I’m reading Zag – a little book with the thesis that to succeed you not only need to be good – but you need to be different from everyone else that is good. It’s a nice way to look at things.

Unfortunately for author Marty Neumeier he picked one bad example – a hazard when you write any business book to be sure:

So when my local bank bought a fifty foot outdoor poster emblazoned with the tagline “Nice. Since 1878,” they’d have been better off putting their money in a savings account.

…Citibank positioned their bank as the anti-bank with the tagline “Live Richly,” and headlines such as “For a guaranteed return on investment, try buying flowers”

Ouch. Citibank has since hit the wall hard, and a “nice” bank is very hard to find these days – especially in the USA.

Citi’s greed-oriented slogan was always bad – not just now, but when the book was published in 2007. Who wants to bank with someone that is encouraging its customers to blow money? It’s not a good look, and it was a pointer to gaps in the values of Citibank – gaps that ultimately resulted in the collapse.

It’s a lesson we can all learn from – being different and being good is not nearly as important as doing business in the right way and for the right reasons.

Incidentally – the Zagbook website is well worth a look – a great example of book promotion. It’s missing the vital component though – the ability to interact with the author.

This year to date my US-based stock portfolio is up 44%, well above the benchmark S&P500:

Yippee!

Actually – not so fast.

Last year my highly levered (lots of options) portfolio went down a stunning 66%. I got caught out selling my shorts too early (I was short Citibank amongst others) and bet on the market turning around – and it didn’t.

Now I did withdraw money along the way, so things were not so bad,  and I’ve always looked at this particular portfolio as play money. But that last quarter hurt – no doubt about that.

What really hurts is how much effort it will take to get that back. Even after the excellent performance year to date, $100 invested in my portfolio at the beginning of 2008 would be worth only $49.

Money I have with Gareth Morgan investments in the meantime has lost 13.6% since September 2006 – or 4.4% per annum. That’s a lost better return than the S&P500 and my own portfolio. My instructions to them were for a growth portfolio, and while they lost a bit initially they have toed a very conservative line since. I’d like to see a bit more Berkshire Hathaway in there though.

Michael Carney picks up that Trade and Exchange has finally given up on publishing in print. They ceased to be relevant a number of years ago, and will not be missed today.

However Trade and Exchange were the Trade Me of their day. They seized an opportunity to grab and extend the classifieds market away from newspapers, and in doing so created a large business and a headache for the papers.

Then Trade Me then seized the opportunity to grab and extend T&E’s business, and finally Fairfax completed the circle when they purchased Trade Me to get their old line of business back.

On the way through T&E and Trade Me the classified’s business grew tremendously in size and usefulness, to become the e-commerce engine of New Zealand.

There are a number of lessons to be learned:

1. Don’t be afraid of destroying your own business by launching a new one. If you don’t then someone else will.
2. If you accept that you are not capable of destroying your own business, then pull out your check book when it looks like someone else will. Once you have purchased them then leave them alone and let them grow independently of your own systems and processes.
3. Know when to lose – exit a market when you stop making money, and not a moment before of after.\

(disclosure – I’ve consulted Trade Me, Fairfax and WAN’s Quokka)

Another post by my father Glen Wiggs. In this one he refers to a Scottish study where imposing a minimum price of alcohol did nothing to reduce sales of ready to drink products (sold to younger folk), but did reduce spirits, wine and beer sales. So the older voters get to drink less while the newbie votrers still drink the same

More on Minimum Pricing of Alcohol

The Scottish Government is determined to introduce minimum pricing of alcohol where there would be a minimum price per standard drink unit of alcohol There have been two significant studies by The University of Sheffield. The United Kingdom Department of Health commissioned the first and the Scottish Government commissioned the second. These studies are being used by the Scottish Government to justify the introduction of minimum pricing. The Scottish Government is also keen on a discount ban. The New Zealand Law Commission are giving strong consideration to both minimum pricing and discount bans in their review if the liquor laws.

The second University of Sheffield study, which was released a month ago, http://www.scotland.gov.uk/Publications/2009/09/24131201/0 assessed both the impact of discount bans and minimum price on consumption. The study used epidemiological and econometric models and therefore in the formulation of the models made a number of assumptions. The conclusions are therefore theoretical and it would it would be risky to base policy on the study.

The study claims that there would be a reduction in consumption in different types of drink in different proportions. Page 76 has a graph with examples, which is reproduced.

