Track & Hack

Jan
18

#5 MS Tracking: Lost Money Data

This is a series of posts detailing data points and experiments to eliminate the risk of losing money while manufacturing spend for cash back and travel rewards.  The result of these experiments will be a tracking tool for manufactured spend from credit card purchase to liquidation (of cash equivalents or goods).

The last post covered a root cause analysis to solve my $3,300 problem of lost MSing money.  I started with my own data points as example while we gather more to further test our theory.  My goal was gather data to find statistical correlation between the following attributes:
  1. At what level of gift card, money order purchasing does our risk increase?
  2. At what level of MSing does our risk increase?
  3. What are the chances we’re losing money at each level?
  4. What $ or % range are we losing?
  5. What are the most common variables that increase our risk?  Are there contingency plans?
  6. Capture more case studies to illustrate the full list of variables or risk we exposure ourselves to so we can create contingency plans

 

The contest is still open so keep adding your data points!  The deadline is January 31 so only 13 days left!! Get your chance to win the MS tracker for life before it’s over.  Here are the data points we have so far from 13 responses.

 

Q1

Q2

Q3

Q6

There are two more questions in the survey but they’re open-ended.  I’ll need to scrub and find any trends before sharing in the next post.  This is just data now.  I’m sure you’re already drawing your own conclusions but I’ll save mine for the next post.

Feel free to add yours below!

This is a great start!  Since we’re all doing the same thing process, we’re all coming across the same breakdowns.  Which means we’re most likely implementing the same fixes.  If we can gather data at all volumes and complexities of MSing we can find out where the breaking points are, which fixes didn’t/did work!

 

What do you think so far?

 

What Can You Expect Next?

 

  • Post #1 – Why you’re losing money manufacturing spend
  • Post #2 – Process vs tool analysis:  Why you’re focusing on the wrong one
  • Post #3 – Manufactured Spend Tracking: Problem Statement
  • Post #4 – Manufactured Spend Tracking: Root Cause Analysis
  • Post #5 – Manufactured Spend Tracking: Contest Data (In Progress) (current post)
  • Gather data to find statistical correlation between the following attributes:
    • At what level of gift card, money order purchasing does our risk increase?
    • At what level of MSing does our risk increase?
    • What are the chances we’re losing money at each level?
    • What $ or % range are we losing?
    • What are the most common variables that increase our risk?  Are there contingency plans?
    • Capture more case studies to illustrate the full list of variables or risk we exposure ourselves to so we can create contingency plans
  • Review and analysis about why these 20 tools don’t work for the MSing or reselling process:
    1. gift card trackers
    2. smart cards
    3. various other tools – spreadsheets, memory, backpacks
  • What MSers and small business owners have in common
  • What MSers and agile software development have in common
  • Put solution through the following stress tests:
    1. Amazon FBA reselling
    2. GC reselling
    3. MSing ranging from $30k – $500k
  • Ongoing posts – Adjust prototype and develop final solution for MSing based on community feedback and MSing experiments

 

Add Your Data – WIN A MS TRACKER FOR LIFE

Jan
15

#4 MS Tracking: Root Cause Analysis

This is a series of posts detailing data points and experiments to eliminate the risk of losing money while manufacturing spend for cash back and travel rewards.  The result of these experiments will be a tracking tool for manufactured spend from credit card purchase to liquidation (of cash equivalents or goods).

The last post defined our problem statement:
My ideal state is that I have $0 lost in tracking process.  My current state is year to date, I’ve lost track of $3300 somewhere in my tracking process at various points in time.  This means I have a problem which I can quantify as $3300 (ideal state minus current state).
Since we’re still in the process of gathering data, I stated with my own data points as an example.  I’ll share the data points we’re getting as a whole community in later posts to further test this theory.  Many of you are familiar with root cause analysis and it’s tools.  If you aren’t the simplest way to explain it is below:

rca

 

We’re going to systematically break this problem down using one of my favorite RCA tools: the 5 why’s. In the last post, we did some prework by PAreto-ing the $3,300 problem based on our problem statement.

 

I made you a pie! (chart)...

 

$1000 Costco Gift Card

How did I find it?

