In this new weekly series, I look back on what stood out, what was bemusing, amusing and interesting during my weekly travels, interesting findings within the FX industry and interaction with an ever-shrinking big wide world. This is purely observational and for your enjoyment.
Monday: What to points make? Rip-offs
Thirty years ago, the ‘jet set’, a group of elitist global travelers who had positioned themselves via various printed media as an enviable group of people who traveled the world to participate in social activities unavailable to the ‘ordinary’ people of the Swinging Sixties were riding the wave of affluence as they headed into their forties and fifties during the capitalist go-getting and social climbing years of the 1980s.
With the passage of time at the top came the very clever marketing of what appeared to be elitist services by banks, airlines and travel equipment manufacturers, the now very well heeled members of international society could flaunt their status by handing over a suitably branded ‘Platinum’ credit card which carries the name of the executive club of their preferred airline and by paying an exorbitant membership fee per year and enough interest to make your teeth itch, could gain some points, which were used to trump similarly aspirational social climbers via dropping references to them into conversation at the local golf club.
Back then, the internet did not exist, yet the media-obsessed and image conscious baby boomer generation were absolutely the right audience for branded payment methods and award schemes that openly display everybody else’s inability to be eligible.
It did not matter what the cost was – that was never a discussion point. What mattered was “I have one and you do not, you peasant” which eradicated any form of rational scrutiny when taking up membership of the British Airways Executive Club or a Platinum American Express card with accrual of airline miles.
This epitomizes the perfect targeting of product placement to an ideal audience, but the reality is that, whilst even in today’s electronic and highly mobile society where the ‘jet set’ no longer exists and we are all part of a global world with every opportunity literally at our fingertips, the words ‘Platinum’ and ‘points’ seem to still carry massive kudos and are regarded as the preserve of the socially enabled Queen’s English establishment, yet the reality is that they are no better than an unscrupulous unregulated offshore B-book brokerage’s modus operandi.
For “Platinum” read VIP. For “Air miles” or “points” read “bonus”.
What is the difference? There is virtually none.
Airlines struggle to make an operating profit in the face of massive expenses, huge competition, lack of differentiation and a plethora of quite simply excellent budget airlines that do short to medium haul flights (the majority of all flights) very well indeed for a fraction of the cost of the dinosaurs (EL AL, are you listening!) that continue to charge like a wounded Rhino for terrible service and an omelet that tastes of plastic.
You would have to be the modern day equivalent of Phileas Fogg to make these worthless points and miles (which do not equate to actual miles – It is not 30 miles from Tel Aviv to Hong Kong – a rather worrying calculation by a company whose core business is logistics!) anything like redeemable at an advantageous position to you, the customer.
A flight on a flag-carrying airline from Bristol or Birmingham to Berlin, only just under two hours in duration, can cost anything between £250 for a return ticket, yet Ryanair or easyJet can do the same journey for between £50 and £90.
Yes, you’ll have to pay £9 for a sandwich and a glass of Coca-Cola, but it is entirely possible to take a packed lunch – afterall Glamping is fashionable too these days!
This means that the tiny amount of false “miles” gained means that you would have to spent something like ten times the cost of paying for a ticket from a budget airline to get a ‘free’ trip on the same short route.
This rip off is amplified tenfold once you start considering the same equasion on trans-continental long haul travel.
To add to the lack of transparency, these schemes are peppered with a litany of gobbledegook, similar to that used by, not to put a finer point on it, bucket shops when defining bonuses and withdrawal restrictions.
To quote one of them directly from their website after a very brief Google search: “The only flights you do not earn Avios or Tier Points on are reward flights, agency discounted fares and industry discounted fares. The amount you collect depends on which airline you fly, how far you fly, the cabin you fly in, the type of ticket you hold and your Executive Club tier.”
This is a massive shoulder shrug, and is worth avoiding.
What is the difference between bonuses offered to retail traders by offshore and unlicensed b-book brokers where you cannot withdraw your initial deposit until a certain number of lots have been completed? The answer is that there is no difference. It is the same scheme exactly, but one is dressed up in a middle-class suit and the other is regarded as very seedy.
Hence, on Monday, my MatMid card (which I have never used) has been canceled. Airline points and miles – you are a thing of the past!
Tuesday: Why don’t we all use loss-leaders?
