Emerging
technologies are poised to personalize the consumer experience
radically—in real time and almost everywhere. It’s not too early to
prepare.
April 2013
| byPeter Dahlström and David Edelman
Digital marketing is about to enter more challenging
territory. Building on the vast increase in consumer power brought on by
the digital age, marketing is headed toward being on demand—not just
always “on,” but also always relevant, responsive to the consumer’s
desire for marketing that cuts through the noise with pinpoint delivery.
What’s fueling on-demand marketing is the continued, symbiotic evolution
of technology and consumer expectations. Already, search technologies
have made product information ubiquitous; social media encourages
consumers to share, compare, and rate experiences; and mobile devices
add a “wherever” dimension to the digital environment. Executives
encounter this empowerment daily when, for example, cable customers push
for video programming on any device at any time or travelers expect a
few taps on a smartphone app to deliver a full complement of airline
services.
Remarkably, all this is starting to seem common and routine. Most
leading marketers know how to think through customer-search needs, and
optimizing search positioning has become one of the biggest media
outlays. Companies have ramped up their publishing and monitoring
activities on social channels, hoping to create positive media
experiences customers will share. They are even “engineering” advocacy
by creating easy, automatic ways for consumers to post favorable reviews
or to describe their engagement with brands.
But we’re just getting started. The developments pushing marketing
experiences even further include the growth of mobile connectivity,
better-designed online spaces created with the powerful new HTML5 Web
language, the activation of the Internet of Things in many devices
through inexpensive communications tags and microtransmitters,
and advances in handling “big data.” Consumers may soon be able to
search by image, voice, and gesture; automatically participate with
others by taking pictures or making transactions; and discover new
opportunities with devices that augment reality in their field of vision
(think Google glasses).
As these digital capabilities multiply, consumer demands will rise in four areas:
1. Now: Consumers will want to interact anywhere at any time.
2. Can I: They will want to do truly new things as disparate
kinds of information (from financial accounts to data on physical
activity) are deployed more effectively in ways that create value for
them.
3. For me: They will expect all data stored about them to be
targeted precisely to their needs or used to personalize what they
experience.
4. Simply: They will expect all interactions to be easy.
This article seeks to paint a picture of this new world and its
implications for leaders across the enterprise. One thing is clear: the
consumer’s experiences with brands and categories are set to become even
more intense and defining. That matters profoundly because such
experiences drive two-thirds of the decisions customers make, according
to research by our colleagues; prices often drive the rest.
It’s also apparent that each company as a whole must mobilize to deliver
high-quality experiences across sales, service, product use, and
marketing. Few companies can execute at this level today.
As interactions multiply, companies will want to use techniques such as
design thinking to shape consumer experiences. They also will need to
be familiar with emerging tools for gathering the right data across the
consumer decision journey. Finally, the marketing organization’s
structure will need to be rethought as collaboration across functions
and businesses becomes ever more essential.
What to expect in 2020
Over the next several years, we’re likely to see the consumer experience
radically integrated across the physical and virtual environment. Most
of the technologies needed to make this scenario happen are available
now. One that’s gaining particular traction is near-field communication
(NFC): embedded chips in phones exchange data on contact with objects
that have NFC tags. The price of such tags is already as low as 15
cents, and new research could make them even cheaper, so more companies
could build them into almost any device, generating a massive expansion
of new interactive experiences. To understand that near future, review
the infographic below and follow a hypothetical, tech-enabled consumer,
Diane, who purchases an audio headset.
http://www.mckinsey.com/insights/marketing_sales/the_coming_era_of_on-demand_marketing?cid=other-eml-alt-mkq-mck-oth-1304
Taken together, the scenes from Diane’s consumer journey illustrate the
four emerging areas of consumer demands we touched on above.
Now
Marketers have gotten a foretaste of the consumer’s desire for more
urgency and ubiquity. Bank balances running low? Send the consumer an
alert on her cell phone. A question about fees shows up on the bank’s
Twitter handle? Post an immediate response. An executive of one major
bank believes that the immediacy of smartphone apps has already made
brick-and-mortar contact unnecessary for many young consumers, who use a
range of mobile services to manage their accounts and rarely interact
with the brand physically. Yet having an entire bank in your phone may
be only a baseline for the experiences on the horizon. Consider one
European beverage company’s beta test of beer coasters embedded with NFC
technology. A club patron contemplating a new brew can tap a coaster
with a cell phone and get a history of the beer, bars where it is
served, upcoming promotions, and a list of friends who have given it a
thumbs-up.
