Saturday Cup of Joe from Detroit

187.

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Detroit, MI, USA

Week 187 in Detroit. Christmas season is upon us. Admittedly, since I was in Ireland last week I don’t have room to talk about how quickly it became almost-mid-December. The later Thanksgiving did kinda throw it off a little. As a result, we got our Christmas tree on a Thursday night at Eastern Market. The last customers of the evening. There are plenty of trees left but it was a different experience than the usual weekend trip. Now we can be sure to get the most time out of our tree as possible. The advent calendar is well underway as well. A fan favorite especially with the resident 6 year old.

I’m supportive of the 24/7 Christmas music playlist but not until the day after Thanksgiving.

I will watch the marathon of Christmas movies — The Muppet Christmas Carol, Home Alone, Love Actually, The Family Stone, White Christmas, Christmas Vacation, and (on Christmas Eve) It’s a Wonderful Life. And probably Die Hard.

What Christmas movies are your family’s tradition?

What’s this week look like for you? Company Christmas party? Partner’s company Christmas party?

Enjoy and have a great weekend.

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Dublin, Ireland

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“No man can get anywhere in this world in any really and endurable manner without some recourse to books.”

— H.L. Mencken

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Shipwrecks: Just a cool list of shipwrecks. What?

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Detroit views

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People are getting worse at The Price Is Right.

I know, hard to believe.

You’d think with the rise of the Internet and Amazon.com and ads within your social media feeds that consumers would be getting better at determining price.

Turns out, nope. Worse.

Harvard researchers studied The Price Is The Right and found insights on consumer retail and marketing that can benefit your business. Based on conclusions from the research, consumers are less price sensitive today than ever before. The result of being less price sensitive is the inability to accurately guess the price of the items usually displaced on the show.

The change in price sensitivity over time can be traced to lower inflation, to e-commerce offering greater convenience (less attention paid to the price), and to the increasing volume and availability of products. All these factors combine to blur price clarity.

Do you agree?

How does price sensitivity affect your market or your product?

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AI. Algorithms.

The questions about how Fintech companies are selling, underwriting and approving loans sparked regulators and advocates to claim that algorithms discriminated against certain applicants. The fear being that traditional credit models and software written by privileged white guys would inherently value the traits and data that the authors of the software favored. In reality, many of the coders and authors of today’s software are no longer white men and, beyond that, the platforms have been operational long enough to test the results. In other words…

Proof is in the pudding.

In reference to Upstart, a consumer lending platform, the Consumer Financial Protection Bureau (CFPB) wrote that “the results provided from the access-to-credit comparisons show that the tested model approves 27% more applicants than the traditional model, and yields 16% lower average APRs for approved loans.” While not an end-all-be-all, the results show that some companies are finding positive efficiencies in the data and therefore in the business.

Upstart is likely just the beginning of financial services companies ready to test the traditional norms of lending and banking. As long as we rely on data, there is much to be gained for better understanding the credit habits and attributes of eligible customers. Perhaps this type of research will also help temper the rumors about algorithmic bias while the industry, advocates and regulators gather more information to guide the future of innovation in this space.

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Exclusivity: Nothing tells me that the mortgage industry is immune from the trends we’re seeing in consumer banking, fintech and other types of lending. For years, real estate agents and mortgage lenders have believed that the mortgage — a complicated and intimidating transaction — was treated differently by consumers than something like their checking & savings account or a personal loan.

On top of that, real estate agents have long held influence over consumers based on much the same belief.

As technology improves and competition becomes more fierce, mortgage lending is becoming more and more like the credit card industry. Exclusivity and loyalty to brand drive the “top of wallet” choice for most consumers. Airline frequent flyer miles or retail shopping rebates are examples of how exclusive partnerships dominate the product line.

Get ready for exclusivity and rewards to become the norm in everything we transaction.

Whether web browsing, online shopping or applying for a mortgage, exclusive partnerships and therefore exclusive perks will drive consumer loyalty more than anything else.

On top of the convenience and perks, consumers will be able to demand greater benefits like reduced price, faster service and increased visibility in exchange for loyal usage and consumer data.

Put another way, lenders and banks will “pay” you to watch you browse and transact, even if you are not shopping for their specific product.

It’s way less creepy than it sounds. Most are already doing it by either a). paying for the privilege through third parties or b). providing a product or service that includes gathering data.

I allow Google to monitor / scan my email and web browsing in exchange for unlimited photo storage and an email address. I’m guessing Google is getting the better end of the bargain.

Whether consumer data, credit card or mortgage, we’re all headed toward a world of aligning with the perks and rewards we want in exchange for financial relationships with the providers.

Who are you going to choose?

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Seen in Limerick, Ireland

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Innovation: keep in mind 3 things.

1. Demographics

2. Inequality

3. Information

Whether its innovation or new products, the economic and cultural trends matter. Your business is subject to much more than just a product-market fit or your product’s value proposition.

How you innovate matters. The trends determine choices and behavior. Larger than transaction-by-transaction value, is the perception of the innovation, the product, the service.

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Value. The Motley Fool identified a broader value of Disney+. The subscriber rate is the primary focus for investors. Beyond the subscriber rate the value of the app is the value of consumer behavior collected through the app. Short term investors care about the subscribers and market share. Long term investors should consider how the additional information fed back into the Disney+ platform’s new content will ensure further success. Disney+ will get stronger and stronger through subscriptions and new content alike. A long term view suggests that Disney+ can develop new shows from the interests and behavior of existing customers. Taking the broader view of value, Disney+ measures value by both subscribers and market research. Too often, companies are only looking at the direct value of revenue or lead generation not the broader value associated with continued growth and iteration on existing customer behavior.

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Fair lending. An undercover investigation into real estate practices on Long Island revealed discrimination. Newsday (as reported in the New York Times) found that applicants — some real and some actors — were treated differently when shopping for a home. “All told, real estate agents treated people of color unequally 40 percent of the time compared with white people when they searched for homes on Long Island, one of the most racially segregated suburbs in the United States.”

Agents have tremendous influence over consumers from the type of home to the neighborhood to the financing partner. Despite the inconsistency of service, expertise and results among all agents, real estate agents overall continue to maintain an influential role in the home purchase transaction. As homebuyers are presented more and more data and online tools for listings and estimated value, customer service and value in the real estate industry will remain under scrutiny.

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Quote: “Realize deeply that the present moment is all you ever have. Make the Now the primary focus of your life.” -Eckhart Tolle

Bonus Content: Marriage and finances. It can work

Continued success and continue to answer well,

Written by

Thinker, curious leader, once an attorney…always trying to answer well.

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