Increasing Dash adoption through better consumer incentives
The objective of this article is to start a healthy debate on how to bring better consumer incentives to the Dash ecosystem. I hope to make a fact-based analysis, persuade you of the importance of this issue, convince you we can do better, and hopefully inspire you to come up with ideas.
We will ignore exceptional scenarios (donations to Wikileaks), scenarios from distressed economies (Venezuela, Ghana), and non-democratic regions (North Korea, Iran). Let’s define these as exceptional scenarios. Instead, we will focus on the ones such as consumers paying for regular goods and services, and regions with good access to technology (USA, Canada, the Euro Zone, Japan, Australia etc). Let’s define them as common scenarios.
Comparison of incentives between payment methods
We are comparing Apple Pay, Paypal, Credit Card, Bank Transfer, Debit Card, Cash, Check and Dash. This is a high-level analysis where exceptions and minor details don’t matter.
Cryptocurrency features (low inflation, permissionless, censorship resistance, decentralization, etc) are not listed because they are not a direct consumer incentive for the specific common scenario we are analyzing.
Remember again the objective of this article: start a discussion on how to bring better consumer incentives to the Dash ecosystem. It is not important if Dash’s rank on incentive #X should be 1 instead of 3. Please let me know if you disagree with any particular row in this table, but try to keep the focus on the big picture.
Dash ranks great for merchant incentives, but poorly for consumers
The main point to take from the previous table us that it is significantly more advantageous for consumers (in common scenarios) to use Apple Pay, Paypal, and Credit Cards over Dash. Unfortunately, having more merchants accepting Dash isn’t going to move the needle on consumer preference.
Dash is great for merchants, offering important incentives such as fast settlement speed, low fees and fraud prevention. However it doesn’t do so well for consumers. Let’s take Credit Cards vs Dash as an example. Having a Dash transaction being as fast as a credit card one doesn’t bring any competitive advantage; it just levels the plane-field. Being easy to use is not a competitive advantage either because other payments are just as easy.
Competitive Advantage: a condition or circumstance that puts a company in a favorable or superior business position.
Consumers paying with Dash aren’t insured for unauthorized transactions, can’t chargeback, don’t get extended warranties, don’t earn points and so on. If we are to compete with American Express, VISA and Mastercard, we should expect them to do heavy marketing campaigns on all these competitive advantages they have over us.
Our marketing strategy for consumers could be better
Assuming Dash is in the payments industry (as said many times by Mr. Taylor), its competitors are companies such as Paypal, American Express, VISA and Mastercard.
Lets analyze the main points that we are currently marketing:
They keywords are: spend anywhere, instant, private, secure and open-source.
- Spend anywhere: not remotely true and credit cards have orders of magnitude more coverage.
- Instant: credit cards are just as fast, and not all Dash transactions are instant.
- Private: credit cards are more private because there is no risk of merchants seeing your purchase history. (I’m ignoring PrivateSend because it is not mandatory, it is a hassle to use, represents an insignificant percentage of the total volume, and it’s not available natively on mobile. The fact CC providers can see your purchase history is not an issue for the common scenario. )
- Secure: credit cards transactions are way more secure for the consumer. By federal law in the USA, consumers aren’t responsible for unauthorized transactions and chargebacks makes it easy to handle dispute with merchants.
- Open-Source: not a relevant incentive for consumers.
Unfortunately, none of these are competitive advantages for Dash. They are areas where our competitors are better than us, especially from a consumer’s point of view. I still believe those keywords should be there, but in a secondary place and not with too much emphasis. One rule-of-thumb in marketing is that if you do not have the competitive advantage on a feature, don’t do marketing over it.
For best results, separate consumer and merchant strategies
All things being equal, customers and merchants will prefer the payment method that is most advantageous for themselves. Because they have different needs, marketing has to be tailored independently. It is a mistake to advertise “low fees” to consumers because they already enjoy zero fees with all other payment methods. It is however a good strategy towards merchants, because they usually pay a high percentage to payment processors.
If you go to VISA or American Express, you’ll see a portal almost exclusively geared towards consumers. Merchants have an entirely different site with a distinctively different message:
Consumer portal, American Express. Notice the “Don’t live life without it” message geared towards consumers.
Merchant portal, American Express. Notice the very clear difference in the message (dispute handling and chargebacks).
The point of this section is that Dash would get better results by creating different advertising strategies for each group. We could follow Amex’s example and have a portal for consumers and another one for merchants.
Consumers drive adoption, not merchants.
Checks were adopted because it was easier for consumers to pay large amounts when compared to cash. Credit cards made payments more convenient for consumers in comparison to checks. Paypal made it even easier for customers by not having them type credit card numbers every time.
There is very little incentive for a consumer in our common scenario to pay using Dash, or any other crypto-currency, instead of a credit card. If we spend money on merchants to get them to accept Dash without having the proper consumer incentives first, we will not increase adoption.
My suggestions
I suggest the following strategy:
- Find Dash’s current competitive advantage. Dash has an amazing technology and I believe we already have some points we could focus on. Unfortunately I wasn’t able to come up with important ones on my own.
- Focus 80% of our resources (time, money, energy, opportunity) on creating incentives for consumers, not merchants. I am not saying we should spend 80% of the budget on this, but rather focus on consumer incentives disproportionally more.
- Separate marketing initiatives for consumers and merchants, highlighting different incentives for maximum effectiveness.
- Do marketing only over features where Dash has equal or better competitive advantage. It is wasteful to do otherwise.
- Have influencers within the Dash community encourage debates about consumer incentives on Discord, Forums and DashCentral.
- Go through each incentive and brainstorm ideas on how to improve Dash’s position. Maybe it’s something we can code, a new business entity we need to create, or a new partnership we need to seek.
I am sorry if the list is not extensive, I do not have a better solution for this problem. Hopefully this article brings the issue to the attention of the Dash community and is enough to spark debates and get some ideas going.
Final thoughts
Thank you for reading and I hope you found this article useful.
Julio.