In this environment, a marketer’s “publishing” extends to virtualized
media such as the coaster or Diane’s headphones, which become touch
points for considering and evaluating products and services. Digital
information technologies, operating behind the scenes to integrate data
on all interactions a consumer has across the decision journey, will
provide insights into the best influence pathways for companies, while
also triggering new personalized experiences for consumers.
Can I
Most first-wave digital capabilities helped people access things they
already did—shopping, banking, finding information. Consumers must
often settle for compromises in their digital experiences. Yet robust
programming, data-access, and interface possibilities now available
could make every digital interaction an opportunity to deliver something
exceptional.
Consider Commonwealth Bank of Australia’s new smartphone app, which
changes the house-hunting experience. A prospective home buyer begins by
taking a picture of a house he or she likes. Using image-recognition
software and location-based technologies, the app identifies the house
and provides the list price, taxes, and other information. It then
connects with the buyer’s personal financial data and (with further
links to lender databases) determines whether the buyer can be
preapproved for a mortgage (and, if so, in what amount). This nearly
instantaneous series of interactions cuts through the hassle of
searching real-estate agents’ sites for houses and then connecting with
the agents or with mortgage brokers for financing, which might take a
week.
The mortgage app shows how the digital environment is now integrating
disparate sources of information, at low cost and at scale, for many new
domains. The challenge for companies is to look beyond today’s
interfaces and interactions and to see that moving past compromises will
require a rethinking of aspects of packaging, pricing, delivery, and
products.
For me
Some online marketers already use features in devices such as cameras
and touch screens to help consumers see what apparel and accessories
may actually look like when worn. Web retailer Warby Parker, for
example, offers hundreds of customized views of eyeglasses overlaid on a
Webcam picture of the consumer.
In the future, demands for more personalized experiences will intensify.
A phone tap, a click, or a stylus jot will instantly personalize
offers, using information captured on “likes,” recent travel, income,
what friends are doing or like, and much more. With each interaction,
the consumer will be creating new data footprints and streams that
complement existing digital portraits, sharpening their potential
impact. Facebook will eventually be able to mine the world’s largest
database of photographs, linking individual people to their activities.
Smartphones have rich data on every place where you have traveled with
one in your pocket. This is just a start, and the privacy, security, and
general trust implications are staggering. Yet consumers consistently
show a desire to provide more data when companies use captured
information to provide truly helpful feedback (you’re over budget or you
are doing well in your exercise program) or to offer recommendations,
services, and customization tools rather than just push what might
appear to be intrusive (and creepy) messaging.
Simply
The quest for simplicity led Amazon to create a subscriber model for
delivering bulky repeat-buy items (such as diapers) and Starbucks to
adopt a tap-and-go approach to mobile payments. Yet many interactions
remain complex and fragmented: to name just a few, finding, organizing,
and redeeming online coupons; turning weekly meal plans into online
delivery orders; tracking your monthly cash flow; and staying on top of
your health-insurance bills and reimbursements.
Evolving technologies and consumer behavior should make it easier to
redesign many complex experiences. For example, companies offering
inherently complicated products or services could overlay a game
interface on certain Web pages, to let consumers play at trading off
different options and prices. Visual-recognition technology could allow
you to scan health-care bills, receipts, statements, and appointments
into one integrated calendar and cash-management system. Already,
start-ups in travel, expense, and sales-force management are
experimenting with approaches that streamline processes and make
interactions more inviting—using touch and swipe to make changes,
gestures to activate large displays, and data in phones to recognize
consumers and automatically customize interfaces.
Setting strategies and building capabilities
Consumers will soon make these demands of every interaction they have
with companies. Although the marketing function may often be the best
conduit to get customer input and to drive decisions about how to
distinguish brands, coordinated efforts across the enterprise will be
needed on three levels.
Designing interactions across the consumer decision journey
Today, many companies have successfully defined and addressed
customer interactions across a few channels. What they need to be
designing, however, is the entire story of how individuals encounter a
brand and the steps they take to evaluate, purchase, and relate to it
across the decision journey. Marketing or customer research can’t do
this alone. At one apparel retailer, managers from multiple functions go
together into the field to do deep ethnographic research— watching how
customers shop, going into their homes, and uncovering the triggers and
motivations that drive behavior. These managers look for the compromises
that people face as they try to get things done, probing for their
higher aspirations. And the managers watch how customers react as they
interact with brands.
