Welcome to Dig In, the podcast brought to you by the minds at Dig Insights. We're interviewing some of the most inspiring brand professionals in marketing, innovation, and insights to discover the story behind the story of their most exciting innovations.
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VO
Welcome to Dig In, the podcast brought to you by Dig Insights. Each week Jess Gaedeke chats with world class brand professionals to bring you the story behind the story of some of the most breakthrough innovations, marketing tactics, and campaigns.
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Jess
Hello, everybody. Thank you for joining us on the Dig In podcast. I'm Jess Gaedeke and I'm super energized today to tap into inspiration from the financial services industry. We'll put on our economic thinking hats and learn from the very talented Michael Nevski, Director of Global Insights at Visa. Michael, I'm so happy you are here. Thanks for joining me.
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Michael
Thank you so much, Jess. I'm really excited to be here. Thank you for having me.
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Jess
Yeah, let's start with you telling our listeners a little bit about your background.
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Michael
Thank you. My background is in marketing and marketing research, client insights and product management. Currently, I work for a company, well-known payment company, and what I do on a daily basis, I research consumer mindset and put together point of view on consumer mindset in multiple markets, including the US, Canada and many others. And I also the primary and secondary research to support global economics team at Visa.
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Jess
Really big job and we're going to get into that in more depth. But first I want to just throw an impromptu question out at you. What's the last song that you sang out loud?
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Michael
Évidemment. It's actually a French song. Which was, not everybody watches that, at the Eurovision in May of this year. So and it's a very inspiring French song presented by Canadian singer so but not traditional choice but I love lots of domestic American songs as well.
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Jess
No, it's good. We have something to go look up and make sure we've all listened to. So thanks for inspiring us there. So speaking of inspiring us, tell me a story. You know, let's let's dig in. Our listeners really do crave inspiration from other leaders. And I think one of the best ways to get that inspiration is to hear stories.
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Jess
And you developed the Spending Momentum Index at Visa, which we might refer to as SMI throughout our conversation. But this Spending Momentum Index, it's really quite relevant to any brand that wants to quickly adapt to economic shifts and changes in consumer spending. And I'd love for you to tell us the story of that. How did that idea originate?
00;02;27;05 - 00;02;28;23
Jess
What inspired the SMI?
00;02;28;23 - 00;03;04;03
Michael
Thank you, that's an excellent question. Before I answer that, just to step back and give a credit to my partners in crime. So originally Spending Momentum Index, so I’ll be referring to that, to your point, going forward as SMI, was developed as a concept by two brilliant economists, my partners at Visa and they utilized the internal data to really create the index.
00;03;04;05 - 00;03;34;08
Michael
But when I joined the team almost three years ago, I was really inspired by their analysis and we're going to talk about that. So and I decided that we need to make a significant improvement to create a really demographic segmentation and make it more business applicable. And with that said, what is SMI? SMI is an index which shows you on a scale of a 100, a 100 is neutral.
00;03;34;12 - 00;04;03;16
Michael
If it drops below 100, that means people spending less. And if it goes above 100, that means people spending more on a 12 month rolling basis. So year over year basis. And this index indicates how consumers spend, let's say in the United States on credit and debit discretionary non-discretionary spend and also shows your restaurant and gas spend, certain categories spend.
00;04;03;18 - 00;04;52;18
Michael
So with that said when this index analysis was created based on internal data. So again it's not some kind of a volume payments of any kind. It's just the index showing you how consumer spending around the country I think goes by geography, I could show you state by region down to a large city or county where sample is available, but they would not tell you who is spending. Lack of demographic information was the biggest challenge, and that's what inspired me to team up with the original inventors to really create SMI premium version where we would bring demographic segmentation and understand who is spending and where are they spending it.
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Michael
So with that said, the story was that that some of the challenges were the internal. Number one, of course, are legal compliance because Visa is very, very conservative, which is good about customer data, but also lack of data availability specially on the demographics side, what's the best way we can come up with some suppliers? So we're being showed by the data demographics in what version it needs to be.
