Thoughts From The Cake Scraps

When times get tough there is always much coverage of the interesting concept of shrinkflation – where consumers get less for the same price. This can take many forms, such as fewer ounces in a similar size box or a lower count of items – all without changing the price. They count on the consumer not noticing, often with great effect.

But there is another type of shrinkflation that has been slowly seeping into the veins and that is the shrinkflation of benefits of rewards programs. These, often small, changes slowly erode the value proposition to the consumer through sneaky tactics like increasing ‘breakage’ – or the chance a consumer fails to qualify/earn rewards.

There are many examples of this, but Starbucks is perhaps the most egregious. It has been a multi-step, multi-year process which is slowly eroded away value from their starts program.

Example 1: Several years ago, you used to be able to redeem your birthday drink perk anytime in your birthday month. Then they changed it to the week of your birthday. And now it is only available literally on your birthday- no grace period.

Example 2: Over the same time Starbucks has increased the cost, and therefore decreased the value of the Stars, reward points, which you earn through spending. They didn’t adjust historical balances, so hard-earned points simply changed value overnight.

Example 3: Star expiration is another small feature that was added – 1 year from the date you earned them. The only reason to do this is to pull more value away from a consumer who might be saving up. The whole point is to encourage frequent visits and spending and to eliminate anything ‘owed’ to lower-value or less frequent customers.

Example 4: There used to be other ways to earn Stars – codes on retail bags of coffee. This was from when they first started selling beans at non-Starbucks stores. They’ve phased those out and now at-home stars are a thing of the past.

Example 5: They now offer Double star days – or even triple! However, these used to be automatic for anybody who visited. They have now changed it so that you have to opt in or else you don’t get the benefit. It’s about as pure of a “how can we get less consumers to redeem” play as you can get.

Example 6: Starbucks runs sweepstakes and games where they give away things (usually Stars) for playing. Typically, you earn plays via purchases, but you can also (by law) register without a purchase. Starbucks has slowly made these entries harder as well – going from requiring a simple entry form, to requiring answers to a multiple-choice question, to having several questions, to – most recently – requiring you to watch a 30-second Starbucks ad. 

Update: November 2023 – The Starbucks for Life game is back, and they have now increased the required video view length to 2 minutes and 18 seconds. Additionally the questions went from multiple choice to open ended, such as “What does the ethical sourcing stamp mean?”. Check back next year for how else they are building walls.

I’m sure there are other’s I’m missing – the list of ways to take advantage of loyalty is nearly endless.

But this is not just a move that has been happening for large corporate brands. Unfortunately, it has also started infecting smaller businesses but that’s a post for a different time.

Now, I’d be remiss if I didn’t acknowledge that none of these businesses must have a loyalty program. However, the decision to be loyal to a program or a store is at least partially dependent on the value that store brings to me as a consumer. And the changing of the value of those rewards, slowly reducing their value, is a particularly insidious move by the company.

I believe this hit particularly hard because, unlike typical ‘shrinkflation’ items where I can just buy a different brand, loyalty points have no such fungibility. The points are captive, with little recourse for me as an individual.

I can take business elsewhere in the future, which I do, but that the earned value is eroded is completely out of my control. And this change, this decrease of consumer value without consumer consent, is an unfortunate development to witness.

So, I encourage you to realize that while loyalty can pay, it might pay less than you think. Or even less than what was promised.

This has been another Thought From the Cake Scraps. 

Data ownership is a very hot topic these days, and for good reason. The value is in the data. Big data. But it’s important to note that data accessibility is also quite important. Unfortunately, I’ve seen many companies move away from data accessibility – sometimes with the intent to lock the user in and sometimes with an intent which is unclear. Here are two recent examples.

Amazon, for some time now, stopped sending order receipts in their order confirmation. This means that in order to find a prior item purchased you must search your order history on Amazon’s website or app. While this seems like no big deal, imagine if all companies took a similar approach.

Take the example of needing to buy replacement parts for a tent. You probably threw away any documentation, and want to find the model you bought. In the days of ‘old’ you could simply search your email for “tent” and your results would probably be a short list. But if all companies did what Amazon now does – send order confirmations, with no receipt or detail – your search would return no results. Then you have to go hunting to on all the websites you may have bought it from – Amazon? REI? Dick’s Sporting Goods? Walmart?

