Why finance must create CRM objectives and metrics that will translate back into its traditional framework.
In two previous articles I outlined how to create analytical methods that support customer-focused profitability and forecasting & budgeting analysis ("The Art of Customer Profitability Analysis" and "The Financial Side of CRM"). I explained that finance cannot continue to conduct business as usual in a CRM environment, because its conventional analytical toolkits and systems lack customer dimensions.
This article, the last in the series, focuses on the third area where finance has to evolve: creating CRM objectives and metrics that can be translated back into the traditional framework of income, balance, and cash flow statements for financial planning and reporting.
After all, CRM success ultimately depends on irrefutably proving that realizing CRM objectives leads to improved financial performance and is the result of specific CRM activities. Becoming too preoccupied with customer retention, acquisition, and satisfaction goals for their own sake is perilous, because their initial appeal inevitably wears off, and rightfully so, when tangible payoffs cannot be traced to them.
Reorienting to a Customer PerspectiveAt the core of every CRM initiative are objectives containing a customer-value proposition that describe clearly the targeted customer segments and the corresponding product/service strategies. The first provides the underpinnings for differentiated customer treatments that are the basis for CRM efforts; the second the process to measure.
However, as uncomplicated as this sounds, supporting these objectives is not easy for the finance department. Its product-centric analytical methods and systems reflect the philosophy that companies are solely the sum of theirs individual parts; a view that fails to take into account the complete chain of activities that creates customer value across the whole enterprise. The chief hurdles finance will encounter are finding and consolidating the data needed to develop a enterprisewide customer perspective; translating non-financial goals into financial ones; and pulling CRM objectives out of their ambiguity. This article focuses on the latter two, because they create the greatest amount of confusion due to the nebulousness of many CRM objectives.
Demystifying CRM ObjectivesFirst, CRM objectives need to be clearly defined. For example, catalogers view retention on a sliding scale based on customers' most recent purchases. Recent purchasers are considered "more" retained than those who bought a while ago, because the probability of additional purchases diminishes as the time since the last purchase increases. Conversely, wireless companies view retention as cut and dry, customers either continue their service or they don't--retention equals not disconnecting the service.
Second, because no clear-cut way of understanding or evaluating the financial repercussion of CRM objectives exists, standard measurements need to be established that hold them accountable. You have to move from clarification to dissection--cumulative goals are pulled apart to reveal their internal workings: a process practically identical to the one used for conventional goals. Take, for example, a publisher that wants to increase the renewal rate of subscriptions from 40 percent to 60 percent over a three-year period. Certainly, management wants to know prior to that time passing the financial impact of achieving this goal under different scenarios. Table 1, which breaks the cumulative 60 percent goals into yearly intervals for two scenarios, gives you an idea of how this can be done.
Year 1Year 2Year 3New CustomersActive CheckingRet. RateInc. Ret. RateActive CheckingRet. RateInc. Ret. RateActive CheckingRet. RateInc. Ret. RateScenario 110,0009,00090%90%7,70077%86%6,00060%78%Scenario 210,0008,00080%80%6,80068%85%6,00060%88%You can see that both scenarios reach the goal (shaded column). Scenario 1, retains 90 percent of customer after the first year, 77 percent after the second, and 60 percent after the third, while Scenario 2 retains 80 percent, 68 percent, and 60 percent over the same time period. However, from a financial and marketing analysis perspective, reaching the goal is of minor value; far more important is to understand the causes of the disparity in retention patterns and their effect on the bottom line.
Creating VisibilityUnderstanding the later is a two-step process. It requires moving beyond the apparent decline of retention from one year to the next, to exposing concealed dynamics. A good way to start is by calculating the incremental retention rates: the percentage of retained customers for a given year divided by the percentage from the previous year.
For Scenario 1, divide 90 percent by 100 percent for the first year, 77 percent by 90 percent for the second, and then 60 percent by 77 percent for the third. The numbers you get are 90 percent, 86 percent, and 78 percent. The same calculations for Scenario 2 yield 80 percent, 85 percent, and 88 percent. Input the newly created data, and the original raw retention percentages in a spreadsheet and create the two graphs as shown below.
As you can see, the graphs portrait two very different flows. The raw retention graph shows a gradual decline in percentages towards the same point for both scenarios, while the incremental graph shows that them moving during the second and third year in opposite directions and then ending up at very different end-points. From a marketing perspective these dynamics reveal that customers in Scenario 1 remain in their first year in the service at a greater rate than those from Scenario 2, but that this behavior reverses itself in the following two years as the incremental retention from Scenario 2 increases. What this data suggests is that Scenario 2 might have greater retention than Scenario 1 in the long run, despite its poor performance in the first year.
The next step is translating the retention process into cash flows. Table 2, shows cash inflows assuming annual revenues of $200 per customer.
