Wednesday, October 24, 2007

Pay By Touch Blog Daily Headline News for October 23rd



Headline News - October 23, 2007


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Tuesday, October 23, 2007

Full Circle or: "A priori" and "a posteriori"


"What came before...what comes after"


Good Morning: Okay, here's my "Full Circle Inference" I mentioned I'd blog about last Friday:

Does anybody find the connection between "GreenPoints" and the Pay By Touch Logo a little bit interesting? They're both green points. I find that to be quite the coincidence. But as with all coincidences, I always question, "Why"? What is the meaning behind the coincidences? At the end of the day, when the smoke clears, the answer seemingly always "points" to what I refer to as the "Full Circle" inference. Another name for it is "a priori" "a posteriori" if you want me to go latin on you.

The terms "a priori" and "a posteriori" are used in philosophy to distinguish between deductive and inductive reasoning, respectively. As coincidence would have it, loyalty marketing appeals to both the deductive and inductive reasoning powers of consumers. That fact is the driving force behind the popularity of loyalty programs and why 45% of Visa's Interchange Rate is comprised of covering the cost of rewards programs.

As I mentioned, the phrases "a priori" and "a posteriori" are Latin in origin, and literally mean "from what comes before" and "from what comes later", respectively.

It has been also called "logical positism." which grew from the discussions of Moritz Schlick's Vienna Circle and Hans Reichenbach's Berlin Circle in the 1920s and 1930s. Which is why I call it the Full Circle inference.


S&H GreenStamps started the loyalty industry 110 years ago, and today, using software programming, which coincidentally (not) is made up of 1's and 0's, they have created potentially the best loyalty program in the industry.

After acquiring S&H for 100 million, Pay By Touch can create the 1-to-1 marketing "end all" 111 years later. Now I'm no numerologist (don't even really know what one does) but my instincts tell me that this is going to be big.

Let's look at the generics of what "loyalty marketing" is:

Loyalty marketing: From Wikipedia, the free encyclopedia

Branding, Product Marketing and Loyalty marketing all form part of the customer proposition – the subjective assessment by the customer of whether to purchase a brand or not based on the integrated combination of the value they receive from each of these marketing disciplines.

Loyalty marketing is an approach to marketing, based on strategic management, in which a company focuses on growing and retaining existing customers through incentives. The discipline of customer loyalty marketing has been around for many years, but expansions from it merely being a model for conducting business to becoming a vehicle for marketing and advertising have made it omnipresent in consumer marketing organizations since the mid- to late-1990s.

Some of the newer loyalty marketing industry insiders, such as Chris X. Moloney and Fred Reichheld, have claimed a strong link between customer loyalty marketing and customer referral. In recent years, a new marketing discipline called "customer advocacy marketing" has been combined with or replaced "customer loyalty marketing." To the general public, many airline miles programs, hotel frequent guest programs and credit card incentive programs are the most visible customer loyalty marketing programs.

History of loyalty marketing

On May 1, 1981 American Airlines launched the first full-scale loyalty marketing program of the modern era with the AAdvantage miles program. This revolutionary program was the first to reward "frequent fliers" with reward miles that could be accumulated and later redeemed for free travel. Many airlines and travel providers saw the incredible value in providing customers with an incentive to use a company exclusively and be rewarded for their loyalty. Within a few years, dozens of travel industry companies launched similar programs. The AAdvantage program now boasts over 50 million active members.

American Airlines' AAdvantage program can trace its roots to S&H Greenstamps which were a popular retail reward coupon issued very commonly from the 1930s through the 1980s. Typically, as a consumer shopped at various grocery and dry good stores, they would receive a set number of Green Stamps that could be pasted into booklets and redeemed for prizes.

"A Priori"

What came before was, "GreenStamps," the world's first rewards program, operated by the Sperry and Hutchinson company (S&H), founded in 1896 by Thomas Sperry and Shelly Hutchinson. Here's an interesting backgrounder I was unaware of:

During the 1960s, the rewards catalog printed by the company was the largest publication (I thought it was Sears) in the United States and the company issued three times as many stamps as the U.S. Postal Service.

Once again, coincidentally, customers would receive stamps at the checkout counter of Pay By Touch's biggest niche markets, namely: supermarkets and gas stations.

"A Posteriori"

What came after, or "a posteriori" was "GreenPoints" which is now Pay By Touch. When greenpoints are combined with Pay By Touch's proprietary SmartShop program, it is poised to become the most rewarding loyalty experience, available, period. After all, who cares if you get "rewarded" with $1.00 off Corn King Bacon if your an Oscar Meyer bacon kinda guy? Because SmartShop gives discounts on Oscar Meyer Bacon to the Oscar Meyer Bacon eating family, the numbers are amazing. Instead of a .0065 coupon redemption rate, the SmartShop redemption rate is above 40%! There's no denying the statistical significance of those numbers.

