If it were a school debate, the subject of the topic would be ‘Sodexo coupons – A boon or a curse. Discuss’.

Fortunately most of us are past that stage of life where we need to debate such issues in front of other school kids. Unfortunately though, unless we discuss and debate, we would lose money on a transaction like this. Let us look at the bare bone facts of the Sodexo business and try to draw some conclusions.

The perquisite valuation rule (Sodexo/Food coupon is a perk) (Fringe Benefit tax) governing the issuance of Food coupons states (Rule 3(7)(iii)) -

(iii) The value of free food and non-alcoholic beverages provided by the employer to an employee shall be the amount of expenditure incurred by such employer. The amount so determined shall be reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity:

Provided that nothing contained in this clause shall apply to free food and non-alcoholic beverages provided by such employer during working hours at office or business premises or through paid vouchers which are not transferable and usable only at eating joints, to the extent the value thereof either case does not exceed fifty rupees per meal or to tea or snacks provided during working hours or to free food and non-alcoholic beverages during working hours provided in a remote area or an off-shore installation.

If you didn’t have the patience to go through the rule, here’s what it states in summary. The Employer cannot pay more than Rs. 50/- per meal during working hours. Assuming a reasonable 2 meals per day and 22 working days in a month, it works out to Rs. 2200/- p.m food coupons (which is the limit that most of us get) (the max. anyone can get is Rs. 3000/-). Of course, since the Employer cannot pay more than Rs. 50/- per meal, the maximum value of any one Sodexho coupon cannot exceed Rs. 50/-. Hence the denominations are always Rs. 50/- or lower (usually they are Rs. 50/-, Rs. 35/-, Rs. 20/- and Rs. 10/-).

These coupons are useful for different parties in multiple ways. There are four parties involved in any food coupon transaction as illustrated below (along with Sodexo’s business model):

Employee: The Employee is usually very excited with any prospect that saves him a little tax. And so is the case with Sodexo coupons too, where availing the Sodexo coupon opportunity will make the food coupon amount tax free. For employees in the highest tax bracket (30%), this would save tax of Rs. 660/- p.m (or Rs. 7920/- per year). Of course, if you didn’t opt for the coupons, you would get Rs. 1540 as deposit in your bank account (Rs.2200/- after tax deduction). But did the food coupon craze take off in huge numbers just because an Employee could save some tax and buy food from his office canteen? Absolutely not. The reason it took off was because the retail chains (FoodWorld, Spencers, Foodbazaar, Big Bazaar, MK Retail, Total, Reliance etc.) started accepting the coupons for anything and everything that you purchase at their store. Employees jumped at the opportunity (and most people mentally classify these coupons as free money than hard cash – look at some stuff they buy using the coupons. They would never buy it with hard cash).

Company: Most companies started this perk out as a differentiator to employees (and marketed it as ‘it’s actually extra money in your pocket since it’s tax-free). And then all companies started offering it. From a nice-to-have feature, it has now turned into a must-have feature in the pay package. Companies don’t make or lose any money on this transaction (apart from the administrative headache).

Retail Store: Initially, the retail store used to accept Sodexo coupons only for pure food item purchases. It was a pure sales/marketing tactic from thereon – to attract more customers and to wean away customers from other competing chains, they started accepting Sodexo coupons for anything and sundry (which apart from increased sales, also increased customer loyalty). Eventually, competitive destruction happened and the retail chains till Dec 31st, 2011 accepted Sodexo coupons for all purchases. They redeemed their Sodexo coupons with Sodexo for a 5% discount (and they used to receive cash only after 20-30 days after submitting the coupon; credit card companies credit the retail store within 24 hours usually). It’s almost become mandatory for retail chains to accept Sodexo, else they risked losing customers to other retail chains and very fast (the cornershop marwariwala lost his business this way, till of course he also started accepting Sodexo!). Of course, to cover up the lost 5%, people usually concur on the fact that retail stores usually mark up the prices of certain items (although this cannot be corroborated with any data available).