There’s no good (consumer friendly) reason for Amazon not to include an order receipt with a list of items purchased. Nearly all other companies do this and Amazon used to do it too!

The second example is in the Finance sector. Everybody wants you to go paperless. Great! I can access all of my account history online then, right?

Wrong.

For inexplicable reasons you can only access a very limited period of time online. Want to see what your balance was 5 years ago? Not available. Sure, there is often not a reason to look back in time that far. However, the cost of storing and serving that data must me cheaper than sending out paper statements. Or, perhaps, on the whole it isn’t. I simply don’t understand why so many other companies can show me my order history back 10+ years (or more!) and most banks offer 18 months or 2 years at the most! When I was working for Lands’ End in the late 2000’s order history online was always one of the top requested features (they have since implemented this, obviously!).

These are small, subtle changes in data accessibility but they do matter. Each step away from data accessibility matters and we should be aware when that access is being whittled away.

This has been a thought from The Cake Scraps.

In negotiations, the goal is often to get the most value while giving the least. At first glance this seems like a zero sum proposition – anything one party gives up the other gets. However, the trick is in framing these choices in terms of value. When you begin thinking in terms of value, all parties can come out ahead.

Consider a simple example of clothes that no longer fit. Nostalgia aside, these items have little value to the owner since they do not fit. Let’s call it zero value for simplicity. If someone else needs those clothes, they are willing to pay for it. If the person who needs the clothing values a pair of pants at $5 and only has to give the owner $1 at a garage sale, both people are better off. The buyer got something they value at $5 for just $1 and the seller got rid of something valued at $0 and received $1 for it.

When you start thinking about the world from this perspective, you start seeing these dynamics all over the place. One of the most prevalent places where you see this in business is rewards programs. Often times the value to the company of fulfilling the rewards is negligible while the value to the consumer is quite high. 

Consider airline tickets – frequent flyers can redeem miles for tickets. This is a perfect example where the cost to the airline is often almost zero. Unless literally every single seat was sold on that flight, there is almost no additional cost to have a reward ticket occupy a seat. However, from a consumer’s perspective it is great since the reward ticket likely saved them hundreds of dollars.

Sometimes companies get the asymmetry wrong – this leads to consumers thinking the rewards programs are not worthwhile. It could be because the rewards are unattractive or it could be that the cost of those rewards is disproportionate to the perceived value. 

However, the item that has struck a chord with me recently is somewhere in between. When I have a bad experience, I have noticed a distinct trend of companies using credits rather than refunds to compensate. To me, this is quite frustrating – I must now use the service again to actually get the value. It has happened on ride sharing trips where the driver cancels my trip or when a delivery service delivers the wrong items. 

In these cases, where the company has messed up, it feels a bit disingenuous to offer a credit rather than refund what I paid. Worse still is what GrubHub does, which I now try to avoid. When a wrong delivery was made they provided multiple coupon codes (rather than a single code or account credit) with short duration expiration dates (~2 weeks). Since only one promo code is allowed at a time, giving me promo codes not only prevented me from using other promotions they had running, but forced me to make 3 different purchases if I wanted to redeem the full value of the credit.

So yes, there is great opportunity to use value asymmetry to everyone’s benefit, but it should also be used wisely to avoid unnecessary frustration. 

This has been a Thought from the Cake Scraps.  

Dog agility is an activity which I would have never guessed that I would enjoy. I mean, it’s a rather specific thing to do with your dog, takes a lot of space, a lot of time, and isn’t really all that applicable to everyday life – either for the human or for the dog. It’s not something I would have sought out had a local dog “life center” not opened up and offered the course just at the time we were competing the work to certify our dog as a therapy dog with Therapy Dog International.

Since the timing was right, we decided to give it a shot. If we didn’t love it, we could simply stop going and that would be that. We would find another activity to entertain ourselves. But, after a few weeks, I started really enjoying it. In fact, not only did I enjoy it, it was clear that our dog did as well. That was almost 1.5 years ago now and we’ve been doing some form of agility practice most weeks since.

