Saturday 2 August 2008

Have a free lunch

I’ve gone on repeatedly in this column about how there’s no such thing as a free lunch, meaning that people can’t ever really expect to get something for nothing. The free blankets offered as an incentive when you buy a set of furniture aren’t free at all. The store included the blankets in the price of the furniture in the first place. You’re paying for them whatever you do.

So just to break the rules we’re going to give stuff away this week. Nothing physical, better than that, better than a free t-shirt, better than a baseball cap, better than a corporate rucksack.


This week it’s the idea give-away. These are ideas that many organisations can adopt with little investment, with only a little effort and that we think may bring significant returns.

Save The Planet Discounts

We’re running out of electricity, only a couple of years ago we had no water and soon we might even run low on basic foods. It’s all doom and gloom and whether we like it or not we all have to cut down a bit. It’s in our interest to do this for many reasons. It’s the environmentally friendly thing to do, it’ll help reduce waste and, most selfishly of all, it can save us money.

But why don’t the utility companies, the ones that deliver us our electricity and water encourage us to reduce our consumption? I don’t mean with encouraging advertising campaigns, I mean something practical, a real encouragement to reduce our consumption?

Why don’t BPC and the others give money back to those consumers who reduce their consumption the most? They have the technology and the information to do this. They know how much power we all used last month, last quarter and last year. I think it would be a real encouragement if at the bottom of our power bills they added a line that said something like “BPC has calculated that you used 10% less power last month than you did in the same month last year so we’re knocking off 10% of your bill this month”. That would be a real incentive don’t you think? We’d be getting money back to reward us for following their advice on saving power.

It would reward the conscientious, power-saving, patriotic customers for doing the right thing. The really interesting part would be if they also did the opposite. Add an alternative comment on the bill that said “You used 10% more power last month than you did in the same month last year so we’re adding a 10% penalty to your bill. Stop wasting power!”

It’s all very well asking people to do the right thing for the right reasons but why not give them an incentive in the pocket as well?

Focussed rewards

This one is for banks but it could also be used by insurance companies, micro-lenders, even the stores that sell on illegal credit (if you can’t remember why some of them are illegal check out our web site for more details).

Banks keep track of everything their customers do. Every time they put money in, take money out, move money around, every time they pay a bill, fail to pay a bill or pay a bill late. They must have amassed vast quantities of data on us, our spending habits, and, most of all, whether we’re good customers or not.

I read a report some while ago about a bank in Portugal who had started to analyse their data in some detail. They came up with some interesting results. They found, for instance, that they could predict which customers were going to leave the bank and take their money elsewhere. One of the key predictors of customers leaving was that they would always, in the 2 or 3 months before stomping off in a huff, clear their credit card bill rather quickly. The bank then set up their technology that it would alert them when a customer started doing this. All it took was a phone call from a senior manager to sweet-talk the customer, address their dissatisfactions and send them a box of chocolates and they could prevent the loss of a valuable income-creating customer.

I think we should begin to expect banks here to do the same. I want to see banks focussing special offers on the customers that really deserve them. Instead of offering us all the fancy new accounts, the cheap loans and the gold credit cards why can’t they be more focussed? Offer those customers who have never defaulted on their loan repayments a lower interest rate on their next loan. Offer the customer who always pay his credit card bill promptly every month a reward. The customer who never exceeds her authorised overdraft limit should get a prize.

Yes. It may seem patronising but why don’t banks reward the good customers rather than treating everyone the same. There’s no point in being all politically correct about it, some customers are better than others so banks should treat them accordingly.

Above all I think I want to see my bank spending the profits they’re making from my overdraft by using their “intelligence” intelligently and I think we should all expect the same.

Free ideas?

The key idea is for an organisation to use the information it has to maximum advantage. It is, after all, why they capture it, isn’t it? Start converting the data they have into valuable information and then, if they are courageous enough, into knowledge and then into action. They’ll become better, more productive organisations and their customers will get better, more flexible and cheaper services.

This week’s stars!
  • Kabelo Johannes from the Ministry of Finance and Development Planning who, we are told, is a true service star

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