The 80/20 Principle

The 80/20 principle says that 80% of our profits come from 20% of our customers.

In customer-relationship management or CRM, that leads us to believe that we should therefore concentrate our resources on those 20%.

But what happens in the long run if you dedicate more and more resources to the top 20%?

  • You get fewer customers overall, as budgets for recruitment of new customers decrease
  • You become extremely dependent on those top 20% — which is all and well if that’s your strategy, but a highly risky one
  • You get fewer new customers who are likely to be part of that 20%
  • Some in the 80%, whom if you had continued allocating adequate resources to (i.e. maintaining a level of service/support before shifting the focus to the 20%) might have become some of your biggest customers, thus you lose opportunities

This is not an extensive list of what may happen after the focus shifts from the overall good service/support of the company to a more hierarchal method of resource-allocation, but it provides some insights into what might happen.

On Making Resolutions

I’ve never been much of a “new year resolutions” kind of guy.

As much as I’ve always believed in goal-setting, which is what new year resolutions really are, it has never occurred to me that they actually work.

I was looking back on the new year resolutions I had written about last year — both explicitly and implicitly stated, through my old written journals — and I realised that I had actually accomplished many of them without the need for any conscious thinking about them throughout the rest of the year.

Subconscious Push

It was as if I had set the tone for the rest of the year simply by stating what I had wanted early on, creating a kind of “subconscious” push toward it.

The Business Plan

This concept reminds me of the creation of a business plan.

It has been said in various business publications that a business plan is important to the success of a business not because it is followed strictly throughout the year.

It has been even said that many successful businesses do a business plan in the beginning of a new year only to forget about it for the rest of the year!

There are simply too many unknown variables (both external and internal) that are impossible to take into account during the formulation of the business plan.

So why, and how, do business plans work?

Thinking of the Future

The formulation of a business plan is important because of the thinking through the year ahead.

The thinking alone allows the business to orientate itself toward its goals. It sets the general direction in which the business will take.

It is not at all necessary to follow everything found inside a business plan.

Resolutions

So, much like the business plan, setting resolutions and making broad plans toward the resolution of these resolutions, is important toward the relative “success” of your year.

Why MyMall.Sg Will Not Work

mymall.sg has been making its rounds on Singapore TV lately, and this entry is just to say: it doesn’t work.

What is mymall.sg?

It is a new marketing platform based on a combination of two mediums: television (TV) and the web.

A splash screen showing a “keyword” will appear at the end of a TV advertisement affiliated with mymall.sg. A voice-over will announce to you to “go to mymall.sg now” and “type in the keyword”, so that you can “find the best bargains”.

Sounds simple enough. Now, how could this not work? Let us count the ways…

The Keyword Problem

First of all, there’s a problem inherent in having their site usable only if a visitor has a “keyword”. People who don’t have this keyword will not be able to use the site at all.

They’re expecting people to (a) write down the keyword; (b) memorise the keyword; or (c) have a computer at hand so they can immediately type in the keyword.

Most consumers, especially those who watch TV, are lazy. Lazy people generally don’t do (a) or (b), they won’t write down or memorise the keyword. They’re most likely do (c), use the computer and watch TV at the same time. Here’s a rhetorical question for you: how many adults do you know simultaneously use the computer and watch TV?

The adults I know who watch TV are just hoping for a way to just tune out of the work day; they don’t want to think at all about anything, they just want to sit down, relax: to stone in front of the TV. And you expect them to memorise or write down a “keyword” that is not guaranteed to be useful?

So, if we stick with (c), we’re looking at the younger people, who are the most likely to simultaneously use the computer and watch TV (despite protests from parents for them to “do one thing at a time.”)

Small Market

That’s a pretty small market to conquer if you ask me.

Add to that that mymall.sg advertisements happen only every once in a while, and we’re looking at a few hundred people, probably tens, out of tens of thousands of viewers, tops. In other words, a potential response-rate of say, 0.1 – 1%.

Target demographic found, let’s see what they’re selling

Now that we have found that there are tens to hundreds of teenagers and young adults who might visit mymall.sg and actually type in a keyword, let’s see what deals these people have.

I have seen only one advertisement so far, that of OG.

OG is a departmental store, selling generally clothes and household items. It appeals to women in their late twenties, early thirties, up to, say, early fifties. This was probably not OG’s best choice of marketing channels. Thumbs down

I asked my 14-year-old brother, who watches way more TV than me. He told me he has seen a few more: Harvey Norman, Sony Walkman, and Royal Umbrella Rice.

Harvey Norman is an electronic store. From personal experience their main customers are young adults, twenties to thirties, buying electronics like TVs, computers, washing machines and the like. Again, like OG, these people are too old for this marketing channel. It must be said, though, that they do appeal to the younger crowd in their carrying of smaller and cheaper gadgets like shavers, MP3 players and mobile phones. Thumbs undecided.

