Category Archives: Uncategorized
Payments Part of OS: What does that mean?
Tokens: Merchant Options
What is Apple doing in “Payments” and Commerce
WOW.. New 10yr JPM/Visa “Partnership”
Xoom IPO – $500M+?
CLOs where is your content?
MCX Wallet – QR Codes and Gemalto?
Rumor is MCX is going with a “Starbucks model” QR code payment mechanism. Gemalto is rumored to have won the wallet (… arghh why another one?).
There are many Merchant benefits to this approach, primarily it skips the entire bank owned payment network as QR codes are read directly by the ECR (IBM, Micros, Aloha, NCR, ..) with minimal hardware changes. MCX members with Loyalty cards (ex CVS) would be able to skip the phone based wallet and leverage common MCX infrastructure (cloud) to enable payment on loyalty cards.
Fraud infrastructure will be critical to the success of this approach. Retailers have tremendous historical data for loyalty card customers… but they really don’t know who their customers are. Banks are certainly able to help solve this fraud, identity and reputation problem. MNOs may also be able to add value here IF they move quickly (example Payfone would be perfect here).
Another story I heard was the Starbucks was a founding member of MCX, but then left. If this QR code approach is accurate, their departure makes sense.. as they are the team that paved the way for the success of this approach. Why would they throw their technology and standards away for something exactly the same?
The payment mechanics of all this certainly look good. However what will be the consumer value proposition? I hope this QR code can be ported to other wallets (let the customer decide).
Retailer CRM … enabled by ?Payments?
Question for the day: As a consumer goods Retailer, how do you build a CRM solution when you don’t know who your customers are?
Back in my Oracle days, Larry launched Oracle CRM. Quite frankly I was a little slow picking up “front office” back then. My areas of focus were: banking, supply chain, online stores, B2B businesses…. in all cases we knew our customers (although not always our prospects). At Citi we were much more focused in online acquisition and tuning the marketing funnel, we were able to improve performance 2x-4x by looking at where profitable customers were coming from and the costs to obtain them. Running sales teams helped me appreciate how wonderful a tool salesforce.com is… and of course my partner Peter Burridge (former CEO of Seibel Asia) and friend John Buchanan (founder/CEO of Retek) helped fill in many other “gaps” in my retail CRM understanding: demand planning, config management, merchandising, inventory optimization, behavior tracking, …
Customer Relationship Management “CRM” still has not clicked for me.. it is not an obvious “bundle”. Given $2.4T in retail sales, and $750B in US marketing spend.. isn’t it amazing that there is not more “structure” managing the customer in retail? Why? I believe itss primarily driven by a lack of KYC (know your customer). Not KYC the way bankers interpret it.. but just a basic understanding of who shops at your store. I was in a forum with the CMO of Gap and she said “I get at least 2 calls a week from start ups and I have bandwidth to do 2 things next year… one will be with someone big like Google… the other with someone that will help me use my data to better reach my customers”.
How can Retailers get to know their customers? The traditional solution has been loyalty programs (Colloquy is a great resource for industry data), however we are begging to see some significant innovation as the business models of Square, Google, Amex, MCX are all starting to shift to address this problem.
Example was given by Ken Chenault and John Hayes last month. Amex has a pilot going with Loyalty Partners (which it acquired in 2011) in Europe. Retailers contribute their line item data to Loyalty partners and then they are able to couple it with issuer data for both analytics and targeted marketing/incentives.
Targeting individuals based on hard data (ie beyond the website you visited), and getting feedback on marketing effectiveness (actual purchases) is the holy grail of marketing. Don’t think of Amex’s activity as payments, think of it as helping retailers execute a CRM strategy. Card linked offers, prepaid offers are fundamentally broken.. they only solve a yield management problem … while destroying brand and pricing. At the end of the day CLOs and PPOs don’t build loyal customers and reinforce price as the central decision point.
By helping Retailers know their customers, Square/Amex/Google are tackling a VERY BIG problem. These are not the only companies.. my bet is that we will see a wave of participants:
- Banks work to extend payment networks,
- Retail CRM providers extend software,
- Loyalty systems (like Catalina) work to extend services, and
- Retailers build new ad/payment data networks (MCX)
- Advertisers extend to POS integration
This is a VERY VERY big wave with tremendous implications for big data, marketing, advertising, enterprise software, privacy…
What should we call this wave? Enabling retailers to know who their customers are? Would you give up your anonymity for real value? Would you allow an advertising agent to take bids to reach you? Think of yourself as a professional athlete.. sponsors lining up.. What is the price of your loyalty? Is this where Amazon Prime is today?
If retailers and CPGs could focus marketing spend ONLY on relevant customers, just imagine the impact to other advertising channels.. no more free TV? no more billion dollar Olympics?