The thing is, it’s not an inexpensive hobby, so what’s the draw? Why is it worth the time and effort to go do agility each week? Why did I go to agility the same day my newborn son came home from the hospital? I’ve reflected on this, often between runs at the agility center, over the last few months. I think I finally have a few answers.

Mental escape. When my dog and I are out on the course, there is nothing else on my mind. There can’t be. He is counting on me to guide him and I am focused on him to make sure I’m seeing what he’s doing, how he’s moving, and where he’s going so I can give him the right cues at the right time in the right location. Only by fully being present in that moment can I help him be successful in running the course. In fact, I find that our best runs are when I can stand in the middle of the course with my eyes closed and replay the course in my head. At that moment, it’s the only thing I’m thinking about.

Problem solving. While it is an escape from other life complexities cluttering my brain, running a good course takes a lot of mental focus. Once my dog had the basics down for the various obstacles, the session is much more about where am I going to be. How do I want to position myself between obstacles? When should I be signaling to my dog? How do I transition smoothly between point A and point B so that we don’t lose any speed? What body language am I going to use to signal the turn direction or a speed change? All of these things and more are a fun opportunity to do a little problem solving. It’s all very low risk and it’s a bit of a time trial against yourself.

Mentally stimulating. An unexpected result of doing agility is that I get to see just how smart and engaged my dog is. He is very literal – often if I mess up a physical cue but say the correct verbal cue, he takes action on the verbal cue. It is so clear that he’s not simply running around the course to where I’m pointing, but that he is very engaged with me just as I am with him. If I throw a late verbal cue, I can see him adjust his stride, make a tight cut, or quickly collect himself before or after a jump. Sometimes it’s frustrating because he’ll try so hard to make the cut that I get worried about if he’ll land the jump safely or have a proper approach to an A-frame or dog-walk obstacle. Still, seeing how focused he is (and happy while doing so!) reminds me of just how much fun it is for both of us.

Physically exciting. To be fair, even in longer courses I only have to do a fraction of the running that my dog does. Sure, I do have to do a little jogging, but as we continue to form a bond, and I can cue at greater distances, the amount I run is less and less. My dog, however, enjoys running around at top speed. A straight course that resembles a loop is one of his favorite types because it’s a pure speed game. I think that it is the combination of mental engagement and physical exertion that gives him so much pleasure. Therapy dog training provided a great avenue for mental exercise but isn’t physically demanding. Similarly, play-care or a Flyball course take a lot physically but (I’d argue) is not very mentally engaging. Agility provides the perfect pairing of the two.

The final thing I’ll say about agility is that I often get asked if we’ll compete. It’s a good question because we’re certainly good enough that we’d do alright, particularly in any sort of amateur trials. The thing is, as I think about all the things above, I’m not sure what we’d gain from it. There is no part of me that wants to train to be some sort of national or regional champion. While a victory could be cool, I don’t see the need to introduce the pressure of competition to something that is currently a source of pure fun and entertainment. It is not the competitive part of this that we’re interested in, rather it is the bond we’re forming as we problem solve the course together.

So for now we’re going to keep going to our weekly class, running around in a large (although probably too small) arena, where we can have fun just doing our thing. And I’m not sure there’s anything better than that for us.

This has been a Thought from the Cake Scraps.

Giving people options is one of those seemingly straightforward ideas that is fraught with an inordinate amount of traps that would rival an Indiana Jones movie.  You see, when the world of online shopping was just in its infancy, a real-world study on choice was released.  The findings, summarized here, essentially show that while a huge selection can draw more attention, the actual sales of a smaller selection can be higher (due to a higher conversion rate).

That experiment, and the hypothesis it created – that more choice isn’t good – has had a meaningful impact in the retail world around us. For example, how many times have you heard that companies are simplifying their menu? This can mean everything from reduced items on the menu – something McDonalds has talked a lot about – to ingredients customers “can understand“, to simplified pricing like Subway. All of these companies want to close the sale, and do it as quickly as possible.

I can see the logic of their actions. Sure, it’s pretty annoying when your favorite item is no longer on the menu even if all the ingredients are still behind the counter. And when you ask people if they want optionality, of course they say yes.

