The busiest time of year is approaching and you’re running ads to increase acquisitions and revenue…
Let’s say you acquire two new customers at an acquisition cost of $20 each. Luke spends $50 & Jason just $25. Luke, therefore, represents a better ROI, right? Well, initially yes, but perhaps we’re thinking too short term as Jason returns at a later date and spends another $100.
Instead of focussing on short-term ROI, businesses should consider a customer’s lifetime value. Businesses need both Lukes & Jasons but by focusing on acquiring high-value customers revenues will increase, your business will grow and all shall be donning ear to ear grins.
If lifetime value does not exceed cost of acquisition, however… you get the picture.
So how do businesses identify, target and acquire high value customers while inspiring long-term loyalty? Well, we provide a tailored experience using RFM segmentation: Frequency, Recency & Monetary.
Imagine you’re the proprietor of a coffee shop (the kind that sells drinks prefixed with too many adjectives) & want to introduce a 50% discount voucher. Ok, great. Offering a discount to customers with a low frequency may be a great way of enticing them through the door.
Now consider a customer that religiously purchases their dirty, skinny chai latte each day without fail. Their frequency is already high so a 50% discount is probably the wrong approach. Instead, you could give them a free hamper on their birthday; you already know what they like.
In DV STREAM: LIfetime ROI, Suraj Pabari discusses how you can develop a strategy to retain high-value customers and increase loyalty with low-value customers.
by Paul Scott, Director and Board Advisor at Digital Village
Payment Platforms are often referred to as the rails on which commerce transacts. It’s an interesting analogy, given the gauge of rails used today on most of the world’s train tracks were established by the Romans over 2,000 years ago, and has not changed significantly since in most parts of the world. Payments Platforms haven’t been around for the equivalent of seconds, but we have multiple incarnations, and none entirely seems to meet customer needs.
Technology can be tricky bedfellow. Take payment platforms for example. Before ‘digital’ was even a twinkle in John Vincent Atanasoff’s eye, banks were using multiple payment reconciliation methods — all paper-based of course. Records were kept in dusty ledgers scribed with ink pens by crusty men in starched shirts and voluminous morning coats.
Roll forward 90 years, and here in Australia, we have an abundance of digital payment platforms. Which is odd, because usually when technology replaces manual processes, you’d expect some degree of consolidation, streamlining and a leap forward — innovation perhaps.
Eftpos was born some ten years later and stands for electronic funds transfer at point of sale. It’s principally aimed at credit, debit and payment terminal transactions. Its also owned by the big four banks via a company called Cardlink.
BPAY was established in 1987 by the big four banks in Australia. It was the world’s first phone-based payment system. Nowadays its a full-blown digital bill payment platform.
The New Payments Platform is owned by 13 banks. It’s the new kid on the block, formed in 2013 and launched to the public in 2018. They were given an innovation mandate and launched an instant settlement process which uses phone numbers, email addresses as well as ABN’s.
Between them, each of the three principle payment platforms serves every business and consumer in Australia, but why three? Well, it’s a result of several factors, federal, industry institutions, regulators and the banks all had a hand to ensure the applecart remains upright.
Now there’s a move to seek consolidation, but just how long that will take and what the composition of the outcome could look like is anyone’s guess. There’s a bucket-load of vested interest and the glacial pace of change in banking to consider. In their wisdom, Australian Payments Council chair Robert Milliner has been appointed as the independent convener of a special industry committee examining NPP Australia’s proposed merger with BPay and Eftpos.
Not content with the existing complexity APC’s decided to have Milliner’s committee operate within a NPP-owned subsidiary, Industry Administration Committee Pty Ltd (ICA).
The purpose of ICA is to establish a governance framework for “making non-binding recommendations” on the merits of merging NPP Australia’s operations with the two domestic payments schemes.
