Starting with a problem isn't a bad beginning. An innovation isn't meaningful until it solves one.
Myles Bristowe gave me a wonderful review on December 7th.
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Television was a sociological phenomenon that fundamentally rewove the fiber of American society in the 1950's and 60's. As archaic as this sounds today, television was a technology breakthrough that changed everything in our cultural ecosystem. Not only would the advertising and entertainment industries never be the same, neither would the interpersonal dynamic of families, thanks to television.
This major shift in the tectonic plates of family social interaction coincidentally collided with an otherwise unrelated occurrence: the overproduction of turkeys. Robert Klara wrote a fascinating article in Adweek last year about how these two seemingly unrelated events changed our culture. In 1954, the team at the C.A. Swanson & Sons food company over-projected the demand for turkeys and found themselves with railcars full of unmarketable frozen fowl. This dilemma came with the unfortunate wrinkle that the only way the refrigerator system worked on those trains was to keep them moving on the rails. Consequently, Swanson had trains traveling back and forth across the country full of frozen turkey, while the company tried to find a solution. But thanks to innovative thinking, those chilly railcars soon turned into hot gravy trains.
According to Klara’s article, a resourceful member of Swanson’s sales team who recently traveled on American Airlines, gained inspiration from the metal tray the flight attendants used to serve his meal. He suggested to Swanson that they create a whole meal around the frozen turkey and provide it to consumers in a metal tray that could be heated in the oven. Here was the big “ah ha” – they could call the frozen meal a TV Dinner to be served while the family was gathered around the television set! The team researched meal ingredients that could be frozen and heated together concurrently with turkey – such as cornbread stuffing, sweet potatoes, green peas, and of course gravy – and the TV Dinner was born. The company sold 25 million of them before the end of the year, based on the Adweek article.
The marketing angle was brilliant because it appealed to the desire for mothers to provide a well-balanced meal they could easily prepare enabling the family to eat together in front of the television. So thanks to Swanson TV dinners, the very busy American family had more quality time to sit down and watch Leave It To Beaver and Gunsmoke together. It's hard to quantify the influence this had the Baby Boomer generation, isn't it?
But this qualifies as a meaningful innovation because it had a lasting impact --beyond the era of conventional ovens and TV trays. Now the frozen meal section at the supermarket consumes a whole aisle, ready to be popped into the microwave. And there is barely a home freezer in America that doesn’t have some modern variation of that original TV Dinner in it, albeit most people are trying to focus on the frozen meal as a healthy offering today.
But here is the real moral of the story. Regardless of the appeal of an innovation, it will not gain traction if it is too expensive, too hard to use or does not solve a fundamental problem for consumers. And the frozen dinner did all of that nicely. So let's give thanks for the folks at Swanson and their innovation on Turkey Day.
And here's hoping that you did not have a frozen TV dinner for Thanksgiving and that you have an abundance of other blessings to fill your gratitude list during the season ahead!
This is an excerpt from Fredda's new book, BoxBreakers! which is available on Amazon.com.
“Living on $6 a day means you have a refrigerator; a TV, a cell phone, your children can go to school. That’s not possible on $1 a day.”
“Tech giants like Google, Facebook, and PayPal are all steadily rolling out new-fangled services to turn our smartphones into digital wallets -- replacing cash and checks. And it's been reported that Apple is working on a new payment option to let iPhone users send money directly to one another -- as easily as a text message.
If this all seems cutting edge, you may be surprised to learn there's one country that adopted mobile money years ago: Kenya.”
-Leslie Stahl : 60 Minutes
60 Minutes just aired a terrific feature that highlighted the impact of Kenya's digital currency, M Pesa, which allows their citizens to send and receive money via text messages on their cell phones. The benefits to the country include greater financial inclusion, reduced crime and interestingly enough -- national pride. They are so proud of their technology advancements they have named themselves the Silicon Savannah! And that pride is well placed, because their digital currency adoption has placed them ahead of many countries we consider more advanced.
As a payments professional, however, I appreciate this advancement in Kenya as a demonstration of the pivotal role of payments in society. The impact that digital payments technology can have for financial inclusion around the world is dramatic and the implications to the banking industry are enormous. I told a story about M Pesa in my new book, BoxBreakers!, that demonstrates this very well. Many tribes in Africa forbid women to touch money, which has been supremely effective in keeping them down. (Imagine that.) However, those tribal leaders never conceived of a currency that could be accessed via a mobile device.
I told a story about M Pesa in my new book, BoxBreakers!, that demonstrates this very well. Many tribes in Africa forbid women to touch money, which has been supremely effective in keeping them down. (Imagine that.) However, those tribal leaders never conceived of a currency that could be accessed via a mobile device.
