Brand – Platform Business Firms

Far and near mindsets

Last month, I was at the Yale University and was listening to Prof. Nathan Novemsky on different mindsets. Of the various mindsets we discussed, psychological distance (and its impact on communication and marketing) caught my attention. In this blog post, I elaborate the concept of psychological distance, and why it is important in the context of entrepreneurship and multi-sided platform businesses.

Psychological distance: Basics

Prof. Novemsky’s (and his colleagues’) research indicates that as people get closer to the decision in terms of time, their mindset changes from a “far mindset” to a “near mindset”. When people engage with you on a far mindset, they are concerned about the “why” questions; whereas when they engage with you on a near mindset, they are concerned about the “how” questions.

Let me illustrate. When a customer downloads an Uber App for the first time, she is more concerned about how she is contributing to the environment by being part of the shared economy, and therefore is less concerned about issues like the minute features of the user interface/ user experience. On the other hand, a customer who is getting out of a day-long meeting with a demanding customer is worried more about the minute details of the ride, like the time taken for the car to arrive, type and cleanliness of the car, and driver’s credentials and behavior; as she is engaging on a near mindset.

Communication and marketing

The understanding of what mindset your customer is engaging with you is imperative to designing your communication. When you advertise a grocery home delivery service on television, you might want to appeal to the consumer’s far mindset … that talks about why he should choose your service rather than the neighborhood grocer/ vegetable market. For instance, the benefits of fresh produce straight from the farm (without middlemen) faster would make immense sense. However, when you communicate with your customer after he has decided to place an order, you might want to talk about specific discounts, receiving delivery at a convenient time, quantity changes, add-ons and freebies, and payment options.

What does this mean to start-ups/ entrepreneurs?

That’s simple, right. A founder communicating with a potential investor should talk to the “far mindset” rather than the “near mindset” if he has to raise money. However, a customer presentation has to appeal to the near mindset.

For instance, the home-health care start-up for pets (petzz.org) communicates convenience of all-day home-visits of veterinarians to its pet-owners; the specific plans available that pet-owners can choose from; and the significant increase in business for the veterinarian partners. However, when it runs camps to enroll pet-owners, it talks about “healthy pets are happy pets” communicating to the far-mindset.

However, the investor deck only appeals to the far mindset … how their business model leads to “healthy pets” and why this is a compelling value proposition for its pet-owners, veterinarians as well as other partners in its platform.

[Disclaimer: I advise petzz.org]

Implications for multi-sided platforms

Not so simple. I can envisage that there may different sides of a platform that may be operating at different mindsets and the MSPs may need to be continuously aware of. Take the example of the social-giving/ crowd-funding platform Milaap (milaap.org). The two sides of the platform are givers and fund-raisers.

Imagine a fund-raiser appeal … which one appeals to you most?

“help a school from rural Chattisgarh build toilets for girls”
“help support girls’ education”
“make sure girls like Shanti don’t drop out of school”

As you move down from option 1 to 2 to 3, you are increasingly operating from the far-mindset!

On the other hand, when Milaap attracts fund-raisers with the following messages

“you get the most socially-conscious givers at milaap”
“it’s easy to communicate with givers at milaap”
“it’s is easy to login, set up and free”

As you move down from option 1 to 2 to 3 here, you move towards a near-mindset!

It gets more complicated when the different sides of the platform are at different stages of decision-making. For instance, when a C2C used-goods marketplace platform like Quikr has a lot of buyers and lesser number of sellers; the messaging across the two sides has to be different! For the sellers who are yet contemplating joining the platform, the message has to be appealing to the far mindset (of decluttering their homes), whereas for the umpteen buyers who are looking for goods on the platform, the message has to appeal to the ease of transacting (near mindset).

Match the message to the mindset and the stage of the engagement

In summary, effective platforms have to communicate consistently across multiple sides of the platform, however keeping in mind the different mindsets of the respective sides. A cab hailing app has to communicate differently to its riders as well as drivers, while sustaining the same positioning. If the rider value offering was about speed of the cab reaching you, the driver communication has to be consistent – speed of reaching the rider. For the driver, it is near mindset (speed of reaching the rider is about efficiency), whereas for the rider, speed may be appealing to the far mindset (about not driving your own car and keep it waiting all day at an expensive parking place; or better still, reducing congestion in the city centers). And for sure, these messages also have to change over the various stages of consumer engagement, right!

