The Next Wave.
We are constantly bombarded with news around the current platforms creating disruption. We all know them (sharing, connecting, aggregating, etc).
Today's blog post is not about these current disruptions. What I want to start is a deeper contemplation as to what the potential next wave of disruption will be.
Most of the people who read this will have spent the last 10 to 30 years honing an extremely sharp set of specific skills that is very marketable. If you have analysed the job market trends, you are probably also spending a lot of time collaborating with other professionals at the top of their game. You are probably collaborating, not competing.
Consider this:
With over 7 billion people on the planet, your skills, abilities and experience are not completely unique. If you are lucky, you just happen to be the only person in your local area with them.
What if you were able to convert all those skills, abilities and experience into a system / platform to allow others to operate at close to your capability? Lessor skilled or experienced people would be able to follow your framework to execute at a higher level and help them grow. I am currently dealing with companies who are building these Software as a Service (SAAS) platforms to replace highly skilled and difficult to recruit positions and allow those roles to be executed by more junior people who can grow into those roles over time.
If you are not creating a disruptive platform out of your unique skills, abilities and experience off the back of your personal brand, someone else will and YOU personally will be disrupted.
Be ready to surf that future wave or make sure you have your tissues packed.
Have a great day!
Ross.
www.TheMcKinnonGroup.com.au
Tuesday 8 September 2015
The next wave of disruption
The world has changed. Tiny components of software and hardware can now be purchased online at an extremely lost cost with open architecture platforms. The wave of transformation has been occurring for decades, but the speed of change is increasing, but still we constantly see things which make us question why? Why do it that way?
Tuesday 1 September 2015
Digital Execution. Brisbane City Council vs Queensland State Government
Hi Everyone,
When executing digitally, always exceed the customers current expectation and map their entire journey.
Queensland State Government
This story starts with me running on time (but with no spare time) for a meeting and driving 84 klms per hour in an 80 zone. I turned a corner a little quicker than I probably should have and was promptly pulled over by a police officer from highway patrol.
I wasn't pulled over for speed or my cornering technique.... My car had been unregistered for 79 days.
79 days!!!! I was aghast! How did that happen? I believed I paid it back in May. I thought through the full implications of this including insurance coverage and I was suddenly very embarrassed and extremely grateful to the officers that had pulled me over.
At this point, the officer informed me that I could download an APP for my phone to keep track of my vehicle registration.
If this has happened to me, then I wonder how many other people were having the exact same experience each day.
This is poor digital execution by the state government. 12 months ago, I was actually happy when I no longer had to worry about taking off and putting on the new sticker on the windscreen. But I now realised that the little sticker for all these years has been performing a dual purpose. It was also my visual reminder to ensure I paid my registration on time. Every time I hopped into my car, I had a visual reminder of when my registration was due and if it ever became overdue. It is the same for when my car service is due.
My next thought was how did they fail. The people executing the digital transformation for the state government did not completely map out the customer journey. Part of the current customer journey is the daily visual reminder (not looking at an App on your phone once per year). They trusted that the one posted reminder (the bill) would be sufficient. This is such an important process that it either needs a visual reminder or a push notification to break into the limited attention span of the customer. It is an annual task, so installing an App is not the answer. This will never be one of the key App's of the consumer.
How can this gap in the journey map be solved? There are plenty of options.
Push notifications - email, SMS, automated call, something to let the owner of the vehicle know that they have missed an annual appointment. They have all our data... Notify us the day it is overdue.
As a side note, the two gentlemen from Highway Patrol were really nice and professional. I was let off with a warning (the transport department consider it an acceptable defense that I believed I had paid for it). They escorted me to my meeting for safety reasons where I paid my registration online extremely smoothly.
Brisbane City Council
This story starts with me running on time (but no spare time) to catch a ferry to get to a meeting in the city. I had parked in a 4 hour BCC carpark. I didn't have the time to pay as the ferry was approaching the terminal and I was second in line. I took a photo of the iPark service and figured I would work it out on the way.
I had it worked out before I even got on the ferry. Talk about easy. Create an account and SMS +61 427 247 275 with
2hr 5201 123ABC (123ABC was my licence plate and 5201 the parking terminal)
As the two hours was approaching, I realised that this meeting was still resolving itself and I wouldn't get back to my parking on time.... 'DING' went my phone. 'Your parking is about to run out, would you like to top up?' A reply SMS by me and the parking meter was topped up and was no longer an issue.
