One of our customers achieved a 20% conversion to sales ratio in our last field trial meaning that for every 100 digital sales calls made, 20 people walked into the store and bought something with the offer we delivered. How'd they do it and what does it say about the ideal Micronotes customer?
First off, we were able to get the appointment. Entrepreneurs and flush trust-funds owners notwithstanding, most people have either time or money -- but not both meaning those with the most spending power tend to have the least time to interact with marketers. Busy affluent people can be sold products and services but, you've got to value their time, then use it wisely. Simply put, we value people's time by paying for it, then use that focused 30 seconds to formulate and make a compelling offer to buy. By this criteria, the ideal Micronotes customer is a marketer who is unable to get the attention of a target group of busy affluent people by other means.
Second, we were able to marry the right brand to the right audience. Therefore, we serve marketers who know the characteristics of their prospective customers.
Third, through a carefully crafted sales script and segment-specific offers, we we were able to marry the right offer to the right prospective customer. This means that the marketer needs to be able to effectively answer the question, "If I could get you 30 second appointments with 35,000 targeted prospects tomorrow -- what would you ask them and what would you offer them based on their responses to those questions?" Perhaps a bit daunting at first but, our software and support makes this process much easier than it looks. For example, if you are a car dealer, you'd want to make a different offer to the person identifying himself as a car owner servicing at another dealership than to the person identifying herself as in the market to buy a Ford. Moreover,we serve marketers who wish to make private offers to individuals. For example, if you want to give prospective auto service customers 50% off their next service to try your service department, and a free detail to existing customers -- you can do that with our system and your competition will never know.
Lastly, we know that the cost of the digital sales calls in this case was $16 per customer acquired plus the cost of the coupon. Corresondingly, marketers need to have enough lifetime customer value to pay $16 to acquire the new customer plus the cost of a compelling offer. For example, a firm making only $10 over the life of a customer relationship is better off using another customer acquisition vehicle.
So, if you are a marketer who meets these criteria, you ought to talk to us.
I'm excited to announce that Tom Burgess, founder and CEO of Third Screen Media, has joined our advisory board as marketing practitioner. Tom is a serial entrepreneur in the internet marketing space with extraordinary customer-side communications talent. Micronotes is pioneering an entirely new way of marketing with our "digital sales call" technology and it's great to have Tom; entrepreneur, executive, and avid sailor -- aboard to help us navigate.
I asked Tom why he joined our board and here's what he said, "Micronotes is a pioneer in a new marketing paradigm that is focused on bringing benefits directly to the consumer. Traditionally, the media players are the only ones with an obvious ROI in the marketing ecosystem. What about the general public? "What", they beg, "benefit do we get from all this 'in-your-face' advertising?" Micronotes allows brands to cut through the marketing fog, interact one on one with the consumer and leave behind a very positive brand experience. Doesn't get much better than that. I'm excited to be part of this innovative team."
About Tom Burgess:
Mr. Burgess is a seasoned executive in online and wireless interactive marketing and technology. He is a pioneer of innovative advertising solutions and holds a patent in wireless advertising. Mr. Burgess, a recognized authority in digital marketing, is a consistent speaker at global marketing conferences and has been quoted or featured in Forbes, NY Times, Wall Street Journal, Boston Globe, CNBC and many industry publications. Mr. Burgess founded Third Screen Media, a wireless advertising company, in March of 2001. Third Screen set the standard globally for wireless advertising and secured customers such as Sprint, Verizon Wireless, USA Today, Weather Channel, American Express and many more. Third Screen Media was purchased by AOL/TW in May of 2007 delivering a 245% return for investors in two years. From January 1999 to March 2000 he served as President of internet portal CollegeLink.com. During this period he successful guided the company from a shrink wrap software developer to a multifaceted online destination. CollegeLink was purchased by Monster.com early in 2001. From 1998 through January of 1999 he served as Founder and CEO of 9th Square Inc. (currently Bluestreak.com, Inc.) an Internet E-commerce and advertising software and services company that he angel financed and directed through successful initial product development and market launch. From 1994 until 1998, Mr. Burgess served as Founder and CEO of Echomedia, Inc., one of the first internet advertising marketing and technology businesses. In December of 1997, Burgess successfully merged Echomedia with Softbank Interactive Marketing. Throughout his career, Mr. Burgess has consistently provided excellent returns for investors and was recently inducted into the Entrepreneur Hall Of Fame for superior performance by Blue Chip Ventures. Mr. Burgess currently resides in Rhode Island with his wife and two children. Mr. Burgess has a BA from Providence College.
I am pleased to announce that Drazen Prelec, Digital Equipment Corp. Leaders for Global Operations Professor of Management, has joined the Micronotes Advisory Board.
Professor Prelec's research deals with the psychology and neuroscience of decision making (behavioral economics and neuroeconomics; risky choice, time discounting, self-control, consumer behavior).