Sodexo: Who exactly is Sodexo? This link gives more information (and this one in more juicier detail), but in summary, Sodexo is a French multinational corporation Sodexo is one of the largest food services and facilities management companies in the world, with 380,000 employees, representing 130 nationalities, present on 34,000 sites in 80 countries. They are the biggest beneficiary in this transaction. Since this is almost like a parallel currency, they have to invest a lot of money upfront to get the govt. machinery working in passing certain laws. They make money in three ways:

a) They receive Rs.100/- worth of coupons, while give back only Rs. 95/- in cash, netting a straight 5% gain.

b) Sodexo coupons usually come with an expiry date (think of it as a currency with expiry date *shudder*). Once its expired, no retail store would accept it and it becomes null and void. However, Sodexo had already received the money from your Company when they issued the coupon (and hence a 100% profit!). There is a complex process through which you can get new coupons issued, but most people would not have the time or the patience to go through the process for getting the new coupons.

c) The biggest of them all. They get money at 0% interest. Have a look at the diagram once again. Day 1, they receive Rs. 100/-. Day 24-34, they give back Rs. 95/-. That is, they have had the money for a full 20-30 days without paying any interest. In fact, till the coupon is used, it is practically free money (and they can lend this money at interest, thereby making money).

So, if this was a win-win-win-win arrangement for all the folks involved, why did the retail store chains suddenly stop taking Sodexo coupons in lieu of items?

There is no clarity on what exactly happened, but here are the news items floating around -

a) They have increased the brokerage from 5% to 9%. That is, the retail chains used to get back Rs. 95/- of their money, but in the revised scenario, would get back Rs. 91/-. Already under pressure for margins, this was not acceptable by retail chains. Presumably, they formed a clique and stopped taking the coupons across the table.

b) The number of days in which cash conversion happens has gone up from 20 days to close to 60 days, thereby impacting the cash cycle of organizations

thereby, resulting in a clique where the retail chains have closed ranks and have decided to put up a fight with Sodexo – to i) reduce the brokerage rate below 5% (and they’ll eventually settle to the original 5% figure) and ii) reduce the cash conversion cycle (and settle back on the 20-30 day figure).

Sodexo certainly has to negotiate and accede to the demands of the retail chains, simply because without them, Sodexo ceases to exist. Retail chains will also join the negotiating table because they will have too much to lose (the corner stone marwariwallah is still accepting Sodexos, and more probably, there is always a possibility that one retail chain breaks away from the clique to grab customers quickly). All in all, this is bound to be a temporary situation (max of 1-2 months), and as usual, the employee is being inconvenienced for the greater good of the mankind or some such.

My personal opinion is that the entire Sodexo tamasha is not worth the administrative hassle that most companies undergo (the big IT firms have everything automated, but all other firms are not). Why not give Rs. 2200/- as a food perk straightaway as cash instead of this circuitous food coupon route? Or tax it at the minimum rate? This whole hassle could have been avoided. But then again, there are vested interests at play here and I am not even a micro-bit player in the rational minority.  (As an aside, I always wondered about an active secondary market. For example, you get Rs. 2200/- worth of coupons and you save Rs. 600/- in tax. Which essentially means, you would be willing to sell the coupons for cash for anything above Rs. 1600/- thereby making a neat, tidy profit. I am almost sure this is illegal, but I just wonder!). Also, Sodexo coupons involve a lot of paper. They can shift to card based system (if at all this system has to exist) and save a lot of money (IT firms usually give out cards, but try using a card in any retail chain – nada for now!).

Disclosure: I don’t subscribe to Sodexo coupons. My wife does and hence have a vested interest liquidating the Sodexo vouchers

P.S: I can also see a govt. conspiracy here Sodexo coupons out of circulation means Employees will not subscribe to them January end (or future months). Which means, more taxable income and which means, more taxes. Government #FTW

P.P.S: I explained a scenario above where a Employee can technically make a profit by selling the coupons at a discount. One enterprising person actually tried to sell these coupons at a premium on an internet site. Why would anyone pay hard cash (say, Rs. 105/-) in exchange for Sodexo coupons (worth Rs. 100/-). Beats me. Not too sure what the guy who posted this was thinking though

However, looking at this issue and understanding it through the lens of Hindu Mythology is a little unique (and hopefully enlightening!).