Sony Walkman needs no introduction. They probably hit the sweet spot with this marketing channel. Target demographic: tech-savvy, multi-tasking students and young adults with some cash and a high propensity to spend it. Thumbs up.

Royal Umbrella is a brand of white rice. All I can say is, “WTF?” I mean… WTF? This is so totally wrong that I don’t know where to begin. Wrong demographic, wrong product. “Wow! Who would have thought? The greatest, wildest bargains on white rice, now online!” Thumbs down, down, DOWN.

And that is why, ladies and gentlemen, mymall.sg will not work.

Update: 11th July 2007

Much as I had predicted at the start of the year, MyMall.Sg has disappeared. This concept was doomed for failure from the start. There just wasn’t enough motivation for people to use it. How was the concept sold to its target consumers? Who were its target consumers?

On the Lack of Ambition

The old man walked up to me and asked, “what would you do if you could do anything, anything at all, and knew you couldn’t fail?”

I looked at him, thought for a bit, and shrugged.

He looked at me with a curious eye. “How can you not know?” he asked. “What would you do if you knew you couldn’t fail?”

My face was blank. I really didn’t know.

His face, at first fatherly, grew intense; he demanded an answer.

“I would just live, I guess.”

“Just live, boy? Just live? Have you no goals? No aspirations? Have you not thought about your purpose here on Earth? Have you no ambition?”

I could find no answer.

His brows furrowed. “With an attitude like yours,” he said, “you will never amount to anything. You will die a statistic. Just another one of the billions of souls who have walked the Earth and left no mark.”

His faced relaxed a little, then he continued, “Is that the way you want to die? A statistic?”

I thought about this a moment, smiled, and said, “sir, if I died a statistic, I wouldn’t live to regret it.”

He grew furious and grabbed me by the collar of my shirt. Pulling my face close to his, he said, “Boy, do you not understand? It is people like you — apathetic, selfish people like you — that have made this world such a horrible, horrible place.”

“Sir, what have I done?” I asked, feeling terribly maligned.

“Nothing, boy. Absolutely nothing.” And he walked away.

Rich Dad Poor Dad

I once borrowed the book Rich Dad, Poor Dad by Robert Kiyosaki from Wilson sometime back in 2001.

Though I found the book interesting, it left me with quite a number of questions, especially regarding the integrity of the facts stated.

For example, “if ‘Rich Dad’ is so rich, just who is he, and why haven’t we heard more about him from other sources?” (yes, I know, not all rich people live their lives in the spotlight, but after this book came out, surely he had no choice? Wasn’t anyone else curious? Why weren’t there any interviews with him about the book?)

Another thing that bothered me immensely was Kiyosaki calling his biological dad “Poor Dad”. Asians not estranged from their fathers typically do not call their fathers “poor”. I know I‘d lose some sleep if my son wrote a best-selling book that called me “poor”, and started calling the neighbour’s dad “dad”.

But of course, he’s a best-selling author, and I’m not, so who am I to argue? Millions of people couldn’t be wrong, could they?

I thought this way until I came across this page called John T. Reed’s analysis of Robert T. Kiyosaki’s book Rich Dad, Poor Dad.

From the page:

As to the whereabouts of Rich Dad—at one point, Kiyosaki tells Smart Money that he died in 1992. Poor man.

Later, he says Rich Dad is still alive, but a reclusive invalid. Uh huh.

Later, he tells Smart Money that Rich Dad was a composite of several persons.

Finally, he gets angry at Smart Money. “Is Harry Potter real? Why don’t you let Rich Dad be a myth, like Harry Potter?”

I never heard of John Tweed before this. I had thought him to be one crazed reader taking his jealousy to the extreme. It was only after I read the page where he addresses the jealously issue (people wrote to him calling him jealous of Kiyosaki), that I felt he had some credibility.

On that page he also gives some (rather detailed) background information on himself as well. (Of course, even with what he says, I’m pretty sure there’s a tinge of jealousy in him; he is human, after all, and a non best-selling one at that.)

John Tweed’s analysis is really, really long, and starts off feeling like a pointless rant; but it gets better towards the end, where he starts explaining his reasons behind his scathing remarks. I especially liked the part where he wrote about how people “got hurt” by Rich Dad Poor Dad.

This man is doing damage. I got an email from a surgeon. Her 17-year-old son read Rich Dad Poor Dad and now does not want to study or go to college. He just wants to get rich and believes Kiyosaki’s pitch that education is a waste of time. He now puts down and criticizes his mom for not being richer. I never knew a surgeon who was fighting the pigeons for something to eat. And this particular surgeon says she finds her profession extremely rewarding in non-monetary ways as well.

All in all, I wouldn’t say that I wouldn’t totally not recommend the Rich Dad Poor Dad book — it did get me interested in personal finance, if anything due to the positive, upbeat way he wrote it — but keeping in mind that the book may contain many elements of untruths sold as truths, you’d better have more than your normal share of salt on this one.