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eBusiness Secrets is a series of in-depth articles about Internet mediated Business and Commerce, what makes a great eBusiness and how do the best ensure they keep thriving online.

Cashback sites are blood-sucking parasytes. I’ve recently said that much. In the financial services market they increase cost per sale while adding no value to merchants. They don’t put your brand in front of users that would otherwise not buy from you, nor do they encourage more repeat purchases or higher average basket values. They live off your top line, effectively charging a premium for access to the wallets of those customers you have acquired through your existing marketing activity. They incentivise churn and commoditise the market. They’re evil.

It doesn’t have to be that way. As ever, there has to be a silver lining. While current usage trends offer little hope of offsetting marketing costs against cashback spend today, explosive growth in other mediated channels would indicate that over time customers will use cashback sites as their preferred shopping interface, diminishing the need to spend in other channels.

Google’s algorithms provide today’s shoppers with a proxy for trust. Customers perceive Google as a reputation management system, not just a search engine. Cashback sites users’ have got a much better proxy for this today: their trusted cashback site. While the headline feature of these sites is the fact you get money back, a much interesting feature is the fact that they run extremely lively forums. Their users like to talk about what they buy and will not think twice of thrashing a bad experience or recommending a good one.

Cashbacks are a brand’s social play. Cashback sites have grown entirely by word of mouth, they have a large audience of commited visitors and hold some of the largest collections of user generated content. Cashbacks, it turns out, are very successful social media sites. For years now we’ve been looking for ways for commercial organizations to exploit social media. We’ve tried advertising on Facebook next to nazi propaganda. We’ve tried throwing the brand book out of the window, concocting silly characters and creating profiles in MySpace for them. Heck, we’ve even tried grabbing land in Second Life - land that must surely lie now covered in cobwebs, waiting for the switch to be turned off out of mercy. I think we’ve finally hit gold. Cashbacks are still infant, wild and parasytic. But I have changed my mind about them and so should you. With the right nurturing and guidance, cashbacks could become the online marketer’s weapon of choice in the world of social media.

The time is now. Cashback sites will remain when Facebook is long gone. Think about it. What would you ultimately get as a thank you for some of your shrinking free time, a poke or £50? A few years from now, when Facebook is just a distant memory and Third or Fourth Life once again fail to make a dent, cashback sites will still be going strong and those of us brave enough to support them -and learn to work with them- from the start will have turned the relationship to symbiosis, and will be in an enviable position to benefit from their staying power.

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cashback cashback sites ebusiness ecommerce emarketing facebook social media

Posted on April 29th, 2008 by Roberto Hortal

Filed under: eBusiness, eBusiness Secrets | No Comments »

eBusiness Secrets is a new series of in-depth articles about Internet mediated Business and Commerce, what makes a great eBusiness and how do the best ensure they keep thriving online.

I’m a Renaissance Man: skilled in Marketing, eBusiness & IT and possessed by a keen commercial appetite, I have always found myself at the crossroads between corporate functions. Many corporate structures pre-date the Internet and organizations typically find it difficult to get their different departments (Marketing, Sales, IT, Product development, customer service, etc) to work together. There’s were I come in: wearing the customers’ hat, pulling resources into a virtual group, getting people across different functions to work together and embedding the practice of eBusiness into companies rarely set up to make the most of their online channels.

I recently came across this quote from Bill Buxton at Microsoft:

The renaissance is over - the problems are far too difficult for any one individual to have sufficient knowledge to advance them. On the other hand, the renaissance team is possible and our only hope is the collective - the cross disciplinary team. Engineering and computer science, interaction design, ethnography, marketing and sales.

My initial reaction was dismissal: engineer speak -I thought. Don’t they like to sound like they’re saving the day? Then I read it again, and I got it. I’ve spent so much energy making people work together: people from different backgrounds, with different goals and incentives, with wildly different skills and attitudes…

I have been building Renaissance Teams! Teams that have been consistently successful at adding remarkable value to the organizations that asked me to set them up. Temporary, project-centered teams have worked wonders for me, but if corporations are to go full-on down this route, implications are profound: they’ll need to restructure themselves radically.

Companies must reshape away from a structure that clusters similarly-skilled people together, instead grouping diverse individuals around shared goals. eBusiness departments are best placed to lead the charge: we’re typically the youngest function. Frequently, tiny resources force us to beg, borrow and steal talent internally. We also have some of the most accurate measurement around: we can clearly define, measure and refine our goals and activities based on what customers and markets do.