When I got back to my car I sent a 'Clockoff' SMS and received a refund for the left over time. Admittedly, it was only $1.38 refund, but isn't this such a clear example of exceeding customer expectations. I am never going back to the old way of paying for parking. The Brisbane City Council have done an excellent digital adoption to a daily problem experienced by many people.
Summary
For all of your digital transformations, do you have a complete customer journey map with all the touch points including all the senses and expectations of your customers?
Have a great day!
Ross.
www.TheMcKinnonGroup.com.au
When executing digitally, always exceed the customers current expectation and map their entire journey.
Queensland State Government
This story starts with me running on time (but with no spare time) for a meeting and driving 84 klms per hour in an 80 zone. I turned a corner a little quicker than I probably should have and was promptly pulled over by a police officer from highway patrol.
I wasn't pulled over for speed or my cornering technique.... My car had been unregistered for 79 days.
79 days!!!! I was aghast! How did that happen? I believed I paid it back in May. I thought through the full implications of this including insurance coverage and I was suddenly very embarrassed and extremely grateful to the officers that had pulled me over.
At this point, the officer informed me that I could download an APP for my phone to keep track of my vehicle registration.
If this has happened to me, then I wonder how many other people were having the exact same experience each day.
This is poor digital execution by the state government. 12 months ago, I was actually happy when I no longer had to worry about taking off and putting on the new sticker on the windscreen. But I now realised that the little sticker for all these years has been performing a dual purpose. It was also my visual reminder to ensure I paid my registration on time. Every time I hopped into my car, I had a visual reminder of when my registration was due and if it ever became overdue. It is the same for when my car service is due.
My next thought was how did they fail. The people executing the digital transformation for the state government did not completely map out the customer journey. Part of the current customer journey is the daily visual reminder (not looking at an App on your phone once per year). They trusted that the one posted reminder (the bill) would be sufficient. This is such an important process that it either needs a visual reminder or a push notification to break into the limited attention span of the customer. It is an annual task, so installing an App is not the answer. This will never be one of the key App's of the consumer.
How can this gap in the journey map be solved? There are plenty of options.
Push notifications - email, SMS, automated call, something to let the owner of the vehicle know that they have missed an annual appointment. They have all our data... Notify us the day it is overdue.
As a side note, the two gentlemen from Highway Patrol were really nice and professional. I was let off with a warning (the transport department consider it an acceptable defense that I believed I had paid for it). They escorted me to my meeting for safety reasons where I paid my registration online extremely smoothly.
Brisbane City Council
This story starts with me running on time (but no spare time) to catch a ferry to get to a meeting in the city. I had parked in a 4 hour BCC carpark. I didn't have the time to pay as the ferry was approaching the terminal and I was second in line. I took a photo of the iPark service and figured I would work it out on the way.
I had it worked out before I even got on the ferry. Talk about easy. Create an account and SMS +61 427 247 275 with
2hr 5201 123ABC (123ABC was my licence plate and 5201 the parking terminal)
As the two hours was approaching, I realised that this meeting was still resolving itself and I wouldn't get back to my parking on time.... 'DING' went my phone. 'Your parking is about to run out, would you like to top up?' A reply SMS by me and the parking meter was topped up and was no longer an issue.
When I got back to my car I sent a 'Clockoff' SMS and received a refund for the left over time. Admittedly, it was only $1.38 refund, but isn't this such a clear example of exceeding customer expectations. I am never going back to the old way of paying for parking. The Brisbane City Council have done an excellent digital adoption to a daily problem experienced by many people.
Summary
For all of your digital transformations, do you have a complete customer journey map with all the touch points including all the senses and expectations of your customers?
Have a great day!
Ross.
www.TheMcKinnonGroup.com.au
The world has changed. Tiny components of software and hardware can now be purchased online at an extremely lost cost with open architecture platforms. The wave of transformation has been occurring for decades, but the speed of change is increasing, but still we constantly see things which make us question why? Why do it that way?
Tuesday 21 April 2015
Is Time Running Out For Our Big Banks?
Hi everyone, I did a blog post almost a year ago about traditional banks and it has been interesting to see what has happened in a year. It is time for a another post at how they are missing the mark. I personally have lowered my expectation on their long term growth potential with their model coming under strain through digital disruption and direct consumer connections.