But, for me, I have to say that I think certain companies are missing the boat on this. Specifically, I’m thinking about the entertainment space. And even more specifically about online rentals. You see, from my experience, the online selection of movies included in Netflix or Prime can be pretty terrible. No wonder Netflix started making their own content. When I am browsing their online catalogs it feels like I have to search through some pretty terrible stuff to find the few good movies. If only their were data-oriented companies who could help me programmatically figure out what I might like to watch…

Oh, right, that’s basically what those companies are built on. I’m sure they do a great job with it. They know how to limit the selection the the categories that I might find most relevant. I get that Netflix doesn’t want me to see all the crazy categories they have (however you can search for them). What irritates me is that in these buckets of recommended movies (or apps, etc.) the companies put a finite amount of options.

When I see a section called “Recommended for you” I want to be able to scroll for days and days. Instead, it seems like they have some sort of random cap and I can reach the end of the list. Same thing for “Top rated movies”. The list comes to an end. Sorry guys, but there is absolutely no reason to do this. Or, if there is, could you make some sort of link so I can keep on scrolling. By definition you’ve scored (or viewers have rated) all the movies considered. There is, in fact, a next best fit or next highest rated movie beyond the end of that list.

My ask to these companies is basic. Allow limits to be removed on what is, at it’s core, a browsing activity. It should feel like the selection is limitless. Instead, if feels like it only serves to highlight the terrible, and overly finite, selection these services contain.

This has been a Thought from the Cake Scraps.

What is it that defines a vacation? It’s kind of an interesting question.

For those of us currently working, we use vacation days to spend a day not working. But there are many who are retired and I’m not sure they would consider each day a vacation. Perhaps it is the act of going somewhere for more than a day, ideally not on a day you would typically work. Then again, people take day-vacations so it cannot simply be duration either.

Then I thought that it could be to go see something or do something. That seems like a characteristic that would often apply to something called a vacation. But, some people take a day of vacation to be at home, relax.

Ah, so that’s it then – it should be something that you’re doing to relax. If you’re taking a day of vacation to catch up on housework, attend a wedding, or something similar, your employer may consider it a vacation day but it is not a vacation for you.

And yet, one must be careful with that description because how one defines relax can be very different for people. Some people find that a return to nature as part of a multi-day hike is just what they need, while other would hate every minute of that. Others want to go and see things, packing an event into every open moment. Others would rather sit and relax, be it at home or at a destination of some kind. And still others would use it as a time to reconnect with themselves – taking a break from the ever-present connection to technology and the outside world – by taking time to reflect, or as a friend of mine just did, spending 10 days in silence, meditating, as part of a Vipassana Meditation.

I believe that it is probably best if one samples from the above ways to enjoy a vacation. A vacation where there is little planed affords needed breaks, but may not create experiences which are very memorable. And if new memories are not created, there is little to reflect back on. One should not work simply so they can take breaks to escape it.

At the same time, if each vacation is filled with activities, many memories are created, but one might fail to create deeper connections. It is the white space between activities in which you get to know those you are sharing your time with. Get to share stories of days gone by. Whether funny, or interesting, or odd, or whatever the flavor, it is those stories that can reinforce a relationship for years to come.

And finally, it is hard to maintain any of the above without being in touch with oneself. At the end of the day, that is the person that must be happy with the life lived. It is important to reflect and understand the things which truly make yourself happy. Where do you want to spend more time going forward, and where do you want to spend less? Because while life is short in many ways, it is also very long in others. It’s a journey that deserves some good company, and you are with yourself every step of the way.

Go ahead and take the vacation which is right for you.

This has been a Thought From the Cake Scraps.

I am the type of person who loves to do projects. For whatever reason it brings me a lot of joy to have small tasks that I can complete. Sometimes that is something as simple as finally getting around to folding laundry and sometimes it is a bit more involved.

Over the last few weekends I’ve had a chance to do two of those types of projects. Neither of them took more than an hour or so, but they were projects out of the ordinary. That’s the part that made it special; it is the fact that it was something new and different. The first was fairly straightforward. It was washing down the windows from the outside. It was one of those things that was bugging me for a bit. Every time I looked outside there was a thing layer of dirt to see through first. Sometimes it’s easy to look through, and other times the sun catches it just right and it looks terrible.