  • While packing up a cabinet drawer.

Why did I lose this?

  • I didn’t have a spreadsheet tracking this.
    • Why?
      • I keep them in my wallet or my husband keeps in his to spend over time.
        • Why?
          • I purchased an additional $1k beyond our “normal” prepaid spend.
            • Why?
              • I had increased my MSing volume and signed up for more cards than usual.

$300 Visa Gift Card & $500 Visa Gift Card

How did I find it?

  • While going through my tuperware (oh yeah) of used gift cards reconciling gift cards to receipts.

Why did I lose this?

  • I mixed up cards while loading at KATE.
    • Why?
      • I keep them in separate sides of my wallet moving used cards over and wrapping in the receipt.
        • Why?
          • I started loading more and more at KATE and didn’t think of a better way to keep track of cards.

$1500 e-Visa Gift Card

How did I find it?

  • While cleaning out my email inbox.

Why did I lose this?

  • I didn’t have a spreadsheet tracking this.
    • Why?
      • I manually add these to the first version of my MS tracking app but I forgot
        • Why?
          • I purchased an additional $1.5k beyond my normal volume.
            • Why?
              • I was taking advantage of an ending deal.

 

What Did I Learn?

 

My initial hypothesis of increasing volume and complexity was spot on.   I have no process to ensure I log everything.  Because this is manual it just takes just one distraction to throw me off the tracks.  I can lose temporarily or permanently anywhere from $800 – $3,800 and not even notice it.

I say $3,800 instead of $3,300 because I was floating a $500 gift card for resale and didn’t notice that either.  This makes sense because that’s less than 10% of what I’m MSing.  The last important learning was the $1,000 gift card was before I started MSing.

I normally track this in my Mint account with the initial purchase and then allocate out as I spend.   I missed this because it somehow got hidden previous month.  I wouldn’t have noticed this lost gift card it until I did my annual budget to actual expense review for my personal spending (I’m not weird. I’m Mustachian).

 

How much money is 10% of what you’re MSing?

 

What Can You Expect Next?

 

  • Post #1 – Why you’re losing money manufacturing spend
  • Post #2 – Process vs tool analysis:  Why you’re focusing on the wrong one
  • Post #3 – Manufactured Spend Tracking: Problem Statement 
  • Post #4 – MS Tracking: Root Cause Analysis (current post)
  • Gather data to find statistical correlation between the following attributes:
    • At what level of gift card, money order purchasing does our risk increase?
    • At what level of MSing does our risk increase?
    • What are the chances we’re losing money at each level?
    • What $ or % range are we losing?
    • What are the most common variables that increase our risk?  Are there contingency plans?
    • Capture more case studies to illustrate the full list of variables or risk we exposure ourselves to so we can create contingency plans
  • Review and analysis about why these 20 tools don’t work for the MSing or reselling process:
    1. gift card trackers
    2. smart cards
    3. various other tools – spreadsheets, memory, backpacks
  • What MSers and small business owners have in common
  • What MSers and agile software development have in common
  • Put solution through the following stress tests:
    1. Amazon FBA reselling
    2. GC reselling
    3. MSing ranging from $30k – $500k
  • Ongoing posts – Adjust prototype and develop final solution for MSing based on community feedback and MSing experiments

 

Add Your Data – WIN A MS TRACKER FOR LIFE

Jan
11

#3 Manufactured Spend Tracking: Problem Statement

This is a series of posts detailing data points and experiments to eliminate the risk of losing money while manufacturing spend for cash back and travel rewards.  The result of these experiments will be a tracking tool for manufactured spend from credit card purchase to liquidation (of cash equivalents or goods).

 

We left off in the last post talking about the difference between a process and tool.  To test the theory that we should be process focused instead of tool focused when solving the problem of tracking manufactured spend, let’s run through 2 scenarios:

 

Scenario 1 – a tool focused conversation about gift card reselling:

 

You:  I have a lot of gift cards and I need a way to track them.
Me:  I have this manual gift card tracking app.  Just enter in all the details of each card!
You:  Well actually I buy so many gift cards each month copying and pasting is painful.
Me:  Oh ok.  Use this magnetic stripe card reader to get the card number into your spreadsheet faster.
You:  That doesn’t me with help the electronic ones.
Me:  Oh ok.  This reads your email and will enter in the e-cards.
You:  Great but that doesn’t tell me the balance on each card!
Me:  Oh ok. Here’s another tool that will check the balance and update your spreadsheet.  Also this was a super conversation – let’s be best friends!