Among the findings, the managers identified seven key “use
cases”—customer situations that lead to satisfaction along different
decision journeys. They found a wide range of trigger points for
choosing an “outfit solution” for a social occasion, learning that
shoppers became frustrated, especially online, when they couldn’t see
how items would look together. Customers wanted to drag and drop items
on an on-screen model or to see great combinations in advance. But that
required different merchants to work collectively and the stores to
bring items together on sales floors.
Cross-functional teams also came together in workshops. With third
parties such as fashion bloggers and thought leaders from online-media
companies, they mapped out new ways to influence the decision journeys
of customers with different attitudes toward the retailer’s brand or
different kinds of spending behavior. One of the most valuable outcomes
was clarity on how the store’s brand positioning could guide the design
of new experiences. The teams knew that their story would always be
“better value than the shopper expected, delivered in a friendly way.”
That meant warm visuals and messaging on the company’s Web site and
across various media to reinforce the story of value to the customer.
And the teams explored new ways social media could help customers show
off the value they received.
Out of the work came not only a shared, company-wide sense of the
decision journeys of consumers but also immediate buy-in to a wide range
of initiatives that could boost market share. These initiatives are on
track to provide an 8 percent sales lift above what the existing plan
envisioned and were implemented more quickly because of the management
team’s shared sense of engagement.
Making data and discovery a nonstop cycle
To win over on-demand customers, you must know them, what they
expect, and what works with them, and then have the ability to reach
them with the right kind of interaction. Data lie at the heart of
efforts to build that understanding—data to define and contextualize
trends, data to measure the effectiveness of activities and investments
at key points in the consumer decision journey, and data to understand
how and why individuals move along those journeys. To realize that
potential, companies need three distinct data lenses.
Telescope. A clear view of the broad trends in your market,
category, and brand is essential. Digital sources that track what people
are looking for (search), what people are saying (social monitoring),
and what people are doing (tracking online, mobile, and in-store
activities) represent rivers of input providing constant warning signs
of trouble or signals of latent opportunity. Many companies are drowning
in reports from vendors providing these types of information tools, yet
few have much clarity on which things they need to look for and who
needs to know what.
One packaged-goods company got a jump on competitors when it saw a spike
in online conversations about the lack of natural ingredients in
shampoos and then recognized a corresponding rise in search inquiries on
the subject. A new line of natural hair care products, launched at
record-breaking speed, has become a successful early mover in a growing
segment. A telecommunications company has become similarly plugged in:
it now has a war room to track every online comment anywhere. Besides
being better able to address—in an open, friendly, and fast way—problems
that could escalate, it now has a great frontline source of line-outage
signals that trigger repair crews and increases in call-center
capacity.
Binoculars. Against this backdrop of market activity, few
companies have a complete, integrated picture of where they spend their
money, which interactions actually happen, and what their outcomes are.
Most direct-sales companies (retailers, banks, travel services) measure
the performance of their spending through isolated last-attribution
analyses that look narrowly at what consumers do after confronting a
search link, an e-mail, or an advertisement. Branded-goods companies try
to throw all of their media spending together into an econometric model
assessing the effects of their media mix. In the world of on-demand
marketing, where multiple interactions take place along multiple
journeys, last-action attribution explains only part of the impact of
media spending, and media-mix models fail to account for touches and
costs outside of paid channels.
What’s next? Deploying tools that rapidly assemble databases of every
customer contact with a brand, companies will need to push every
customer-facing function to work together and form an integrated view of
consumer decision journeys. With longitudinal pictures of customers’
touches and their outcomes, companies can model total costs per action,
find the most effective decision-journey patterns, and spot points of
leakage. As more contacts become digitized—and they will—the data will
gradually get easier to create. Getting a head start can help companies
build ongoing test labs where they tune the ability to create and
analyze the right data and immediately learn where to add investments.
One bank has already realized millions of dollars in added value from
the knowledge that weak points in the customer on-boarding process were
undermining major marketing programs. Only when branches, call centers,
and marketing worked together could the bank find the right fixes,
improve customer satisfaction, and raise marketing’s return on
investment.
Microscope. Trust is essential, and personalization can show
customers they matter. They expect a brand to be a good steward and user
of data about them and, increasingly, have high expectations for what a
brand should know. In the example described earlier, data about Diane
powers the brand’s ability to make it easy for her to share photographs,
to buy a headset, to set up and manage a free Spotify subscription, to
receive information about a local event, to be recognized at it, and to
get additional special offers. Information about Diane is the thread
that keeps all of her brand interactions immediate (
now), valuable (
can I), relevant (
for me), and easy (
simply).