Drazen's life's work is absolutely central to Micronotes KulaQ technology insofar as our work stands at the intersection of psychology, mathematics, and commerce. I also see a clear path to commercializing some of Drazen's research to the mutual benefit of consumers and brands alike. I think Dan Ariely, Alfred P. Sloan Professor of Behavioral Economics, had it right when he said, Drazen is academic royalty. Long live the king!
I asked Drazen why he joined our advisory board and here's what he said, "The Micronotes system is a real innovation, providing an extremely elegant solution to the problem of matching consumers and purchase incentives. Because participation is voluntary and compensated, the system maximizes the chance that the consumer evaluates the offer in a positive frame of mind. The 3-question targeting system ensures that the offers reach the right destination. Micronotes represents the future of marketing, I am very glad to a part of it."
About Drazen Prelec
Drazen Prelec's research deals with the psychology and neuroscience of decision making (behavioral economics and neuroeconomics; risky choice, time discounting, self-control, consumer behavior). He works both on the development of normative decision theory and the exploration of the empirical failures of that theory, using behavioral and fMRI methods.
A current project on "self-signaling" tries to understand the strange power of non-causal motivation - when individuals favor actions that are diagnostic of good outcomes, even though these actions have little or no causal force. Diagnostic motivation is real, and is probably essential for human self-control. Its cognitive and neural mechanisms are not well understood however.
A second "Bayesian truth serum" project deals with scoring systems for evaluating individual and collective judgment in knowledge domains where no external truth criterion is available. Examples would be long-range forecasts, political or historical inferences, and artistic or legal interpretations. He is developing scoring systems that reward honest judgments, and that can identify truth even when majority opinion is wrong.
Prelec has been a member of the MIT faculty since 1991, and presently holds appointments in the Sloan School, the Economics Department, and the Department of Brain and Cognitive Sciences. He received his Ph.D. in experimental psychology and AB in applied mathematics from Harvard University. He was a Junior Fellow in the Harvard Society of Fellows, and has received a number of distinguished research awards, including the John Simon Guggenheim Fellowship.
We've just completed our second field trial with real brands and real bill-payers using our KulaQ technology which enables marketers to conduct mass-scale one-on-one MicroInterviews with opted-in bank bill-pay customers; and automatically make the right offer based on that interview. If you'd don't understand what a MicroInterview is, please go here: http://www.micronotes.com/whats-a--microinterview--/.
KulaQ represents a new form of targeted outbound marketing based on a very old idea; namely, "Advertising is salesmanship mass produced. No one would bother to use advertising if he could talk to all his prospects face-to-face." Morris L. Hite, Advertising Hall of Fame.
Well, here's what we got, by category.
MicroInterviews taken refers to the number of prospective Customers our marketers interviewed using KulaQ technology. Offer acceptance refers to the number of offers accepted, which were emailed to the prospective customer, divided by the number of offers made. Cost per acceptance is the price our marketers paid to get an offer accepted by a prospective customer. Cost per acceptance is similar to cost per action insofar as the goal of the interview is to craft the right offer for the interviewee based on his or her stated preferences - and have her request the offer made. In other words, it's the action you'd like your visitor, or in this case, interviewee -- to take.
With acceptance rates at 40-81%, how many of those offers convert to leads or sales? Ah... you'll have to come back for that data.
In the meantime, what do your conversion rates look like?
Banks earn most of their profits from fees. The whole fee thing feels a little like a shell game to me. The bank advertises free checking and online bill-pay but, in fact, those services aren't free to the bank so -- it follows logically that they can't be free to the consumer. So, the cost of "free checking and bill-pay" is moved from one shell to another which, of course, gets lifted whenever I, or someone else, stumbles on any of the tripwires the bank has set up to recover the actual costs of "free checking and bill-pay." The problem is that this gauntlet of fees doesn't do much to foster customer trust -- which decreases the probability of gaining new business from the existing customer base.
Given the choice, would you give more of your business to a bank that lost your trust?
The problem here is that someone has to pay for all this online banking technology we enjoy. Right now, the cost is just moved from one customer to another and back again in the form of "hidden fees". What we could use is another source of income that helps offset the real costs of online banking and bill-pay that builds trust and understanding.
I think our KulaMula cash-back bill-pay system can help. Our system is merchant-funded, pays online bill-pay customers to customize offers, including offers from their own bank, to their own tastes, and provides a revenue share for banks. That sounds like a different and better game to me.
Actually, I don't know -- I haven't found that number just yet.