Year 1Year 2Year 3Scenario 1Total = $4.54m9,000 * $200 = $1.8m7,700 * $200 = $1.54m6,000 * $200 = $1.2mScenario 2Total = $4.16m8,000 * $200 = $1.6m6,800 * $200 = $1.36m6,000 * $200 = $1.2mYou can see that Scenario 1 creates $380,000 more than Scenario 2. However, 100 percent of this difference is accounted for during the first two years; in year three cash inflows are equal and looking beyond that time it appears the Scenario 2 will generate more revenue. Results that confirm the impression from the incremental rate analysis that in the long-run Scenario 2 might be the stronger one.
Next you need to assign the costs that correspond to the revenue stream. Go to the first article in this series, " The Art of Customer Profitability Analysis," for ideas on how to do that. Keep in mind that when doing so in the context of developing an attrition model, as we are doing here, you need to figure out how to deal with potential unamortized amounts that are created by customers leaving the program at a net loss. Some companies write them off, because they belief that customer profitability should be evaluated on the individual level; others spread them over the remaining customer base, because they consider the loss part of the cost of acquiring and servicing those that remain active.
Meeting the ChallengeFrustration with traditional financial systems and objectives quickly emerges in a CRM environment, as they are an outgrowth of a time when a company's main objective was optimizing manufacturing processes. The irritation is as much with the philosophy that separates cost and revenue at the customer level, as with the inflexibility and isolation of the systems--attributes that successfully block, or at the very least make it very burdensome to use them for customer relationship management. The latter requires an unimpeded flow of information throughout the organization.
But the challenge is not limited to the infrastructure level. After all, its design is a mere reflection of the philosophy that companies are nothing more than the sum of their isolated operations. A viewpoint that generally permeates every aspect of a company, from who is hired, how accountability is doled out, types of analysis done, and certainly the nature of objectives.
However, changing, or evolving to a customer perspective doesn't mean that everything has to be reinvented or existing knowledge become invalid. Evolution in this context means gradual change to a broader perspective, it is inclusive not exclusive. You don't relinquish existing know-how, but apply it in a different way. For instance, the ROI ratio, despite its shortcoming, is popular, because it communicates concisely the critical relationship between income and invested capital. You can only compare business results if you know what it took to generate them, a principle that holds true in a CRM environment.
Evolving finance from a strictly product-focused perspective to a function that is flexible enough to include a customer perspective requires also the willingness to question deeply imbedded views of control and accountability. Challenges you will encounter are not going to be limited to hardware, software, or data issues, as CRM is about the empowerment of employees so that customers are better served. The types of goals you choose, and the methods to evaluate them, can have a profound influence on the behavior of individuals, and therefore the organization--for better or worse. So as is the case with the development of customer-based profitability and forecasting models, be pragmatic when creating CRM goals: clarity and simplification reign.
Tom Richebacher is an information specialist with the EDS Business Intelligence team. His area of expertise is the creation of statistical and financial models based on database services that are used for customer relationship management purposes. He also develops the infrastructure and reporting systems needed for financial, marketing, and operational analysis and information delivery. Contact him at
Monday, November 17, 2008
CRM Performance Management
Why finance must create CRM objectives and metrics that will translate back into its traditional framework.
In two previous articles I outlined how to create analytical methods that support customer-focused profitability and forecasting & budgeting analysis ("The Art of Customer Profitability Analysis" and "The Financial Side of CRM"). I explained that finance cannot continue to conduct business as usual in a CRM environment, because its conventional analytical toolkits and systems lack customer dimensions.
This article, the last in the series, focuses on the third area where finance has to evolve: creating CRM objectives and metrics that can be translated back into the traditional framework of income, balance, and cash flow statements for financial planning and reporting.
After all, CRM success ultimately depends on irrefutably proving that realizing CRM objectives leads to improved financial performance and is the result of specific CRM activities. Becoming too preoccupied with customer retention, acquisition, and satisfaction goals for their own sake is perilous, because their initial appeal inevitably wears off, and rightfully so, when tangible payoffs cannot be traced to them.
Reorienting to a Customer PerspectiveAt the core of every CRM initiative are objectives containing a customer-value proposition that describe clearly the targeted customer segments and the corresponding product/service strategies. The first provides the underpinnings for differentiated customer treatments that are the basis for CRM efforts; the second the process to measure.
However, as uncomplicated as this sounds, supporting these objectives is not easy for the finance department. Its product-centric analytical methods and systems reflect the philosophy that companies are solely the sum of theirs individual parts; a view that fails to take into account the complete chain of activities that creates customer value across the whole enterprise. The chief hurdles finance will encounter are finding and consolidating the data needed to develop a enterprisewide customer perspective; translating non-financial goals into financial ones; and pulling CRM objectives out of their ambiguity. This article focuses on the latter two, because they create the greatest amount of confusion due to the nebulousness of many CRM objectives.
Demystifying CRM ObjectivesFirst, CRM objectives need to be clearly defined. For example, catalogers view retention on a sliding scale based on customers' most recent purchases. Recent purchasers are considered "more" retained than those who bought a while ago, because the probability of additional purchases diminishes as the time since the last purchase increases. Conversely, wireless companies view retention as cut and dry, customers either continue their service or they don't--retention equals not disconnecting the service.