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Michael
Syndicated data, depersonalized data. So just the segments at the segment level and not the individual level because we don't have anything on our personal identifiable data by default, but also a lack of such data and reputable providers is a challenge. And you need to find out a reputable provider and build a system where you can addend the data and create the segments according to all the policies and legal laws and everything else in between.
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Michael
So those factors combined were the biggest challenges besides budgetary and technology and operational. So but that's how we proceeded or I proceeded in terms of the creating the use case, getting that information. Now, you asked me, Jess, why you were inspired. What was the impetus? Actually, the impetus was just to provide more insight to economic community as well as my company’s partners that provide that business intelligence and understand high level trends. Are consumers spending more or consumer cutting back and where are they're cutting back in what segments of the market cutting back or increasing their spend. To really understand and provide that kind of a forecasting capabilities for my team as well as support.
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Michael
our clients need to understand the macro level consumer mindset.
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Jess
So there's a lot going on there. There's a lot of different moving parts and a lot of stakeholders. There's a lot of people you had to coordinate. You had to have had some barriers or some setbacks in your effort to kind of plus up the SMI. So can you tell us about any of those challenges you might have faced?
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Michael
Yes. So number one, of course, when you join a new team, like in my case, out of my previous experience working with syndicated data for my consumer panel and providing intelligence services for consumer packaged goods and retail verticals supported me initially. But the challenge was not only building those use cases, providing those internally and through review committees and everything else, but also really build that reputation of the expert.
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Michael
Because you coming from a different industry and bring that experience and showing your internal business partners that there is a better way and how to responsibly use the data to build responsible ethical products which can still provide some market intelligence. That's number one. Number two, privacy, of course, the new privacy laws. How can we create a depersonalized, aggregated, anonymous, anonymized environment internally working with technology, and also how we can addend the data transfer data, convincing my suppliers, business partners that they can send data to our environment so we would never share anything outside of our environment.
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Michael
Those are probably three major components. But then you have I would say this is the of the lower funnel, but the upper funnel I would say once you feel that showing and educating and providing more support to your business partners on how to utilize those reports on a monthly basis and how they can support our business partners in their business and what they do.
00;08;50;18 - 00;09;09;19
Michael
That was another challenge to really get through education and supporting them to build that kind of a pipeline and support your business partners. So those are the major components. You have an internal component and you have an external component for business community to really understand and embrace the products right?
00;09;09;22 - 00;09;33;09
Jess
Yeah, That educational component is so important as with any sort of insights discipline, right? Making sure people understand how it should be used and how you got there is so critical. And in terms of how it is being used, there are so many brands that are benefiting, I'm sure, from understanding this deeper look at consumer spending. Can you share some examples of brands that have used it and what impact it's had?
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Michael
Absolutely, without naming some brands. But if we're talking about a banking services, one of the use cases, if I look at my own card data versus the total market, how my portfolio of card credit cards, for example, is doing against the overall market. So because again, we have certain rules, we don't release any individual results, clients can only look at their own data.
00;09;59;19 - 00;10;25;03
Michael
Right? So but anyway, benchmarking against the market and where there are strong sides and where are not, understanding segments, if it's a marketing purpose, who is spending in the demographics segment and what they're spending on like a basic spend, like I said, discretionary, non discretionary. So which the non discretionary could include travel and not just discretionary, groceries.
00;10;25;03 - 00;10;56;11
Michael
Right? So in appealing to those segments at the segment level, that's another one. Or even if you're trying to staff new location for hotel or restaurant and you're looking at unemployment rate, you're looking at the overall spend, the labor force availability because this product comes with economic indicators as well. So to see is it going to be hard for me to stop that vacation, you're having enough, according to my requirement, educated labor force available.
00;10;56;14 - 00;11;22;28
Michael
But also, will this allocation generate enough business for me? Right. Because do they have enough traffic that people come to this location and spend money on hospitality, spend money on travel, spend money on food, dining out and stuff like that. Those are probably three most popular cases Benchmarking, activation and also staffing, I would say, or understanding the market dynamic.
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Michael
Those are three major ones. Yep.
