Thought readings 2

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Each week I capture, mark, and comment on blog posts and news articles around the internet. This is short list of three links that I think others will find valuable for their thought lives.

  1. Aero aimed at TV cable cord cutters by Kay Bachman at Adweek announces a new service to bring cable television programming to internet connected devices. I have a dream one day to cut my cable TV cord. I just wish my family shared the same dream.
  2. Digital marketing matures beyond “best practices” by Scott Brinker at Chief Marketing Technologist. This is a thoughtful piece that discusses the maturation of landing page creation. Brinker lists a set of principles higher than any check-list that are relevant for landing page (and other marketing disciplines) creation.
  3. Study finds huge drop in corporate blogging by Helen Laggatt at Biz Report. Laddatt reports that the number of companies in the Inc. 500 that are keeping active blogs has dropped to 37%.  Producing relevant content consistently is hard work. Does the work strain big corporations or is it a matter of proving ROI? You decide.

Let me know what links you shared, tagged, or commented on this week.

Using LinkedIn for Client Forums

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Client forums are a valuable tool for gathering input and creating an open dialogue on industry relevant topics.  Positive take-aways are numerous and include:

  • Creating a space where clients can hear what each other are doing and discuss common needs
  • Gaining input on industry topics to aid with new product development
  • Finding pilot clients for testing new products
  • Strengthening relationships
  • Showing relevancy for your company

It’s not always possible to host these forums in-person, so I posted a question in the LinkedIn Answers area about using private LinkedIn groups as a client forum.

 

http://www.linkedin.com/answers/management/planning/MGM_PLN/970296-2204068

 

I’d like your input as well either on the question answer section at LinkedIn or in the comments area of this post.

Attacking process waste

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I don’t like process waste.

Who does? But how many of us really try to change processes to eliminate or reduce waste? In my experience this is a tough topic, and I dare say an unwelcome one, most of the time. The problem is that in an organization processes are tied to job existence and security. So the people in charge of setting the processes and administering them really don’t see the incentive to make adjustments.

I’m nearing my 20th year of software development experience, so I’ve observed and talked to many practitioners about software development process philosophies and techniques. Process waste starts to build when the people within the organizations place more importance on the process steps (requirements, estimates, and schedules) instead of the process output. The ultimate goal of software development is to make money by producing output. Waste takes away from the output.

Business case modeling and estimates are a common area for waste.

Let me start by saying that business case modeling and estimates are a necessary part of software development. The problem arises when the business case and estimates begin to consume a large percentage of the organizations time and a large percentage of the work is rejected. All of the work becomes throw-away because it has not created a return. Ironically the entire point of the business case is to prevent waste. We don’t want our organizations to produce product that does not yield a financial return.

Think about it. If the software development team is constantly estimating and scoping projects that are not approved then it reduces the amount of usable output created for the business.

The theory of constraints is a critical teaching to understand.

The Wikipedia entry for the Theory of constraints quotes Eliyahu Goldratt.

The underlying premise of theory of constraints is that organizations can be measured and controlled by variations on three measures: throughput, operational expense, and inventory. Throughput is the rate at which the system generates money through sales. Inventory is all the money that the system has invested in purchasing things which it intends to sell. Operational expense is all the money the system spends in order to turn inventory into throughput.

In a perfect world, everything the software development team touches is processed into work output that generates money. We don’t live in a perfect world, but we do want the throughput of the system to be optimized. So it should produce money making output as quickly as possible. Work that is started and later thrown out is like throwing away inventory and only increases the overall operational expense of what it takes to get good output.

You have to work the constraint.

I’m a strong advocate that software development needs to focus on features, not projects. Projects are by definition unequal in size and length. Features are smaller in size, easier to understand, quicker to estimate and assist with providing more consistent system output. Bloated projects tend to have large price tags, take weeks to estimate, and are more likely to be rejected by management.

Think about the project approach. A team may spend two weeks creating a business case to review with management. Then the development team spends another two weeks estimating umpteen features. If the project is rejected then there is four weeks of effort that creates $0 of sellable output. The exercise devolves into a discussion about a single cost to build and the the time required to do so. It’s all or nothing and the focus on the goal of making sellable output is lost.