A lady we will call Ester lives in one of those villages outside of Nairobi; she is a mother of five who was never allowed to touch money. When M Pesa came along, her family situation was becoming dire because her husband spent most of what he made on banana beer. Thanks to a relationship with a local credit union, called a SACCO in Kenya, Ester was able to start her own business using M Pesa. And now she employs two of her sons and her husband, as well.
Her business? She makes banana beer.
“So what is your credit union to do with a recalcitrant generation that sees credit cards through the murky lens of the financial crisis as they drag a massive boat anchor of student debt along behind them?"
There is an old French saying that states, “Plus ça change, plus c'est la même chose.” Actually, Jon Bon Jovi sang about it, too. But it sounded like “The more things change, the more they stay the same.” And in regards to basic human nature, it is probably true.
However, in the case of credit cards, it may not be true anymore, and the potential impact on credit unions is huge.
Baby Boomers were raised on credit cards, as a necessity of daily life, and American Express had a catchy ad campaign in the 1980’s that coined the phrase “Don’t leave home without it.” Boomers took that advice seriously and used credit cards as their primary means of payment for travel, entertainment and large dollar purchases – and very often for everyday purchases, too. But the Millennial Generation has changed the way they use money – and specifically how they use credit cards. They are representative of the dawn of a new era in payments and that era is characterized by a pay now mentality.
However, an important finding regarding this generation is their likelihood to turn to a credit union versus a bank when they do want a credit card. Recent statistics from Filene Research show that members of the 18-28 year old segment are significantly more likely to get a new credit card from a trusted credit union because of their mistrust toward banks. One of my favorite recent findings, from Viacom’s Millennial Disruption Index published in 2014, says they would rather go to the dentist than to a bank. The underlying assumption here is they really don’t like the dentist. Wonder how that makes the dental industry feel? “Yay. At least we’re better than a bank!” they shout. But we digress. Back to the topic at hand, credit cards.
In that age-old formula of Acquisition, Activation and Usage (AAU), this data makes it look like your credit union has a leg up on the first “A”. But those of you who have embarked on a strategy to attract this generation may find that the difficulty is with the “U” – getting them to regularly use your credit card. The default payment method for them is either a debit card or often a mobile payment account, something like Venmo, that is withdrawn directly from their checking account. The credit card stays tucked safely at the bottom of their wallet – for use in emergency situations, like when they are actually successful in getting those concert tickets for the gang to go see The National. “$628.42?” they gulp. Yes, they will use the credit card sometimes.
But the Great Recession scarred these kids in ways we are only now coming to fully understand, because watching their parents or neighbors being foreclosed on had a mighty impact on them. Additionally, being saddled with more college debt than any previous generation is affecting their credit card usage, as well. The Class of 2015 graduated with an average of $35, 051 in student loans. It doesn’t exactly make you want to throw your cap in the air, now does it?
So what is your credit union to do with a recalcitrant generation that sees credit cards through the murky lens of the financial crisis as they drag a massive boat anchor of student debt along behind them?
Step One is education for this group. We already know that they trust the credit union more than the bank – so what better platform to show them how credit card usage can actually be a really smart decision for them? Even for their everyday purchases, not just for the concert tickets. Using the credit union’s money and paying it off every month is a great way to pay while they simultaneously build up a good credit file. And the best way to reach them with this message is through their social media network, most likely not Facebook though, because that is now the Baby Boomers’ neighborhood. Millennials moved away to Snapchat and Instagram.
Step Two is communicating the lower fees they receive from the credit union and here is where the message of the cooperative resonates most strongly. We said they didn’t like banks and part of the reason is because they feel ripped off. Credit unions gain trust when Millennials understand that member-owned and not–for-profit translates into money in their pocket. Cha Ching.
Step Three is all about rewards. One thing Millennials are very good at it making thrifty decisions. They are not ashamed to download coupons and they are very attuned to the benefit of a good rewards program. This is the generation that made GroupOn into a household name, remember? So if they see the benefit of your rewards program over others, to the top of the wallet she goes.
Therefore, your credit union, as a trusted financial institution, has all of the tools necessary to attract and retain this new generation of consumers to your credit card program: Education, Lower Fees and Rewards. With one final caveat that is the most important factor of all. Remember the AMEX ad? They will leave home without a credit card, but the thing they will not leave at home is their mobile device. Research reveals that this generation is never more than three feet away from it at any time, even in bed.
So set the alarm. A strategy to win this generation has to be mobile enabled. Or your poor lonely credit card will be at the bottom of the wallet, the back of the sock drawer or worse yet – will be used to scrape the ice off their windshield after The National concert.
Get a credit card product on a mobile device right and you’ve got ‘em.
Fredda McDonald, Managing Partner of Lydian Management Consulting, is a payments expert with a career history of energizing teams to find better ways. Her latest book on Amazon, BoxBreakers, highlights some recent industry disrupters and the lessons to be learned to fuel meaningful innovation. She can be reached at email@example.com.