First Data created its empire in large part by being all things to all people; issuing and acquiring, card production, transaction processing, and POS solution provider.  At the heart of the company was the First Data network and the enormous distribution channel they've built amongst merchants of all sizes.

Now that the major U.S. issuers have headed off in new directions and the credit card market softens even further in the face of unstable economic times, the value of holding both ends of a credit-based transaction has been diminished. 

The recent announcement of First Data's acquisition of InComm should ring some familiar bells as the company searches for ways to leverage their assets in a market that continues to post double digit growth figures.  In the past few years, First Data has moved aggressively to build a world-wide merchant processing base through a number of strategic global acquisitions.  It makes sense that now they will turn their attention to opening those distribution channels through prepaid card products where once again, they hold all the major strings.

The beauty of the prepaid card is that it is in essence, a blank piece of paper.  An issuer can define the account to be open, closed, constricted or general purpose.  If this same flexibility can be offered to the merchant in such as way as to allow them to migrate accounts from closed to open, for example, then both the cardholder and merchant receive more value.  And in the middle of it all is First Data.  It's a strategy that worked very well in the past.  I would expect to see more acquisitions like this in the future.

        

Working hard doesn't always mean working smart and sometimes the best strategy to get something done is to leave it alone.

One of Buddha's precepts is to embrace all aspects of life rather than pit one against the other.  Take for example, productivity.  I spoke with a colleague this past week who was clearly exhausted.  Traveling for weeks at a time, stretched out over a job that years ago would have been done by two or three people, it made me consider that her productive output had tipped and was heading downhill fast.  She was put in a position where she was actually fighting her own job.  In that situation, eventually, something's going to give and it won't be a billion dollar company that collapses.

Reflect on times in your own life when you were most productive and you'll soon realize it was the times when you were in the zone.  All cylinders pumping in concert combined with a razor sharp focus on the work at hand.  Sweet feeling and one that hard to come by in a lot of companies where less (employees) is more. 

So, in honor of springtime, the time of year when we yearn to be outside - our creativity is at its peak - and we long to stop and smell the roses, I offer up a great post on staying focused (http://zenhabits.net/2008/05/16-ways-to-keep-a-razor-sharp-focus-at-work/#more-696).

My simple advice to being truly productive is to build in time to leave it alone.  Learn to walk away, allow your mind to clear, and give that "real thinking" of yours some space to move around in.

        

Consider this, you are interested in purchasing a new exterior hard drive for your computer.  You know nothing about them.  What is more important to you - the brand or the reputation? 

Try this, you would like to purchase something from Company A, but you frequently see their products in close-out stores.  Would you still purchase the item?  What if you saw excellent recommendations on an industry website about that product?  Would you feel better about the quality of the item? 

In other words, is the idea of a "brand" beginning to be superimposed by what people say about a company or its product.  Is reputation the new brand?

Consumers are actively encouraged to voice their opinions on products and services today.  This happens in personal blogs, industry sites, and user groups.  These consumer experience postings directly affect a companies market position and in fact, I would argue that a good or bad recommendation can trump a brand any day of the week. 

The combination of complex product functionality, large numbers of product choices, marketing skepticism, and lack of trust in corporate veracity creates an environment where consumers will believe what they read on an Internet blog before they will a company's claims.  Organizations that want to grab more market share may be well served to nurture a user community that actively promotes their product in their daily communications.   Just consider the success of Apple and the focus they have always placed on their user experience.

The degradation of brand is a function of an increasingly skeptical, sophisticated, and informed consumer.  The importance of information in the form of opinion, may be the next phase of the branding experience.

        

This post is designed to allow readers of my white paper, "The Best Meeting I've Ever Been To" to post comments and feedback.

If you're interested in receiving a copy of the white paper and joining the discussion, just send me an email (patricia@phewittconsulting.com) or click over to the Contact page of My Website to enter your contact information and "The Best Meeting Ever" in the Subject or Comment line and I'll get one out to you right away.

After you've read it, come back and post a comment.  Thanks!

        

Recently I was reading some very interesting posts on the changes that may be on the horizon for our organizational structures, so here's my thoughts on the subject. . .

I am of the opinion that in this century we are going to see the emergence of the matrix as a viable organizational model.

In the model, large companies will exist as a matrix of smaller companies; selected for their specific core competency and/or economic value. These smaller companies will be independent and in many cases, non-exclusive of the larger organization.

This structure will allow global organizations to maintain a core infrastructure and brand ownership, but provide a reactive outer shell that will provide on demand expertise and access to competitive pricing structures.

The emergence of the matrix will occur due to three main factors:

1. Global organizations will not support the variable cost of maintaining a stable workforce and deliver the profitability expected by the market. Nor will they be able to maintain a disclipined operational infrastructure and still be able to react quickly to a market's innovations.

2. The small business innovation and services sector will continue to grow with the seeding of seasoned and experienced resources being pushed or jumping out of large organizations.

3. The technology of communications has matured to the point of making this model possible in its ability to support a virtual.

Your thoughts?

        

In a recent article on ATMMarketplace.com, Travis Kurcher takes a look at the impact of interchange fees on ATM usage at the POS.  It wasn't until I reached the end of the article that someone got to the real problem when Harry Popiel of Rock Mountain ATM Sales stated the obvious when he said, “The ATM industry is a very challenged industry right now and they have to look to other ways to use the real estate that they have. . .".