Second, because no clear-cut way of understanding or evaluating the financial repercussion of CRM objectives exists, standard measurements need to be established that hold them accountable. You have to move from clarification to dissection--cumulative goals are pulled apart to reveal their internal workings: a process practically identical to the one used for conventional goals. Take, for example, a publisher that wants to increase the renewal rate of subscriptions from 40 percent to 60 percent over a three-year period. Certainly, management wants to know prior to that time passing the financial impact of achieving this goal under different scenarios. Table 1, which breaks the cumulative 60 percent goals into yearly intervals for two scenarios, gives you an idea of how this can be done.
Year 1Year 2Year 3New CustomersActive CheckingRet. RateInc. Ret. RateActive CheckingRet. RateInc. Ret. RateActive CheckingRet. RateInc. Ret. RateScenario 110,0009,00090%90%7,70077%86%6,00060%78%Scenario 210,0008,00080%80%6,80068%85%6,00060%88%You can see that both scenarios reach the goal (shaded column). Scenario 1, retains 90 percent of customer after the first year, 77 percent after the second, and 60 percent after the third, while Scenario 2 retains 80 percent, 68 percent, and 60 percent over the same time period. However, from a financial and marketing analysis perspective, reaching the goal is of minor value; far more important is to understand the causes of the disparity in retention patterns and their effect on the bottom line.
Creating VisibilityUnderstanding the later is a two-step process. It requires moving beyond the apparent decline of retention from one year to the next, to exposing concealed dynamics. A good way to start is by calculating the incremental retention rates: the percentage of retained customers for a given year divided by the percentage from the previous year.
For Scenario 1, divide 90 percent by 100 percent for the first year, 77 percent by 90 percent for the second, and then 60 percent by 77 percent for the third. The numbers you get are 90 percent, 86 percent, and 78 percent. The same calculations for Scenario 2 yield 80 percent, 85 percent, and 88 percent. Input the newly created data, and the original raw retention percentages in a spreadsheet and create the two graphs as shown below.
As you can see, the graphs portrait two very different flows. The raw retention graph shows a gradual decline in percentages towards the same point for both scenarios, while the incremental graph shows that them moving during the second and third year in opposite directions and then ending up at very different end-points. From a marketing perspective these dynamics reveal that customers in Scenario 1 remain in their first year in the service at a greater rate than those from Scenario 2, but that this behavior reverses itself in the following two years as the incremental retention from Scenario 2 increases. What this data suggests is that Scenario 2 might have greater retention than Scenario 1 in the long run, despite its poor performance in the first year.
The next step is translating the retention process into cash flows. Table 2, shows cash inflows assuming annual revenues of $200 per customer.
Year 1Year 2Year 3Scenario 1Total = $4.54m9,000 * $200 = $1.8m7,700 * $200 = $1.54m6,000 * $200 = $1.2mScenario 2Total = $4.16m8,000 * $200 = $1.6m6,800 * $200 = $1.36m6,000 * $200 = $1.2mYou can see that Scenario 1 creates $380,000 more than Scenario 2. However, 100 percent of this difference is accounted for during the first two years; in year three cash inflows are equal and looking beyond that time it appears the Scenario 2 will generate more revenue. Results that confirm the impression from the incremental rate analysis that in the long-run Scenario 2 might be the stronger one.
Next you need to assign the costs that correspond to the revenue stream. Go to the first article in this series, " The Art of Customer Profitability Analysis," for ideas on how to do that. Keep in mind that when doing so in the context of developing an attrition model, as we are doing here, you need to figure out how to deal with potential unamortized amounts that are created by customers leaving the program at a net loss. Some companies write them off, because they belief that customer profitability should be evaluated on the individual level; others spread them over the remaining customer base, because they consider the loss part of the cost of acquiring and servicing those that remain active.
Meeting the ChallengeFrustration with traditional financial systems and objectives quickly emerges in a CRM environment, as they are an outgrowth of a time when a company's main objective was optimizing manufacturing processes. The irritation is as much with the philosophy that separates cost and revenue at the customer level, as with the inflexibility and isolation of the systems--attributes that successfully block, or at the very least make it very burdensome to use them for customer relationship management. The latter requires an unimpeded flow of information throughout the organization.
But the challenge is not limited to the infrastructure level. After all, its design is a mere reflection of the philosophy that companies are nothing more than the sum of their isolated operations. A viewpoint that generally permeates every aspect of a company, from who is hired, how accountability is doled out, types of analysis done, and certainly the nature of objectives.
However, changing, or evolving to a customer perspective doesn't mean that everything has to be reinvented or existing knowledge become invalid. Evolution in this context means gradual change to a broader perspective, it is inclusive not exclusive. You don't relinquish existing know-how, but apply it in a different way. For instance, the ROI ratio, despite its shortcoming, is popular, because it communicates concisely the critical relationship between income and invested capital. You can only compare business results if you know what it took to generate them, a principle that holds true in a CRM environment.