00;11;25;09 - 00;11;45;21
Jess
And you know, I love that example of staffing because that's good for the brand. So it's good for the hotel chains or, you know, the the airlines to understand where those shifts are happening, but that also benefits the consumer because especially in the past three years. Sure, we've all gone to a favorite place that you just can't get the same service that you once had.
00;11;45;21 - 00;11;57;29
Jess
And so I think that I like thinking about how this SMI can benefit certainly brands that are making decisions about some of those considerations, but at the end of the day, it also helps the consumers make sure that brands can meet their needs, right?
00;11;58;01 - 00;12;34;05
Michael
Yes, absolutely. And that's the unique space for us to play because we have that data, national data we can leverage for trend analysis and scale to understand those trends. Even at the National Regional level. So an understanding that helps our clients to be more efficient and real understand the dynamic, not time lag kind of scale, but really almost simultaneous, almost instant.
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Michael
Excuse me. So on a monthly basis, because you see what is happening with consumers and we tested this data and it's truly a leading indicator of what consumers are going to do for the next 6 to 9 months.
00;12;47;13 - 00;13;00;15
Jess
Yeah, that's just so powerful. And I'm sure a lot of brands are in that planning stage right now where they need to anticipate that next timeframe. So. Well, excellent. What's your biggest takeaway from this effort around SMI?
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Michael
A couple, I would say maybe a few. Yeah. Very good question. Number one, you need to really focus on what you're trying to accomplish in knowing what is your mission, Why are you there? Why are you trying to do what you're trying to do? That's number one. Never lose the sight of that. Is it about supporting your business partners is about bringing data and market intelligence insights to internally or externally or improve the processes.
00;13;30;26 - 00;13;59;20
Michael
Right? So create better, memorable experiences for your clients, for example. That's number one. Number two, having a real support and education for your business partners, not just trying to bulldoze with your agenda, saying you understand that this is what needs to happen. Really build those alliances through education, share your experience, share your knowledge, at least take the feedback, adjust accordingly.
00;13;59;20 - 00;14;29;26
Michael
It's almost like a sprint. So iterate and continue building that and create that synergy. And number three, probably understand that, predict those challenges down the road which you might incur, how you're going to act in terms of that maybe having a contingency plan, maybe understanding how long it's going to take potentially budget for that. So to overcome those challenges or regulatory issues.
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Michael
So having those components in place and you don't have to know everything, but having those milestones and key check ins absolutely a must. So and again, always put on multiple hats when you do something like that, when you innovate in marketing research, you need to do more than just conducting research. You need to be a project manager, you need to be a leader, you need to be aneducator, you need to work different hats and bring your experiences from all previous backgrounds, works, jobs you've done over different verticals to really be successful and always be willing to share all of your knowledge to support,
00;15;14;17 - 00;15;30;27
Michael
again, I cannot overemphasize that, to support your mission. So this way, when you educate people, when you share, when you provide the support, so people really see partner in you and they're willing to really create that win win situation.
00;15;31;10 - 00;15;55;01
Jess
I completely agree. And I think that the insights professional is under even more pressure than others to wear those multiple hats. You need to have the CFO mindset. You need to have the marketing component. You need to think about operations. To be most impactful, I think as an insights professional, you really do need to have that cross functional interdisciplinary approach.
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Jess
And I think that, you know, is a good segway to this next conversation about you as a leader. You are someone in your industry within the insights community. What's one of your more passionate viewpoints about the state of insights right now? I think what you just talked about is one of them, right, is just this need to be very multifaceted.
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Jess
But could you elaborate a little bit more on something you're super passionate about?
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Michael
That is an excellent question, Jess. if you look at our industry, to step back, right, just one step, what is the environment? And we put on this hat of being consumers as well, you and me, on a daily basis. Are we being bombarded by this uncertainty, inflation, geopolitical events or increased unemployment, recession? So companies act the same way they play cautious, they play caution ball, they try to slow down on their hiring or maybe keeping their resources close to their chests.