A 70p (about $1.60, which would make the minimum price for a bottle of Heineken $2.08) per unit minimum price with or without a discount ban is estimated to reduce spirits consumption by 40%, beer by 10%, wine without a discount ban by 17% and with a discount ban by 20%. But note that there would be virtually no reduction in consumption of RTDs. We question whether this is a desired social outcome as RTDs are popular with younger drinkers.

In the 2007-08 ALAC Alcohol Monitor 35% of drink types consumed by youth 12-17 were RTDs, but of youth Binge Drinkers 51% drank RTDs. A minimum price policy is likely to incentivise young drinkers to drink greater numbers of RTDs. Clearly a minimum price policy in New Zealand is likely to increase inappropriate drinking by youth rather than curtailing it.

Glen Wiggs

Director

Foundation for Advertising Research

Adjunct Professor of Advertising Regulation

University of the Sunshine Coast, Queensland

Fairfax execs to feel shareholder ire on pay, originally uploaded by LanceWiggs.

A nice juxtaposition – this Sydney Morning Herald article reporting complaints about former Fairfax senior execs earning too much in payouts is accompanied by a video ad.

I think Sankar and David’s payouts were justified – and that shareholders should be questioning why they were pushed out. They were the people behind the Trade Me deal and understood the transformative power of the internet. The current regime has a ery old media flavour to it, which will help streamline the newspapers, but what will happen to the digital assets?

A warning sign for those digital assets could be the video advertisement on the smh.co.au website. Video ads may pay a bit more, but they are a great way to put folks off your site. Use them with care or preferably not at all.

So is the video ad a sign of usability taking a backward place versus demands for revenue?

Perhaps not – this particular ad was for MyCareer.com.au – another Fairfax property.

It’s all wrong.

Cart – Apple Store (New Zealand), originally uploaded by LanceWiggs.

A rare mishap on an Apple site – this the Store.Apple.co.nz site. I would like to buy the new mouse, but when I try to view the cart I get this. Tonight is the second time I have tried.

A PRESS RELEASE FROM MY DAD. Plenty more to come on this topic I feel

Website: www.ffar.org Email: gwiggs@ffar.org
Media Release
Box 776, Noosa Heads Queensland 4567 Australia
ALCOHOL MINIMUM PRICING – Reversing the Facts
The Scottish Government is actively pursuing the introduction of a policy of minimum pricing for alcohol. The proposed minimum price would be 40 pence per unit. The Chief Medical Officer of Health for England also supports a minimum price policy and suggests a minimum of 50 pence per unit but this has been firmly rejected by the Prime Minister.

In Australia the Preventative Health Taskforce (PHT) has recommended the development of “the public interest case for minimum (floor) price of alcohol to discourage harmful consumption and promotes safer consumption.”

In New Zealand the Law Commission favours minimum pricing and says in its report “Earlier this year, Professor Sir Liam Donaldson, the Chief Medical Officer for the United Kingdom [actually England], also recommended that a minimum price model be adopted based on research carried out by The University of Sheffield.”
Both the PHT and Law Commission favour increased price by way higher excise tax.
The rationale adopted by the Chief Medical Officer for England is set out in his Annual Report “There is a clear relationship between price and consumption of alcohol. As price increases consumption decreases, although not equally across all drinkers. Price increases generally reduce heavy drinkers’ consumption by a greater proportion than they reduce moderate drinkers’ consumption.” (Emphasis added) He based this conclusion on the Sheffield University study that was commissioned by the Department of Health. The same argument would apply if price were increased by other means such as higher excise taxes.
A research report by the Centre for Economics and Business Research (CEBR) analysed the University of Sheffield research along with other research. A study by Wagenaar et al (also cited by the PHT and Law Commission) covered much the same ground as the University of Sheffield study on the effect of an increase in price on moderate and heavy drinkers.
The CEBR study found, “Heavier drinkers are generally less responsive to price changes than moderate drinkers, in terms of overall consumption”. In technical terms “The elasticity of -0.21 found in the Sheffield study implies that a 10% general price increase across all alcohol products would only lead to a 2.1% reduction in alcohol consumption amongst heavy drinkers”. On the other hand the Sheffield study found that the elasticity of moderate drinkers is -0.47 which would be a 4.7% reduction in consumption. The Wagenaar study had similar results. The CEBR study prepared the following graph showing the two studies and clearly illustrates that the consumption reduction by moderate drinkers will be more than twice the rate of heavy drinkers.