 

Scenario 2 – process focused conversation

 

You: At a high level, I do this every time I buy a gift card:
1. I watch for gift card deals err day every day.
2. Use a shopping portal to get cash back or buy in-store.
4. Update spreadsheet
5. Sell them online.
6. Update spreadsheet
7. Check for cash back payout
8. Update spreadsheet
9. File all gift cards and receipt
Me:  Based on your current process you need a tool:
1. designed for a high volume transactions, that’s simple and quick to get in an out of.
2. to minimize your repetitive tasks – most likely data entry – as much as possible.
3. allows for multiple transaction types or gift card sources
4. allows for standardization like the ability to create templates (i.e. limiting repetitive administrative tasks).
5. Built-in audit process for cost of goods sold (e.g. cash portal, shipping, etc) and sales so you don’t lose any profit margin
6. Cloud based document archive system.
You:  Yes!  Develop this for me please!  Here’s all my cash.

 

Hopefully the scenarios came across as a lighthearted way to show that focusing on the process to define our requirements is a more efficient and effective way of picking our tool(s).  Tools should complement and support your process.  If you build your process around existing tools, you’ll sub-optimize.

 

Your process will be built with hidden inefficiencies causing slowness, errors and increased risk of losing money.  Now that we know this is a process problem we can brainstorm some hypotheses around why our processes are breaking.  Because we’re always either increasing the complexity or volume of MSing, we’re putting greater demand and stress on our tracking process.

 

We’re demanding more goes through the process (i.e. throughput) and we want the speed and accuracy to stay consistent.  We have these expectations but we aren’t doing anything to strengthen the process to handle the increased stress.  There are many tools used in lean/process improvement to strengthen processes but they all use PDCA (plan, do, check, act).
Source: www.chartitnow.com

Source: www.chartitnow.com

 

PLAN (PDCA)

 

Like any good lean/process improvement person, I’m going to set up a problem by establishing quantifiable data points.  Why?  Because data doesn’t lie!  Because I’m still gathering data from our community, I’ve set up my own data points as a starting point. If you have 5 minutes you can add your data and get a chance to win a free lifetime subscription to the MS tracking tool!

 

Problem Background

I tracked my credit card sign up bonuses via memory.  In April 2015, I lost track of 3 credit card minimum spend bonuses, due date and my required amounts.  I created a spreadsheet to sign up bonuses.

 

Two months later, my company switched to a mandatory corporate card so I wasn’t able to use my corporate travel expense.  With these variables changing, I added complexity to my travel hacking process by manufacturing spend.

 

Within 30 days I manufactured spend (MSed) from $0 to $5k using Redbird as my liquidation method and purchasing Visa gift cards (vgcs) in store.  The next month I increased my MS volume from $5k to $15k using the same method above but adding 2 Redbirds and purchasing vgcs online.  Currently I do ~$30k per month using One VIP Serves, money orders (MOs), Amazon FBA and bill paying for others.  Let’s simplify!

 

Problem Statement

We want to take our qualitative statements to quantitative statements.  By doing this we accomplish two things –
  1. if we can get our problem into quantifiable data then we can study it by gathering more data points.
  2. we can create actionable metrics or KPIs to show that we’re solving or problem

 

Qualitative:  The beginning and end points of my MSing process is from using my credit card to buy cash equivalents or real goods to liquidated cash available to pay off my credit card.  Whether buying vgcs, MOs, paying bills for others or buying inventory to sell via Amazon FBA, I don’t know where my money is at all points in the process while manufacturing spend.  Why is this a problem?  If i don’t know where my cash is at all times then there’s a chance I’m losing it somewhere.