Customer loyalty in a world of online business,, electronically traded financial instruments and e-commerce is one of the most concerning aspects of being a COO or marketing executive in today’s business environment.
The retail FX brokerage business has for some years been burdened by a distinct consideration that many (around 85%) of retail product ranges are identical to each other, largely due to the over-reliance on white labeled third party platform and trading infrastructure from just one provider.
Thus, the short term approach of quite simply getting as much out of existing customers as possible before they move elsewhere and carry on their business without any interruption (again, those who developed their own trading platforms will see the reward long term) has become a de facto business practice for many smaller retail firms.
Would it not be better to actually give customers a nice surprise once in a while, in the form of something that they were not expecting? After all, many customers and even introducing brokers have been ‘educated’ by some of the smaller brokerages at the lower end of the spectrum to consider themselves a target to be pumped until they have no more order flow to give.
On Tuesday, I received a call from the events manager at the Bryanston Country Club in Johannesburg.
FinanceFeeds has arranged many events for several purposes since establishment, mainly because we believe that relationships between different components of this industry are absolutely vital and therefore will do our utmost to provide the right environment in the right places to foster business networking between relevant potential corporate partners.
There are excellent venues and there is excellent service, however the Bryanston Country Club went one step further. Once an event concludes, practice usually dictates that a polite thank you is conveyed, and the next event then takes place according to the same principle. At Bryanston, however, a refund of what was not consumed was offered!
This is the first time that I have ever encountered such service, and it is a clever move indeed.
Not only is it an excellent venue and the attention to detail spot on, but by offering a small refund for items not consumed, they gain a long term customer relationship.
Churn and burn is not a practice that holds any value and creates a tremendously expensive, and once the entire market is exhausted, almost impossible feat for marketers. Hence, a little bit of extension of service and loyalty to customers, which in turn generates loyalty from customers, would work wonders in our industry.
Two years ago, FinanceFeeds conducted an investigation into customer service from well known retail brokers. Our findings were interesting and can be read here, however those with very knowledgeable staff can easily adopt a method of being loyal to clients, as well as expecting clients to be loyal to brokers. Loss leaders, however, are what led some of the world’s giant conglomerates to their enviable position today.
Wednesday: Vegemite and Kangaroos
Within two hours of announcing the event, senior executives from large, well known companies registered to attend, once again demonstrating the enthusiasm and importance of the Southern Hemisphere’s economic powerhouse as a major mainstay of the FX business worldwide.
The Antipodean acumen is a case in point. Australia is home to some of the most well organized and properly run businesses anywhere in the world, and this is why we must pay attention to it.
It is a great place to do business, yet far but worth it. Over the past few years, I have experienced massive enthusiasm from quality people from auditing companies to legal professionals, and from platform developers to ancillary service providers and some of the best retail brokers in the world, all wanting to network with the best.
Australia’s geographical distance from North America and Europe is the only factor that I can think of that means the majority of non-Australian industry participants do not make the journey. As harsh as this may seem, that is commercial idleness. Those who have taken such steps have done very well indeed due to the first class business environment that Australia provides, plus its absolute alignment with the all important Asia Pacific region.
In December, I was in New York with an introducing broker from Boca Raton, Florida, who had flown to the Big Apple for a two hour networking event. He disembarked from the yellow Toyota Camry that had conveyed him from the airport, and unloaded a suitcase from the trunk, placing it in the concierge. “What is that for?” I asked. “I am going back to the airport to go to Australia in two hours time” he replied.
By any stretch, a trip from Fort Lauderdale airport to New York to attend an evening event, then a 30 hour flight to Sydney is the sort of venture that would make Captain Cook flinch, this particular executive came back from Australia with a good quality set of partners and the completion of the establishment of an Appointed Representative status with ASIC.
Want APAC business in a good environment? That’s the way to do it. Those calling remotely on the nightshift are embodying inefficiency.
See you all in Sydney in November !
Thursday: Digital River
Jeff Wilkins and Fred Gewirtz, two very good friends of mine, are people who have achieved something out of the ordinary. That being to have succeeded in creating an environment in which I, without encouragement, boarded a boat.
The roads and I are best friends. The sky and I are best friends. I am a lifelong motoring and aviation enthusiast, however whilst I fully understand the appeal of the sea and the vessels that float upon it, and have spent the majority of my life living next to it, the sea and I do not generally mix.
