to receive updates via email, LinkedIn will proactively dial-down the frequency of communications if you haven't visited the group for a while.


Preference centres essentially help to manage this by giving customers control over what communications they want to receive, about what topics, over what channels and at what frequency.  Email marketing specialist Adestra reports that preference centres can have a real impact on unsubscribe rates, suggesting that giving customers choice keeps them engaged.  Digital marketing specialists Smart Insights provide some advice on the use of preference centres suggesting that you don't offer what you can't deliver.  If you provide choice in terms of topic or frequency, make sure you have the content and capability to manage this.

If you google preference centres however, they seem to be a feature of email marketing but, little else.  This is I think needs to change.


Preference centres need to become a key feature of loyalty programmes to control preferences for all aspects of the programme and to help manage some of the innovations that are just around the corner.

• For gamification features, members are going to want control about what achievements are posted to which social channels and when.  This  "social currency" is where the key value is within gamification, but that value will only work if the member feels in control.  
• Vendor Relationship Management (VRM) functions will allow members to manage their loyalty data and which partners and/or applications can access this on their behalf.  Like Facebook, members will expect to be able to control both who has access to the data and what data is shared.  They'll also want to able to terminate these relationships at will.
• The "Internet of Things" will bring a host of interactions that can be recognised and rewarded, but members will want to be able to control what can be seen (and recorded) and what can't.  Just because my toothbrush can tweet it's usage, doesn't mean I want it to.

With an increased focus on "Big Data" and the headlong trend to get more and more data from more and more sources it can sometimes be easy to forget that there is a customer at the heart of that data and they'd actually like to be heard.

Sure, we can use the data to work out when someone might be pregnant based on their purchase patterns, and this can be really useful to both the retailer and the customer.

We could also just provide the customer with an easy way to tell us and to give them a big voice...

Mutualistic Marketing - The Loyalty Cuckoo

As everyone knows, many Cuckoos will lay their eggs within the nests of other species.  This activity, known as brood parasitism, relieves the parent cuckoo from the investment of rearing young or building nests and so they have more time to spend foraging for food or producing offspring.  It also lets them mitigate risk by distributing their eggs amongst a number of different nests - taking the phrase "not having all your eggs in one basket" to it's literal conclusion.

The word parasite can seem quite negative but it literally means "one who eats at the table of another" and it is just one type of symbiotic relationship.  Another type of symbiotic relationship is known as Mutualism and this is where two organisms of different species interact in a relationship in which both parties derive benefit.

As with biology, where different species have evolved to benefit from and to other species, we are seeing a similar evolution within marketing.

Credit card loyalty marketing for example could be classed as a parasitic relationship as it essentially benefits from the merchant (the host) spend without providing it with any real benefit back.  However, this is changing with the advent of transaction driven marketing.  With companies like Cardlytics allowing merchants to interact directly with consumers through targeted offers that are based on card spend, they now stand to gain from this relationship, moving it from parasitic to more mutualistic.

This is not just about adding value back to merchants though.  It also begins to change the loyalty paradigm for many sectors, including loyalty providers.

As an example, consider a retailer looking to get closer to their customers.  Setting up and running a loyalty programme would be a costly endeavour and while there are many benefits to running their own scheme, at a basic level they may simply want to be able to identify customers (and prospects), based on their value so that they can communicate with them and encourage repeat purchase.

Traditionally, without a loyalty programme the only method to do this was advertising - getting a message out there far and wide in the hope it hits the right customers.

However, what if you can find someone who already knows your customers and your competitors customers - already knows how much they spend and how frequently.  You might want to strike up a relationship...

This is where mutualist marketing comes into play.  Working with payment providers like card issuers, retailers can create well designed acquisition and retention campaigns without running their own loyalty programme.  To use the cuckoo example, they can put their eggs in someones else's nest, albeit with their permission and for mutual benefit.

This isn't just limited to card issuers though.

Google provides a great example of an acquisition host, letting merchants and brands target their services based on google search resources in a mutually beneficial relationship.

What's really changing though is the number of hosts (vendors with data) and their ability to collect, retain and utilise behavioural information in the form of transactions and interactions.