 

Qualitative but simplified: I want to know where my money is while MSing from using my credit card to buy cash equivalents or actual goods to liquidated cash available to pay off my credit card.  Said another way, I don’t want to lose track of any money while MSing.

 

Quantitative:  My ideal state is that I have $0 lost in tracking process.  My current state is year to date, I’ve lost track of $3300 somewhere in my tracking process at various points in time.  This means I have a problem which I can quantify as $3300 (ideal state minus current state).

 

I made you a pie! (chart)...

I made you a pie! (chart)…

 

This is just one example.  I’ve heard many similar stories from other MSers who were kind enough to share with me and humble enough to value learning from their mistakes more than their own ego.  Here are just a couple:

 

Capture2

I’m sure you have your own data points similar to the ones above.  This doesn’t have to be limited to cash equivalents either!  We could easily replace the information above with goods you’re reselling via Amazon FBA.   Amazon is notorious for losing packages or breaking them.

They also don’t care much about letting you know so unless you’re viewing your inventory reports for random adjustments or auditing your inventory from inbound shipment to sold you may not notice.  Since your inventory is just MSed cash which you need to pay off your MSed debt on your credit card, you may find this a bit annoying.

Gift cards, money orders and Apple watches are just vehicles for MSing.  This means we need a tracking system that can handle CEs and inventory MSing.

What Can You Expect Next?

 

  • Post #1 – Why you’re losing money manufacturing spend
  • Post #2 – Process vs tool analysis:  Why you’re focusing on the wrong one
  • Post #3 – Manufactured Spend Tracking: Problem Statement (current post)
  • Gather data to find statistical correlation between the following attributes:
    • At what level of gift card, money order purchasing does our risk increase?
    • At what level of MSing does our risk increase?
    • What are the chances we’re losing money at each level?
    • What $ or % range are we losing?
    • What are the most common variables that increase our risk?  Are there contingency plans?
    • Capture more case studies to illustrate the full list of variables or risk we exposure ourselves to so we can create contingency plans
  • Review and analysis about why these 20 tools don’t work for the MSing or reselling process:
    1. gift card trackers
    2. smart cards
    3. various other tools – spreadsheets, memory, backpacks
  • What MSers and small business owners have in common
  • What MSers and agile software development have in common
  • Put solution through the following stress tests:
    1. Amazon FBA reselling
    2. GC reselling
    3. MSing ranging from $30k – $500k
  • Ongoing posts – Adjust prototype and develop final solution for MSing based on community feedback and MSing experiments

 

Add Your Data – WIN A MS TRACKER FOR LIFE!

 

Image Source: blog.ssqi.com

Jan
06

#2 – Manufactured Spend Tracking: Process vs Tool Analysis

This is a series of posts detailing data points and experiments to eliminate the risk of losing money while manufacturing spend for cash back and travel rewards.  The result of these experiments will be a tracking tool for manufactured spend from credit card purchase to liquidation (of cash equivalents or goods).

 

Process vs. Tool

In the last post, we talked about how we’re losing money manufacturing spend.  Regardless of how great our plans, processes or tools are – shit just happens.

  1. Redbird gets shut down,
  2. debit card payments are no longer allowed,
  3. someone drained your gift card before you did, etc

If you haven’t had a serious wench thrown into your tracking hacking life you’re either very new or very lucky.  This is a game of odds and with more volume and complexity your odds for something to go wrong, go up.

You will get bored with your level of MSing and you will up your game when the right opportunity crosses your path.  Without certainty that your process can stand up to your increased exposure to losing money – you’re just gambling.  I’m in no way advocating that we shouldn’t MS.  Like all risks we just need a plan to eliminate or mitigate it.

Many people focus on tools to solve their this tracking problem but without analyzing your process you’re stuck with a “garbage in garbage out” situation.  My hypothesis is that we’ve been tool focused in trying to solve our tracking MS problem when we should be processed focused.  So what’s the difference?

process (noun pro·cess \ˈprä-ˌses, ˈprō-, -səs\)
: a series of actions that produce something or that lead to a particular result

tool ([tool] noun)
1. an implement, 2. any instrument of manual operation. 3. anything used as a means of accomplishing a task or purpose:

In the next post I’ll run through 2 scenarios:
  • one focused on the process and
  • the other on the tool to further prove out this hypothesis.