We had a board meeting Monday with not 1, not 2, but 3 MIT Professors in attendance; Glen Urban, Drazen Prelec, and Nelson Repenning. We were talking through the data from our most recent field study which, again, yielded an average offer acceptance rate of 66% and cost per action of about $5 (table above). If you aren't familiar with our Qmarketing system, we enable marketers to pay people to find the marketer's offer that best fits their needs by asking people 3 questions; the answers are then used to locate the right offer -- which we deliver via email. We deploy the system whenever and wherever a payment is made (e.g. online bill-pay, e-checkout) and pay the consumer in the form of a discount or cash-back.
Glen brought up the idea of a "Golden Leaf" -- or that group of people who have identified themselves as being particularly attractive to the marketer. For example, in the real-estate segment, the "Golden Leaf" is the home seller who isn't currently working with an agent. For the auto dealer, it's the car owner servicing her vehicle at a competing dealership. The question to the marketer then becomes, "What's your cost to get an offer accepted by those highly qualified customers today?" Of course, the answer depends upon the industry but, we were able to deliver offers to all qualified segments for between $4-10. If a marketer pays $3 for a paid search click, and 10% of those visitors download an offer from the website - the offer delivery cost is $30. If 10% of those offers, redeem, the customer acquisition cost is $300, plus the price of the discount. It looks like we can acquire customers for a fraction of that cost.
Drazen then proposed a study aimed at quantifying the advantage of the Micronotes system wherein we would compare the offer redemption rates of 3 groups:
Group 1: Distribute offers randomly, much like marketers do today in the Sunday newspaper.
Group 2: Ask people 3 questions about their preferences, then distribute offers randomly much like we do today by asking people to take a market research survey - then deliver a one-size-fits-all offer in the Sunday newspaper.
Group 3: After being asked 3 preference questions, distribute unique offers according to preferences the Micronotes way.
We'll take up the results of that experiment in a future blog. So, if you are a marketer, what does it cost you to deliver the right offer to the right person at the right time today?
We just completed our second field trial of our KulaMula cash-back bill-pay system with 5 consumers brands who collectively conducted 852 20-second interviews with about 150 bill-payers. The results for both brands and bill-payers were extraordinary with average offer acceptance rates well above 50% -- meaning that more than 1/2 of the brand-offers presented, after customization, were accepted by bill-payers.
The other good news is that we received a lot of great feedback from our bill-payers which I've addressed below:
Q: How will I get cash back?
A: Micronotes transfers the cash into the bill-payers account via ACH at the end of each month -- which shows up as a credit. Typical cash-back amounts are $5 per month for people paying 5 bills per month.
Q: "tell me that i only have to answer 4 short questions and i get the $1 credit now!!!"
A: Bill-payers answer 4 short questions for $1 cash-back which is accumulated and transferred into her account at the end of each month.
Q: "assure me that the questions are inline and not a survey that takes me off the site that requires more user action (ala post purchase on ticketmaster)"
A:Correct, bill-payers are never taken off their bill-pay site and it's a zero-spam system.
Q: Cash back on what? the bill payment? my bill?
A: Micronotes transfers cash-back amounts directly into the bill-payers account in the form of a credit. The bill and bill amounts paid are unchanged from the normal bill-pay process.
Q: "may 'we' or the the 'payee' email a coupon? who is getting/owns my data? will my info be shared with anyone else? will i be added to any lists?"
A: We never reveal or share personally identifiable information or email addresses with the brands; we, Micronotes, only email bill-payers offers they ask for. Micronotes holds bill-payer profiles in an encrypted & privacy-secured database.
Q: Can you guarantee next day payments? what about weekend?
A: Micronotes does not alter the bill-pay functionality of your bank so, any functionality your bank has will remain -- as is -- after you opt-in to Micronotes including next day payments, etc.
Q:"how do i opt-out of this ad/promotion system entirely?"
A:"Click the "Close" X - button in the dialogue box and uninstall the application"
Q: "is there a minimum or maxium payment amount?"
A: No, the bill-pay system functions exactly as it does now with the KulaMula cash-back enhancement.
Q: "which payment account is my payment coming from?"
A: Whichever account is attached to your online bill-pay. Again, the bill-pay transaction flow is unaltered by the KulaMula application.
We've got loads more feedback which I'll be commenting on in coming posts - feedback is very welcome!
I am pleased to announce that Glen Urban, David Austin Professor of Marketing at MIT, has joined the Micronotes Advisory Board. Glen Urban is a leading educator, prize-winning researcher specializing in marketing and new product development, an entrepreneur, a prolific author, a sculptor, and a sailor. He has been a member of the MIT Sloan School of Management faculty since 1966, and was Dean of the school from 1993-1998.
Glen's decades of academic and industry work in marketing science is so deep and wide that I sometimes find it difficult just to catalog Glen's marketing knowledge. The great news is that Glen sees the same opportunities that we see in Qmarketing and has joined us.
