#margin compression

[avolusis-blog]

How To Change People's Mind - Lie

#Lie #Lying

1% of people are honest and will never steal.  Another 1% are completely dishonest and will always steal.  The remaining 98% us are somewhere in between.  That's why you need a lock on your door -- to protect your things from the 98%.

While we like to think that the impact of crime and dishonesty comes largely from big liars like Bernie Madoff, the fact is the real impact comes from the sum of all of us lying, just a little.

In an experiment, people were asked to take a test and then report how many problems they correctly solved.  Afterwards, one group was told to shred their tests -- that way no one could see the results.  In the latter group, people on average reported doing 50% better!

Researchers found that it really didn't matter whether money was involved, people still lied.  Except there was a decrease in lying when the monetary award got really high -- and researchers speculate that's because people felt guilty if there was too much to gain.

What reduced lying?  If they recited the 10 Commandments before the exam began, people were far less likely to cheat.  In another sample involving students, cheating was less likely if they were asked to recall the school's ethics policy before taking a test. 

Finally, in a study in involving insurance -- applicants were more likely to be truthful if they signed an affidavit saying "I promise that the information I am providing is true" at the top of the form before answering questions as opposed to at the bottom, after answering.

Source: "Why We Lie" wsj.com

[avolusis-blog]

Are You Leaving Customers In the Cold?

#loyalty #customer #service

Did you know customer retention can return 17 times what you put into it? According to Bain Consulting, reducing customer attrition by a mere 5% can improve a business’s bottom line profits by 25-85%, that's a ratio of up to 17 to 1.

Most businesses understand this, that's why 84.5% of them incorporate customer retention strategies as part of their marketing.  But less than half (48.8%), believe those strategies work.   Most of them use rewards programs (65.2%), social media (65.2%), and 1:1 marketing strategies (64.1%).  But they are not seeing  increases in customer-lifetime value and/or RFM (recency, frequency, and monetary value).  

It's a tough sell to fickle consumers.   Only one in four consumers feels ‘very loyal’ to their regular brands, while just as many profess no loyalty at all, according to The Accenture 2011 Global Consumer Research Study.  Perhaps that's why 84.4% devote less than half of their overall marketing budget to customer retention.  And a significant number (39.5%) commit less than 10% of their marketing dollars to customer retention.

Source: http://loyalty360.org/resources/research/making-every-interaction-count-how-customer-intelligence-drives-customer-lo

[avolusis-blog]

VIDEO: A Cell Phone That Knows Body Language

The XBOX Kinect has been used to allow let people interface with computers with body language.  And new technology may enable phones to do it even better than the XBOX.

And this could have huge impacts for systems integrated around phone operating systems, like Google's anticipated home entertainment system (See post "Google Enters Consumer Device Market).

The technology is known as 3D image acquisition.  And it has already been shown that using it to create gestural interfaces make it much easier for multiple people to interact with a computer at once — as in the dance games the Kinect has popularized.

And researchers at MIT's media lab point out that while we have optimized how a single user interfaces with a computer, there is still much improvement when it comes to multiple users.

The technology measures how long it takes light to travel from different parts of a subject to determine depth.  Researchers are experimenting with a one-pixel camera to do this.  This would be an improvement over existing technology that uses a laser.   And there are two benefits -- a new algorithm is simple enough to run on the type of processor in a smartphone and researchers are showing that they can use crude hardware.

Kevin Owyang

Founder & CEO 

http://avolusis.com

[avolusis-blog]

Google Enters Consumer Device Market

Google plans to market a home entertainment system that would allow consumers to stream music and video from anytime/anywhere.  This, combined with their acquisition of Motorola Mobility, represents a sharp departure from their previous strategy which focused on the Android operating system but not the devices.

Google hopes to increase the size of the market by selling devices at lower price points.  And this would inevitably drive margin compression in the industry -- similar to what happened to eBook devices with the introduction of the iPad. Analysts widely believed Amazon sells eBooks at a loss. (See post "Amazon Thinks Out-Of-Box May Include Boxes" and "Mon Dieu Pepe Le PEW! It's the Cost That Shocks!"

