Digital wallets have been around for some time, but now look likely to become the default virtual payment method of the future. And with good reason, since they offer much more than mobile transactions.
What is a "digital wallet"? As the name implies, this is a wallet used via digital means such as a smartphone, tablet or computer (it can also be called a "mobile wallet"). It is a digital application allowing users to collate all their financial information in one place, from all their bank details and credit and debit card information to loyalty schemes, promotional offers, tickets, personal details and more. It is a genuine wallet with a big bonus – it also offers connectivity and services, anytime and anywhere. And digital wallets have many more benefits besides: they enable faster, contactless payments and easier deposits, and let users keep on top of their spending and manage their day-to-day budgets, etc. And while their popularity is growing thanks to the progress of technology and increasing take-up by both consumers and retailers, the market is still buoyant too.
From PayPal to Apple Pay
The digital revolution is ripping up the payment method rulebook, both in relation to how consumers themselves make payments and the facilities offered by retailers. Digital wallets are certainly part of the pattern in this respect, as one of the tools of the present and the future. Yet the idea is not a new one. In the 1980s, David Chaum had already created DigiCash, a precursor to virtual payment methods. Then in 1998, PayPal emerged as a solution for buyers on eBay, allowing them to simplify the payment process by storing their credit card. This was the first sign of the digital wallet revolution... but despite the launch of Google Wallet in 2011, the next decisive step forward in the process was not until 2014 and the arrival of Apple Pay, closely followed by a series of competitors (Samsung Pay, Android Pay, Visa Checkout, etc.). Even though it wasn’t the runaway success experts predicted, use of digital wallets is continuing to grow.
Creating added value around the transaction
A digital wallet is more than just a means of making payments. Akin to a "digital Swiss Army knife", it allows its owner to centralise all their financial information (and perhaps more) without carrying everything around in their pocket. The result is easier purchases and greater security in comparison with more conventional payment methods, especially through the use of data encryption. But there are also advantages for retailers: these include transaction processes which are faster, more flexible and accessible, which in turn improve the flow of customer in-store journeys and increase conversion rates for online purchases. But that's not all. Digital wallets provide more methods of communication, more targeted and effective customer loyalty incentives, stronger customer relationships, advanced reporting tools and more. A set of benefits which each take their place in a secure ecosystem.
Millennials are in the know
If digital wallets are becoming the norm, it is because every day, mobile payments are gaining ground on the path towards an ever more cashless world. The number of payments made by smartphone has skyrocketed in recent years. According to the German statistics body Statista, mobile transactions have risen from 5.5 million in 2009 to 64 million in 2016 in Europe alone, a rise driven by usage among younger generations in particular. It is estimated that almost 8 in 10 European millennials (digital natives born between 1980 and 2000) use their mobile phones to make financial transactions and manage their savings. Mobility, practicality, immediacy, connectivity, added value and real-time operations are the demands of these consumers, and the digital wallet is riding the crest of the wave in order to become a crucial tool in the lives of these generations. It still remains that in a forever changing world, the payment market is not yet fully mature; dozens of innovative digital solutions, all with their own ecosystems and benefits, continue to abound. The ultimate app is still in the making...
Scale-up concludes mega contract in the midst of the coronavirus crisis
The Antwerp-based scale-up IPEE transforms ordinary toilets into innovative products. BNP Paribas Fortis is more than just the financial partner. IPEE have already come into contact with the right people via the bank’s network several times.
“The traditional urinal has no brain. The infrared eye simply detects that someone is standing in front of the urinal. The result? A lot of wasted water and misery”, says Bart Geraets, who founded IPEE in 2012 together with Jan Schoeters.
The scale-up devised new measuring technology that makes it possible to detect through the ceramic of a urinal when someone is urinating or when the urinal is blocked. With this innovative technology, the scale-up designed urinals that use half as much water and toilets that can be operated without touching them.
“IPEE is an atypical scale-up that innovates in a sector where little has changed in the past few decades”, says Conchita Vercauteren, relationship manager at the BNP Paribas Fortis Innovation Hub.