The corporate world has not yet started this journey -indeed, it has not yet realized this is a journey it must set off on. Opportunities will be huge: small teams bursting with a rich set of complimentary skills are ideally suited to the quick pace demanded of today’s companies. They are also best able to intimately understand their customers and to create products and services that are truly unique - that feel truly personal to those customers. These teams must be tight-knit, their members expert practitioners of their own trade. Renaissance Teams demand top-notch people full time: top talent rather than a flexible pool of resource. Dedication and passion, not scale. Is this something an outsourcing arrangement or an agency are likely to be able to provide?

Will companies rearrange themselves to take advantage of this opportunity? Will large services organizations adapt or dissapear? Will something else, hitherto unpredicted, be the real catalyst to change? I’m not sure yet. In the meantime, I’ll remain a builder of Renaissance Teams. I’ve yet to see one that doesn’t deliver great results.

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business commerce corporate structure ebusiness ecommerce marketing renaissance man renaissance team

Posted on March 24th, 2008 by Roberto Hortal

Filed under: eBusiness, eBusiness Secrets | No Comments »

Vote buying has trumped FUD-spreading and xenophobia in Spain’s most dispiriting election since democracy was restored. The country has been given in trust to a government that has spent the past 4 years slowing the country down, allowing inflation to rocket and turning a budget surplus into vote rigging hand-me-downs.

As Spain matures into a developed nation it’s slowly turning its attention from constitutional -regionalism, terrorism and structure- to economic woes. This is no doubt good in the long run, but the next few years in the process of growing up are crucial and I have serious doubt about the capacity of Zapatero’s PSOE to steward the country through the challenges ahead.

On the good side, communists and separatists have both suffered great losses. Surely an indication of the country’s coming of age. And I wouldn’t be surprised if the dominant faction at Rajoy’s PP -Rajoy himself and all those who chose to campaign on divisive issues like race, freedoms and the artificial juxtaposition of tradition and prosperity- start to lose power and give way for a new generation of pro-business, socially pragmatic leaders. Closer to the centre, this new generation of leaders should be able to reconnect with the Spanish electorate and to tune with their real desires, wants and needs, creating a political program to inspire the voters and build -together- a mature, confident European democracy with a solid, prosperous economy at heart.

The next 4 years will be tough. A bright future may still await Spain in the long term.

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coming of age economic woes new generation politics pp pro business psoe regionalism separatists spain xenophobia

Posted on March 10th, 2008 by Roberto Hortal

Filed under: Commentary | No Comments »

As I’ve recently commented, the current electoral campaign in Spain has been branded a dispiriting spectacle by at least two of the world’s most respected media institutions: the FT and Hortal.com

Luckily the Spanish character prevails. Fazed with constant disappointment by politicians from all parties, Political Sciencies student and blogger Eva Ros has decided to strip herself of a piece of clothing every time politicians lie, insult or flip-flop during the campaign. She’s doing it on camera for all the Internet to see.

She’s set herself a limit of 3 pieces of clothing a day. No matter: predictably she’s down to her knickers with half a week to go till poll day. Now Spain awaits impatient our politicians’ next lie for Eva to be bare all: an image of her namesake in the garden of Eden before a bite from an apple got the whole lying business started in the first place.

Along the way, Eva has managed to gather quite a loyal following, getting people engaged with more than just her slow but unstoppable descent to nakedness. She’s got readers, commenters and a newfound voice that she’s actively using to denounce lies and half truths across political lines. She’s even got top-ranked mentions in Spain’s mainstream press -including the most read article today on the website of the Conservative-leaning ABC.

Eva hopefully belongs to the new generation of politicians eagerly waiting in line to run the country when the current generation leave after Sunday’s election. There’s hope yet.

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disappointment electoral campaign eva nude politicians spain striptease

Posted on March 6th, 2008 by Roberto Hortal

Filed under: Commentary | 1 Comment »

Spain goes to the polls this month in a general election. Faced with an global economic downturn and a local climate of tension, the campaign has been a truly dispiriting exercise.

Politicians have opted to use bribes, FUD and insults rather than policy proposals in a race to the bottom that is threatening to leave voters alienated and angry at the lack of a viable alternative to the 2 main parties, too busy playing their little games to bother with the opportunity to effect real, positive change.

