Lemon juice and smart marketing


Bet you couldn’t tell it was me.

ONE DAY IN 1995, McArthur Wheeler took it upon himself to rob two Pittsburg banks. When policed arrested him a few hours later, he was astonished to learn that they had identified him from surveillance videos.

You see, he taken the precaution of painting his face with lemon juice.

Doubtless the science behind Wheeler’s reasoning has already burst upon you. Since lemon juice can serve as invisible ink, Wheeler figured that a lemon-juice covered face would be invisible to video cameras. He tested the idea by smearing his face with lemon juice and taking a selfie with a Polaroid camera. Buoyed with confidence when his face didn’t appear on the photo—we are left to wonder why it didn’t—he set off to make some “withdrawals.”

Inspired in part by Wheeler’s ill-placed confidence, David Dunning and Justin Kruger of Cornell University’s Department of Psychology decided to conduct a series of tests. In what would in time be creatively dubbed the Dunning-Kruger Effect, they established that the incompetent often overrate their competence, while the highly competent often underrate theirs.

In an article he wrote last year, Dunning added an important observation:

I’ve become convinced of one key, overarching fact about the ignorant mind. One should not think of it as uninformed. Rather, one should think of it as misinformed.

An ignorant mind is precisely not a spotless, empty vessel, but one that’s filled with the clutter of irrelevant or misleading life experiences, theories, facts, intuitions, strategies, algorithms, heuristics, metaphors, and hunches that regrettably have the look and feel of useful and accurate knowledge.

Wheeler’s error was not in overestimating his smarts. It was in overestimating the value a smidgeon of information or, in his case, of misinformation.

It’s important for us marketers to recognize that we are not immune. Trouble is, there’s a Catch 22 when it comes to evaluating the information we rely on. Dunning also wrote:

… even the broad outlines of what we don’t know are all too often completely invisible. To a great degree, we fail to recognize the frequency and scope of our ignorance.

Now lest hackles rise, let me be clear: I am not calling anyone ignorant. What I am suggesting is that regular input from the outside can provide a needful reality check as to the reliability of information on which we base marketing decisions. Who knows? Had Wheeler subjected his information to the scrutiny of an outside expert, he might have settled on working for his money as the wiser course.

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Rewards ≠ Loyalty

Not quite interchangeable terms

ONE FINE DAY in 1981, someone at American Airlines eyed the empty seats on many a flight and mused, “If we gave those seats to our most-frequent fliers, they’d be tickled and we’d be none the poorer.” Thus began what today are commonly called rewards programs. They range from American Express’s program, where card users earn points good for catalog items, to buy-ten-get-one-free punch cards the neighborhood sandwich shop hands out.

A well-executed rewards program can increase frequency and spend, but there is danger in mistaking those metrics for loyalty. Loyalty is a feeling, an emotional commitment, a not terribly rational compulsion that makes the mere thought of defection abhorrent.

For a good example of loyalty, look no further than your nearest ardent sports fan. You may infer that person’s loyalty from game attendance, pennant-covered walls, or block letters painted on chests, but it’s important to keep in mind that some of the most dedicated fans do none of these things, and some of the least do all of them.

You may accuse me of conflating apples and oranges. As a diehard sports fan, I want to agree with you. Indeed, to compare a credit card or sandwich shop to my beloved Utah Jazz or Denver Broncos strikes me as akin to blasphemy. But as a marketer I must concede that sports teams are still products. I must also concede other product categories that boast no less ardent fans. For example, try persuading a Harley, Coke, Mac, or mayonnaise devotee to settle for Honda, Pepsi, Windows, or Miracle Whip—while being prepared to duck.

Granted, loyalty-as-a-feeling is all but impossible to quantify. We marketers have little choice but to infer it from frequency and spend. And there’s nothing wrong—in fact, there’s everything right—with using incentives to bring customers back more often to spend more.

But marketers who believe their customers are loyal would do well to submit to the occasional reality check. If a competitor could lure away your best customers by offering them a richer rewards program, you don’t have loyal customers; you have purchased ones.

Now, there’s nothing wrong with purchased customers any more than there’s anything wrong with incentivized customers. The difference matters only if loyalty truly is your goal. If so, remember that attaining loyalty begins with recognizing its nature as a two-way street. Or, as evolutionary psychologists put it, with reciprocal altruism, which essentially states that a proven strategy for getting others to scratch your back is first to scratch theirs.

Want loyal customers? A good starting point might be to first show—not just claim in advertising—your loyalty to them.

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Apple Pay, Samsung Pay:
Does being first matter?

Sam-Apple CroppedConsulting firm First Annapolis recently posted a helpful, feature-for-feature chart comparing forthcoming Samsung Pay with Apple Pay. I won’t reproduce the entire chart here for two reasons. One is that you need only click here or on the image at right to view it on First Annapolis’s site. The other is that I have high regard for copyright laws and for the consequences of violating them.

In their classic Positioning: The Battle for Your Mind, Al Ries and Jack Trout argued that no position was stronger than being first. If you cherry-pick, it might look like a solid claim. Products like Coca-Cola and Scotchgard have held their primacy, and it is not unreasonable to include iPhone with them.

Upon announcing iPhone in January 2007, Apple set the smartphone standard that holds to this day. At the time, Google was poised to introduce the first Android smartphone. It was to have been a Blackberry-esque device with a small screen and solid keyboard. With one look at iPhone, Google quietly scrapped two years of development and returned to the drawing board, choosing being late over being eclipsed.

But the case for first-ness falls apart when you reverse-cherry pick. Consider IBM PCs, Jeep, and Prodigy, where being first helped pave the way for latecomers by softening a market toward a new product, and by bringing to light mistakes for latecomers to avoid. And, to wit, Android now commands more than 50% of the smartphone and tablet market despite its late arrival.