So how could the Chief Medical Officer of Health justify the claim that price increases will reduce consumption by heavy drinkers by a greater proportion than moderate drinkers when the opposite is the case? It seem that the University of Sheffield data was misinterpreted. As CEBR observe, “Unfortunately this evidence appears to have been misinterpreted by the proponents of minimum pricing, including the Chief Medical Officer of Health.”
This misinterpretation has had far reaching consequences with the Law Commission repeating the error, as has the PHT to a lesser degree.
The evidence is crystal clear. Increased pricing will have minimal effect on reducing consumption of the heavy drinker but far greater impact on the moderate drinker. Policy should be evidence based – not based on factual error.
Glen Wiggs Director
Foundation for Advertising Research
Adjunct Professor of Advertising Regulation
University of the Sunshine Coast, Queensland
16 October 2009

ccselector.html, originally uploaded by LanceWiggs.

Technebish and Adam suggest I switch to that I switch to the Global Plus Platinum Card.

Here, straight from the BNZ website, is the comparison table between the Global Plus, Platinum (mine) and GlobalPlus Platinum cards.

They all show Air New Zealand AirPoint Conversion.

Why would the other two stay if the one in the middle is going?

Dear Air New Zealand

Why are you walking away from the revenue provided by people with bank rewards programs – and stopping conversion to Air New Zealand Airpoints Dollars?

I refer of course to the recent notification by BNZ and other banks that they will no longer support Airpoint Dollar conversion.

It puzzles me I admit – as it would seem to me that the program would be 100% electronic and cheap to administer, that the extra money people place in to their Airpoints accounts would encourage them to buy significantly more flights – with both Airpoint Dollars and cash, and that the effort you have put into making the Airpoints Rewards program as good as it is – well it’s a bit wasted now isn’t it?

It also seems like a bit of a clunker of a move for an organisation that in recent years has been getting everything right. What gives? Are you launching a bank?

Please work it out with your former partners – all we want is our AirPoint Dollars back.

Looking forward to your reply

Lance Wiggs

P.S. BNZ, Westpac, ASB and Amex are still on the hool for their annual fees if this benefit does  go away.

To/BNZ Credit Cards
Wellington,
New Zealand

CC/ a few other folks.

Dear BNZ Credit  Cards;

I am very upset.

The other day I opened this message in my BNZ internet banking inbox (good to see the newer website by the way):

In this letter (which I assume you have also sent to my address, which I have not been present at for some time) you state that you are removing the ability for me to convert BNZ reward points into Air New Zealand Airpoints Dollars.

This makes me angry as the only reason I selected, and have stayed with, your range of cards is this very ability. Over the last few years I have found real value in the ability to convert reward points into something of genuine measurable and realizable value. It is a wonderful system.

You state in your letter that I will still be able to convert my Rewards Points into FlyBys. I am not, and nor will ever be, a member of FlyBys. It’s not that I don’t think they are an impressive bunch, it’s just that I don’t want to share my transaction data, and nor do I want the economic deadweight loss associated with applying points to a program where the potential purchases are selected for you. In simple terms the value of my airpoint dollars is known – it is $1 for each $1 reward – while the value of a FlyBys point is a function of my perceived value of the goods on offer – goods that I probably would not purchase with my own money.

As I mentioned – this made me quite annoyed. So I searched on my BNZ internet banking site for the terms and conditions of my credit card. I thought that clicking on the Credit Card and Personal Loans section would be the right thing to do – and so that’s what I did.

I expected (I’m kidding really – it was a forlorn hope) to see a range of options under that heading.

For starters one or two credit card offers that you had selected for me based on my transaction records. I’d simply click the find out more button for the one I liked, follow through a page or three of features, benefits and costs and then click the “accept” button to get my credit card in the mail.

The “need a loan?” section would be aimed at helping me into that new Mercedes or buy the house down the road. Or maybe a Hyundai Getz and a room in Taihape – but you get the idea. Once again it would be a simple process. I’d type in the make, model and VIN number for the car, select the dealer from a list and you would come back with an offer. I’d examine the T’s and C’s and then click accept – and the loan docs would go off to the dealer, and the dealer would drive the car to my place.

Similarly for the house – for that you just need the address, and you’ll calculate the valuation, offer me two to three loan options based on my transaction history, let me accept an offer and then offer to take care of the conveyancing for a flat fee. Then you’d liaise directly with the lawyers, the agents and counterparty to make it all happen. After all you are the ones making all the money out of this deal.

I’d also see, of course, the terms and conditions for all of the loan products that I currently have.