The FT says it best:

Spain’s general election campaign, now reaching its climax, has been a dispiriting spectacle. Against the background of an economy weakened by the end of cheap credit and a sharp property market correction, the contenders seem to be trying to bribe or frighten Spanish voters.

What are the options? In the short term, not many. This election will be won by the lesser of two very bad choices and the victor will have their hands full dealing with an impending crisis.

Over the longer term, the Popular Party (PP) must to undergo radical change:

• remove all ideas (and people) left over from the Franco years, undoing the recent reversal culminating in Gallardón’s sidelining
• create ample distance from Spain’s wavering, irrelevant Catholic church
• clean up the party from special interest influence (at the top) and corruption (at the local level)
• become a credible centre-right party along the lines of Europe’s best
• embrace today’s richly diverse Spain - migration is good news, celebrate it and make the most of it

The Socialists (PSOE) need to:

• invest in substance, avoiding short-term populist jerks
• accumulate a solid base of capable, experienced people from credible backgrounds, better able to compete with the PP’s traditionally better educated, connected and more experienced base
• take a decidedly business-friendly approach to socialism (take Blair and Brown’s example)
• resist the urge to deploy old glories to do the party’s dirty bidding

Finally, both parties must look themselves in the mirror of their European peers. Learning and applying what left and right mean in the 21st century will be greatly beneficial for Spain, and is long overdue. Letting go of petty personal rivalries and old civil-war feuds and allowing the country to stop staring back in time and instead look forward together with hope and a common purpose would be the real prize.

For the sake of the country where I was born and I plan to retire I hope both parties get on with it soon. For now, signs are they aren’t rushing.

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election campaign general election politics race to the bottom spain spanish voters

Posted on March 3rd, 2008 by Roberto Hortal

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2007 was the year of the price comparison site. uSwitch had been operating on the utilities space for quite a while and product price comparison has been available for quite some time as well through i.e. Google Shopping. Yet it’s been the arrival of Insurance price comparison and the deep pockets of Confused.com, MoneySupermarket and recently Tesco that have taken price comparison mainstream via a winning combination of real convenience, massive marketing budgets and the ultimate distress purchase.

The success of aggregators has been fueled by the huge commissions on offer from insurance companies. Price comparison sites can be paid anywhere between £30 to over £100 a sale, making them highly profitable. This profitability is easy to sustain as they make the insurance shopping process orders of magnitude faster and easier, providing real customer value and generating lots of loyalty.

Their success has spawned a whole new set of internet intermediaries keen to put their hand in the money pot. Unable to replicate the aggregators’ business model of adding value to the customers, these new intermediaries have looked for alternative ways to get customers’ attention. A first generation of specialist information sites is now on the way out. MoneySavingExpert is the only strong survivor, having been able to play the personality game as a differentiator and extended to TV and other channels. 1st generation sites’ typical technique -amassing loads of useful, original content and making it available free- has proven too easy to repeat and not very successful commercially, as it is all too easy to soak up information on those sites and defect to the price comparison sites for the actual purchase.

The new generation have a much stronger formula. Rather than trying to add value to a user experience with content or convenience tools, this new generation cuts straight to the ultimate customer motivator: hard cash. Sites like Casback Kings and Quidco promise to pass their commision (all or in part) back to customers in exchange for their email address. Surely enough, they have proven popular with the public and may be starting to take transactions away from the price comparison sites.

Cashback sites are winning propositions for consumers, who see their prices drop by what can be a significant amount. They are much worse news for retailers, experiencing the opposite effect: having their costs skyrocket by paying a commission on top of every sale. Where price comparison sites offer retailers extended distribution reach, Cashback sites are purely parasitical, feeding on retailers’ margins while adding no real value to the chain. Yet in a very competitive market -retailers’ favourite mantra these days- they seem happy to keep feeding the beast and allow it to take hold in their business space. Price comparison sites commoditise, lower retention and increase churn to a point where most insider would recognise they’d be glad to see them fade away. Cashback sites add to the value-destruction spiral. Yet the lessons have not been learned. And we happily feed our business’ Brutus.

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cashback cashback kings confused.com insurance price comparison shopping uswitch

Posted on February 20th, 2008 by Roberto Hortal

Filed under: eBusiness | No Comments »