"I do definitely see the opportunity Micronotes presents in targeting and increasing the productivity of communication and deals. Micronotes has a unique way to identify high potential customers and deliver a powerful and targeted individual incentive to buy." Said Dr. Urban. "This is an exciting technology and I look forward to working with Devon and his team." he concluded.
About Glen Urban
Glen Urban concentrates on the fascinating area of trust-based marketing on the Internet. How trust is built on a web site, how site design can maximize sales and trust, and how a trust-based marketing system could provide an alternative to the "push" type of marketing commonly observed, are just a few of the facets that Urban explores. His current research focuses on customer advocacy. His new Theory A aligns the firm as a representative of the customer's needs and leads to transparency, unbiased advice, trusted advisors, and best products. Recent research concentrates on morphing a Web site to fit individual cognitive and cultural style.
A couple of weeks ago I gave a talk at a technology roadmap conference of Credit Union Executives. I've done a fair amount of work on technology roadmaps and appreciated the difficultly my audience had in answering the question, "what's the core value driver in the credit union industry and how is it measured?" One astute executive answered, "About half our customers care about superb customer service and the other half care about our loan and deposit rates." Customer service quality is measureable and well within the control of credit unions. Loan and deposit rates are less controllable and largely driven by monetary policy; though less so if these rates are viewed in competitive context. That said, it is our job to deliver superb customer service and provide an income stream to consumer and banks that is disconnected from monetary policy. Because credit unions provide a service and services are produced and consumed simultaneously, it is difficult to separate marketing, customer service, and operations. Correspondingly, Micronotes will have to be a very strong part of the service delivery organization that delivers a differentiated and superior product to credit union customers. We're well-trained and prepared to do just that.
Just this week, I also received these questions and feedback which I've addressed below:
"Can the CU market companies that are local?" Absolutely! Since our goal is to bring relevant brands and customized offers to credit union customers -- we can't think of a better way to do that than to have local brands that are highly relevant to local communities use our KulaQ system. The primary challenge will be to ensure that local companies are trained in the use of our KulaQ marketer interface; which is our job.
"Can the CU market their own products?" Absolutely! Credit Unions are local brands and ought to use the system to help their own customers save money by customizing their own credit union offers. However, financial institutions are not permitted to use the system to market to the customers of other financial institutions.
"The CUs asked for a more detailed explanation on the process of how the member gets paid, including determining what account gets credited." The process depends upon the credit union's secure website configuration and program desires. For example, if the CU's online banking site contains the customer's account number, our software is able to read that number and append it to the CU-Customer's profile. At the end of each month, we sum the cash-back each CU-Customer has earned and make an ACH transfer directly into that customer's account. We can also make a single cash transfer -- with earnings report by customer/account -- at month-end to the CU, who credits customer accounts in either cash or reward points. If the CU's online banking environmnent doesn't present the customer's account number, we collect that number from the Credit Union once, and only once, upon customer registration.
Additional comments and feedback included:
• "[I] can't picture encouraging this to our members."
o While I don't claim to understand the exact nature of the concern here, I can understand wanting to protect my customers. We'll just have to demonstrate that we are the quality organization that we claim to be and focus on delivering a great experience, cash-back, and great offers to credit union customers.
• "I was prepared to not like this, but in the end I see real possibilities."
o Indeed, we are already in discussions with at least one credit union who has an inventive way to strengthen and existing customer retention program using our platform.
• "I will refer this to marketing."
o Marketing does seem to be the natural locus for our platform since it doesn't require IT development.
• "Interesting product."
o Well, we think so -
I really enjoyed our discussions and look forward to strengthening our partnerships with our flagship credit unions.
Nope, this is not an article about sustainable farming or prospecting for gold in the California hills - it's about customer prospecting.
• Have you ever received marketing material that wasn't relevant to you?
• Have you ever told someone who was trying to sell you something that you really weren't interested in their product -- and have them persist?
• Have you ever sat in front of 24 different varieties of some product and finally decided just not to buy anything at all?
I'll bet you have... How'd you feel? Violated? Angry? What did you do? Consider staging a boycott? Chose not to buy anything because all those choices made your brain hurt?
Any of the above sentiments or actions is unlikely to lead to a long and healthy customer relationship.
A few assertions sit at the core of the Micronotes value proposition:
1. A prospective customer's time is valuable.
2. A prospective customer wants to interact with brands that are relevant to his or her life.
3. Prospective customers' need help navigating efficiently through the myriad of choices available in today's marketplace.
By enabling brands to pay prospective customers to rapidly customize a relevant brand's offer to her own tastes, Micronotes has created fertile ground for customer acquisition and retention.
On the basis of the data we have acquired thus far, our Qmarketing system pays prospective customers at a rate of $100/hour to customize offers to their own tastes. An average of 73% of these customized offers were requested by prospects. Given these metrics, Qmarketing is competitive with paid search on a cost per action basis with CPAs below $5.
How does your prospecting look?