This is just the first attempt to gather more data points.  With our data, we can draw some type of statistical conclusions.  With those stats, we can analyze our problem – tracking manufactured spend – end to end – to make sure we haven’t lost money temporarily or permanently.

 

How Do We Get More Data?

 

I created a survey to validate or invalidate these hypotheses:
  1. I believe based on my 150+ conversations that our processes start to break around a certain threshold of MSing.
  2. I believe certain MSers are more at a higher risk of losing money than others.

 

What Can You Do To Help?

If you have 5 minutes take the survey here.

You’ll be entered into a contest to win a free subscription to an MS tracking tool for LIFE!

What Can You Expect Next?

 

  • Post #1 – Why you’re losing money manufacturing spend
  • Post #2 – Process vs tool analysis:  Why you’re focusing on the wrong one (current post)
  • Gather data to find statistical correlation between the following attributes:
    • At what level of gift card, money order purchasing does our risk increase?
    • At what level of MSing does our risk increase?
    • What are the chances we’re losing money at each level?
    • What $ or % range are we losing?
    • What are the most common variables that increase our risk?  Are there contingency plans?
    • Capture more case studies to illustrate the full list of variables or risk we exposure ourselves to so we can create contingency plans
  • Review and analysis about why these 20 tools don’t work for the MSing or reselling process:
    1. gift card trackers
    2. smart cards
    3. various other tools – spreadsheets, memory, backpacks
  • What MSers and small business owners have in common
  • What MSers and agile software development have in common
  • Put solution through the following stress tests:
    1. Amazon FBA reselling
    2. GC reselling
    3. MSing ranging from $30k – $500k
  • Ongoing posts – Adjust prototype and develop final solution for MSing based on community feedback and MSing experiments

 

Add Your Data – Win an MS tracker!

Image Source: http://inspirably.com

Jan
04

Why You’re Losing Money Manufacturing Spend

 

Background

 

Manufacturing spend (MS) is when you use a credit card (or charge card) to buy a “cash equivalent”.  Cash equivalents are the second most liquid asset you can have.  Manufactured spenders (MSers) love cash equivalents because they are the vehicle that allow us to “create cash” without all the hassle of breaking federal laws.

MSers favorite cash equivalents (CE) are gift cards and money orders.  After we buy them, we liquidate the CE by depositing it in a bank or prepaid card like Serve, Bluebird, Netspend, etc.  Now use that cash to pay off the credit card charged for the CE purchase.  This is the most basic flow for MSing.

It’s definitely not the only method as some people purchase real goods or services for resale.  The ultimate definition is that you’re not using your normal personal or business spend.  You’re creating spend for the intent to accumulate cash back, travel rewards or both.  A high level process is below.

 

You can keep things nice and simple or you can make it interesting by doing one or more of the following two things:

  1. ramp up your volume – increase the dollar you’re MSing
  2. increase the complexity of your MSing

Let’s say you increase your MSing from $5k to $15k per month.  You can buy more gift cards in-store but that doesn’t always work out.  Stores can be out of stock or have purchase amount limitations.  The pro here is convenience but how are you going to liquidate that volume?  If you’re lucky your current liquidation strategy can handle $5k just as easily as it can $15k (ex: money orders).

If it can’t (ex: prepaid cards) you need to increase your MSing complexity.  You’ll sign up for more and/or different methods to liquidate.  The pro here is you’ve just diversified your liquidation risk.  The examples show we tend to create this problem for ourselves over and over again.

We do this because it’s the nature of who we are.  We’re not in this game because it’s easy – we do it because we love the challenge.  This means the second we’re comfortable with our current level we’re going to up the bar therefore increasing our risk.

 

Capture

 

Did you notice the additional flow (flow 2) above?  You just added that into your MS tracking process by buying online.  I told you things were going to get interesting!  How many of us stop to ask ourselves if we just added complexity to our process?

Not to say that we shouldn’t but if we add time (e.g. cost) did we also add benefit?  Does it outweigh the cost?  How many of us take it another level before asking if our current process or tool can support the complexity/volume?