00;17;00;12 - 00;17;29;00
Michael
And we as consumers are experiencing that. And it creates that kind of uncertainty, which unfortunately, the 21st century phenomenon, but also creates that dynamism, disruption, those three factors which we'll all go through as consumers and as businesses as well. So what it dictates for us, how it translates for us as market research professionals. So why are we acting in this environment?
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Michael
We also need to deal with some innovative or new trends like artificial intelligence, right? And on top of that, we have regulatory challenges because it's getting more and more challenging. I would say, from our perspective as researchers to conduct our business, because privacy laws like GDPR getting stricter and stricter in Europe or in the United States, or is that changing?
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Michael
So how can we stay efficient, stay highly capable and deliver value for our businesses we work for as professionals. So and I think what is that passion for me, not my very often people would say it's natural curiosity knowing what's next. But to me it's also understanding the marketand trends and trying to predict what is next for us collectively as the industry, as professionals in such a dynamism, disruption, uncertainty, environment.
00;18;30;23 - 00;19;03;14
Michael
And those trends like AI how is that going to affect our work? How can apply that to be more efficient? The same time I have third party cookies being obsolete probably early next year, How is it going to be more challenging for me to utilize certain methodologies like cross-channel attributions and stuff like that? So should I be utilizing synthetic panel or should I be devising a AI to create some kind of a value for me tracking value or maybe communities, etc., etc., or maybe more tri stage research, like
00;19;03;14 - 00;19;22;08
Michael
your company is practicing where you have a quant and qual and third party data when you need it. And many other aspects of it. So that's kind of a passion of mine to really understand where are we moving because our environment constantly changing and that dynamics is very exciting to me.
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Jess
Yeah, it is exciting and sometimes it can feel daunting, at least to me, but also just the power of where we are right now. And as an industry, the moves we can make. You know, you mentioned a lot of different things that I think at Dig we're very passionate about. But on the topic of AI in particular, it's a place that we're really experimenting and already implemented a number of things, whether it's helping clients tap into AI to help generate new ideas and sort of fuel that innovation at the front end.
00;19;51;08 - 00;20;12;09
Jess
Also obvious applications within the research process to be much more efficient in how we execute research projects. But then also the back end to draw new inspired insights, right? There's just so many applications of it within our system or ecosystem and we've got some wicked smart people that are working on it, right? So it's just it's so fun.
00;20;12;09 - 00;20;29;10
Jess
And on a daily basis, the advancements that are coming that are shared internally is just incredible. So I'm with you. I think that that is going to be remain a hot topic for sure. In terms of the financial industry. What's your hot take on the future of that? Like what's what are we going to see in 2024?
00;20;29;14 - 00;21;06;10
Michael
I think we're going to see more personalization. And when you say financial industry, there are some verticals, I would say, right, wealth management versus banking versus payments. So but bottom line, younger generations want to have more of application of a AI, right? When they, if you will, when they look for products and services, especially younger people. But all generations want to see more personalization, customization, and then when they will look at the app, it needs to be really applicable to them.
00;21;06;12 - 00;21;35;03
Michael
People want to have in the financial services more memorable experiences and far less experiences. They want to have everything at their fingertips. Almost like active traders in the millisecond, and they don't want to spend too much time on that. But at the same time, I see a financial industry also supporting those cross generation values. This phenomenon of Gen Z being part of something good, part of the community contribute to society.
00;21;35;03 - 00;22;17;13
Michael
Now it's spreading all over the generations and the one of my colleagues in Kentar calling out this confrontational ------- definition. When people treat brands and companies based on their contribution to the society and I think financial sector is going to also pay attention to that, and not only on the larger scale, but also connecting to local communities, support local communities, because again, if we go back and put on our consumer hats, right, this disruption, uncertainty of 21st century, right?
00;22;17;15 - 00;22;56;21
Michael
Create this kind of a triangle where we're constantly moving from one thing to another. And that uncertainty and inflation creates that understanding of the risk, right? I'm constantly experiencing risk. How can I play that risk as a consumer and how I as a brand, connect with consumers only through building a trust, understanding consumers challenges, right, and creating those customized approaches, whether it's about health and bringing healthy ingredients or contributing to local community and supporting the movements and environment and climate change.