Evolving finance from a strictly product-focused perspective to a function that is flexible enough to include a customer perspective requires also the willingness to question deeply imbedded views of control and accountability. Challenges you will encounter are not going to be limited to hardware, software, or data issues, as CRM is about the empowerment of employees so that customers are better served. The types of goals you choose, and the methods to evaluate them, can have a profound influence on the behavior of individuals, and therefore the organization--for better or worse. So as is the case with the development of customer-based profitability and forecasting models, be pragmatic when creating CRM goals: clarity and simplification reign.
Tom Richebacher is an information specialist with the EDS Business Intelligence team. His area of expertise is the creation of statistical and financial models based on database services that are used for customer relationship management purposes. He also develops the infrastructure and reporting systems needed for financial, marketing, and operational analysis and information delivery. Contact him at
In two previous articles I outlined how to create analytical methods that support customer-focused profitability and forecasting & budgeting analysis ("The Art of Customer Profitability Analysis" and "The Financial Side of CRM"). I explained that finance cannot continue to conduct business as usual in a CRM environment, because its conventional analytical toolkits and systems lack customer dimensions.
This article, the last in the series, focuses on the third area where finance has to evolve: creating CRM objectives and metrics that can be translated back into the traditional framework of income, balance, and cash flow statements for financial planning and reporting.
After all, CRM success ultimately depends on irrefutably proving that realizing CRM objectives leads to improved financial performance and is the result of specific CRM activities. Becoming too preoccupied with customer retention, acquisition, and satisfaction goals for their own sake is perilous, because their initial appeal inevitably wears off, and rightfully so, when tangible payoffs cannot be traced to them.
Reorienting to a Customer PerspectiveAt the core of every CRM initiative are objectives containing a customer-value proposition that describe clearly the targeted customer segments and the corresponding product/service strategies. The first provides the underpinnings for differentiated customer treatments that are the basis for CRM efforts; the second the process to measure.
However, as uncomplicated as this sounds, supporting these objectives is not easy for the finance department. Its product-centric analytical methods and systems reflect the philosophy that companies are solely the sum of theirs individual parts; a view that fails to take into account the complete chain of activities that creates customer value across the whole enterprise. The chief hurdles finance will encounter are finding and consolidating the data needed to develop a enterprisewide customer perspective; translating non-financial goals into financial ones; and pulling CRM objectives out of their ambiguity. This article focuses on the latter two, because they create the greatest amount of confusion due to the nebulousness of many CRM objectives.
Demystifying CRM ObjectivesFirst, CRM objectives need to be clearly defined. For example, catalogers view retention on a sliding scale based on customers' most recent purchases. Recent purchasers are considered "more" retained than those who bought a while ago, because the probability of additional purchases diminishes as the time since the last purchase increases. Conversely, wireless companies view retention as cut and dry, customers either continue their service or they don't--retention equals not disconnecting the service.
Second, because no clear-cut way of understanding or evaluating the financial repercussion of CRM objectives exists, standard measurements need to be established that hold them accountable. You have to move from clarification to dissection--cumulative goals are pulled apart to reveal their internal workings: a process practically identical to the one used for conventional goals. Take, for example, a publisher that wants to increase the renewal rate of subscriptions from 40 percent to 60 percent over a three-year period. Certainly, management wants to know prior to that time passing the financial impact of achieving this goal under different scenarios. Table 1, which breaks the cumulative 60 percent goals into yearly intervals for two scenarios, gives you an idea of how this can be done.
Year 1Year 2Year 3New CustomersActive CheckingRet. RateInc. Ret. RateActive CheckingRet. RateInc. Ret. RateActive CheckingRet. RateInc. Ret. RateScenario 110,0009,00090%90%7,70077%86%6,00060%78%Scenario 210,0008,00080%80%6,80068%85%6,00060%88%You can see that both scenarios reach the goal (shaded column). Scenario 1, retains 90 percent of customer after the first year, 77 percent after the second, and 60 percent after the third, while Scenario 2 retains 80 percent, 68 percent, and 60 percent over the same time period. However, from a financial and marketing analysis perspective, reaching the goal is of minor value; far more important is to understand the causes of the disparity in retention patterns and their effect on the bottom line.
Creating VisibilityUnderstanding the later is a two-step process. It requires moving beyond the apparent decline of retention from one year to the next, to exposing concealed dynamics. A good way to start is by calculating the incremental retention rates: the percentage of retained customers for a given year divided by the percentage from the previous year.
For Scenario 1, divide 90 percent by 100 percent for the first year, 77 percent by 90 percent for the second, and then 60 percent by 77 percent for the third. The numbers you get are 90 percent, 86 percent, and 78 percent. The same calculations for Scenario 2 yield 80 percent, 85 percent, and 88 percent. Input the newly created data, and the original raw retention percentages in a spreadsheet and create the two graphs as shown below.
