Silver Slam, page-83

Monetisation views!
a decade ago I was having an argument/debate with my peers, the leadership team of a large international bank. We were about to launch a couple of credit cards to the market. The usual debate was going on about monetising using an annual fee or deferring fees and revenue streams till later. I was strongly in the camp of monetising later. My challenge to convince the leadership team was difficult.... short term reporting cycles occur bi-annually so difficult to make people see longer term. People wanted to see a quicker ROI. Wanted to show money to the board now, not later. Without getting into detail, I managed to split the strategy (as I was losing the argument). One card got an annual fee, with an increased value proposition and significantly higher immediate acquisition benefits. The other was no annual fee in year 1. Then introduce annual fee in year 2, albeit deferred the billing of this until year 3. Card 1 was at 30k customers by year 3. Card 2 was making 30k customers a month and hit 1 millioncustimers. PBT for card 1 was marginal at best. Break even. Card 2 was making $250million a year in year 3. We didn’t introduce a fee, and worked out other fee and revenue sources as we went along. Just stayed nimble. And leveraged the customer base. The customers had become “sticky” and inelastic

i’m worried about people focusing on monetisation now, versus missing the bigger picture. I hope mgt stay the course and get 10 million users. Very impossible. But not if we impede consideration

so steps should be;

1. Get mega millions of people enrolling (get their email). Go for 20million
2. Keep working the data-base and keep a strong and dynamic focus on “activity or engagement”. Make this a critical board/mgt KPI - along with pipeline enrolments (part 1)
3. Once users are sticky, and behaviourally wedded, introduce monetisation on mass. Not just revenue services (through cross sell/advertising, as well as fee for enhanced value prop subscription. But hit the middle and mass users. Small amount that users won’t feel. Payable through phone or line bills. Payable by third parties (credit card reward utilisation) etc etc 

cheers
pez