Let me explain.

I’ve been reading “7 Secrets from Hindu Calendar Art” by Devdutt Pattnaik (btw, brilliant book) where he lucidly explain the mysteries behind the myriad calendar arts that we see on a daily basis of atleast 100 or so Hindu Gods. Some of his explanations can be used to understand why men will never understand women.

Here are a few excerpts from the book -

The right side in Indian art represents the soul and intellect while the left side, with the beating heart, represents movement, hence matter and emotions. The left side represents change while the right side represents soul. Since change is undesirable, the left side became the inauspicious part (inauspicious in the sense of attaining Nirvana) and the still right became the auspicious part of the body.

(In the Ardhanari-eshwara image, Parvati merges to the left of Shiva. I am also given to understand that the wives are advised to sleep to the left of their husbands).

Shiva dancing in the Nataraja pose. In this dance pose, he raised his left foot above the ground and pointed to the moving left foot with his left hand, while standing firm on his right foot. The left side is that of the material world, while the right side represents the spiritual world. Shiva stands on his right foot because he is firm in spiritual reality. Shiva indicates (through his left hand) that our fears and insecurities emerge because we do not understand the nature of material reality – that it is transient, that it arouses and it depresses amongst stormy waves of positive and negative emotions.

The Sanskrit word for measurement is ‘maya’ – that is why the Goddess is called Mahamaya, the great one who can be measured and evaluated. She is classified using words, limited by thoughts, and measured with scales. Suddenly, she is evaluated and judged. These forms, names and evaluations enchant us, entrap us, delude us, stir our passions, make us happy and sad because they are never still. That is why this material world of changing forms is often referred to as maya, the embodiment of delusion. She is the world that we experience. As she keeps changing, we struggle to control her, hold her still and make her permanent, but we fail, for her essential nature is to transform.

As you would gather and deduce from the above excerpts, women change all the time. This has been reaffirmed through Hindu Mythology. That is the reason we men can never understand them. We are still and serene. The women change every second – enchanting us, entrapping us, deluding us, stirring our passions and making us happy and sad in weird sinusoidal curves we can never begin to understand. We men, just can’t seem to catch up with change. It’s like the Heisenberg Uncertainty Principle. If you can determine her emotion correctly, you can’t be sure of her action and vice-versa (For the uninitiated, Uncertainty Principle states our inability of not being able to determine the speed and position of the particle at the same time).

P.S -

1) This is probably the reason why eating/writing with the left hand is forbidden by our parents during our young age. Not because it was dirty to do so, but because the right side implied stillness and the left, never ending change (which is obviously undesirable). But then the wisdom got twisted during the ages, and now it is just dirty. That’s it – no questions.

2) The book is absolutely brilliant. Here are some other excerpts which relate tangentially to the topic at hand -

Shiva represents spiritual aspiration, the desire to focus on the soul within. Parvati represents material aspiration, the desire to focus on the family and the world around. Hindus have always sensed a tension between the two goals.

By holding the right toe with the left hand (Baby Krishna’s image usually), God is connecting the spiritual with the material, the intellectual with the emotional.

Why is the male form used for the spiritual subject while the female form is used for the material object? Material reality is that which is contained within space and time. That which cannot be contained by space and time is spiritual reality. Material reality has form’; hence, it is measurable and is ‘contained’ within a ‘container’. Spiritual reality is formless and immeasurable; hence it is not containable. The human male physiology, for example, creates life outside itself. On the other hand, life is created within the human female’s body. Thus, the female form best represents the container, the source of all things material. The woman becomes the symbol of material reality, making man the symbol of spiritual reality.