As you can see, the graphs portrait two very different flows. The raw retention graph shows a gradual decline in percentages towards the same point for both scenarios, while the incremental graph shows that them moving during the second and third year in opposite directions and then ending up at very different end-points. From a marketing perspective these dynamics reveal that customers in Scenario 1 remain in their first year in the service at a greater rate than those from Scenario 2, but that this behavior reverses itself in the following two years as the incremental retention from Scenario 2 increases. What this data suggests is that Scenario 2 might have greater retention than Scenario 1 in the long run, despite its poor performance in the first year.
The next step is translating the retention process into cash flows. Table 2, shows cash inflows assuming annual revenues of $200 per customer.
Year 1Year 2Year 3Scenario 1Total = $4.54m9,000 * $200 = $1.8m7,700 * $200 = $1.54m6,000 * $200 = $1.2mScenario 2Total = $4.16m8,000 * $200 = $1.6m6,800 * $200 = $1.36m6,000 * $200 = $1.2mYou can see that Scenario 1 creates $380,000 more than Scenario 2. However, 100 percent of this difference is accounted for during the first two years; in year three cash inflows are equal and looking beyond that time it appears the Scenario 2 will generate more revenue. Results that confirm the impression from the incremental rate analysis that in the long-run Scenario 2 might be the stronger one.
Next you need to assign the costs that correspond to the revenue stream. Go to the first article in this series, " The Art of Customer Profitability Analysis," for ideas on how to do that. Keep in mind that when doing so in the context of developing an attrition model, as we are doing here, you need to figure out how to deal with potential unamortized amounts that are created by customers leaving the program at a net loss. Some companies write them off, because they belief that customer profitability should be evaluated on the individual level; others spread them over the remaining customer base, because they consider the loss part of the cost of acquiring and servicing those that remain active.
Meeting the ChallengeFrustration with traditional financial systems and objectives quickly emerges in a CRM environment, as they are an outgrowth of a time when a company's main objective was optimizing manufacturing processes. The irritation is as much with the philosophy that separates cost and revenue at the customer level, as with the inflexibility and isolation of the systems--attributes that successfully block, or at the very least make it very burdensome to use them for customer relationship management. The latter requires an unimpeded flow of information throughout the organization.
But the challenge is not limited to the infrastructure level. After all, its design is a mere reflection of the philosophy that companies are nothing more than the sum of their isolated operations. A viewpoint that generally permeates every aspect of a company, from who is hired, how accountability is doled out, types of analysis done, and certainly the nature of objectives.
However, changing, or evolving to a customer perspective doesn't mean that everything has to be reinvented or existing knowledge become invalid. Evolution in this context means gradual change to a broader perspective, it is inclusive not exclusive. You don't relinquish existing know-how, but apply it in a different way. For instance, the ROI ratio, despite its shortcoming, is popular, because it communicates concisely the critical relationship between income and invested capital. You can only compare business results if you know what it took to generate them, a principle that holds true in a CRM environment.
Evolving finance from a strictly product-focused perspective to a function that is flexible enough to include a customer perspective requires also the willingness to question deeply imbedded views of control and accountability. Challenges you will encounter are not going to be limited to hardware, software, or data issues, as CRM is about the empowerment of employees so that customers are better served. The types of goals you choose, and the methods to evaluate them, can have a profound influence on the behavior of individuals, and therefore the organization--for better or worse. So as is the case with the development of customer-based profitability and forecasting models, be pragmatic when creating CRM goals: clarity and simplification reign.
Tom Richebacher is an information specialist with the EDS Business Intelligence team. His area of expertise is the creation of statistical and financial models based on database services that are used for customer relationship management purposes. He also develops the infrastructure and reporting systems needed for financial, marketing, and operational analysis and information delivery. Contact him at
Point & Shoot: The Future of Wireless Payment Technologies
We are entering a new era of payment technologies that could have you reaching for your mobile phone instead of your wallet at the checkout counter. The Mobile electronic Wallet (MeW) application will enable your mobile phone, PDA, Smartphone (combination PDA and mobile phone) to store and use financial tools (i.e. electronic credit cards, cash, checks, and receipts) at the point of sale, or Local Transactions (LTs). To initiate an electronic payment you simply press a button on your mobile device. Within seconds your transaction is completed and an electronic receipt is stored within your device.