However, in February this year, whilst discussing the current progress and perspectives of the senior management at IS Risk Analytics during a visit to the company’s headquarters in Grand Rapids, Michigan in minus 12 degree Celsius Midwestern winter, the subject of fishing was raised.
Jeff and the team considered that in April or May, we would charter a boat and enjoy fishing at Grand Haven, Michigan, in much more conducive weather conditions. We did just that, and I can quite sincerely say that, after my first fishing charter experience, it was one to be repeated. Of course, I started at lofty heights. King Salmon fishing on Lake Michigan is hard to beat, however it was a day of very interesting boatmanship (with the help of professional fisherman and skipper Chas), great company and the resultant haul of 7 salmon.
This Thursday, it was my turn to follow on from this great experience, this time heading to Cornwall, UK over the weekend for an attempt at sea fishing for Cod, Pollock and Mackerell during the British heat wave. Are you a pioneering proprietary developer, or an MT4 minnow?
Will we do well, or will it be a load of Pollocks?
Friday: Let’s do our bit
Empowerment is the key to every aspect of life. Our industry provides, if executed properly, empowerment to everyone worldwide. The continual development and striving to innovate the infrastructural components of the retail FX business is, by design, a means of granting every literate person worldwide a financially independent future. This is how it should be seen and considered from the boardroom downwards.
On Friday, I was bombarded by a soundbite-infused advertisement for what UNICEF, the children’s charity, calls “School In A Box.”
The advertisement encouraged the giving of small change, which would be collected by charity volunteers and then hopefully provided to a logistical team who would then deploy such a system in a remote area which has been subjected to environmental and political factors that have caused interruptions in the abilities for schools to remain operational on a permanent basis.
I decided that I would respond personally to this and seeing it as an opportunity, would sponsor the deployment of a School In A Box to a village in Africa, in order to secure the continued education of 30 children between the ages of 8 and 15.
Schools in certain parts of the world often have their continuity interrupted due to government mismanagement, lack of local funding resources, war, or water shortages, and this system helps to overcome it.
Why is this relevant to us?
Instead of seeing individual people as leads and targets, we should educate the future generation of people who will want to use their initiative to generate their own wealth via electronic trading. That is our raison d’etre after all , to innovate and provide the right tools to empower people toward financial independence. In regions of the world which have less industry, and a lack of structured career paths for young people, investing in the youth is the key to not only their future but ours too.
Retail brokerages can easily penetrate developing markets because unlike various saturated and over-regulated areas of the world in which most of the population are already gainfully employed and very fiscally conservative, perhaps trading for a short while one hour a day with only money that they can consider worthy of risk, with every other aspect of life already well taken care of whilst ESMA creates a highly expensive and potentially non-transparent infrastructure directive that could result in fines for late reports on clients trading very low volumes and taking no risk, the young and enthusiastic populations of some of the untouched areas of the world could see a trading platform as their route to self-made profit.
A resident of a village in Ethiopia or Congo would be very happy to make a profit of $2000 per year, that is ten times the average annual salary in rural areas, with no operating costs and no likelihood of being extorted or abused by local leaders.
It would be the route to a global marketplace, and the only input would be education. By ensuring that thirty children can secure a continued education, the small investment that goes into such a venture would make such people gain the skills to empower themselves via their own methods, rather than relying on bleak and mismanaged governments.
Ethics and business do go together, especially when we are in the business of providing the possibility of financial independence to everyone, everywhere.
Saturday: Bono serves me a sandwich
No, seriously, he did.
As the easyJet flight left the tarmac bound for the UK on Saturday afternoon, Bono visited my seat and asked me if I would kindly fasten my safety belt.
Whilst on the runway with operations beacons flashing and ready to depart, I waited for the inevitable announcement that the flight will depart “With or Without You”, will fly over a place “Where the Streets Have No Name”, that it is a “Beautiful Day” for the journey, if there is turbulence that you should “Get out of Your Own Way”, and those with “Vertigo” should close the window blind to create a “Blackout”. Our landing would likely be close to “Cedarwood Road” in the “City of Blinding Lights”.
Of course, the reality was somewhat different and more ordinary, less poetic and more in accordance with CAA guidelines, however I was served a sandwich and a Coca-Cola, so I would like to thank Bono for his hospitality.
Wishing you all a super week ahead!
The post “Mind The Gap!” – The life and times of a man on the move Episode 2 appeared first on FinanceFeeds.