A lot of people questioned the acquisition of S&H, including, initially, myself. But after further thought, and absolutely no insights, as per usual, from Pay By Touch, I now firmly believe that the acquisition of S&H Solutions will empower Pay By Touch to create the best loyalty marketing program in the history of the industry.

That is the main impetus behind this post...to alter the perception of the S&H acquisition. I'll attempt to do that by providing some insights as to how it is destined to become a powerful play. By the way, It might not have been a bad idea for Pay By Touch themselves to have done that for, if not the analysts, at least the shareholders of the company. It's one thing to keep the competition guessing, but an entirely different thing to keep your shareholders guessing. But then again, that's something that is easily fixed, so I'll move forward...

According to Ron Pedersen, CEO for S&H Solutions, "Together we aim to transform the personalized marketing industry by offering unprecedented opportunities for relevance marketing and customization."

The acquisitions of 7th Street Software, Capture Resource and S&H combined create a whole new entity, one that has a future primed to be a star. They got it right. This, from their website:
Pay By Touch Personalized Marketing offers retailers and manufacturers proprietary, next generation services that work to maximize the shopper lifetime value, increasing customer satisfaction and providing a true competitive advantage. The future of individualized retail marketing, our cost-effective solutions increase shopper frequency, basket size and retention.

Once again, ironically, coincidentally, whateverdentally, S&H's two largest markets were supermarkets and gas stations. SmartShop has the grocery market figured out. Pay By Touch is beginning installs at Shell Gas Stations in Chicago. A cross promotion between Jewel/Osco, Cub Foods and Shell Gas Stations is blatantly recommended once the installs at Shell are complete. But what of other gas stations?

I believe they are an ideal target market for a new and improved Greenpoints Rewards program. But don't reward Visa purchases, as Visa is not only our competition in payments, but also in rewards. Obviously those are our two core businesses.

Make no mistake, Visa is the enemy. Once again, coincidentally, (and fortunately) Visa is also the enemy of Gas Station operators, since Visa sucks up 66% of their profits so they can "reward" the more affluent. The full circle is that Pay By Touch can come from help, and this new "Petrol Rewards" program will be one which can be tied to check and debit transactions. The timing is perfect. What came before: Visa (a priori) and what comes after: Pay By Touch (a posteriori)

The perception that Interchange is exorbitantly high, combined with the fact that 45% of interchange revenues go to rewards programs, is resulting in the desire of gas station owners to shift their payments to checks, debit or cash. This shift in perception, will provide momentum towards shifting the payments they accept. In essence, the new PBT program would also be "rewarding" to the Gas Station owners as well, as it will give them back their profits.

So it seems like a perfect time to create a synergistic platform customized towards that sector. I have a pretty good idea on how to go about that.

Coincidentally, I have an "employment clause" in my contract with Pay By Touch and I think it might be that time to exercise it.

Talk about full circles...
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Bigg's Elects to Roll Out Pay By Touch to all Stores



The supermarket chain Bigg's is launching several initiatives this week as it upgrades stores and adds new services, from Kosher meats to the Pay By Touch fingertip payment systems.

At the Bigg's store at Highland Ridge, the retailer has expanded and added several departments including the Kosher Marketplace, featuring kosher meats, breads, cakes, wine and dairy products. It will officially open Oct. 24.

On the same day Bigg's will unveil its renovated Delhi store, with an enhanced wine and beer department and expanded produce, meat, seafood and deli departments. The store also will feature a Honey Baked Ham Express kiosk through the holidays.

Lastly, Bigg's this week is rolling out its Pay By Touch register payment system, wherein the shopper can place a finger on a special scanner and the value of the transaction is automatically deducted from her bank account.

This service, now at the stores in Oakley, Mason, Florence and Skytop Pavilion on Beechmont Road, will be rolled out to Bigg's other locations.

Story Link Here

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New Feature: Daily Payments Related Headline News



In a new feature to the Pay By Touch Blog I will bring you daily headlines gathered from around the world that are related to the Payments Industry. Hopefully this is something you'll find insightful. Here are yesterdays payments related news headlines:


Headline News - October 22, 2007

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Friday, October 19, 2007

Connecting the Dots

No, this is not my "full circle" inference, that will be Monday.

However it does have to do with one. A special opportunity exists which has been presented on a silver, (make that neon green) platter. If played out, it is certainly one that is ideal for Pay By Touch to both take advantage of and benefit from.

Pay By Touch has already sponsored PKV Racing for the Champ Car World Series. I'm aware of the reason...they agreed, in return for an infusion of capital, to forward a portion of the proceeds to sponsor PKV Racing. And it's been fun to watch. But for all that money, they are sponsoring 1 driver out of over 20. And he's not the most popular driver on the course, although this week, in Australia, Pay By Touch is in pole position.

Sure racing is has fans...but it's an expensive sponsorship too. For a fraction of the money, they have an inroad to sponsor the most popular sport in America. It's pretty popular in Canada, Mexico and Europe too.

The most popular spectator sports is NFL Football. It is watched by millions upon millions of fans. The most popular player of the most popular sport is the arguably the quarterback.