Based on the process flows above MSers accept 2 types of risk:

  1. Pipeline risk
    1. At every step in the process flow you have to know exactly what’s in your pipeline.
      1. How much $ or how many CE’s did you just buy?
      2. How many are in the mail now?
      3. How many are activated?
      4. What’s your progress or % utilization towards your liquidation maximum (ex: $5k Bluebird/Serve maximum)?
      5. Did you liquidate enough to not incur bank or prepaid card fees? (ex: One VIP)
      6. How much money do you have in your bank or prepaid to pay off your credit card?
      7. Have you paid off the credit card or are you still floating a balance?
  2. Conversion risk
    1. Every arrow in the process flow is a conversion.
      1. You’re physically and/or transactionally transforming the CE into a more liquid asset (i.e. getting closer to pure liquid cash).
      2. Ultimately the end goal is to get yourself back to $0 on your credit card.

If you miss something in the pipe or at conversion you’ve just lost money while MSing.

If you haven’t already lost money manufacturing spend – you will.  If you haven’t lost money then you’ve at least lost track of it at some point and I hope you found it later.  If neither of these things are true, then you’re truly exceptional and I tip my hat to you.

I’ve spent 6 months talking to 150+ churners and MSers and found the less exceptional majority of us seem to fall into three categories:

  1. We’ve lost money permanently
  2. We’ve lost money temporarily (i.e. found it later)
  3. We don’t know if we’ve lost money but it’s a real possibility

No one wants to think about the possibility they’ve lost money while tracking manufactured spend.  We got into travel hacking because we love a challenge but we also love money in our bank accounts!  Like all good problems – good, bad or ugly – just because we aren’t acknowledging it doesn’t mean it’s not happening.

We should challenge ourselves to recognize that uncertainty about whether you’ve lost one $500 gift card since you started MSing means you most likely have.  This isn’t because we aren’t organized, detailed or smart people.  This, my friends, is a process problem.

What Can You Expect Next?

 

  1. Post #2 – Process vs tool analysis:  Why you’re focusing on the wrong one
  2. Gather data and hopefully find statistical correlation between the following attributes:
    • At what level of gift card, money order purchasing does our risk increase?
    • At what level of MSing does our risk increase?
    • What are the chances we’re losing money at each level?
    • What $ or % range are we losing?
    • What are the most common variables that increase our risk?  Are there contingency plans?
    • Capture more case studies to illustrate the full list of variables or risk we exposure ourselves to so we can create contingency plans
  3. Review and analysis about why these 20 tools don’t work for the MSing or reselling process:
    1. gift card trackers
    2. smart cards
    3. various other tools – spreadsheets, memory, backpacks
  4. What MSers and small business owners have in common
  5. What MSers and agile software development have in common
  6. Put solution through the following stress tests:
    1. Amazon FBA reselling
    2. GC reselling
    3. MSing ranging from $30k – $500k
  7. Ongoing posts
    1. Adjust prototype and develop final solution for MSing based on community feedback and MSing experiments

What Should You Do Now?

 

Dec
31

DATA SET #2 – Part 1: Chances of Losing a Gift Card

If you’re managing multiple prepaid accounts (Bluebird, Serve, Netspend) you’re buying gift cards to max out the monthly load limits.  The chart below shows you how many gift cards you’re buying and the amount of money that translates to.  This is just a quick glance at our exposure.  I’ll do a more in depth post on this at a later date digging in to chance and statistics.

Number of

Prepaid Accounts* 

 Gifts Cards  

 Bought 

 Money You

 Are/Aren’t Tracking 

1 120 $60,000
2 200 $120,000 
3 360 $180,000
4 480 $240,000 
5 600 $300,000

*Assuming $500 gift cards only to meet $5,000 monthly max load per account per year

Dec
31

DATA SET #1 – Lost Gift Card Cost

 

WHAT’S THE COST OF LOSING ONE GIFT CARD?

 

Gift Card Value Cost Per Month
$50 $4.17
$200 $16.67
$500  $41.67
$1,000  $83.33