Whether is location based checkins, TV viewing or sports/fitness tracking services, these are becoming increasingly sophisticated and more importantly utilised.  At the same time, they're providing additional ways for a brand to target the right behaviours without the expense/investment of a dedicated loyalty solution.

Pepsi for example has recently run a promotion that tied up with reward company Kiip to offer fitness "achievement rewards" when a user logs activities such as runs through fitness apps such as Nexercise and MapMyRun.  Rather than trying to get consumers to enter on-pack codes to interact with Pepsi, they have instead chosen to interact with the consumer at the point when they may actually want a Pepsi.

There has been talk about the divide that may be created between the data "haves and have nots" - in evolutionary terms, a data survival of the fittest.  However, like all things in evolution, it was never going to be that simple.  Just as symbiotic relationships form in nature to ensure species survive, the same is true for us.

The data "haves" are essentially leveraging their data for the "have nots", creating a mutualistic relationship which benefits both sides.

This means on the one hand your loyalty strategy should take account of all routes to your customer, not just the ones you can create - using other peoples "nests" may just let you focus on growing your business and distributing risk.  On the other, a strong loyalty programme may also prove a real data asset that you can leverage for greater synergies.

The question as to what your loyalty strategy should be has just gotten a little more complicated.

What we can learn from PayPal's shunning of skeuomorphic design

Skeuomorph is an interesting word.

It's from the Greek for vessel/tool (skeuos) and shape (morphe) and is basically used to describe something which retains the design cues from an original product, even when these aren't necessary anymore. Examples would include digital music players which have the look and feel of a real-world device like a car radio or online calendars that present information in the style of a paper, month by month calendar.

In many ways, a Skeuomorph is positive as it allows us to transition from the old to the new; letting people understand how something works as it replicates the look and feel of the original. The example below shows how the iphone calculator look and feel is based heavily on the extremely popular 1977 Braun ET44 calculator, even down to the button colouring.

However, skeuomorphs can also hold our thinking back. Rather than trying to re-think a problem with newly available technology, it is sometimes easier to try and transfer the existing solution into a new medium.

Digital advertising for example simply tried to transfer the understanding and heritage of the physical world into the digital. The direct mail campaign morphed into the email campaign and the outdoor poster into the banner ad. It took a different kind of thinking from a young upstart called Google to approach it in another way back in 2000. Google did away with the visual aspects and instead focused on the relevancy, linking text based adverts to search terms. Combined with their innovation around ranking/click-thrus, this helped propel Google to the number 1 position.

Google hasn't done too well in another domain however - namely digital wallets. When people talk about digital wallets, they discuss taking your existing payment cards, loyalty cards and paper coupons and essentially digitising these into a smart phone application. Indeed, the Google Wallet even shows a representation of a credit card so you can choose how to pay.

The problem with this though is it's trying to solve a problem people don't have and doing it by simply moving what people have and do today into another medium. In reality, you are simply exchanging a leather folder for a smart phone - it's skeuomorphic design. What it's not really doing is challenging how people pay.

Of course, I'm not a payments expert, so I'll leave it to someone who is, namely Jack Stephenson, Director of Mobile, E-Commerce and Payments at JP Morgan Chase who said:-

"Consumers don't really have a mobile payment problem. Ninety-five percent of the time, paying with cash and credit cards actually works pretty well. Consumers have a mobile shopping problem. There's a difference."

While I agree with the first part of Jack's observation, I don't really agree with the latter. Consumers don't have a mobile shopping problem either, they have a money management problem - and many of them don't even realise it.

As I've discussed in a previous blog, if we're going to change how consumers pay, we should take the opportunity to change how consumer think about payments. Instead of being bounded by a skeuomorphic requirement to replicate the old, we should look to invent the new.

And that's just what PayPal have done.

Paypal are looking to reinvent our relationship with money. Not just our physical money or payment cards, but all of our liquid assests, from loyalty points to gift cards. If it can be converted into cash, PayPal will let you use it.