The Upanishads, ancient Hindu scriptures dating to 500 BC, constantly refer to these two truths: a truth which changes and a truth which does not change. The existence of one, points to the existence of the other. In change, we seek permanence. In restlessness, we seek restfulness. In movement, we seek stillness. In sound, we seek silence.

In symbolic language, the male half represents the formless divine known in Vedas as Purusha, in Vaishnava manuscripts as Narayan and in Shaiva manuscripts as Shiva. The female half represents the divine that has form. The female form in Vedas is known as Prakriti, in Vaishnava manuscripts as Maya and in Shaiva manuscripts as Shakti.

In image after image, we will find the continuous discourse between the left and right side of images, which in effect is the discourse between the material and spiritual halves of reality. Krishna will always be shown sucking his right toe or placing his right foot over the left leg, reminding us that our life is a continuous dialogue between the divine within and the divine without, between God and Goddess, for without either there is neither.

In this post, I attempt to demystify the reasoning behind valuations of each of the IPL players that will go under hammer tomorrow. Before that, a brief of some basic rules are in order –

• Each franchise needs a squad of players, with 11 playing at any one time.

• Only 4 players at any time are allowed to be non-Indian.

• The franchises bid on the basis of the salary they are prepared to offer the player.

• The salary offer is valid for three years, although there is the possibility of player transfers in future years.

• Each team must also have four under 22 players.

• Each bid starts with the base fee fixed by the IPL (based on the band), and there is no upper limit.

• Players were grouped into different bands (5 bands) within the auction based on the  expectations of the organisers that they were of similar experience and  ability.

• Each of the IPL franchises can retain up to 4 players in advance of the player auction. Out of these, 3 could be Indian.

• A franchise can bid for up to 10 overseas players. However, during a game, only 4 of these can be on the field while the rest have to be Indian cricketers only.

• There is a maximum limit of $9 million for each franchise to spend at the IPL 4 auction. This means that a franchise which retains 4 players will have less spending money ($4.5million) for other players.

• The maximum size of a franchise team is 30 players.

• Sahara Pune Warriors and the Kochi teams were allowed to sign up to 4 players prior to the auction from a list of players who were not on any team during the previous IPL seasons.

The auction of IPL players is a classic English auction where the franchisee with the highest bid for the player gets the player. It is a simple auction process, with no complications and slimy strategies. However, we cannot just keep bidding for all players. So, what can be a strategy?

The strategy is essentially to have a list of 50 players (the maximum size of a franchise is 30 players, and on average over the past 3 IPL seasons, teams have had 18-24 players in their squad), classify them depending on various factors like batting, bowling, all-rounder etc and then rank them. After the ranking is done, we need to set the minimum and maximum prices that we can pay for each player and move down the list depending on the cash remaining (unless of course, the owner wants a particular player at any cost – in that case, all calculations go out of the window and the remaining players get short changed).

Classification based on batting, bowling or all-rounder is very basic. We all know who ‘bats only’, ‘bowls only’, ‘bats but also bowls’, ‘bowls but also bats’ and ‘genuine-all-rounder’. This requires no further elaboration.

Ranking them though is the challenge. How do you rank one player above the other in each of the classifications? What are the factors that can lead you to quantitatively rank one player over the other? Here is where I think Statistics and Regression models play a large part (in determining which variable is significant towards calculation of a value, what variables to-gether contribute towards the valuation etc.). However, as stated earlier, I will skip this part and probably go for a guesstimate of these variables. More quantitatively inclined folks can compare if these variables were indeed significant over the valuation in the previous auction (seasons). The variables, in no particular order are (as you would observe in the variables, we consider a split within variables: one for ODIs and the other for T20s. This is because of a lack of statistically significant player history for T20s. As we go along in T20 matches, only the T20 variable can be considered) –

a)      Experience – Quite a basic variable, in the sense that a great Test player may not be a fantastic T20 player. The number of T20s that a player has played is one of the variables. Here, Experience consists of two variables – one for T20s and the other for ODIs

b)      Batting Strike Rate – This is for ‘Batters’ classification. Many players across the world might not have played a lot of T20s (domestic/international). Therefore, this Batting Strike Rate variable needs to be split into two. We need to consider the Batting Strike Rate1 of T20s and also consider the Batting Strike 2 of ODIs.