00;22;56;27 - 00;23;04;17
Michael
So all of that and I think financial services sector is going to embrace that even more than in 2023.
00;23;04;22 - 00;23;27;29
Jess
You know, I love that because there's something about in that tension lies the opportunity to really connect with consumers through your brand and how you show up for them, whether it is, you know, taking care of their privacy, anticipating their needs, etc.. I think that this is a great time for brands to take that opportunity. So excellent, excellent perspective on the financial industry.
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Jess
So we're going to move to the final dig. This is all about you as a consumer, and so you can feel free to take off your professional hat, the many hats you wear for a moment. So I'm going to ask you first, what's the last product or service that you bought on impulse?
00;23;41;15 - 00;24;14;18
Michael
Yeah, that's a very good question. Actually. It's not that low involvement product, but it was Cyber Monday just very recently. And because I'm a very active skier, I saw this wonderful cargo box by Thule deeply discounted at Amazon and I just snap it up because it would allow me to keep our skis on top of the car, not inside of the car, especially when you're driving back from the slopes.
00;24;16;19 - 00;24;39;29
Michael
I was surprised I was surprised myself as well, because usually stuff like that tends to the more high involvement product and you really start doing research and moving towards that. But really it was like a snap. So like a few hours sale and I got it. So and I'm glad I got it because it brought me those unique experiences now and I feel really good about going skiing nowadays.
00;24;39;29 - 00;24;55;18
Jess
That's excellent. I know exactly the car top carrier you're talking about, and we definitely believe that impulse drives decisions and that's a great example of that. How about a category or brand that you can rationalize any price point for? You just need to have it in your life.
00;24;55;20 - 00;25;25;29
Michael
That's a very good question. Just very interesting. But my answer is very, very simple. I drink a lot of a naturally carbonated water instead of still water and one of the categories which I buy at Costco, I guess I can start calling the brands, Pellegrino, Perrier, I cannot live without. And I guess my price elasticity is very inelastic. So that means as they increase prices, it's one category I cannot live without.
00;25;26;06 - 00;25;30;15
Michael
So I always would buy nature carbonated water because it's good for your body.
00;25;30;19 - 00;25;36;14
Jess
So good one. I'm sure they're happy to have you as a brand ambassador and a loyal consumer.
00;25;36;17 - 00;25;39;03
Michael
Hopefully they'll hear us.
00;25;39;05 - 00;25;53;27
Jess
Yeah hopefully, we’ll send it to them. And so that's a great brand. And we know that brands do have distinct personalities. And so this is a fun one. But what's a brand that you would like to date? And then what's a brand that you might want to actually marry long term?
00;25;53;29 - 00;26;22;20
Michael
wow, That's a very good one. I think I would date Disney because they have a family connection, because they’re fun, flamboyant, they’re different. All those personalities. Never a dull moment. It's always celebration, right? I think Disney would be the one that I would date. Marry, you need something more long term stable, exciting.
00;26;22;22 - 00;26;36;07
Michael
But also bringing joy and reliability. And to me it will be probably one of those German cars, so which I had in the past. So I would probably do that.
00;26;36;07 - 00;26;46;07
Jess
So that's hilarious. So you've got the German car with the car top carrier and your Pellegrino in the cup holder and you're good to go.
00;26;46;09 - 00;26;53;20
Michael
You created the demographic profile I even wasn't aware about myself. There you go.
00;26;53;22 - 00;27;12;07
Jess
You just self segmented, yeah. Absolutely. Well, Michael, this has been such a great conversation. Obviously, again, all of our listeners are impacted in some way by consumer spending. So I really appreciated the insights that you shared around the development of SMI Visa and it was just a pleasure to hear your perspective. So thanks very much for being here today.
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Michael
Thank you, Jess, it was so eye opening discussion and I truly enjoyed our conversation. You're a very good anchor. So and hopefully we'll do it again in the future. Thank you.
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Jess
Great. Thank you. Until next time, guys.
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VO
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