History may repeat itself with Apple Pay and Samsung Pay. Samsung is bringing to market a product that looks a lot like Apple Pay. Both platforms support credit, debit, and prepaid cards. Both rely on cloud-based payment credentials, support NFC technology, and neither stores credit card account numbers on the device.

That is not to say that there aren’t differences. Apple Pay triggers POS devices to receive payment tokens from Visa, whereas Samsung Pay retrieves cloud-based payment tokens and passes them to POS devices at the point of sale. Samsung portends greater convenience at the point of sale with magstrip reader compatibility, and allows for Private Label Credit Cards (PLCC). On the other hand, Apple Pay offers convenience in the form of automatically loading at the point of sale, whereas Samsung Pay customers must launch the app. Apple Pay allows for payment through the app, whereas Samsung Pay works only at the point of sale.

Early indicators are that Apple’s system may be the more secure, but whether security differences are subtle or great, or matter to consumers, remains to be seen. One difference that I predict will be largely moot—unless Americans step up plans to vacation in Seoul—is that, unlike Apple Pay, Samsung pay will work in South Korea.

Returning to first-ness, I suggest that both products qualify. First-ness per Ries and Trout has nothing to do with being first to launch, but with being first in consumer minds. Since Apple Pay is available only to Apple users, Samsung Pay can own the position of “First” among non-Apple users. Samsung may also enjoy a slight advantage in the form of a market that has had a year to adjust to the concept of payment-by-portable-device.

It should be noted, however, that we not dealing with an iOS-versus-Android situation, but with a single manufacturer of Android devices. Were we discussing not Samsung Pay but Android Pay, its chances of attaining better than 50 percent of the market as did Android itself would be far greater.

It goes without saying that Samsung and Apple each hope to pull converts from the other’s camp. Good luck to them. From what we know about each group’s commitment to its own platform and animosity toward the other, conversions happen but not en masse. Each brand will simply sing to its own choir. The relative merits of Apple and competing products will matter less at the point of sale and more when people sit down to argue about whose phone or tablet is better. As long as neither Apple nor Samsung goes to great lengths to alienate its respective piece of the market, both products will probably fare well.

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It’s Time To Accelerate
e-Bill Adoption

(My newest article in The Financial Brand)

Research shows a strong positive correlation between e-bill adoption and customer satisfaction, loyalty and profitability for both financial institutions and billers. Yet, despite a growing digital consumer lifestyle, growth of e-billing remains underdeveloped, especially when compared to rates of online bill pay.

By Matt Wilcox, Senior Vice President, Marketing Strategy and Innovation, Fiserv

Marketing consists of filling wants and needs at a profit. The safer, less costly way to do that is to find out what the market wants and outdo the competition in delivering it. The riskier, costlier way is to introduce an unknown product that fills an unknown need – as 3M did with Post-It® Notes – and set about convincing the market that they can no longer get along without it.

At the outset, with no track record on which to base predictions, e-bill adoption fell in the latter category. It wasn’t quite clear whether the idea of going paperless would turn out to be Post-It Note success … or an Edsel flop.

Now, just a few years after being introduced, we know there is [read the rest of the article by clicking here now]

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How to make your bank the envy of the Peppered Moth


Ever sat down for a chat with a Peppered Moth?

Prior to the Industrial Revolution, the Peppered Moth flourished in the forests of England. Well, the light-colored ones did. They alit on tree trunks and blended in. Life wasn’t so easy for their dark-colored siblings. They struck such a contrast with the surrounding trees that they might as well have held up signs that said “PREYING BIRDS–DINNER IS SERVED.”

But then the Industrial Revolution came along, bringing with it smokestacks that blackened the trees. Before long, lighter moths became easy pickings while darker ones flourished in their place. A dark moth given to schadenfreude would have had a heyday.

The triumph of this well-known adaptation belies a sobering lesson. Creatures can adapt to environmental change only if they have the DNA for it. Most species that have lived on this planet didn’t, which is why 99 percent of them aren’t around anymore. The Peppered Moth was downright lucky that it had the DNA for producing the occasional dark-colored adult. Without it, it could well have fallen to extinction then and there.

Bankers, our environment is changing.

Going back to the days of green visors and sleeve garters, banking had always been a face-to-face business. As competition swelled, some—if not you, people you know—buried their heads in the sand of being in a “relationship business.” Our customers are our friends, went the reasoning, so no bird will pick them off.

If ever that was true, and you may have gathered that I have my doubts, it is no longer. Just as factories made light-colored tree trunks the exception, technology is making in-person financial transactions the exception. In this new, fast-changing environment, is adaptation within your financial institution’s DNA?

DNA is a set of coded instructions that guide an organism’s development  in terms of traits genes will express, when genes switch themselves on or off, when they work in concert, when they work at odds, and when they don’t work at all. These factors determine how an organism will fare in a given environment. I think it’s fair to say that a financial institution’s DNA is its management, rules, policies, guidelines, and culture. These account for the difference between a bank that is well suited, and one that is not so well suited, to adapt to and prosper as the landscape shifts.

Now, permit me to share a bit of news that is sure to make you the envy of even the most successful Peppered Moth. Your financial institution needn’t resign itself to metaphorical biological determinism. It can do something that no Peppered Moth could ever hope to do. Namely, it can look around, assess the environment, and change its own DNA to match.

There’s just one catch. The ability to look around, assess, and change must itself be written into your bank’s DNA. It must be a product of management, rules, policies, guidelines, and culture. Here is where the analogy breaks down. DNA is not subject to ego. Management, rules, policies, guidelines, and culture are.

Having trouble adapting in a timely manner? Maybe it’s time for a little gene splicing. If a moth can adapt by serendipity, surely a financial institution can do so on purpose.

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