The technology aspect of this is interesting. It’s a classic case legacy myopia. The core systems underpinning BPAY and Eftpos are 40 years old. Ask any digital solution builder what they’d recommend its likely to be ‘Reno’ versus ‘Doer-Upper’. In other words, it would be easier, quicker and better to build from scratch. Why? Because it takes 1/10 of the time to build the equivalent of 40 years ago and costs a fraction of what it takes to consolidate and build on top of existing computer code.
Speaking to people like Andrew Walker — the Impatient Futurist and you understand the logic. He’s spent a career showing retailers, banks, and insurance companies that building and consolidation on top of old systems is a waste of money and never delivers the desired outcome. Better to start with a blank screen, start solving one problem at a time and deliver outcomes users need.
Likewise, a senior executive in one of the three principal platforms explained it as follows: “Another industry insider concluded: “I feel the big four banks, in their current form, are not good for Australia, particularly over the longer term. They need to innovate, with a view to extending their business into a ‘platform’, with open support and collaboration for new entrants. An ecosystem if you will. Only this will deliver useful products and services to the Australian market and ensure the ongoing relevance of the big 4.” He concluded: “Otherwise, bring on the ‘asteroid’ for these dinosaurs.”
What happens next? Well, major shareholders in each of the platforms — the banks — will examine the landscape, sound out the regulators and oversight boards and decide what they can get away with. Sorry, I mean they will have an epiphany, recognise the extraordinary opportunity they have to leap forward with a new technology solution to payments people want and need. Maybe.
Whether you’re a start-up, small business or established enterprise, the need to move fast, fail faster and adapt in today’s market is crucial. Design Sprints allow you to solve complex problems in just five (or even four) days and unlock the benefits of Agile.
Agile methodology is an iterative, incremental response to the inadequacies of traditional software development and allows companies to move faster and meet the requirements of customers. The principles of Agile and the wider application of organisational agility (there is a distinction) have swept throughout Silicon Valley as businesses continue to race from idea to market.
Although I wholeheartedly think if you’re not adopting the methodology (at least somewhere in your innovation process) something is wrong, Agile is not a “silver bullet” solution… nothing is. Testing and cooperation are integral to the customer-centric principles of Agile and validating an idea can be, well, time-consuming.
Cue Design Sprints.
Developed by Jake Knapp out of Google’s Venture division, The Design Sprint is a pressure cooker, collaborative process that can take you from idea to tested solution inside of five days. Yes, really. In fact, organisations like AJ&Smart have released a 2.0 version that streamlines the process to just four days.
By the end of the Sprint, you have a tangible, tested prototype that you built together. Think of it as a crystal ball into the future: you’re able to gain valuable customer insight without committing the time and capital of building a real product. With a little bit of experience, you can also utilise the process to develop everything from complex marketing strategies to kickstarting a new business.
So what does a Design Sprint look like?
First things first, you need somebody dedicated to driving his new way of thinking. You need a facilitator. Regardless of their involvement in the business, they are able to provide an outside perspective and guide you through the discovery process. The ideas are in there, they just need to be extracted and ordered.
Next, you need the commitment of your team for the intensive (but short) process. Dedicating time can be one of the biggest challenges for any business, big or small, but consider the potential wasted months developing the wrong product.
Day 1 // Definition
Kick off the first day by unpacking the problem space and validating the idea. These structured conversations are the foundation of the Sprint as we define your “North Star”. This unwavering definition of purpose will be a constant point of focus to ensure you’re solving the problem.
Who are your customers? What do they need and what drives this need? Begin to build out a simplified customer journey and kickstart the magic of the sprint process. Using a simple “how might we…” process you can begin to source opportunities and create the basis of your new idea. Through voting and a process of elimination you’ll decide which ideas to take to the next stage.
Having considered your customer segments, now is the time to start organising your 4-6 test subjects for the final day. Remember, the aim of the Sprint is to have a tested prototype so subjects are crucial to the process!
Day 2 // Sketch & Decide
Firstly, we want to make sure we’re happy with the idea we’ve chosen. Validation throughout the whole process is crucial to success so key decision makers must be in the room (or can drop in and out as the days progress.