Bankground (to reiterate what you already know)
If you analyse hundreds of the banks income streams and if you spend time analysing the financial statements of the large institutional banks around 2/3rds of their income in general comes from a margin on interest of around 2%. Across the entire industry, the funding cost (including all costs) comes in at around 1.5% less than what they lend it out at (home, consumer and corporate). It is all basic stuff that we all know and lets ignore local deposit growth which has funded lending recently.
The banks then have side financial products (insurance, payments, etc). The market share on these products is getting eroded with so many new entrants into the marketplace.
They key to owning the banking industry however is home loans. That by far is the largest chunk of banking revenue, but it is much more valuable that that.
The humble home loan is the lead into creating a deep and personal relationship between the bank and that customer. I will say that again.... When a bank is chosen to be the provider of an individual's home loan, it is the largest and most relevant investment for a large proportion of the Australian population and gives the chosen bank an incredible opportunity to create a lasting relationship. It is the same as jewellery retailing, when a customer chooses an engagement ring from your organisation, it is deeply personal, emotional and the potential start of a lifelong relationship. The customer has their strongest bond with you in that field.
Some background figures for Australia
Average home loan size is around 300k (~9 million homes, 40% some form of residential loan)
around 15% of households have a vehicle loan debt
around 100,000 people are first home buyers per year
around 250,000 people refinancing on their existing property
around 450,000 new loan on a new property
Banks own 90% of the home loan market
In the whole, the market is reasonably stable. The 700k of people who are refinancing or getting a second or new loan generally go to their existing bank or shop around causing minor churn. The interesting component is the 100,000 first home buyers who represent ~$750 million annual ebit entering the market every year.
Over time, whoever can capture that market for life (with all the additional financial products) will grow to dominate the Australian banking market.
Currently all the traditional banks are doing very little. They blast advertising on television and use all the traditional marketing techniques, but have a think about who already has a relationship with these people.
First home owners have a bank account, they have a credit card, they have a mobile phone, around 70% of them shop at either Coles or Woolworths and they have a lot of friends. This market typically has a fairly thin credit file (the new positive credit reporting changes will be very helpful) and not a lot of information is known about them.
What methods are banks are using to acquire these customers:
1) The balance transfer - lets move your credit card debt over to us for a low temporary rate and we will start to get to know you. Nothing positive comes from managing a customers credit card facility. It has a huge interest rate, late fee penalties and points that are near worthless at 0.5 cents per dollar spent. That being said, banks do it to acquire a customer.
2) Brokers - It is far too late by this stage. It is a fight to the bottom of the margin barrel to acquire the customer.
3) Advertising - blast TV advertising. It does have subliminal affect, but I would question the return on marketing $ spent in this area with the recent fragmentation of media. The explosion of channels and Netflix etc and a large number have been using anonymous proxies for several years. These people are the younger generation and they will be the ones who will be first home owners.
4) Referral usually by friends and older family. Banking is not utilising this area enough. They expect it will naturally come their way with the first savings account and then naturally the first credit card.
5) Telco - Bendigo bank has diversified into becoming a telecommunications provider. They are trying to create a relationship with the younger customer. I think the franchise model of banking is an interesting one and worth a separate blog post at some point.
6) Technology - they are investing in technology to smooth out the customer experience and ease. They cannot acquire customers this way, but they may lower the churn.
It seems obvious that Woolworths and Coles are about to offer home loans. They already have a strong relationship with 70% of the population, including the first home owner market.
The merchants have been recruiting heavily in the banking technology space over the last 2 years as a preliminary move to prepare for their banking offerings, but they have also been very smart and investing in analytics engines such as Woolworths purchase of Quantium 2 years ago. If your credit card is already with Woolworths, they already know all your purchase history across all retailers / service providers and they will be able to provide an extremely well constructed targeted first home loan offer to a Woolworths loyalist.
The banks at their core must be retailers and adopt customer centric retail relationships. Operate how successful retailers do otherwise their customer base will decline.
The banks are already stagnating with their customer base. They have to attract new customers in the same way that successful retailers and merchants have always done. It is rare to see a bank with growing total customer numbers.
Have a great week!
Ross.