The system would be run by Android and would interface with users tablets and smartphones running Android.

The system would be the first time Google will directly manage the manufacturing process of overseas hardware suppliers and selling devices to consumers.

Kevin Owyang

Founder & CEO 

http://avolusis.com

[avolusis-blog]

Getting Paid For Knowledge

VIDEO:  Large companies are challenged to find ways for employees to share knowledge across the enterprise.  To do so, some have implemented information exchanges -- places where employees can ask questions and other employees post answers in return for points for good answers, somewhat like Yahoo! Answers.

For example, in the SAP Developer Community System, participants receive from 2-10 points for each answer.  And they can accumulate points in knowledge areas, like Python and C+programming.  But these points are seen as credentials. So much so that third-party re-sellers of SAP's products post there point accumulations as a badge to bolster their reputation.  

The critical part is getting more senior employees to share their knowledge.  Because when they do, it can boost the productivity of more junior employees by 10%, and that's the equivalent of a college education.

But there needs to be a system of rewards to get these senior employees to participate, because once they share their knowledge -- once they give that value away -- they can't take it back.

But their are other ways to get paid for knowledge and it can be used to help small companies avoid margin compression.  For example by collecting data on food allergies at the pharmacy counter, a mom & pop grocery store can have the cash register alert consumers when they purchase grocery items that contain allergens harmful to them.  This technology is in use today, and it can be a valuable service to many customers.  Further, it's a way for small grocers, whose margins are only 3%, to differentiate from larger chains.

[avolusis-blog]

The Future Of Glass

Some what cool video of the different ways glass will be used in the future.

Only somewhat cool, because you can see a lot of this portrayed in the film Total Recall released in 1990. 

[avolusis-blog]

Manufacturers Boost Jobs in US

With growth slowing and costs rising around the globe, US companies are looking to add manufacturing in the US -- sometimes moving production away from overseas.

United Rentals plans to increase capital spending by $1 billion this year.  Cummins, maker of diesel engine, is looking to double capital spending compared to two years ago.  Carlisle Companies is looking to bring back tire production from China to the US due to, rising wages overseas, higher transportation costs, and the shipping time of goods from China.  Union Pacific plans to buy twice as many locomotives this year, spending upward of $400 million.   The auto industry too is looking to add shifts or expand plants in the US, with some hoping to use the US as a production source for markets in Latin America and Asia.  

Whether this translates to job gains is a different story -- most of the capital investment is in productivity gains.  And a broad based turnaround may still be some time away.  Of the 55 companies that provide 1Q earnings forecasts, 43 said they expect it to be weaker, according to Thompson Reuters. 

[avolusis-blog]

Daily Duds? Groupon and Living Social Disappoint

The Wall Street Journal reports that Groupon's growth is insufficient to justify its current valuation.  Revenue has grown 18% in the fourth quarter, compared to the third, but this has been unable to overcome rising costs.  Operating profit still remains negligible because of its payroll of 11,471 -- 1,000 of which were added in the fourth quarter alone. 

Further revenue guidance suggests growth could slow in the current quarter.  Another notable item: Groupon stopped telling investors how many people subscribe to their email list.  Now, if it we growing, why would they not tell?

Meanwhile Living Social isn't fairing all that well either.  Their revenue was $245 million in 2011, far less than the $1.1 billion that Groupon reported.  And Living Social gives a far better payout of revenues to merchants -- 67% compared to Groupon that pays out 41%.  (Basically it works like this -- if a merchant sells 200 deals for $100 each on Groupon, then the merchant gets 41% or $8,200.  Now, since the deals are typically steep discounts from retail -- say 60% or more, the merchant doesn't make much at all.  So in the preceding example, a $100 deal is a discount to full retail of up to $250, of which the merchant gets $41 -- an 84% discount!  And the main reason why many merchants do not repeat deals on Groupon and Living Social -- the steep discounts don't pay off in repeat customers.)

Finally, Living Social is operating at a loss of $400 million in 2011.

As for valuation... Living Social was valued at $4-$5 billion when it raised capital last December while Groupon is valued at $14 billion.  That equates to 9x sales for Groupon and 18x sales for Living Social.