There are several industry groups currently working to create a single set of standards for worldwide compatibility of mobile local transaction solutions. These groups include: Infrared Data Association’s (IrDA) Infrared Financial Messaging Special Interest Group (IrFM SIG) Infrared Financial Messaging (IrFM) is an international standardization initiative of IrDA whose key participants are Palm, Nokia, Agilent, Ericsson, Motorola, Sharp, Infineon, Extended Systems, Hewlett-Packard, Zilog, Visa, Vishay Telefunken, Harex InfoTech, VeriFone, and CrossCheck. The IrFM protocol defines payment usage models, profiles, architecture, and protocol layers to enable hardware, software, and systems designers to develop IrFM-compliant products that are globally compatible. Electronic wallet applications where users beam their financial information to make a payment and receive a digital receipt have been demonstrated using IR-enabled Palm and Handspring Visor PDAs. Mobile Electronic Transaction Forum (MeT Forum) MeT is an initiative started by Ericsson, Motorola, and Nokia to establish a framework for secure mobile transactions (ability to buy goods and services using a mobile device). Bluetooth Special Interest Group’s (Bluetooth SIG) Short Range Financial Transaction Study Group (SRFT SG) The Bluetooth SIG SRFT Study Group is a research group within Bluetooth examining the development of a profile that improves the device discovery and connection times for short-range financial transactions at the point of sale. Key participants include Toshiba, Tech, Verifone, Panasonic, and IBM. National Retail Federation (NRF) The Association for Retail Technology Standards (ARTS) of the National Retail Federation is a retailer-driven membership organization dedicated to creating an international, barrier-free environment for retailers. ARTS was established in 1993 to ensure that technology works to enhance a retailer’s ability to develop business solutions while maintaining industry standards that provide greater value at lower costs. There has been much discussion among analysts about the use of RF (radio frequency), rather than IR (infrared), for short-range data transfer. One such wireless protocol that has been getting a lot of attention in the past few years is Bluetooth. Originally developed by Ericsson in 1994 and named for Harold Bluetooth, the Viking king who united Denmark and Norway in the 10th century, Bluetooth uses a short-wave, always-on radio signal that lets devices of all kinds communicate with one another, including mobile phones, printers, laptops, and PDAs. Since it uses RF waves, communication doesn’t require a line-of-sight connection between devices, as does IR. Unlike IR, Bluetooth can travel through non-metal obstructions like furniture and walls, send signals in all directions, and be initiated by the devices themselves. The biggest buzz about Bluetooth is centered on the era of "personal area networks" that this technology promises to create. The thinking behind this is that once Bluetooth components become inexpensive they will be embedded in all kinds of machines, including washer-dryers, stoves, VCRs, and CD-players, all of which could be monitored and controlled by Bluetooth. With the development of Infrared Financial Messaging (IrFM), a new "point and pay" wireless payment standard designed to accommodate 200-plus millions of IrDA-enabled devices already in the marketplace, it’s becoming apparent that IR technology will be playing a major role in the future of financial transactions. The numerous advantages IR technology has over RF for local transactions include: Security Because RF solutions (including Bluetooth and devices with wireless Ethernet connectivity) send radio waves in all directions, not point-to-point, they lack the inherent security offered by IR when implemented in transactions requiring confidentiality. Ease of Use Another problem with RF solutions is that competing 802.11 standards haven’t yet been formalized, whereas IR standards have been developed for a multitude of applications. Market Presence Much of the necessary hardware for short-range RF technologies doesn’t exist yet or hasn’t penetrated the market in substantial quantity. IR hardware and software is readily available. Speed The data transfer rate for IR solutions is five times higher than that of Bluetooth. Power IR uses five times less power than Bluetooth. Cost IR costs 10 times less than Bluetooth. The future of wireless payment technologies will mean always having the right change for parking meters and vending machines, a quick and easy checkout experience, and easy access to receipts, coupons, and gift certificates. Paying for almost anything by pressing a button on your mobile phone or PDA will soon become a way of life. Because IR allows all types of devices, both costly and cheap, to share data, IR solutions suit both low-cost, high volume applications as well as high-end applications. Up until now the IrDA and Bluetooth payment solutions have been mere technology demos rather than mass market rollouts. Analysts predict that by the first quarter of 2002, local transaction technology should start rolling out to consumers.
Jourdan is a contributing writer at MedioCom.net. This well designed and easy to navigate site has quality and affordable feature stories, articles and images about timely and relevant topics. Custom content is also available. All products are available in English and Spanish and are easily accessed through MedioCom.net. Check it out today!
