Consumers Do What’s Easy
Happy New Year!
DCA members are talking about lots of things as 2023 dawns – big plans, exciting innovations, the next big DCA meeting (April, in San Francisco – more to come on that). But we had an important conversation this week about a perennial issue: friction.
Physical friction slows things down. That’s why skiing is more fun when there’s snow, and considerably less fun when you hit a patch of grass. (Good news: after the last two weeks, there’s no grass to be seen on most ski hills.)
Friction in digital commerce is more of a metaphor, but just as unpleasant. The dream is frictionless digital loyalty and rewards programming – merchant systems know who the customer is, the customer’s status and preferences, and those factors are taken into account automatically in every transaction.
I had an example of a low-friction transaction today: I am writing this from the Turkish Airlines lounge at Washington-Dulles. Getting in involved two things, both on my phone: Priority Pass from my digital wallet and my Delta boarding pass. The machine beeped, I got in.
At least in theory, it could have been one step easier if the system “knew” me better – one beep of Priority Pass or my boarding pass, and I’d be in.
Friction losses are real. Car engines have a lot of friction and are about 50% efficient – i.e., about half the energy a car consumes is converted into forward motion. Bicycles are around 98% efficient, because their “engines” (pedals, chain, cogs, bearings) have so little friction.
So too, when a digital commerce system is complicated, that requires extra effort and further steps – and it also means we simply lose transactions. I was informed by a member this week that a card I have in my wallet right now was offering 10% off gas in December. I spent a lot of money on fuel last month (we drove to grandma’s house for Christmas, as one does), but had no idea about the offer, so I didn’t use it. That’s a complexity problem, which is – strictly speaking – a sibling of friction, not quite exactly the same thing.
But it’s hard to reduce friction without reducing complexity. And both of those things involve using better-quality data to tailor experiences to consumers in a way that fits them best.
- The “Norm Standard” is true frictionless commerce: Norm walks into Cheers, everyone yells “Norm!” – and a beer shows up at his seat. Thinking radically, what could you do to achieve “The Norm Standard” for your consumers?
- In the real world of today, what are the most steps a consumer may have to take in order for your systems to recognize them?
- What are the least number of steps?
- By the end of 2023, how will you know if you have closed the gap – i.e. reduced the number of consumers who take a larger number of steps to claim a benefit or participate in a program?
Related DCA Resource:
Commerce Code Episode 93: Simplifying Payments by Embedding Transactions Into Retail Software
Commerce Code Episode 101: New Solutions for Loyalty Programs and Consumers
Commerce Code Episode 103: Fin-Tech Innovation and Open Banking