Jan Schoeters: “At first we mainly focused on durability. But we soon felt that with non-residential applications, the potential water saving is subordinate to the operational aspect. We had to be able to offer added value for each stakeholder in the purchasing process.”
We opted for sleek designs to appeal to architects and end users. The simple installation attracts fitters and maintenance people see the advantages of the sleek design - that is easy to clean - and toilets that do not overflow.
Until 2015, Schoeters and Geraets, along with Victor Claes, an expert in measuring methods and originator of the IPEE technology, put their energy into product development and market research. The financing came mainly from money that they collected in their network of friends, fools and family.
They had to go elsewhere to obtain the funds for production and marketing. Geraets: “We had a product, but it wasn’t ready to sell. To take that step, we needed investors.”
Looking for new investors was a challenge. Schoeters: “We aren’t software developers and we don’t work in a sexy sector. So we miss out with a large target group of investors.”
The young scale-up attracted the attention of Ronald Kerckhaert, who had sold his successful company, Sax Sanitair, at the end of 2015. “He pushed us to think big, more than we dared ourselves. And he never headed for an exit. His express goal was to put our product on the world market”, says Schoeters.
IPEE has achieved impressive growth since then. The product range was expanded and new sectors were broached: educational institutes, office buildings and hospitals. The technology is now used by Kinepolis, Texaco, Schiphol and Changi Airport (Singapore).
“We very soon turned to Asia, because new technology is embraced more quickly there”, Geraets explains. The IPEE technology is distributed in Singapore - where the scale-up has its own sales office - China, Thailand and Vietnam, among other places. About half the turnover comes from abroad, although the coronavirus crisis will leave its mark this year.
“My biggest headache is achieving healthy growth”, says Bart Geraets. One advantage for IPEE is that in coronavirus times, hygiene stands high on the agenda. The scale-up's touchless toilet facilities meet that demand.
At the same time, the shortage of water and the need to use water sparingly is very topical. Geraets: “We notice that in these strange times we are gaining an even bigger foothold. In the midst of the coronavirus crisis we concluded a contract with the world’s biggest manufacture of toilet facilities. Now it’s a matter of further professionalising our business, the personnel policy and the marketing.”
The company’s main bank is an important partner here. Schoeters: “It is more than just a financial organisation. We have already come into contact with the right people via the bank’s network several times. Our bank feels more like a supporter that is also putting its weight behind our story.”
The art of negotiating payment terms with suppliers
Cash management is an SME's frontline weapon, and payment terms are a key means of keeping it under control – providing companies proactively open negotiations with their suppliers. But this solution remains underutilised by entrepreneurs
Cash flow difficulties are the number one cause of company bankruptcy in Belgium. Business owners face a constant battle to stay in control and maintain the balance of their inflows and outflows. Negotiating payment terms is one of the levers that can be employed: shortening them for customers while extending them for suppliers. In Belgium, the statutory deadline between companies is 30 days. Yet the reality can be different, since either trading partner may deviate from the rule. Where one of the parties is in a dominant position, the other is often obliged to accept the conditions it imposes... meaning its payment term becomes longer. Everything is negotiable, however, even with "big" suppliers, as long as you formalise the situation and ensure you protect your business relationship.
Who is your supplier?
They say information is power, and there is some truth in this. Indeed, the more you know about your "opponent", the more you will be able to turn the tables. How are the company's finances, and what is its cash position? Is it experiencing difficulties? Where is it placed on the market, particularly in relation to its competitors? What is your dependency ratio in relation to this partner? How does it make payments, and what is its purchase history? The answers to these questions will allow you to take up better positions in the negotiations, and find the best angle to launch an attack that catches the other side by surprise. Specialised websites, data banks, word of mouth (the competition): all means are justified in order to find out more!
What do you want to gain?
And a resulting question: what are you willing to put on the table to achieve your objective? In other words, you need to be properly prepared and establish a strategy regarding what you are willing to concede (and how much this will cost you) and what you absolutely want to gain in return. Remember that the other party has presumably not requested anything, and potentially has little to gain. Therefore, you cannot arrive empty-handed. Are you willing to order larger volumes in order to extend your payment terms? Can you envisage a long-term contractual commitment? Could you contemplate paying more in return for spreading your debits further? Imagine you are playing poker: clearly, you should keep your cards close to your chest. Wait for the right time to show your negotiating partner that you are prepared to make concessions.