c)       Batting Average – Again for ‘Batters classification’. Again, there is a Batting Average 1 for T20s and Batting Average 2 for ODIs.

d)      Composite Batting Variable – This may or may not work, and can be tested for statistical significance. The hypothesis is that Batting Strike Rate 1 * Batting Average 1 = Batting Composite Variable 1 along with Batting Composite Variable 2 should be easier to rank than each of variables mentioned in b) and c) and then reclassifying them.

e)      Bowling Strike Rate – Same as Batting strike rate, but for Bowling.

f)       Bowling Average – Same as Bowling average, but for Bowling.

g)      Composite Bowling Variable – Same as Batting variable, but for Bowling

h)      Indian Player – Hypothesis here is that an Indian player will fetch more value than an overseas player although the ratio of available positions in the side to the number of overseas players is low. I believe this variable is significant only because the Indian players can be used for extensive marketing within the franchisees across India hence bring in more revenue rather than the overseas players.

i)        Controversy-ridden – Hypothesis here is that the audience is more interested in the drama of a player rather than just the player value per se. For example, an affair with a film actress, the slap-scandal, monkey business and various other characters in the player community would fetch a better price than a normal staid player (a normal staid player but oozing with talent is a different issue which will be taken care by variables b-g).

j)        Players under 22 years – These players will get a premium over players with similar performances (variables b-g) but with age > 22 due to the simple reason that demand outstrips supply. There are only so many eligible and good players < 22 years of age and the demand is of atleast 4 years under 22 (with 10 teams, you need 40 players under 22. Do we have so many decent players at all?)

k)      Popularity – Popular/exciting players are bound to get a higher price than players who have similar performance (variables b-g). For example, a player like a Sachin/Dhoni (both of them have been retained by their franchisees though) are bound to fetch a higher price just because of more avenues for marketing and pulling in the crowds.

l)        All-rounder capability – I am not really sure how we can model this variable. As I thought through all these variables, this is probably the most difficult variable to model. How do we blend the batting composite and bowling composite variables and in what proportion? Do we need to blend them with different weights for a batting all-rounder versus a bowling all-rounder? Anyway, I do think all-rounders would add a great deal of value to all the IPL teams and they would be bid at a premium.

Those are probably the 12 important variables to fit into a regression equation,

Price of player = f(12 variables)

The only remaining valuation variable is the range that we’d like to come up with. That’s easier said than done and probably can be commented on once we solve the regression equation (probably attaching different level of confidences to each price would solve the problem – not too sure, haven’t thought this through).

End of analysis.

Do let me know if this analysis made any sense at all (or was helpful in anyway), and if there was any variable that I left out. Also, kindly shower brickbats on this blogpost (and demand that I don’t write such posts in the future if it doesn’t suit your tastes).

P.S: Oh yes. Happy New Year and all. May the farce..er…force be with in 2011 (Vulcan sign)

]]> http://kirandhanwada.com/2011/01/07/ipl-2011-player-valuation-and-analysis/feed/ 3 http://kirandhanwada.com/2010/03/23/ipl-economics/ http://kirandhanwada.com/2010/03/23/ipl-economics/#comments Tue, 23 Mar 2010 03:28:44 +0000 Kiran http://kirandhanwada.com/?p=401

With the brouhaha around the new IPL teams and their steep prices, one wonders if it makes economic sense to buy these new IPL teams or has it something to do with human behavior (ego?) to own and run a team. (As an aside, I was talking to my friend the other day and he made a very interesting point. He said “Accountability in IPL is pretty stunning if you look at it. There are no more excuses like ‘building for the next world cup’, ‘team is in transition’, ‘it’s the process and not results’. The results are pretty instantaneous.”)