Any examples of mismatched communication welcome!

Cheers from a rainy day in Nuremberg, Germany.

App-in-app?

I recently got an email from my airline app that I could book my car ride within the same app. It was a way of providing end-to-end services. Much like the home pickup and drop service provided for business class customers by the Emirates. What are the implications of these for the customer, the airline, and the cab-hailing firm? Let’s explore.

It is an app-redirect

First, read the terms of how it works in the case of Jet Airways and Uber here. The substantive part of the T&C is hidden in the paragraphs quoted below:

“PLEASE NOTE, YOU ARE MAKING THE PAYMENT TO UBER DIRECTLY. JET AIRWAYS IS NOT RESPONSIBLE / INVOLVED IN THIS FULFILMENT PROCESS. JET AIRWAYS WILL NOT BE LIABLE AND/OR RESPONSIBLE FOR REFUNDS, DELAYS, REJECTIONS, PAYMENT AND FULFILLMENT OR OTHERWISE OF THE SERVICES OR IN RESPECT OF ANY DISPUTES IN RELATION THERETO, IN ANY MANNER WHATSOEVER.” (emphasis original)

Then, what is the value of this app-in-app integration?

Customer perspective

For the customer, it has the potential to work as a seamless end-to-end service. I imagine a future, where you would find a partner using Tinder or TrulyMadly, plan your evening to a game/ movie using BookMyShow, find a restaurant & book your table using Zomato, and take Uber whenever you are ready to move on, or better still, have an Ola Rentals car waiting for you through the evening. All in one app. Wouldn’t you love it, if all of it were integrated in one App? Just imagine the convenience if your restaurant-finder knew that you are in a particular concert at a specific place and you are likely to head out for dinner at a particular time. This specific knowledge could immensely help your restaurant-finder app to customize the experience for you – for instance, it could not only provide you those restaurant options that are open late in the evening after the concert was over, in a location that is close to the venue; it could possibly alert the restaurant that you were arriving in 15 minutes, based on your Uber location. And through the evening, post your pictures on Instagram and SnapChat, check-in to all those locations in Facebook, and Tweet the experience live.

Yes, you would leave a perfect trail for the entire evening in a single place, and if you were to be involved in an investigation, it would be so easy for the officer to trace you! No need for Sherlock Holmes and Watson here – the integrator app would take care of all the snooping for you!

Convenience or scary? What are the safeguards related to such data sharing across different entities? How will the data be regulated?

The Integrator perspective

Why would a Jet Airways provide an Uber link inside its App? Surely cab-hailing and air travel are complementary services. Plus, Jet Airways believes that its customers would find it convenient to book an Uber ride from within the Jet Airways app, as they trust the app to provide Uber with all the relevant details – like the estimated landing/ boarding time of the flight, drop/ pickup addresses, etc. Jet Airways also needs to believe that its customers would rather choose an Uber cab, rather than its competitor OLA Cabs, or any other airport taxi service. The brands should have compatible positioning. Given that Jet Airways is a full service carrier, and differentiates based on its service quality, Uber might be a good fit. But the same might not hold good for a low-cost/ regional carrier like TruJet connecting cities like Tirupati, where Uber does not operate.

Does integrating complementary services affect customer satisfaction, brand loyalty, customer switching costs, and/or multi-homing costs? In contexts where these services and brands are compatible, and there is a convenience involved in sharing of data between these services, there is likely to be some value added. Like airlines and hotels (hotels would like to know your travel schedule); currency exchanges and international travel (the currency exchange would love to know which countries you are visiting); or international mobile services. If there was no data to be shared between the complementary services, the user would rather have them unbundled. Think travel and stock brokerage.

That said, platforms find innovative complementarities. For instance, airlines (primarily the full-service carriers) have launched co-branded credit cards. In a recent visit to Chennai, there were more American Express staff at the Jet Airways lounge than the airline or lounge staff! And they were obviously signing up customers. What are the complementarities between credit cards and air travel, apart from paying from that card? A lot of business travellers have their business travel desks do the payments; consultants have their clients booking the tickets; and even for individuals and entrepreneurs, the credit card market is so fragmented that everyone holds multiple cards. And the payment gateways accept all possible payment options, including “paying cash at the airport counter”. They why co-brand credit cards – sharing of reward points/ airline miles. Either customers do not earn sufficient airline miles and using these co-branded credit cards help them earn more miles and retain/ upgrade their airline status (remember the 2009 movie, Up in the Air?); or they do not earn enough reward points in using their credit cards that they can redeem their airline miles as credit card reward points. Either ways, each one is covering up for the other.