We all see things differently. In fact, the collaborative effort and combined creativity of Design Sprints make it such a powerful tool when building new ideas. Lightning demos are a great way of inspiring creativity and gaining the most from the ideation stage. Take time to find things relevant to the idea that inspires you and share with the group.
It’s time to bring the idea to life. Utilising the process of Crazy Eights, everyone in the room will begin to turn their ideas into written (or drawn) product pieces and share them via a personal two-pager storyboard. Another round of voting begins…
The team reviews all the ideas and ultimately votes on which one to take to prototype. Make sure the ‘decision maker’ is in the room as unsurprisingly they have the final say. Decision made.
Now start to visualise the solution and transform the personal storyboards into blueprints on the wall. A facilitator will begin to draw out the idea, frame by frame, as everybody discusses how it should look.
Day 3 // Prototyping
With the blueprint complete, it’s time to create something tangible that can be tested with real customers. It doesn’t need to be a complete solution, just enough to take the potential customers on a journey and communicate the idea. The team can utilise pieces of paper to develop the prototype, or if possible, translate it using tools like Miro and Figma.
Day 4 // Test & Learn
Your customer was defined at the start of the process and should now be in the room with you. It’s the moment of the truth. Present your idea with the prototype and gather feedback. Was the feedback positive? If so, great! You can start developing the project utilising the agile methodology previously mentioned. Was the feedback average? Is there a way to pivot the idea and refine the solution? Hopefully so.
Was the feedback, let’s say, less than average? Maybe it’s time to scrap the idea and try something different. Trust me, it happens. But at least you didn’t invest months into R&D to discover it wasn’t what the customer needed!
Chris Sinclair is a Digital Experience Designer & Strategist responsible for working with start-ups and organisations to develop products and go to market strategies utilising agile & design sprint methodologies.
by Paul Scott, Director and Board Advisor at Digital Village
The fall out from COVID-19 has yet to be fully understood, but one thing’s for sure; enterprises will be seeking fast, efficient and flexible ways to solve their problems with digital solutions. Projects have been backing up during the lockdown and now’s the time to begin clearing the backlog. It’s likely to lead to an uptick in demand for skilled resources, but will they be able to deliver fast enough and to quality?
The announcement this week of the budget blow out at the Australian Digital Transformation Agency’s son-of-Mygov project hows just how quickly things can get out of control without a laser focus on solving one problem one at a time.
The methods used to build solutions with software haven’t changed significantly for 30 years. And even though we’ve lived in the Agile Age for almost 20 of those years, the time it takes to deliver solutions, not to mention quality and efficacy are still falling short of expectations.
Beyond Agile, examined why software development failed to meet the lofty aspirations of the Agile Manifesto founders. The book also explained how to avoid some of the classic mistakes of Agile software development.
A recent talk given by one of the creators of the Manifesto for AgileSoftware Development, Dave Thomas, underlines the dysfunction caused when the principles of the manifesto are misinterpreted or distorted to fit a corporate IT agenda. He half-jokingly attributes the downfall as our tendency to turn adjectives into nouns; so instead of the title Manifesto for Agile Software Development, people turn it around a truncate it to — Agile Manifesto, thus losing its meaning and purpose.
Beyond Agile explored many of the noteworthy ‘lightweight’ methodologies in use today, some of which pre-date Agile. This provided context and explained why software development often fails to meet people’s expectation. One of the founders of the Manifesto for Agile Software Development, Alistair Cockburn puts it simply:
“The Agile Manifesto was the product of seventeen people from different schools and backgrounds. No one person is responsible for the words we came up with — it is clear that it was the product of all seventeen people. The addition or removal of any one person would have changed the outcome, something we recognised and discussed at the end of that meeting.
Whether you think ‘Agile’ saved the world or poisoned it, be sure always to recognise that it grew from a rich compost (joke intentional) of backgrounds. The next time you read a would-be history of the Agile movement, look for all those names. If you don’t see them, it is not a history, it is one person’s personal recounting of their own journey, years after the event (as indeed, this one is).”
