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Randicoot - PPV Series Guest Post 3

In the last of our series on PPV, Nigel Regan, CEO of Randicoot, has an animated and colour look at one of the key challenges facing Pay Per View strategies: that of earning and honouring a consumer's trust.   You can find out more about Randicoot here:

Reward, reward, reward!

Last week I visited a restaurant, I had an hour for lunch, no more. I had heard about a new pizza restaurant in Covent Garden and decided to check it out. The restaurant has a new payment policy. At the door I was greeted by a charming waitress who gave me a menu then asked for my name, address, date of birth and mother's maiden name, I thought this unusual but seeing as I was hungry, short on time and committed to my decision I gave her my details. She then asked me to pay in advance for my meal, drinks and tip. Odd, but hungry I obliged. I sat at my table and waited. 70 minutes later my food arrived by which time I was late for work so I asked for take-out and promptly walked out wondering when I would get a chance to eat my pizza.

Clearly this scenarios is quite ridiculous, would kill the business and thankfully didn't happen. So why do we expect our highly valued online customers to do this for digital media. Under what circumstances am I going to trust a website with my full personal details, credit card and other private data? The reality is that we don't, unless there is one or multiple very good incentives, a necessity or where very high demand has been created such as Facebook or online banking. My business partner suggests this is like suggesting sex to the better looking gender on the first encounter, pretty unlikely and likely to result in the lengths of the relationship being measured in nano seconds. The point is that imparting with personal information and billing details requires enormous trust. The online video brand needs to earn trust through the development of a deep and lasting relationship with the customer. Ask any major brand manager and they will reinforce this and probably go on to tell you that it is a direct factor in the profitability of the brand.

I think everyone in the industry is signed up to the reality that to distribute the really valuable digital content that we see exchange hands at MIPTV, MIPCOM and NAPTE both consumer payment and content protection needs to occur. I believe the real question is not if or how to charge for video or digital content online but how to build the relationship with the customer to imbue the trust that will provide the foundation for them to have the desire to provide you with these deeply personal details. This is classic relationship dynamic and has to begin by offering something the customer values and is willing to give up some small personal details in order to acquire.

Let's assume that the ultimate goal is having permission from the customer to bill their credit card each month with a variable amount dictated by their level of use of the service off a rate card that is publicly displayed. This level of relationship for me embodies the ultimate level of trust between customer and service provider as the service provider both stores the customer billing information and determines the amount to be billed each month. Now let's assume that this is 10 steps away at least.

What is the first thing you want the customer to want to give you? Their email address or phone number perhaps, remember the first date analogy? With a little encouragement (some flattery perhaps) and a stated reward (dinner at that hip new restaurant) you can persuade them to provide their first name and email address. Wasn't so hard was it now? Moving on from the analogy, give your customers a credit or even a 'freebie' towards their first premium, hi-def, full screen video. Show them what you've got, show them you have a quality product worth paying for and show them that you are rewarding their generous first gift of personal data with a valuable experience.

Great, good start, now you have a small amount of personal data. Don't abuse it, but use it to offer an incentive or reward to encourage another positive encounter. Let's offer to match their first purchase with a free credit and let's deliver this on a coupon to their mobile phone or email with a link to a related video and let them pay without committing any further data by using a simple £1 premium SMS, you know, the same type that millions of people use to vote for Big Brother and X Factor.

Now your customer has given you their email address, mobile phone number and with just 10 characters contributed £1 of revenue and got a £1 credit to use again, terrific. Now they are happy, enjoying your brand and thinking about how to spend the £1 on this or the next encounter.

This is a critical stage in the relationship. The customer has paid and you are now faced with the requirement to provide another incentive to move them from a one off payment to a regular or a credit payment for consumption of multiple items of content. There are two options here: 1. to provide further discounts or 2. to deduct the previous payments against the next big payment, perhaps for a weeks unlimited access or a bundle of related content. So a weeks access is £5, they have paid £1 and have a credit of £1 so for an additional £3 offer the upgrade. Sounds like a good incentive? Of course! This payment can be taken by SMS again or why not suggest paying by credit card. Well, that's a big step so offer another incentive. How about accumulating Nectar, Tesco clubcard or Airmiles points against any payment made with a credit card.

I could go on to talk about double accounting (allowing the customer to receive cash incentive for particular activity as well as make purchases) or multi-tiered affiliate models, micro or nano-billing, multiple-currencies, local merchant accounts for higher conversion rates and of course local languages. Each of these improves conversion rate, builds a deeper relationship and improves your bottom line without any real additional cost to your business and allows the customer to pay on terms that suit them.

I think I have exhausted the point here, but to recap, it is our belief at Randicoot that 'paywalls' present huge challenges for relationship development. The gentle development of a relationship with your customer starting with a reward in return for an email address and ending with recurring billing in their local currency with local language with developing incentives at every step of the way is the single most efficient way of generating revenue.

The key is rewarding customers for imparting with their information at every stage.