The issue ATM's are struggling with is that fact that they are weighted down with legacy processing systems which makes it extremely difficult to be nimble.  That makes the market ripe for disruptive technologies, such as products like Select-A-Branch.  Their are one example of companies that are taking ATM's into the digital age through the use of virtual technologies. 

If I'm in my local store or restaurant or coffee shop and can access an ATM to check my balance, pay my utility bill or transfer money, then I'm using that machine.  And if I'm a financial institution, I can reach out to consumers with relevant information about my products and services who I might otherwise not be able to reach, I'm using that machine.  Finally, If I'm the merchant, and can keep consumers in my store longer and create new revenue streams, I'm using that machine.

Talking about cash-driven interchange strategies is really missing the point.  We have gone over the tipping point and are in a virtual payment world.  Legacy systems are falling and new ones will rise up to take their place which will act to create value streams that break off at simple cash transactions and into new opportunities that are all about how we access and use money.

        

I'm not sure what this has to do with business except to point out that sometimes its the completely unexpected, unrelated functions that come together to create something. . . ?

What you're going to see is a performance by the Finnish rock band, The Leningrad Cowboys, joined by the Red Army Choir in their very own rendition of Sweet Home Alabama. 


 ;

        

The opportunity to jump into the non-cash payments market has never been greater.  As the reality of a cashless society begins to take shape, the traditional rules of the game no longer apply.  At the heart of that tradition is the interchange system now under fire from all sides.

No longer the secret realm of smoke-filled rooms, interchange structures are being dragged out into the light of day and not a moment too soon.  I wouldn't be surprised if even the term "interchange" is quietly buried under the stigma of a once proud system gone bad and a new lexicon takes its place.

One could argue that merchants have received great benefit from the interchange system.  Where else canthey have their receivables funded for 2-3%?  However, we live in a time of consumer participation and they are clearly tired of being shut out of the discussion.  It's hard to say if any action by Visa or MasterCard would have forestalled the governments nose from poking into their business, but the signs were clearly there.  Merchant participation in the interchange system may provide the impetus to finally create a system that takes into consideration risk, reward, and market value into its pricing structure.

Another motivating factor for our legacy processing networks is the stabilization of virtual networks, mobile networks, and PC-based applications that leverage the internet for direct processing.  Both merchants and consumers are growing more comfortable in this new world.  This is not to say that Visa and MasterCard will find themselves obsolete, but as the market for these products moves into its consolidation phase, larger and larger players will have the muscle to take bigger bites out of their territory. 

Now that the time is at hand where both organizations will be squarely in the public eye, more focus will be put on their ability to grow and adapt to dynamic market pressures.  For example, are we far away from having a single account that will give us access to multiple payment purses?  Already a reality in the healthcare world, discussed as a possible role for our cell phones, can legacy systems continue to dominate in a world where my payment can be affected via a text message?

The revolution has begun and now it will be up to all the players to make certain they're not put in a position where regulation trumps innovation. 

        

Speaking with a senior manager of a very large utility years ago, they said to me "We don't know how much money we're losing". 

Translation:  We don't know how many customer's we're losing.  Today, most company's would agree that measuring attrition should be a core performance measurement.  According to a recent Maritz study, a typical bank losses over $6 million of bottom line profit due to customer attrition.

But that's not all the bad news, the rest of the story is that for each customer your lose, you have to gain two new ones to keep pace.  And that doesn't account for the disparity in spending.  If you lose a large customer, how many smaller ones do you need to sign up to equal their revenue? 

If you're one of the companies who takes a hard look at client losses, then go onto your next blog.  If not, then here's a few ideas to consider:

1.  If a customer has to contact you to close their account, ask them why and be specific.  Take as much time with your exit script as your welcome one.
2.  Empower your contact staff to save that customer.  I can't count the number of times I've contacted a company to close my account and the service staff takes my request and says thank you!
3.  Regularly review these exit interviews and better yet, have an outside company review them and send suggestions back to you.  This takes the emotion out of it.
4.  Make customer retention part of your strategic planning every year.  Set a goal, keep metrics, and review results.


If you have a business where you can't interview exiting customers:

1. Talk to your buyers and ask them if they've purchased from you before, why they purchase from you, and have they recommended you? 
2.  Secret shop your own business.  Call customer service, make a return, have a complaint and see what happens.  Would you return to your own business?

Just like the cost of fixing something twice goes up geometrically from fixing it once, losing a customer is the same principle.  Get creative in the way you look at your company and don't make assumptions about how good you are.  Not everyone may agree with you.

        

There's a lot of truth in the old adage, "can't see the forest for the trees".  I recall some years ago I had a real issue with juggling client support across clients that ranged from start-up to Fortune 100 companies.  Everyone was in a big pile and our servicing staff were struggling. 

I finally realized what I needed to do was "hang off the side", meaning that I had to push out from how we thought of ourselves, which was client support, and come back to it with a whole new profile. 

Therefore, the key to the solution was not a change in the way we supported our clients, it was the creation of an identity for that support.  Once the identity was in place, the organization fell in behind it.  It worked very well and had the added benefit of allowing new identities to be created as new client segments were developed.

So, I encourage you to hang off the side.  Look up, down, around - think about how you think about your organization.  What words to you use?  What terms do you use?  What's your internal brand?

Here's a link that might help you spend a few minutes seeing a simple piece of paper in a whole new way.  http://www.petercallesen.com/index/index2.html