The following analysis is a guesstimate of what make up the numbers in these IPL teams, both old and new. It is broken up into two parts –

a) Existing IPL team’s economics

b) New IPL team’s economics

a) Existing IPL team’s economics

When IPL was inaugurated in 2008 with much fanfare, the number of teams were restricted to 8. These teams were owned by Bollywood and Indian Corporates alike. The 8 teams were – Rajasthan Royals (RR), Kings XI Punjab (Kings), Delhi Daredevils (DD), Kolkata Knight Riders (KKR), Mumbai Indians (MI), Deccan Chargers (DC), Bangalore Royal Challengers (BRC) and Chennai Super Kings (CSK). Through a closed auction system, the bid winners were declared, with Mukesh Ambani bidding the highest with Rs. 450 cr ($111.5mn) for Mumbai Indians and Emerging Media Group bidding for Rajasthan Royals at the lower end at Rs. 268 cr ($67mn). The sum total of all bid winners was Rs. 2894 cr. which has to be handed over to the IPL management team over a period of 10 years (in equal amounts).

Let’s look at the two different components that make up Profit for any enterprise. Costs and Revenues.

Costs:

a) The franchises have to pay the bid amount every year, spread over 10 years. The team is then to perpetuity by the owner, without paying any more franchise fee.

b) The franchises also had to bid for different players. Stars like Sachin Tendulkar, MS Dhoni, Rahul Dravid etc. command a premium (close to Rs. 1.5 cr each, every year) while unknown players command the minimum (Rs. 8 lakh every year). Depending on the capacity of owner’s capital and different sponsors involved, various players are bid for and paid in full.

c) The bidders also have to take care of the promotions – television and print ads for the teams as well as star players, to keep the marketing buzz going. This involved, for example, Delhi Daredevils roping in Akshay Kumar for the first IPL season (while dropping him for the 2^nd), while the Royal Challengers chose Katrina Kaif. There were other Bollywood owners like Shilpa Shetty and Shahrukh Khan who were spared the Bollywood expense, but nevertheless had to shell out money for other marketing expenses.

Revenues:

a) Approximately 60% of TV rights revenues is distributed among the franchise owners. TV rights with Sony were renegotiated in the 2^nd season for a record Rs. 8200 cr ($1.6bn) to be spread over 10 years (It was initially Rs. 4000 cr for 10 years. However, basing on the popularity of IPL Season 1, the bid was renegotiated to Rs. 8200 cr for 10 years)

b) Revenues from sponsors (Nokia, Wrigleys, Kingfisher, Pepsi, Reebok etc.)

c) Ticket receipts, selling memorabilia and merchandise etc also called Gate revenue.

The following excel sheet gives a snapshot of the approximate profit/loss for each franchise in IPL Season 2.

(Assumptions: Promotion cost@50% of Team cost, Gate revenue@10% of TV rights revenue, Sponsors revenue on average @30% of TV rights revenue – assumptions made in line with other sports franchises across the world – feel free to disagree)

As seen in the Profit/Loss sheet, inspite of very generous assumptions regarding revenue, 7 out of 8 teams are in the red. The assumption on sponsors revenue might be a bit skewed since Mumbai Indians have the capacity to bring in more sponsor’s revenue while the lesser know Rajasthan Royals might bring in less. Nevertheless, the profit/loss sheet gives us a fair idea of how the franchises fared in IPL Season 2 inspite of low entry cost during the inaugural kickoff.

B) NEW IPL TEAM’S ECONOMICS

Sahara Group and Rendezvous Sport are the two new entrants to IPL. Sahara Group won the bid for Pune while Rendezvous won it for Cochin. The biggest downside for these two groups however is the cost. These two to-gether have paid slightly more than what the other 8 had paid combined in 2008. Sahara paid Rs. 1702 cr while Rendezvous paid Rs. 1533 cr bringing the grand total to Rs. 3235 cr.