There are several industry groups currently working to create a single set of standards for worldwide compatibility of mobile local transaction solutions. These groups include: Infrared Data Association’s (IrDA) Infrared Financial Messaging Special Interest Group (IrFM SIG) Infrared Financial Messaging (IrFM) is an international standardization initiative of IrDA whose key participants are Palm, Nokia, Agilent, Ericsson, Motorola, Sharp, Infineon, Extended Systems, Hewlett-Packard, Zilog, Visa, Vishay Telefunken, Harex InfoTech, VeriFone, and CrossCheck. The IrFM protocol defines payment usage models, profiles, architecture, and protocol layers to enable hardware, software, and systems designers to develop IrFM-compliant products that are globally compatible. Electronic wallet applications where users beam their financial information to make a payment and receive a digital receipt have been demonstrated using IR-enabled Palm and Handspring Visor PDAs. Mobile Electronic Transaction Forum (MeT Forum) MeT is an initiative started by Ericsson, Motorola, and Nokia to establish a framework for secure mobile transactions (ability to buy goods and services using a mobile device). Bluetooth Special Interest Group’s (Bluetooth SIG) Short Range Financial Transaction Study Group (SRFT SG) The Bluetooth SIG SRFT Study Group is a research group within Bluetooth examining the development of a profile that improves the device discovery and connection times for short-range financial transactions at the point of sale. Key participants include Toshiba, Tech, Verifone, Panasonic, and IBM. National Retail Federation (NRF) The Association for Retail Technology Standards (ARTS) of the National Retail Federation is a retailer-driven membership organization dedicated to creating an international, barrier-free environment for retailers. ARTS was established in 1993 to ensure that technology works to enhance a retailer’s ability to develop business solutions while maintaining industry standards that provide greater value at lower costs. There has been much discussion among analysts about the use of RF (radio frequency), rather than IR (infrared), for short-range data transfer. One such wireless protocol that has been getting a lot of attention in the past few years is Bluetooth. Originally developed by Ericsson in 1994 and named for Harold Bluetooth, the Viking king who united Denmark and Norway in the 10th century, Bluetooth uses a short-wave, always-on radio signal that lets devices of all kinds communicate with one another, including mobile phones, printers, laptops, and PDAs. Since it uses RF waves, communication doesn’t require a line-of-sight connection between devices, as does IR. Unlike IR, Bluetooth can travel through non-metal obstructions like furniture and walls, send signals in all directions, and be initiated by the devices themselves. The biggest buzz about Bluetooth is centered on the era of "personal area networks" that this technology promises to create. The thinking behind this is that once Bluetooth components become inexpensive they will be embedded in all kinds of machines, including washer-dryers, stoves, VCRs, and CD-players, all of which could be monitored and controlled by Bluetooth. With the development of Infrared Financial Messaging (IrFM), a new "point and pay" wireless payment standard designed to accommodate 200-plus millions of IrDA-enabled devices already in the marketplace, it’s becoming apparent that IR technology will be playing a major role in the future of financial transactions. The numerous advantages IR technology has over RF for local transactions include: Security Because RF solutions (including Bluetooth and devices with wireless Ethernet connectivity) send radio waves in all directions, not point-to-point, they lack the inherent security offered by IR when implemented in transactions requiring confidentiality. Ease of Use Another problem with RF solutions is that competing 802.11 standards haven’t yet been formalized, whereas IR standards have been developed for a multitude of applications. Market Presence Much of the necessary hardware for short-range RF technologies doesn’t exist yet or hasn’t penetrated the market in substantial quantity. IR hardware and software is readily available. Speed The data transfer rate for IR solutions is five times higher than that of Bluetooth. Power IR uses five times less power than Bluetooth. Cost IR costs 10 times less than Bluetooth. The future of wireless payment technologies will mean always having the right change for parking meters and vending machines, a quick and easy checkout experience, and easy access to receipts, coupons, and gift certificates. Paying for almost anything by pressing a button on your mobile phone or PDA will soon become a way of life. Because IR allows all types of devices, both costly and cheap, to share data, IR solutions suit both low-cost, high volume applications as well as high-end applications. Up until now the IrDA and Bluetooth payment solutions have been mere technology demos rather than mass market rollouts. Analysts predict that by the first quarter of 2002, local transaction technology should start rolling out to consumers.
Jourdan is a contributing writer at MedioCom.net. This well designed and easy to navigate site has quality and affordable feature stories, articles and images about timely and relevant topics. Custom content is also available. All products are available in English and Spanish and are easily accessed through MedioCom.net. Check it out today!
Get Out From Under Debt Weight and Soar to Financial Security
Meg's finances were okay, but she wanted more than to just barely meet expenses. So she decided to start an Internet business.
She searched around, found a reliable company that she liked, products that she felt comfortable using and promoting.
But she didn't have the money to promote her business. What did she do? What any smart business owner would do. She borrowed the money to invest in herself.
Meg found a quality Network Marketing trainer, studied Internet Marketing and invested her borrowed money intelligently. She slowly built a thriving business.
Meg is the ideal. She built her business from the ground up, was able to pay back her loan in 3 years time and retire from her job.
But what happens if you're not Meg. What if you're Bill?
Bill's Floundering
Bill has already gotten himself over-his-head in debt.
He responds to an ad, decides to put yet another $20-$100 into a "business opportunity" for the sole purpose of making quick bucks to pay off his debt.
He sends out a bunch of ads to a mailing list of 100,000 that someone sells him for $50. He waits for the responses, for the $20 bills to start pouring in.
He does get a response all right, but not the one he wanted. His ISP pulls the plug on him for spamming. He is now $70 to $150 further into debt and is worrying his socks off. Plus, he can't get online.
What's Your Story?
Which movie do you want to play in? Meg's scenario or Bill's? Silly question.
The point is, if you're Bill, you need to get out from under debt weight first before you can seriously pursue a business.
Does that mean you shouldn't look for a viable opportunity or that if you are already in one you should quit? No, it doesn't.
But it does mean that you need to separate your business from your debt elimination program, so that you can work your business long term instead of trying to make a profit from day 1.
