A little over a year ago, HRC Advisory reported, “While numerous retailers have collected years of customer data, only 9 percent are leveraging the information in a structured, usable way.”[1] I’m not sure how much that situation has changed over the past year; but, my guess is that retailers are just creeping into the double-digit range. Farla Efros, Executive Vice President and Chief Operating Officer of HRC Advisory, explained:
“Retailers are inundated with consumer data and research, but the reality is the vast majority are not able to effectively use it. Despite the impact of fast moving competitors like Amazon, more digitally savvy consumers and a volatile economy, many retailers are still planning and managing their businesses based on traditional brick-and-mortar practices. The changing dynamics of today’s retail environment require new approaches to meet the challenges and opportunities presented by today’s consumer, and retailers need to update and integrate their organizations accordingly to avoid the lost sale.”
Oliver Jaeger (@OJaeger), Vice President of Global Marketing & Communications for e-Spirit Inc. in North America, writes, “It’s no secret that competition in online retail sales is a cutthroat business.”[2] One would think that stiff competition among retailers would encourage more of them to improve their efforts to persuade consumers to buy from them using the digital path to purchase. Jaeger observes:
“In order to be successful both now and in the future, online retailers need to determine the best ways to establish a positive, differentiated customer experience in their segment. In addition, integrating multiple channels such as the website, mobile shopping, and social media, go a long way to securing satisfied customers who can serve as brand ambassadors.”
Almost every retailer today is an “online retailer” in one way or another and retailers with brick-and-mortar stores have as much (or even more) at stake as retailers that operate strictly online. Allan Alter (@allanealter), a senior research fellow at the Accenture Institute for High Performance, believes that retailers need to adopt a new perspective on marketing and sales. He told Mary K. Pratt (@PrattWrites) that retailers should be thinking about selling consumers outcomes rather than products and/or services.[3] His remarks are reminiscent of those offered by Harvard Business School marketing professor Theodore Levitt, who famously stated, “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!” Alter believes digital path to purchase is all about transforming into an outcome economy. He explains:
“The outcome economy is a shift from competing by selling products and services to competing by selling measurable results important to the customer. It’s an economy where buyers are looking to buy an outcome and the sellers are selling a promise of an outcome. … The idea of providing what people really want is an idea that’s been around, but it’s been hard to do; it takes a lot of technology and the technology wasn’t really there in the past. You need sensors to know if the outcome is met and to measure the outcome, and you need technology and products that have the ability to deliver those outcomes. Now with the Internet of Things and the various components of that, technology has arrived on the scene. And once companies recognize they can deliver outcomes, we think it’s going to drive competition in that direction.”
If HRC is correct, and retailers are swimming in data that could help them master the digital path to purchase, what’s holding them back? Alter notes, retailers have been slow to master the digital path to purchase because, until now, technologies were not available to help. That is no longer true. In addition to the emergence of the Internet of Things (IoT), the maturation of cognitive computing offers another tool in the kit. The IoT is going to generate oceans of data and cognitive computing is going to help make sense of that data. Marketers are beginning to appreciate what the IoT could mean to them. Chuck Martin (@chuckmartin) reports, “As far as trends marketers see as having the biggest impact on them over the next few years, the Internet of Things is at the top of the list.”[4] Martin draws that conclusion from a study conducted by the Economist Intelligence Unit. The study went on to observe that customer experience is what is driving the digital path to purchase. “The customer experience is increasingly seen as a key to competitive advantage, with marketing taking the lead, according to the Economist study. A majority (75%) of marketers say they will be responsible for end-to-end experience over the customer’s lifetime within the next three to five years.”
Retailers and manufacturers are certainly aware of the tectonic shifts taking place in the business landscape as a result of digitalization. “As consumers have transitioned from television and newspaper to connected devices,” writes Assaf Henkin (@ahenkin), Senior Vice President at Amobee, “so also have the big consumer products goods brands that will spend an estimated $5 billion on digital advertising this year.”[5] “So what’s next?” Henkin asks. His answer, “Growing digital conversation and conversion across channels.” He explains that the availability of a variety of channels is “extending the influential power of social marketing and creating new opportunities for CPG brands to become a part of online and offline moments throughout the customer’s journey and to stay top of mind.”
Although we talk about “the” digital path to purchase, McKinsey & Company analysts remind us, “Ask any reasonably complex, large organization how many journeys its customers might experience and the list will quickly grow to the dozens, if not the hundreds.”[6] Trying to master hundreds of different digital paths to purchase would be daunting. Fortunately, they conclude, “Typically, a small number of core customer journeys cover about 80 percent of the customer interaction and 50 percent of the workforce. Digitizing that subset will digitize much of the business with many fewer resources.” Jaeger recommends concentrating on three things in your attempt to master the digital path to purchase. First, examine key integration points. He explains, “Creating a content-rich, targeted and easy-to-use website combined with e-commerce and mobile capabilities takes multiple layers of functionality. As much as we’d like to believe that one product tackles all needs, that’s not reality. Other applications, such as analytics, digital asset management, and social media all contribute to a robust online presence. Therefore, it’s important to understand where you have silos of information and where integration will improve the experience not only for customers, but also save time for your internal teams.”
Second, Jaeger suggests that you focus on content. “Successful e-commerce websites,” he writes, “take advantage of every possible way to educate their customers at every point in their journey, from query to purchase.” Finally, he suggests that you be pragmatic. He writes, “Build around major platforms (think e-commerce and Web content management) that have been designed from the ground up to support content and data sharing.” McKinsey analysts assert, “Digitization is a profound transformation.” Companies that make the transformation are likely to thrive in the years ahead. Companies that lag or falter likely won’t survive. Today, the consumer is king and the royal road is the digital path to purchase.
Footnotes
[1] HRC Advisory, “Ninety-one Percent of Retailers Don’t Effectively Use Consumer Data to Create Omnichannel Shopping Capability,” SupplyChainBrain, 2 October 2014.
[2] Oliver Jaeger, “How to Deliver an Excellent Customer Experience,” Multichannel Merchant, 17 August 2015.
[3] Mary K. Pratt, “The outcome economy is upon us — is your business ready?” SearchCIO, August 2015.
[4] Chuck Martin, “51% of Marketers See Internet of Things as Biggest Impact Trend,” IOT Daily, 25 August 2015.
[5] Assaf Henkin, “Cross-Channel Engagement: The Next Big Thing In CPG,” Marketing Insider: Cross-Channel, 14 September 2015.
[6] Driek Desmet, Shahar Markovitch and Christopher Paquette, “Speed and scale: Unlocking digital value in customer journeys,” Telecom, Media, and High Tech Extranet, 25 November 2015.