Assuming all other parameters remain constant (TV rights revenue have to be shared across 10 teams now instead of 8 but with corresponding increase in matches from 60 to 94 in IPL Season 4, I expect the TV rights revenue to be approximately constant; the Team cost will obviously go up due to higher bids and competition for atleast 3-4 star players), the franchise cost per year is pretty steep.

Conclusion:

With the kind of losses that Sahara Group and Rendezvous are supposed to incur, I wonder what would be the actual cost, if the opportunity cost of investing the franchise fee (say, a corporate deposit @8% per year) is included. To think that the existing IPL teams are making a loss with such a low cost base, it is close to impossible to think that either Sahara or Rendezvous are looking to make money off their IPL franchises in the next 4-5 years unless they come up with stunning marketing strategies and make money off them. Buying a stake in the existing teams would have given them far more leverage in terms of better opportunity cost as well as an already established team than buying a totally new franchise.

]]> http://kirandhanwada.com/2010/03/23/ipl-economics/feed/ 1 http://kirandhanwada.com/2009/01/26/customer-lifecycle-lifecycle-messaging/ http://kirandhanwada.com/2009/01/26/customer-lifecycle-lifecycle-messaging/#comments Mon, 26 Jan 2009 05:32:39 +0000 Kiran http://kirandhanwada.com/?p=159 Customer Life Cycle (CLC) is an oft-used term in Marketing to describe the progression of steps a customer goes through when considering, purchasing, using, and maintaining loyalty to a product or service. The firm which pitches the product/service to the customer typically has the following stages in a marketing campaign:

Reach —> Acquisition —> Conversion —>Retention —>Loyalty

Firms follow different strategies to target different sets of customers at different stages in the CLC.

Let me illustrate this with an example.

A wedding planner cannot increase business if he just targets marketing about conducting weddings. Sure, he can reach and acquire the customers who want to get married. However, marriage is usually a one-time affair for most, and hence if the wedding planner intends to pitch in only for conducting weddings, his business too will be limited.

However, consider the concept of Lifecycle messaging. If the wedding planner is smart enough, he can customize messages to his customers and secure more business. How about marketing an anniversary planning message to couples who got married a year earlier? When the couple starts having children, why not customize messages for conducting birthday parties and so on and so forth.

The Web is an important channel to connect to your customers in this increasingly interconnected, Facebook economy world. The usage, rather under-usage of the Web today in the CLC through Lifecycle Messaging is shocking, to say the least. I am appalled by different email marketing messages I am bombarded with – not only from unwanted sources but from stores I bought a product from previously. I am bombarded by the same message if I bought a computer or if I had bought a mixer. I am showered with the same message irrespective of me being a new customer, a one-time purchaser or a long-time purchaser. Isn’t there an opportunity here to apply the concept of Lifecycle messaging and secure more business. Let me use some examples again to drive home the beauty of this very simple but very effective concept -

1) The first and a universally known example is the Loyalty card. An enterprise wide implementation of this Loyalty card concept would exactly pinpoint the stage of Lifecycle in which the customer is in, and the kind of usage (which would indicate profitability, another sub-category where the messaging can be even more personalized).

2) Customized Email messaging to credit card customers to shop at places where they shopped before to get more points. Different messages to new customers vis-à-vis a year-old customers vis-à-vis a 5 year old customer. Same messaging may be effective, but not as effective as messaging according to the Lifecycle.

3) Online web portals displaying different prices and different products depending on the customer lifecycle stage and new customer/repeat customer basis.

Those were but a few of the many examples that Lifecycle messaging can be implemented. From a local grocery store to a huge organization, from a B2C business to a B2B business, a fundamental concept such as Lifecycle messaging would prove very effective in improving business in a significant manner.

Other interesting links which have a great insight into this topic

- By Josh Kopelman Link 1, Link 2

- By Joshua Porter

To round this post off, here is an image from the Wired magazine which beautifully illustrates the concept of remembrance, an inherent component of Lifecycle messaging.

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