PayPal, Visa and MasterCard Collaborate – For Now.
It was puzzling. Didn’t PayPal already accept both Visa and MasterCard? Yes it did, but the growth of PayPal (and now Stripe), also posed a very real risk of dis-intermediation of the card networks we both love and hate (depending on if you’re a consumer or merchant). PayPal had been promoting the use of direct bank transfers (ACH) to users by encouraging them to enroll their bank accounts for payments. That meant that while it allowed free payment transfers to friends and family, it also saved on fees when the same source of funds was used to pay merchants.
PayPal may lose a little margin on its online transactions, but it now has a real chance at speeding up adoption of physical payments, an area where PayPal was clearly lagging behind.
Why did the consumers sign up for direct bank payments when they stand lose their credit card reward points? Its simple – PayPal charged almost a 2.9% fee for payments to friends and family. So it was beneficial to set up a bank account for the payment where PayPal would charge zero fees. With that major hurdle cleared, PayPal was obviously seeing the cheaper payment sources being used for goods and services as well.
PayPal, and now Stripe, Authorize.net and many others, have created a nice position for themselves in the online, small business payments world. It was a pain area that wasn’t addressed by banks and the card networks for a long time (and still isn’t). So it was just a matter of time that their intimacy with the customer had to threaten the underlying, commoditized service provider (the card networks). And if PayPal decides to become a bank (or ties up with a bank like Simple and Moven did), that’ll spell trouble for banks as well.
All said and done, I see this as an agreement born out of convenience, and with a focus on short terms gains and survival. We can expect big changes soon, at least from the networks. But with the rise of Dwolla, PayPal should be on its toes too.
This entry was posted in blog and tagged customer experience, mobile wallets, payments on September 7, 2016 by Manish Grover.
These bottom-up approaches are indeed required. They are important for innovation and individual enterprise to grow and flourish. They make employees passionate about the work they are doing. And initiatives such as these keep the ball rolling by making incremental innovations, instead of trying to execute a grand old strategy.
However, these initiatives must be supported by a grand old strategy to prevent us from running into inconsistent customer experiences between the multiple touch-points we all have with our customers. That’s true even for small businesses where the biggest limitation is time and resources.
In my book, I laid out 5 core principle of competing in a digital world. Of these, the principle of customer interaction can be used effectively to create the right CX framework. Other principles are important too but our grand old strategy can be reasonably jump-started by the use of this principle alone.
The channels – phone, email, in-person, in-store etc.
A cable company competing with incumbent DSL services touts its network of wi-fi hot spots. But customers struggle to use the wi-fi in many locations (various reasons). And their telecom provider constantly tells customers about the slow browsing speed at home. This is a classic case of CX dissonance, and how customers believe what they constantly hear. What we claim is not being reinforced by the physical experience. How do we mitigate this by messaging, CX changes and even strategic developments of the product?
When we visit a branch, we often finish our transaction at the teller, and then we’re off. And if they do initiate a dialog after that, its to sell a product or service, and hand us a brochure. Although, our financial well-being is something that banks have always touted on billboards, advertisements and on signs inside the branch. it’s so surprising that they don’t try to help us with our financial management without the strong sales push. How should we try to resolve this CX dissonance?
Its obvious that CX initiatives at both individual interactions as well as at the corporate level are needed to support each other. The individual initiatives can only do so much. They can resolve a “known pain” with a business scenario. Every business scenario has exceptional flows when things don’t go as expected. And that’s where the human enterprise and empathy really shines. Think of the associate who goes out of the way to help you with a return or a claim. Individual initiatives create a lasting impact here.
However, individual initiatives cannot be the anchor for our CX strategy. CX is to be enabled by a top down agenda of the right positioning, and enabling of touch points to support that positioning. And realizing the CX vision often needs product improvements and other overreaching corporate changes too. A simple step towards that journey may be to educate all our touch-points on how they are all working together to create the desired effect, and how interconnected they are.
This entry was posted in The Principle of Customer Interaction and tagged customer experience, CX, Digital on August 24, 2015 by Manish Grover.
It’s pretty common now to think of user experience (website or mobile design) in terms of customer experience design (how customers experience your overall brand). The Omni Chanel trends have made this even more necessary in today’s world.
The way I think about it is that customers (on the right hand side) have both primary and secondary needs. Traditionally we focused on their primary needs which was about the products’ direct value proposition – basically costs, features and customer service. In the new connected world, the secondary needs become really important as well – ability to share, being part of a community, reinforcement of choices, motivations for buying, education, ability to track orientation to personal life goals, safety, and security among others.
From this, we can easily see that conventional marketing and customer engagement when it comes to customer experience design have been very “projection focused”: who we are , what our products are, how great we have done, what we have done, who we work with etc. In other words, we rely on a brain dump on the customer and expect them to decide. We put the burden of choosing us on them.
I outlined these aspects more directly in my post on the The Principle of External Reinforcement. Here, I’ll discuss the following framework which is more focused on assessing how current channels are meeting these emerging needs.
Part A is very familiar. The way we have always analyzed our channels (web, mobile etc.). This traditional channels analysis wants to push content to customers, and make it easy to navigate. And that content is all about us, the seller.
Part B is the new way. It focuses on being a partner to the customer, not a seller. It seems very counter-intuitive but if you think about your own journey as a customer, you’ll see why this method is fast becoming the bulwark of customer engagement.
We no longer want to have to figure out how a company’s various products play with each other. We know its important, but we’d appreciate if they would do it for us, instead of just making sales pitches.
We’d like to know whether the products are even applicable to us. And if yes, how exactly will we benefit. We’d love to be advised rather sold the biggest possible deal.
For once, we’d appreciate tools that don’t sell, just help.
We’d like the seller to understand and sell us in context of what we already do, or have done with them. Otherwise, we have to go back and research this on our own anyway.
The reason behind the new way to engage customers is obvious. As humans, we trust and connect with channels that lead us to the “right” decision. Channels that successfully accomplish this become our go-to partners. And in this social world, that positioning also results in customers themselves becoming a contributor to that advice. We love to get, and we also love to help. It’s just human nature.
There’s a reason that when we have to get a new credit card or an account, we look to third party sites and opinion to give us feedback. But if the banks get rid of their marketing and try to educate us on what fits us best, and given the fact that the products are largely commoditized, my guess is that the first bank to do this will win big. And more so, when I already have a product from a bank. The effect will be to become a reference anchor in our minds, something that many banks are failing to do today.
Sending me coupons and promotions is great, but it’s only half the job done. How about if retailers help me decide what I should buy and what I should stay away from – even if they don’t sell what I really need. By entering in to a partnership with me, they might cut down dramatically on costs, and by knowing what I want (and my shopping basket), they may also be able to transform their inventory management.
The biggest things I look for as a customer is credibility (familiarity, expertise, experience, past results). In addition to spending money on jazzy marketing and taking me to ball games, how about focusing on educating me better on my needs. Helping me meet other customers like me, and sharing best practices and means to achieve my goals will make me more likely to bring you in.
Evaluating your channels and customer experience by using the new model will throw up insights that will bring you closer to your customers. You’ll be thinking about what they need, rather that about how to present more about yourself.
Based on the principles in my book Dancing The Digital Tune: The 5 Principles of Competing in a Digital World.
This entry was posted in blog, The Principle of External Reinforcement and tagged customer experience, Omni channel on June 25, 2015 by Manish Grover.