How can you negotiate successfully?
The art of negotiating is a difficult skill. However well prepared you are, keep the following principles in mind:
- Even if you have brought a proposal to the table, listen to the other side and pay attention to detail so that you can react quickly.
- Do not be frightened of bearing your teeth a little, even if you are concerned about spoiling the business relationship with your supplier. Stand your ground and mention what the competition can offer you, for example.
- You must control how you communicate, so that you avoid giving the impression that you have cash management problems. Emphasise that payment delays do not help anyone, and that it would be better to agree on a reasonable and sustainable schedule.
- If your business relationship is established, mention your positive partnership and your desire to see this continue.
- During discussions, regularly refer to how far you have come and your shared progress to date. This positive tone will be well received.
- If the negotiations stall, try to resolve the difficulty by pulling out a trump card, for example (i.e. a concession).
- Remember: a good agreement is balanced, and leaves neither party feeling wronged. So do not be too greedy: the outcome must be worthwhile.
- Are you happy with the situation? Move to finalise the deal, either by accepting what is on offer or by finally opting for a fair compromise.
The conversation manager: essential and permanently online
Coordinating a company's social media strategy is a task in itself. Who will you use to handle this? And what about involved customers who suddenly get too involved?
Because of social media, the role of a traditional marketing manager is evolving more and more towards being a conversation manager: someone who facilitates consumer communication. This includes communication between customers themselves and communication between the customers and the company.
Some key tasks in the conversation manager's job description are:
- Uniting and activating ‘branded fans’, as they will recommend the brand to friends and family.
- Listening to what people are saying about your company and seeking their active contribution to your products and strategy.
- Creating content worth distributing in order to encourage discussions.
- Managing these discussions.
- Ensuring your work is very customer-oriented and customer-friendly through customer care, i.e.by responding faster and providing more than what the customer is expecting.
Some companies are big enough to hire a full-time conversation manager. In other cases another employee will take on this role part-time. A third possibility is using a specialised company.
Caroline Hombroukx, conversation manager at content marketing company Head Office:
“No matter which option you go for, communication in social media must come across as personal. There is definitely a reason why large companies such as Telenet and Belgacom have created a fictitious person to deal with their customers; Charlotte and Eva respectively. The conversation manager also has to know the company and its social media strategy very well. It may therefore be an advantage if someone in the company itself takes on that role. That person is right at the source and so can distribute information, take a quick picture and post it online, etc.
This task is not for everyone. A conversation manager must have experience with social media, have fluent communication and writing style and must be empathetic, positive and solution-oriented in his or her dealings with customers. Prior training is not a luxury, because the employee must be very aware of the company's content strategy. The audience is varied and unpredictable. You have to decide time and time again whether certain content is or is not suitable for your target group. It is also not a nine-to-five job: the online world keeps on turning even at night or at the weekend."
The advantage of hiring a conversation manager from an external company is that in principle the expertise is present. In that case the challenge is to know the company to such an extent that the customer has the impression that he or she is talking to a real employee.
Getting angry is out of the question
Traditional marketing and advertising are a one-way street. If they do not work, they are a waste of money. However, they are not likely to result in angry comments. A company venturing out on Facebook, Twitter or other social media, can be sure to receive comments and reactions. Including negative ones. Caroline Hombroukx:
“On social media the consumer is suddenly right next to you banging the table. It is important to respond well to that. Getting angry yourself is out of the question. You need to respond by showing that you understand and you are taking the question or complaint seriously. Everyone following the discussion must see that the company is providing a quick answer and is trying to find a solution. If a mistake has been made, you can acknowledge this openly and honestly. You can also show the problem as something positive: as an opportunity to improve your brand, product or service. Of course you must find a suitable solution in the end. If the person sharing the complaint becomes too negative, you have to try and divert him or her to a private channel: a private message on Facebook, a direct message on Twitter, an e-mail or a phone call."