To support this they have separated the decision to purchase from the method of purchase. After buying through PayPal you then have 7 days to indicate how you'd like to pay for the item and this could be from a combination of:-

• Money you've saved for it such as a travel savings
• Money you have on a retailers gift card
• Money you have in loyalty points from a frequent flyer
• Money you have in your checking/current account
• Money you have access to from your credit card
• Money you don't have access to yet - so it lets you spread the cost over 3 equal payments

Any and all of these types of funds can be used to pay for the transaction. Now you can save for something and then literally pay for it from your savings.

It's worth watching the following videos from Finextra to see how really revolutionary this is.

Skeuomorphs can help us to transition people from the old to the new, but holding onto the old can also limit our ability to truly transform how we do business.

For loyalty, the collecting of points hasn't really changed fundamentally since the original paper stamps back in the 1930'. Even Google startup Punchd is simply transferring the paper punchcard to a smart phone medium.

Maybe it's time to rethink loyalty recognition for a new era. #gamification

Pinterest taps into the active lurker

Another week, another social network explodes onto the scene. Barely 2 years old and picture collecting social network Pinterest is growing rapidly and making headlines.

Despite being a simple concept - you essentially pin or bookmark pictures onto one or more boards - it is strangely satisfying. I'm by no means an avid user but there is something slightly voyeuristic about browsing image after image to see what takes your fancy. Whether its architecture, fashion, food, travel or technology, there is something for everyone.

I also think it taps into some basic needs in this current financial climate. While there is less money to go round and less desire to be seen flaunting it, people still like beautiful things. Pinterest taps into this, letting you like it, collect it and show it. Friends can still marvel at your good taste and ability to find something unique - just without the need to actually buy it. You're also able to "own" a collection of things that form part of your wish-list, even if most of those wishes have no chance of coming true.

What's makes Pinterest really appealing though is how it engages the active lurker.

Within social marketing we're aware of the 90-9-1 principle which states that typically 1% of people actually create new content, 9% of people curate this content (adding value/re-posting) and 90% simply read/consume it. A recent blog post however from enterprise social network provider Yammer commented on how this 90% might not be quite so passive. Discussing a research study from MIT Sloan, the blog pointed out how upto 50% of these lurkers may actually be active. This may not be directly within the community in terms of posting, but instead are active in terms of how they use and pass on the information.

Within Pinterest though, they seem to use a number of techniques to lower the hurdle for engaging these lurkers directly within the community.

Firstly they have an invite only acquisition process which is something I wrote about in a previous blog. This is becoming increasingly common for these start-ups and social networks as not only does it help them control acquisition (and the associated traffic), but it also helps build up demand and create social currency. As existing members can invite friends, this invite only mechanism helps bestow value on the membership and members are then more likely to recommend it to friends and/or brag about being part of it.

The second interesting feature within Pinterest that looks to create more engagement is how they use "endowed progress". Giving people value up front in the form of a welcome bonus is nothing new within loyalty programmes, however Pinterest takes a different angle on this endowed progress. Rather than a points currency, their currency is measured in friends and so on joining, they automatically link you to people you might want to follow. You're obviously free to unlink from them at any time, but this "instant network" based on your stated interests ensures you see content immediately and don't start with an empty profile. It's a simple idea that really helps you to feel engaged and a part of something straight away - it also helps to power with the final feature, re-sharing.

Pinterest makes the process of collecting very easy, lowering the hurdle to taking part.

You don't have to be the 10% of curators/creators who go out seeking new content to pin from across the web. Instead you can simply browse what others are posting and just pin whatever takes your fancy. This is something that is really interesting and not dissimilar to the Facebook "Like" activity. The difference however with Pinterest re-sharing is the curation part of it - your likes are essentially built up into a collection which you maintain and continue to share with friends. Amazon does something similar with it's Listmania service - but you'd be hard-pressed to find it given it's buried at the bottom of the page.

Pinterest have shown however how to bring this functionality front and centre and really engage members around it. They are obviously doing something right given they are the fastest growing social media site in history and have already got a presence on almost 10% of the top 300 online retailers.

With an increased desire to both share and consume information, the opportunity here for brands is how to engage this 90% of lurkers in an active way - and Pinterest certainly provides some interesting ideas.