In this covering up, or more diplomatically consolidation of rewards, the partners increase customer switching and multi-homing costs. Surely, redeemable airline miles might be more valuable to a frequent traveller than credit card reward points that have limited redemption/ cash back opportunities. But for loyalty to increase, it is imperative that both brands stand on their own – providing compatible services.

Mother of all apps

All this looks futuristic to you? A lot of you have been using an ubiquitous desktop app known as the browser for a long time, which has been doing exactly this! In a subtle form, though. However, there are firms that own multiple such apps, and they use a single sign-on – like all of Google services. Plus, even third-party sites like Quora allow for using your Google credentials to sign-in. The trade-offs are not always explicitly specified – it is always the case of caveat emptor – consumer beware.

So, the next time you experience some cross-marketing across platforms/ apps, think what data might be shared across both the apps; and if you would really value the integration.

Cheers!

Building your brand

This is not a post about marketing, though it may sound so. This is a post about how entrepreneurs and leaders communicate. This is relevant for brands and firms as well. Read on.

I listened to a very insightful TEDx talk by Simon Sinek on inspirational leaders. Listen to it here. He talked about how inspirational leaders focus on the inner most ring of what he called the golden circle. In the inner circle is the why, followed by the how, and then the what. He cited examples of ineffective communication, when firms and brands and individuals focused on the what to drive the how and why, and how successful people and brands and firms focused on the why first, before highlighting the how, and what. If you have not listened to it yet, please do so, before you proceed.

As we see a tramline of enterprises biting the dust, liquidating/ selling off to powerful competitors/ selling off at a fraction of its past valuations to firms in complementary businesses, this message is becoming far more relevant. Couldn’t resist this contrast …

Yahoo is a guide focused on informing, connecting, and entertaining our users.

https://about.yahoo.com/

Google’s mission is to organize the world’s information and make it universally accessible and useful.

https://www.google.com/intl/en/about/company/

Just take a look at how these two pages are organised – Yahoo’s page flows like this – a statement of what they do – inform, connect, and entertain; how did they start, how is it to work for Yahoo, and what does it offer for developers, advertisers, partners, and research. Google’s page begins with the company overview (that includes their history), who they are (culture and locations), what they believe, and then what they do.

If your communication focuses on what problems you solve (why you exist), and then lead towards how you solve those problems, and therefore what products and services you offer; I am willing to listen to you. On the other hand, there are entrepreneurs and firms that begin with what they do. For instance, early this week, I heard someone talk about building the Uber of Indian tractors for farmers (if the one who talked about this is reading this, don’t take it personally). I had to probe deeper and deeper to understand what problem was being solved and why did Indian farmers needed a mechanisation solution in the lines of Uber.

Virgin’s Richard Branson also wrote today (11 August) about why successful entrepreneurs should seek problems, and create solutions (read it here). Begin with the problem and the opportunity; the business model and the solution will follow; and thence products and services.

So, whatever brand you are building – of yourself, your firm, your products/ services, please begin with the why, the how, and then get to what. Build a robust brand that stands for something, signifies why it exists, and speaks to the ecosystem on why it exists. Remember the arrow that connects A and z in the Amazon.com logo? Everything from A to Z.

And in today’s world, as firms simultaneously diversify and depend on a cluster of complementors to provide (each others’) customers with unique value, it might not be out of place to conceive of your brand as a platform. A simple platform (like how the automobile companies use the word) upon which your complementors and partners could build on, customise, co-develop, co-innovate, and co-create. Brian Monahan’s post titled “More than a promise: Brands are platforms” (read it here) develops this argument very well. Brian’s primary argument is that brands transcend the promise and should allow for other firms and its partners to shape the consumer experience. Imagine brand Android!

Borrowing the idea from Simon Sinek’s talk, leaders communicate why more than the what. How is your brand communication structured?

Would love to listen/ read/ hear about your brand stories.

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