An enthusiastic, understanding response also works well if the consumer is sharing something positive about your brand, company or service. Thanking the consumer strengthens the bond between the company and the customer. Caroline Hombroukx:
"The dialogue with the target group is an opportunity to improve your product or operations through constructive criticism. Make customers feel involved. It creates a strong relationship. If you are publishing a magazine or starting a poster campaign for instance, you can let customers choose the best layout or title from three options posted on Facebook, for example. Everything that engages customers can only strengthen their commitment."
Social media dos and don'ts
- The consumer is always right (even when this isn't the case).
- Be open, honest and friendly.
- Use a personal style.
- Respond quickly to any questions or reactions.
- Stay positive and be understanding.
- Do all you can to engage your customers.
- Come up with a free gift every now and then.
- As a brand, try to avoid political topics.
Social media and e-commerce: opportunities and risks
The huge popularity of social media brings new opportunities, but has resulted in some new stumbling blocks as well. What are the most recent trends? And how should you respond to them?
Social media such as Facebook, YouTube, Twitter, Instagram, etc. seem cutting edge, but the principle is as old as the hills: word of mouth, sometimes abbreviated as WOM in marketing. Even in the heyday of the mass media, positive recommendations from neighbours, family and friends remained important to a company's success. Newspapers, magazines and television advertising were the first channel introducing a new product to consumers, but word-of-mouth turned out to play a decisive role in what matters most: consumer behaviour. Consumers shared experiences and thereby affected the behaviour of their fellow consumers. Today, more than ever, they do so through social media.
Consumers persuading consumers
Social media are the contemporary, more sophisticated and super-fast successor of old-fashioned word-of-mouth advertising. They are a catalyst. Social networks allow people to exchange views, share experiences, express their dissatisfaction, etc. more quickly than ever.
In addition, more and more consumers are opting for a "social search" over search engines such as Google to find information. They consciously do not search the entire internet, but approach their friends on Facebook or contacts on LinkedIn or Twitter. It speeds up the search and makes the result more reliable. The idea is that if X thinks it is good/nice/beautiful, we will probably think it is good/nice/beautiful too. There is also the option to ask questions and really discuss the product or service you need information about.
Consumers talk about all sorts of products (offline and online), from new detergents to new car models. And it is not just young people who are sharing their experiences about products and brands. Young and old, male or female: everyone does it. All these recommendations between consumers are worth gold.
We can illustrate this with an example: computer manufacturer Dell assumes that 25% of its customers choose their brand after it has been recommended by another user. The average purchase value per customer is about 210 dollars. Based on this amount, the value of every recommendation is estimated at 42 dollars. The more consumers Dell can convince to buy its products, the more money it makes.
However, the reverse is equally true: bad word-of-mouth advertising can have devastating effects. Particularly in this age of social media, a bad reputation does not take long to spread.
Social media in 2014
Perhaps Facebook will no longer exist in ten years' time, but it will most certainly have been replaced by something else. Social media are here to stay. It is therefore important for companies to build a good social media strategy. They can start by thinking about which channel they want to use for which content and objective. What do you need to take into account?
- Content (the message to the consumer) is still the key part, but the importance of segmentation is increasing. The audience is varied, so not all content and every channel is suitable for everyone. As a company, it is best to divide your target audience into sub-target groups. You can then choose specific content and a channel per sub-target group.
- Create real-time content: define a number of key moments in the year in advance and use these wisely. The World Cup, back to school, the summer holidays, etc. are all events that happen regularly and companies can respond to in a clever way. The trick is to find a good link between the key moment and your product. Be creative in this respect. If a school bag brand presents its content at the end of August, it will have to use an original approach to avoid coming across as predictable.
- Social media are predominantly a mobile story: most consumers are switching to smartphones and tablets. It is no coincidence that the four best-known social networks are also in the list of most popular mobile apps: Facebook, YouTube, Instagram and Twitter. In any case, your content (both on the website and on social media) will have to be mobile-friendly.
- The importance of customer care is only increasing. Consumers will now use social media more than ever to find information, ask questions and make comments.