But, and you know this I am sure, all I saw was this:

I can add a cardholder (though that has an * attached to it) but I cannot see anything related to what products I currently have. You’ve also lost an incredible opportunity to offer me tailored products – so my cash and ability to borrow sits idle still.

So I logged out before you dumped me out and went off to your main website. I found the Terms and Conditions fairly easily to your credit, but they were of course all for new card applications. I assumed that they were the same as my existing card, but was a bit perturbed to find that I wasn’t quite as special as I thought I was:

It seems that there is a Limited Edition Platinum Visa Card as well as a BNZ Platinum Visa Card. I guess that I am normal not limited, but because I didn’t know I read them both.

They were identical – as far as I can see. I really did look, but they each referred to the both cards. There was one difference – a smaller font and no page breaks for the regular Platinum card – it felt a bit cheaper frankly.

Regardless, I scanned through the boilerplate to get to the salient facts. First you assert that you can change these terms and conditions at whim – with just two weeks notice. I guess your email was just that.

Next I noted that I can indeed change my reward points into BNZ AirPoints Dollars. That’s good. I’ve never seen an offer for a physical item by the way – but then I throw away almost all my mail, and only open what is left every two or three months.

But wait – further on you assert your right to withdraw from the conversion to Airpoints Dollars at any time:

Any time! That means you could do it now. or tomorrow. Or on the 9th of November, 2009.

So it seems you have yourself covered legally. And it seems I signed a contract that gives you the right to withdraw all of your benefits by merely giving me a notice.

But I’m not writing to you with a legal problem. I’m writing to you because I am struggling to use words and phrases that are acceptable in public. You see I am angry. (I think I said that already).

Fool on me it seems – I did read the contract but given that you could change anything anyway I trusted you to do the right thing in the future. But it seems that you did not.

Meanwhile it seems that your lawyers and accountants have not talked to your marketers. Go check out http://www.bnzplatinum.co.nz/. I’ll wait.

Actually I can’t wait – so let me run you through what I saw when I went there just now. It’s the marketing site for the Platinum card. See the text in bold?

That bold text highlights what you see as the principal benefit of the card – the Platinum Rewards. So let’s click on the Rewards tab and head to the BNZ Platinum Rewards page.

That’s kinda small – so let me zoom in on the bit I’d like you to read.

That’s right – not only are you are pushing the rewards points as the main feature of the card, but you also place the ability to convert your reward points to Air New Zealand Airpoints Dollars at the top of the list in the rewards page. Clearly it is the major benefit of the card, and sure enough, it is the only reason I got this card. I wonder how many others were in the same boat? 90% 95%??

There are other benefits – but they are amusingly bad. It’s probably better for all of us that I don’t raise them.

We are talking about fairness here, and we in New Zealand are famously intolerant of anything that isn’t Fair. So can I ask you to answer these questions for me?

1. You are marketing a product for which you are canceling the principle benefit.  Why?
   Now I will give you credit for fixing the error on the page you get after clicking apply now (you really should fix that ugliness). But who is going to read all that text to figure out that you no longer offer Air New Zealand redemption? Where is, for example, the warning in red that states this is no longer an option?
   
2. You have taken away the major (99% for this customer) benefit away from an expensive product. Seriously – it is expensive. By how much will you be reducing the annual fees?
3. You imply that Air New Zealand has changed the game. Does this mean that AirNZ put the prices up for Air Points Dollars? Weren’t they always, well, $1 each? What actually changed? (I know this is really three questions, but bear with me)
4. What other credit cards that you market have had the same removal of benefits?
5. Are you aware that Platinum cards are the vanilla card of choice in the USA and that people in New Zealand that think Platinum has some kid of prestige are sorely mistaken?  (I know I know – just look at the state of their economy)
6. Why did you change the design of the previous card – it was almost 10% white, and beautifully discreet. The new one has bubbles

OK – so those last two question not really that important – but I thought I’d take the chance while you were reading this and answering the other ones. You are reading this aren’t you? I hope so. I’d love to hear your replies as well.

I did like this product of yours, and I would be more than happy for you to ignore those questions above (except maybe number 6 :) and simply answer in the affirmative to this question:

Will you please retain the ability for Platinum (and goodness knows who else) cardholders to transfer Platinum Rewards Points to Air New Zealand Airpoints Dollars?

many thanks, and I look forward to your response

Lance Wiggs

P.S. Great job by the North end branch on opening my business banking account in about 12 minutes with a minimum of fuss.

P.P.S. I’d love to hear your side of this too Air New Zealand