Cockburn’s statement gets to the heart of why Agile is such an enigma: few people bother to understand or respect it for what it is, choosing instead to follow second-hand interpretations of the manifesto or, worse still, a consultant’s cheap imitation of it.
Agile failed not because it was inherently wrong or misguided. The Agile Manifesto was an irrefutable thing of beauty, and its core values are spot-on. The problem with Agile is it was released into the wild and then co-opted by people unwilling and unable to really think about it or understand what it meant. Kent Beck, the creator of extreme programming and one of the original signatories to the Agile Manifesto, calls this the ‘staring dog problem.’
“If you try to point something out to a dog, it will look at your finger,” he explains. “If you explain an idea in terms of concrete practices — like test driven development, pair programming, continuous integration — people will fixate on the practices and stop thinking.”
Scrum and other lightweight spawns of Agile are failures precisely for this reason. They shroud important ideas like user-centricity and fast iteration in practices, rituals, silly names and guiding principles. The Agile manifesto itself, despite its brevity, left too much room for interpretation. And now it feels like we’re back where we started in the late twentieth century with powerful technology and tools and no idea what to do with them.
Beyond Agile describes the three reasons why the method was created :
To eliminate (or at least reduce) waste in software development;
To create software that people actually use; and
To deliver projects on time and on budget.
An analysis of fifty thousand software projects conducted by The Standish Group found that in 2015, an average of 29% of projects were successful (meaning they were delivered on time, on budget and to a satisfactory standard). The remainder, 71% were either failures or ‘challenged’ to meet expectations. Just think about that for a moment: starting a large scale technology project you only have a 1 in 3 chance of being able to celebrate success. Not very good odds. The same report in 2018 showed the situation had got worse with only 23% of projects successful and 77% wither challenged or failed.
Other sources corroborate these worrisome facts. In a paper presented to the 7th International Conference on Knowledge Management in Organisations, Stanley and Uden proved that software projects typically overrun their budgets by two hundred per cent, and exceed their schedules by fifty per cent.
But it’s the cost of the failures that’s the real issue here. The financial impact of project failure is nothing short of tragic:
The cost of re-worked and abandoned systems costs the US economy an estimated $75 billion per year;
In Australia, $5.4 billion is wasted each year on IT projects that don’t deliver value or are abandoned completely;
One project alone — the infamously abandoned National Health Service patient record system in the United Kingdom — cost taxpayers £10 billion.
To put those numbers into perspective, the United Nations estimates that a yearly investment of $267 billion would end world hunger by 2030. A meagre $175 billion per year would eliminate extreme poverty globally.
It’s been a long time since the Agile Manifesto was written, and even longer since Winston Royce published Managing the Development of Large Software Systems. But nothing has changed and no single methodology has really improved software development. Software development is still a hugely expensive, wasteful endeavour that rarely meets expectations. And that’s unacceptable, especially as we approach the end of lockdowns in the COVID era.
It shouldn’t be beyond humans to come up with a better, more reliable way of developing software solutions. Just as garment makers and car manufacturers in past centuries industrialised their domains, so too software coders need to do the same. Digitisation begets automation.
Methods like Beyond Agile address some of the shortfalls of alternative methods, but it’s by no means a silver bullet. It requires skilled people, disciplined practices and full engagement with users and the problem owners. Indeed its quite likely that many of the principles distilled in Beyond Agile can and should be applied to other development methods. This would go some way to fixing Agile.
In summary, to make Agile methods work there are four areas to consider which align closely to the original manifesto:
Start by defining the challenge or problem to be fixed
Define the outcome in terms of a quantifiable measure
Describe the 6–12 features or functions the solution must have
Identify the first half a dozen users you’ll engage at the outset and throughout.
Rinse and Repeat.
Digital Village is a community of IT professionals dedicated to providing flexible IT project team solutions to enterprise in Australia and New Zealand.