There is only one common denominator shared by all 32 starting NFL quarterbacks on all 32 NFL teams.

Week in and week out, on any given Sunday, Monday, and Thursday, no matter which team a spectator follows, no matter which game is televised, be it nationally, regionally or locally, there exists a very unique, relatively inexpensive sponsorship opportunity for Pay By Touch.

It would also give them exposure during SuperBowl which the world's most popular sporting event. And instead of paying $2.5 million dollars for 30 seconds of exposure for a SuperBowl commercial, Pay By Touch could have exposure during the big game on almost every snap of every play, no matter who has the ball.

With that said, here's the opportunity I see:

By now, everyone has seen and knows that the NFL has instituted a new rule which requires that NFL quarterbacks who have radio contact with the sidelines, must wear a green sticker on the back of their helmet.

The green dot is the result of a new rule in effect for the 2007 NFL season. The sticker on the helmet designates the one player is who wired with a radio for communications during play-calling.



I'm hypothesizing that in return for sponsoring the equipment needed to communicate from sideline to quarterback, PBT would ask to morph the green dot into the matching Pay By Touch "green dot" logo. Paying for sideline communication equipment for 32 teams would obviously be a much less costly than sponsoring a race car. Exposure would be exponentially increased, albeit the "cool factor" would be lessened.

If this is something that is doable Pay By Touch should consider locking it up now for next season. Otherwise, there's a Prepaid Card company, who has "Discovered the Prepaid Touch" called GreenDot, that might discover this idea and beat them to it.
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Servia Wins Pole Position for Pay By Touch/PKV


Servia: So much drama!






Oriol Servia crowned his return to the PKV Racing fold in the best way possible on the opening day of the annual Surfers Paradise round, claiming a pole position and a guaranteed front row start in Friday's qualifying session.

The Spaniard, taking over the #22 Pay By Touch entry from the absent Tristan Gommendy, claimed top spot on the timesheets with the very last lap of the session, setting a new lap record in the process.

“I am really happy to be on pole, really happy to give a good result to the PKV Pay By Touch car," Servia smiled, "It's a great start for the weekend, I thought the car was already good in the morning but it was all fine, it was all about putting the lap together and there was a lot of drama everywhere. There was a red flag every time I was out there so I couldn't do a lap. It must have been the most drama in a qualifying, it was like a one lap shoot out in the end for everybody and we were just able to do a fast lap because the car was good.

We need to finish like this on Sunday afternoon, I have been on pole before and I know it all counts on the last lap so that is what I am going to be working on. I would like to thank Kevin Kalkhoven, Jimmy Vasser and Mark Johnson for having the faith and believing in me for this race, and of course the crew for all their hard work. We couldn't have a better chance going in to the start of this weekend."

The race is on ESPN 2 Saturday night at 10:30 Central Standard Time.


Practice 1 Practice 2 Qualifying 1 Practice 3 Practice 4 Qualifying 2 Warm-Up Race
-- Fastest Lap -- -- Time Behind --
Pos Driver # Team Lap Time Mph km/h Leader Previous
1 O. Servia 22 PKV Racing Pay By Touch
 1:30.862 110.739 178.217

2 W. Power 5 Team Australia 1:30.895 110.699 178.152 0.033
3 J. Wilson 9 RSPORTS 1:31.365 110.130 177.237 0.503 0.470
4 P. Tracy 3 Forsythe Championship Racing 1:31.820 109.584 176.358 0.958 0.455
5 N. Jani 21 PKV Racing 1:32.520 108.755 175.024 1.658 0.700
6 R. Doornbos 14 Minardi Team USA 1:32.675 108.573 174.731 1.813 0.155
7 B. Junqueira 19 Dale Coyne Racing 1:32.875 108.339 174.354 2.013 0.200
8 S. Bourdais 1 Newman/ Haas/ Lanigan Racing 1:32.883 108.330 174.340 2.021 0.008
9 S. Pagenaud 15 Team Australia 1:33.018 108.173 174.087 2.156 0.135
10 N. Philippe 34 Conquest Racing 1:33.187 107.976 173.770 2.325 0.169
11 D. Clarke 4 Minardi Team USA 1:33.866 107.195 172.513 3.004 0.679
12 K. Legge 11 Dale Coyne Racing 1:33.986 107.058 172.293 3.124 0.120
13 G. Rahal 2 Newman/ Haas/ Lanigan Racing 1:34.049 106.987 172.178 3.187 0.063
14 D. Martinez 7 Forsythe Championship Racing 1:35.578 105.275 169.423 4.716 1.529
15 A. Figge 29 Pacific Coast Motorsports 1:44.381 96.397 155.136 13.519 8.803
16 A. Tagliani 8 RSPORTS 3:20.825 50.103 80.633 1:49.963 1:36.444
17 M. Dominguez 28 Pacific Coast Motorsports 4:27.161 37.663 60.613 2:56.299 1:06.336

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