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Business Psychology Reading

The real cost of what we do

LOYALTY SCHEMES
The following experience prompted me to write this article.

BP petrol stations in Australia have been encouraging motorists to pay for petrol using Virgin Velocity points. If you are a Velocity member, like I am, this may sound like a good deal.

But if you unpack it a little bit, there are a few things that are going on here:

  1. Loyalty schemes are motivated to encourage customers to spend points, rather than saving them. There are a number of reasons for this motivation. Firstly, high breakage rate is bad for schemes. Secondly, saved points accumulate over time, which means increasing liability for the scheme. Thirdly, reward without the emotional stimulation of enjoying the reward does not lead to loyalty. So this offer to customers, first of all, benefits the scheme – which is Velocity.
  2. Many of us are members of various loyalty schemes, and from experience, we know that redeeming points for higher value offers, such as long international flights, first-class seat upgrades, or the latest Panasonic 4K screen, usually gives you more bang for your bucks than lower value deals. Paying for petrol is one of the lower value deals, and this likely benefits the scheme more than the customers. I have not crunched the numbers, so cannot say with certainty that this is also the case with this BP+Velocity offer, so this point is made from experience only.
  3. The price of petrol at the BP station nearest to my home seems to be consistently 10-20% higher than others just around it.

If you are taking in the above considerations, it may not sound like a good deal after all. Being a regular Virgin and BP customer, I have nothing against these brands. 

GIFT CARDS
See a $100 gift card offered on Groupon for $85? Sounds like a good deal?

Now consider these:

  1. Consumers are 2.5 times as likely to pay full price for an item using a gift card (US study). This is known as the “card is not money” mentality.
  2. About a third of gift cards are not redeemed (approximately $400M out of $1.5B spent annually on gift cards in Australia); that’s why retailers love them, but consumers shouldn’t.
  3. Most gift cards have an expiry date (12 months typically), which means it gives you and your household more work to track this expiry. Most households do not have an efficient system to track their vouchers and cards, so missing expiry dates is common and could lead to stress and anxiety.
  4. Having a gift card means you are locked into that vendor regardless of their offers.

Unless you have an immediate need to buy something from that particular gift card brand, a value deal probably would look closer to $30, rather than $85.

SOCIAL MEDIA FANS
Do you know that the likes of Kim Kardashian make roughly 1c out of each follower from one tweet or post, whether they endorse a brand or themselves? When you have millions of followers, that means thousands of dollars or higher per message on social media. But what is the real cost for each follower? Is it 5 minutes of their time per day? I doubt it is that short if one is a fan of someone. But let’s say, it takes 5 minutes for someone to engage with Kim K.’s posts per day. What are some of the hidden costs?

  1. Switching attention between tasks can be very time consuming, taking up to 40 percent of someone’s productive time everyday. So if one typically works 10 hours per day, but spends a lot of time following different people and topics on social media, that is 4 hours down the tube everyday, not engaging, just switching contexts.
  2. Do you watch your emotional engagement level when reading a post? Emotions require energy, especially when those emotions later lead to stress or anxiety.
  3. If you spend time discussing the post later on socially, it takes you even more time.
  4. Following somebody like the Dalai Lama, Seth Godin, or Elon Musk might lead to insights, knowledge and personal growth, so arguably the “following time” could be categorised as “learning time”.

While I am not taking a position against Kim K. and other celebrities here (they are just playing their game), my question is: do followers understand the game being played, and the true cost to them, when their attention and devotion to those celebrities is probably worth 1c to them per post?

NOT READING BOOKS
Yesterday, I responded to a question on Quora:

https://www.quora.com/Why-does-it-seem-that-I-never-have-time-to-read-books/answer/Duc-Do-16

Books may seem important to some, but not important enough. That’s why many do not read.

Most people I know do not read books. Of course, I respect everyone’s choice to read or not to read. Some might argue that reading books is a habit of the past, and it is time to move on to other more progressive modes of consuming information. Speaking from personal experience, in which I have been consuming information through most available modes, from reading, to classrooms, to listening, to watching, to travelling, to direct experiences, I doubt that book reading has become obsolete. In fact, I think that book reading is even more relevant than ever, in this digital age when patience and focus are diminishing qualities.

What is the real (opportunity) cost of not reading books?

  1. The cost of ever expanding the “you don’t know what you don’t know” territory.
  2. As books are much more accessible at a lower cost these days, if you are a competitive person, each day you don’t read, you are falling behind someone else who reads. Personally, I read not because I want to remain competitive. I read because I enjoy the experience of reading and being exposed to different perspectives.
  3. Books can teach you to focus for a long time. It took me half of my life time to learn that the two most essential qualities for myself are: patience and focus. These can be learnt, and books are great teachers.
  4. Unless instructors and educators possess charisma or unique perspectives, most knowledge you would pay for by going to a class can be acquired from books and from discussing what you learn with common interest groups. Reading can be done at your own pace, and in most cases will cost you much less time and money.
  5. Books can be a bit like travelling. They both take efforts. If you don’t travel, you don’t get to experience the joys of travelling. If you don’t read, you don’t get to experience the joys of reading.

Having been involved in hundreds of initiatives and brands, commercial and non-profit, in my career, I rarely see a good deal being offered by someone else. The good deals, by the way, could be referred to as synergistic deals, where it benefits both the brand (they make money or earn brand equity somehow) and the customer (they get value through the offers). The best deals I have ever found are the deals I offer myself, like spending time with family and friends, learning a new skill, reading a book, or travelling.

There are many more of such examples. If you would like me to share my views on specific cases, drop me a note, or ask me a question on Quora.

📸 Viktor Hanacek