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April 24, 2012

Dynamics Inc. at Demo 2012: Reinventing the Credit Card as an App Platform

By Rob Enderle, President and Principal Analyst, Enderle Group

The credit card as an app platform, are you kidding me? That was my initial thought as Jeff Mullen, who is the founder and CEO of Dynamics Inc., got up on the state to talk about his supposedly revolutionary charge card idea at Demo 2012 last week. Revolutionary, right…except, as I listened to the talk, damned if I didn’t conclude this was revolutionary and that he actually may have something here.  

I’ve been doing some work on gamification as a behavior modification tool and part of what credit card incentive programs are supposed to do is modify behavior but most suck. For instance, and Jeff used this as an example, when you are flying are you really thinking you want to get miles so you can go on more planes or are you hoping to survive until the damn thing lands and you can get off?  

I watched the movie “Up in the Air” last year with George Clooney, who lives on frequent flyer perks and, trust me, after seeing that movie I never wanted to fly or stay in a hotel again.   The travel awards you are earning, if you travel massively, is like being promised a whipping if you don’t whimper when you are being whipped.  

What Dynamics has created is a credit card with flexible awards and the apps manage those awards.  

The Credit Card as an App Platform

The apps manage the awards and you pick whatever turns you on. If you live on World of Warcraft for instance your points could go to WOW Gold, unique character items or upgrades, or account credit.   If you are financially motivated they could apply to a recurring lottery like offering which would have a payout frequency and price level defined by how many people liked that app, you just figure out what you want to earn and the app handles that.

Examples of actual apps included Dark Horse comics who developed an app where you would earn pages in a comic book you could view on-line and, once you got the entire book, they’d send a hard copy. Another example was Upper Deck trading cards, and your activity works you up a hierarchy of ever rarer cards so you can build your collection as you shop. The final example was Toys for Tots, where the money would go to helping out children. 

In short, you create the incentives that excite you from lottery-like winnings to collectable cards to charitable giving. You could imagine working towards a car or some other high ticket item but the point is that you are working towards something that gets you excited rather than the more typical opportunity of fixed reward. 

User Experience

It couldn’t be easier as a user that you’d simply log into the platform and select the app that you want tied to your card and you can pretty much change your selection at any time. The app then handles the collection of points, the award itself, and telling you how far you have gone against the goal the award represents.  

This is behavior modification 101 – hold something the subject wants badly and they will likely do almost anything to get it. That should shift businesses away from more traditional award cards over time and result in a relatively rapid rise of use for this new card. One caveat is that to be successful, people actually have to know the card exists and see what Dynamics is offering as something they want to have.   If they don’t want the card, then this will belly flop and this program is different enough that most may find it unattractive because it is different. Fixing that suggests marketing will be a requirement once this service launches so it is accurately positioned in the market. 

Wrapping Up: Brilliant (News - Alert) Idea with Broader Implications

In the end, I saw this Dynamics solution as brilliant but I also realized that because it is so different, people may be afraid of it. Dynamics will need to effectively market this so that customers see what a wonderful tool this will be; otherwise they’ll likely follow a list of other under-marketed startups into the digital sunset. Unfortunately we don’t live in a “build it and they will come” world. But I found the offer compelling and I expect others will as well if they are presented with it properly. 

Now here is a deep thought – if you can reinvent the credit card as a cloud-based app platform couldn’t you do the same with a lot of other things? For instance, what if employee incentives or perks were handled in this way or CRM programs came with a plugins that would reward customers automatically for certain thresholds of spending or loyalty? I think the folks at Dynamics have discovered something far more useful than just a credit card tool, they’ve discovered a flexible rewards program and those can be used from sports to line workers very effectively.   

Edited by Jennifer Russell
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