Well, I went to battle. My weapon of choice was a hose with a nifty window washing attachment. I had never used it before, but it worked wonders. First I hosed down the major chunks of dirt (and there were some pretty gross ones) and then you flick a switch and the suds hits the window. A quick rinse, and you have a beautiful, clean, window.

The second project I took on was a bit more involved. I replaced the deteriorating brick flowerbed edgers with brand new ones! To do that, I had to dig up all the old edgers, or what was left of them, trench out a new path that was actually a semi-circle, and then lay down the new pavers. With a little bit of adjusting and leveling, they went in without a problem. The flower bed looks a lot better and I had fun doing it.

Now, neither of these things are all that exciting. I wasn’t saving the earth, and I wasn’t dropping some interesting new knowledge. What compelled me to write about it was that it was very fulfilling. I think that the fun part for me was doing something with my hands. Creating something. Having a physical product to show for my work (other than a bunch of printouts).

My advice is to not lose sight of these sort of things. Especially in a big city, with little land around, it’s easy to get in a routine where everything is just taken care of for you. Some days, that’s exactly what I want. Yet, there are other times where it feels good to connect with something physical.

So, take a step back from what you’re doing. Go find a project in the physical world. You just might be surprised at how much you enjoy it.

This has been a Thought from the Cake Scraps.

It’s hard to believe that it’s been a full year since I donned a robe and cap to ceremonially celebrate my graduation from my MBA program at Cornell. It has been an amazing year since my graduation, even if the year passed quickly, as they always seem to.

Originally Posted: 6/12/2014 9:18 AM  

I believe there are probably enough posts about how great an MBA is, how many friends people made, how the experience changed a life, or how it might be the best two years of your life. For my part, I can say all of that is true, but I thought it might be interesting to close my time blogging by saying some of the things which surprised me.

To incoming first-years:

1)      MBA recruiting is its own beast; no matter how well you think you prepared to apply to school, or how polished you were for your job before it, you need to be trained in the ways of MBA recruiting. Pay attention to your club leadership and you’ll be fine.

2)      Your courses, immersion, clubs, and most other things don’t matter all that much for interviews. Don’t get me wrong: they are table stakes and they matter for success in your internship. The thing is that you’ll only have taken core courses and attended club meetings by the time you interview. You won’t have had job-specific classes nor done any club leadership roles. Hopefully this reinforces point #1 about MBA recruiting being its own beast.

3)      It is surprising just how much change you can impart on the school in the relatively short time you’re part of the student body. With the whole school turning over every 2 years the only thing known is what one class learns from the class above them. If you teach the class below you something else, you’ve just changed the way things are done going forward.

4)      There are lots of great places to study outside of Sage (you are at an Ivy after all). It might suck when you can’t find a room in Sage, but there are amazing buildings within a 5 minute walk. Go find them instead of being frustrated with the lack of a room.

To returning 2^nd year students:

1)      Where did all the free food go? Seriously. First year students don’t know how good they have it.

2)      Your default question, when you don’t know what else to say, changes by semester of business school:

1. Semester 1: What are you hoping to do?
2. Semester 2: Where are you going for the summer?
3. Semester 3: Where are you going full time?
4. Semester 4: When are you leaving?

3)      It is very difficult to stay involved. I found that it wasn’t because I didn’t care (far from it) but that you’re just not at Sage as often. That means all of the stuff that goes on becomes an extra trip into school rather than another meeting where you’re just moving from breakout room to breakout room.

4)      There are lots of ‘last events’ and you’re never sure which one is actually the one where you won’t see somebody again for a very long time, if ever.

5)      Johnson’s graduation is better coordinated than any other program I talked to. For as smart as we are, it sure is nice the administration makes it so we don’t have to think on our big day.

The End; The Beginning

I’ll close by saying thank-you. Thanks to Peter Krakow for trusting me with a platform for my thoughts. Thanks to my classmates for supporting me and reading my posts. Thanks to the many readers who attended Johnson previously. Thanks to those readers who may (or may not) attend Johnson in the future. It’s been my pleasure to share my journey with you.

What a great 2 years. Time to move on and tackle whatever comes next.

Part of a series of my re-postings of my blog for the “Life @ Johnson” section of the Samuel Curtis Johnson Graduate School of Management at Cornell University MBA program website.