Bankground (to reiterate what you already know)
If you analyse hundreds of the banks income streams and if you spend time analysing the financial statements of the large institutional banks around 2/3rds of their income in general comes from a margin on interest of around 2%. Across the entire industry, the funding cost (including all costs) comes in at around 1.5% less than what they lend it out at (home, consumer and corporate). It is all basic stuff that we all know and lets ignore local deposit growth which has funded lending recently.
The banks then have side financial products (insurance, payments, etc). The market share on these products is getting eroded with so many new entrants into the marketplace.
They key to owning the banking industry however is home loans. That by far is the largest chunk of banking revenue, but it is much more valuable that that.
The humble home loan is the lead into creating a deep and personal relationship between the bank and that customer. I will say that again.... When a bank is chosen to be the provider of an individual's home loan, it is the largest and most relevant investment for a large proportion of the Australian population and gives the chosen bank an incredible opportunity to create a lasting relationship. It is the same as jewellery retailing, when a customer chooses an engagement ring from your organisation, it is deeply personal, emotional and the potential start of a lifelong relationship. The customer has their strongest bond with you in that field.
Some background figures for Australia
Average home loan size is around 300k (~9 million homes, 40% some form of residential loan)
around 15% of households have a vehicle loan debt
around 100,000 people are first home buyers per year
around 250,000 people refinancing on their existing property
around 450,000 new loan on a new property
Banks own 90% of the home loan market
In the whole, the market is reasonably stable. The 700k of people who are refinancing or getting a second or new loan generally go to their existing bank or shop around causing minor churn. The interesting component is the 100,000 first home buyers who represent ~$750 million annual ebit entering the market every year.
Over time, whoever can capture that market for life (with all the additional financial products) will grow to dominate the Australian banking market.
Currently all the traditional banks are doing very little. They blast advertising on television and use all the traditional marketing techniques, but have a think about who already has a relationship with these people.
First home owners have a bank account, they have a credit card, they have a mobile phone, around 70% of them shop at either Coles or Woolworths and they have a lot of friends. This market typically has a fairly thin credit file (the new positive credit reporting changes will be very helpful) and not a lot of information is known about them.
What methods are banks are using to acquire these customers:
1) The balance transfer - lets move your credit card debt over to us for a low temporary rate and we will start to get to know you. Nothing positive comes from managing a customers credit card facility. It has a huge interest rate, late fee penalties and points that are near worthless at 0.5 cents per dollar spent. That being said, banks do it to acquire a customer.
2) Brokers - It is far too late by this stage. It is a fight to the bottom of the margin barrel to acquire the customer.
3) Advertising - blast TV advertising. It does have subliminal affect, but I would question the return on marketing $ spent in this area with the recent fragmentation of media. The explosion of channels and Netflix etc and a large number have been using anonymous proxies for several years. These people are the younger generation and they will be the ones who will be first home owners.
4) Referral usually by friends and older family. Banking is not utilising this area enough. They expect it will naturally come their way with the first savings account and then naturally the first credit card.
5) Telco - Bendigo bank has diversified into becoming a telecommunications provider. They are trying to create a relationship with the younger customer. I think the franchise model of banking is an interesting one and worth a separate blog post at some point.
6) Technology - they are investing in technology to smooth out the customer experience and ease. They cannot acquire customers this way, but they may lower the churn.
It seems obvious that Woolworths and Coles are about to offer home loans. They already have a strong relationship with 70% of the population, including the first home owner market.
The merchants have been recruiting heavily in the banking technology space over the last 2 years as a preliminary move to prepare for their banking offerings, but they have also been very smart and investing in analytics engines such as Woolworths purchase of Quantium 2 years ago. If your credit card is already with Woolworths, they already know all your purchase history across all retailers / service providers and they will be able to provide an extremely well constructed targeted first home loan offer to a Woolworths loyalist.
The banks at their core must be retailers and adopt customer centric retail relationships. Operate how successful retailers do otherwise their customer base will decline.
The banks are already stagnating with their customer base. They have to attract new customers in the same way that successful retailers and merchants have always done. It is rare to see a bank with growing total customer numbers.
Bankers need to hire retailers and merchants.
Have a great week!
Ross.
The world has changed. Tiny components of software and hardware can now be purchased online at an extremely lost cost with open architecture platforms. The wave of transformation has been occurring for decades, but the speed of change is increasing, but still we constantly see things which make us question why? Why do it that way?
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