So if we want to work this particular constraint in the system then we need to evaluate each feature on its ability to achieve the end goal. Everything else is really just noise waste.  I hate waste.

Thought readings 1

Each week I capture, mark, and comment on blog posts and news articles around the internet. This is short list of three links that I think others will find valuable for their thought lives.

  1. The Book Every Analytics Professional Must Read by Douglas Karr at Marketing Tech Blog.  This post hit me in two my passion zones of baseball and internet analytics. I previously saw Moneyball as well and like the parallels Karr draws towards measurement of what really matters for your eCommerce store. Moneyball is on my “to read list”.
  2. 6 Tips for Improving Twitter Link Click Through Rate by Linda Bustos at GetElastic.  I like this examination of how to get a message more noticed. Whether it’s Twitter or some other medium this is part of the life of a marketer. See how many of these tips you are already performing with your tweets.
  3. Pinterest quietly profits off its users’ links by Laurie Segall at CNN Money. Pinterest has received a bunch of media attention lately. My first impression was a visual Delicious. As for making profits on links I think that most people respect making a profit. But the company should be transparent about it. Social networks like this are used by the choice of the poster and reader. They just need to know how the game is played.


Let me know what links you shared, tagged, or commented on this week.

Customer loyalty through debit card reward programs

Debit cards received significant attention in 2011 after the Durbin amendment in the Dodd-Frank Act set the maximum interchange fee for a single card transaction to 21 cents plus .05% of the purchase charge. Large banks responded by removing debit card rewards programs and introducing debit card usage fees.  The new fees were not popular with the public and the large banks soon reversed the fees due to customer complaints and a reduction in new account openings.

Then merchant-funded reward programsappeared as a derivation of the rewards program and resulting fees. In this program, a local merchant works with a bank or credit union to offer a discount/reward to the consumer for the merchant’s product or service. The amount of the discount and the time it is redeemable will vary. It’s a like a coupon that is later credited to the consumer’s account. The consumer sees the offer in their online banking interface and must accept or add the special reward to their account. When the consumer uses their debit card with the merchant it triggers the discount to be paid back into the account from which the debit is withdrawn.

Merchant Funded Rewards
A sample of some reward options that appeared to me this month

It works for financial institutions because it gives them a lower cost to service the debit rewards programs. Instead of funding a percentage reward on each transaction, the financial institution is only paying an agreed portion of the administrative overhead to manage the program. The Merchant pays the discount to the consumer and in some cases a referral fee back to the financial institution.

Merchants are able to target consumers in a specific customer segment and collect information about which segments are attracting the most customers. Of course they also win by selling extra goods and services. But with the marketing data they can collect will help them better target customers for future promotions. The Merchant reduces their financial risk because they only pay a referral back to the financial institution if the customer completes a transaction.

I brainstormed to think of some ideas for how the program administrators might tweak the program in the future to see if will gain greater usage and adoption by consumers. Here’s my list:

* Allow the customer to deposit their reward earnings to a savings/money market account. I think this is more of a psychological play for the FI than a practical win for the consumer. No one will get rich off of the debit transactions that they earn. But it’s favorable to promote healthy savings habits and this would be an easy way to throw a few extra dollars that way.

* Allow the customer to designate a charity to receive their reward earnings. The idea is to be able to pool customer rewards together for a more significant charitable contribution. It gives the customer a sense of working with their community (fellow account holders) to help a worthy cause. It’s also a good way to promote how the financial institution is supporting a local cause.

* Setup debit card usage tiers that earn discounts on other products and services from the financial institution. Examples include reduced closing costs on a mortgage, reduced loan rate, an increased rate on a CD, etc. The idea is to use the debit card program as a loyalty builder that provides leads to other products and services within the financial institution.

I see the program in action every week because my credit union is a participating financial institution in the program. I’m not a big debit card user but I like how the program is structured because it provides something for the consumer, merchant, and financial institution. That’s a  win-win-win for everyone.