Make a Business Plan
Your business plan must be long term. It should include: Goal setting -- what you are aiming for in what time frame long term 3 plus years medium term 1 year short term 1-6 months Know Your Product -- study it well Know Your Customers get into their brain know what they want know the benefits Create a Marketing Strategy Learn from the experts Create a Budget Test Your Advertising Use your company's co-ops Work the Strategy -- See your business grow
Make a Debt Reduction Plan
You have several options to debt reduction.
Self-Help Plan -- A simple plan whereby you pay off your smallest debt first.
As that debt gets paid, you take the money saved and add it to the payment of your next smallest debt.
As the next smallest gets paid, you take the amount saved and add it to the smallest remaining debt.
You continue on this way making larger and larger payments to your next debt until your last is paid off.
This plan works very well, if you have at least a little more than the minimum requirement to pay on each debt.
If you're near bankruptcy, this won't do.
Debt Consolidation -- you can consolidate your own debt if you still have substantial credit. This will allow you to make one monthly payment to one source. Refinancing a mortgage would come under this plan.
You can consolidate through a consolidation company. The advantage here is that they can bargain with your credit card companies to give you a zero finance charge. The trade-off is you lose your good credit.
Debt Payment Organizations -- You can join a cooperative that works to pay off members debts. The main advantage here is that you can get your debt paid without losing your good credit. You need to be careful here, though, to make sure you have a genuine club that does pay your debts. It's easy to fake this one.
Bankruptcy - This one has to be included because it is an option, although a poor one. You will get your debts eliminated but you are also guaranteeing the loss of credit, something you want to avoid at all costs, especially if you really want to build that business and achieve some success. Bankruptcy can haunt you for a long time to come.
So, if you are under the weight of a debt load, choose the debt reduction plan that's right for you and turn around your Bill scenario to that of a Meg.
If you're not in debt yet, play out the Meg story. Avoid Bill (and bills) at all costs.
She searched around, found a reliable company that she liked, products that she felt comfortable using and promoting.
But she didn't have the money to promote her business. What did she do? What any smart business owner would do. She borrowed the money to invest in herself.
Meg found a quality Network Marketing trainer, studied Internet Marketing and invested her borrowed money intelligently. She slowly built a thriving business.
Meg is the ideal. She built her business from the ground up, was able to pay back her loan in 3 years time and retire from her job.
But what happens if you're not Meg. What if you're Bill?
Bill's Floundering
Bill has already gotten himself over-his-head in debt.
He responds to an ad, decides to put yet another $20-$100 into a "business opportunity" for the sole purpose of making quick bucks to pay off his debt.
He sends out a bunch of ads to a mailing list of 100,000 that someone sells him for $50. He waits for the responses, for the $20 bills to start pouring in.
He does get a response all right, but not the one he wanted. His ISP pulls the plug on him for spamming. He is now $70 to $150 further into debt and is worrying his socks off. Plus, he can't get online.
What's Your Story?
Which movie do you want to play in? Meg's scenario or Bill's? Silly question.
The point is, if you're Bill, you need to get out from under debt weight first before you can seriously pursue a business.
Does that mean you shouldn't look for a viable opportunity or that if you are already in one you should quit? No, it doesn't.
But it does mean that you need to separate your business from your debt elimination program, so that you can work your business long term instead of trying to make a profit from day 1.
Make a Business Plan
Your business plan must be long term. It should include: Goal setting -- what you are aiming for in what time frame long term 3 plus years medium term 1 year short term 1-6 months Know Your Product -- study it well Know Your Customers get into their brain know what they want know the benefits Create a Marketing Strategy Learn from the experts Create a Budget Test Your Advertising Use your company's co-ops Work the Strategy -- See your business grow
Make a Debt Reduction Plan
You have several options to debt reduction.
Self-Help Plan -- A simple plan whereby you pay off your smallest debt first.
As that debt gets paid, you take the money saved and add it to the payment of your next smallest debt.
As the next smallest gets paid, you take the amount saved and add it to the smallest remaining debt.
You continue on this way making larger and larger payments to your next debt until your last is paid off.
This plan works very well, if you have at least a little more than the minimum requirement to pay on each debt.
If you're near bankruptcy, this won't do.
Debt Consolidation -- you can consolidate your own debt if you still have substantial credit. This will allow you to make one monthly payment to one source. Refinancing a mortgage would come under this plan.
You can consolidate through a consolidation company. The advantage here is that they can bargain with your credit card companies to give you a zero finance charge. The trade-off is you lose your good credit.
Debt Payment Organizations -- You can join a cooperative that works to pay off members debts. The main advantage here is that you can get your debt paid without losing your good credit. You need to be careful here, though, to make sure you have a genuine club that does pay your debts. It's easy to fake this one.
Bankruptcy - This one has to be included because it is an option, although a poor one. You will get your debts eliminated but you are also guaranteeing the loss of credit, something you want to avoid at all costs, especially if you really want to build that business and achieve some success. Bankruptcy can haunt you for a long time to come.
So, if you are under the weight of a debt load, choose the debt reduction plan that's right for you and turn around your Bill scenario to that of a Meg.
If you're not in debt yet, play out the Meg story. Avoid Bill (and bills) at all costs.
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