Yet given the laser focus on getting programs into the market to improve
performance, few marketers (or even line executives) have stepped back
and pulled their teams together to work through the scenarios and
customer-data models they will now need to build. Even fewer have a
strong sense of what the current plans of the company’s IT department
will deliver in which time frame. One company that addressed these
issues has identified over 20 types of consumer decision journeys as
archetypes of experiences it must support over the next three years.
From those decision journeys, it has derived a core set of information
capabilities it will need to build and is well down a tight road map of
development that has already enabled it to launch products in
breakthrough ways.
Delivering with new skills and processes
To deliver these new experiences, executive teams must rethink the
role and structure of the marketing organization and how it engages with
other functions. The changes are likely to cut deeply, transforming the
way companies manage campaigns and communities, measure performance,
provide customer support, and interact with outside agencies. It’s still
early days, but consider the breadth of recent efforts.
Raising a consumer-packaged-goods company’s digital game. A
European CPG company started by creating a digital-analytics group with
worldwide operations. Rather than sprinkle digital experts across the
globe, the company developed a unified structure with common standards
for roles, common training, and digital career tracks to build an
arsenal of future talent. The analytics team is part of a broader
digital center of excellence that provides service support to the
business units and drives major upgrades in IT capabilities. Defined
commitments from managers in finance, legal, and HR help the center deal
with challenges that arise as it seeks to offer customers a richer
digital experience.
The company also reviewed all of its e-commerce trade accounts and
decided that it needed a much more granular approach to serving
customers. Says one executive, “It is not just an issue of managing our
relationship with pure-play e-commerce sellers versus our traditional
channels; it also is an issue of managing the online versus
brick-and-mortar sides of the same traditional partner.” A new
e-commerce trade team with added digital-analytic support is helping
both to enhance the online-merchandising mix and to improve the
placement of the company’s products in the search engines of e-commerce
providers.
Finally, marketing leaders established a novel
customer-relationship-management (CRM) team because they realized that
the growth of the company’s mobile services, coupon programs, sampling,
and social communities was finally enabling it to gather huge amounts of
direct data about how people interacted with its brands. (That
information had previously been available only to retailers.) These
structural and talent changes led the company to realize that it needed
to reshuffle its agency relationships, replacing a single brand-and-ad
agency with two agencies—one for brand programs, the other for digital
and CRM direct marketing. The company also brought more media and
digital analytics in-house.
Reorienting a bank. At one institution, a new understanding of
emerging brand challenges led to a radical change in the status of the
CMO. Marketing had earlier ranked low in this sales-driven organization,
where the function’s leaders focused mostly on corporate communications
and brand campaigns. Now, a new CMO, much closer to her peers on the
executive board, has been charged with directing the full consumer
experience.
Each month, the bank’s business-unit leaders gather to talk about their
progress in improving different consumer decision journeys. As new
products and campaigns are launched, these executives place a laminated
card of such a journey at the center of a conference-room table. They
discuss assumptions across the whole flow of the journey for different
consumer segments and how various groups across functions should
contribute to the campaign. Where should customer data be captured and
reused later? How will the campaign flow from mass media to social media
and to the bank’s Web site? What is the follow-up experience once a
customer sets up an account?
The bank has created a corporate center of excellence for digital
marketing to give the strategy a forward tilt and to plan for needed
capabilities. It has also appointed a new team of full-time executives
who focus on mobile and social technologies—executives who have become
evangelists, helping business units to raise their digital game along a
range of consumer interactions. The first wave of fixes and new programs
has already generated tens of millions of dollars in the first six
months, and the bank expects these efforts to add more than $100 million
to its annual margins.
The forces enabling consumers to expect fulfillment on demand are
unstoppable. Across the entire consumer decision journey, every touch is
a brand experience, and those touches just keep multiplying in number.
To mobilize for the on-demand challenges ahead, companies must:
- bring managers together from across the business to understand
consumers’ decision journeys, to speculate about where they may lead,
and to design experiences that will meet the consumer’s demands (Now, Can I, For me, and Simply)
- align the executive team around an explicit end-to-end data strategy across trends, performance, and people
- challenge the delivery processes behind every touch point—are
the processes making the best use of your data and interaction
opportunities and are they appropriately tailored to the speed required
and to expectations about your brand?
Executive recruiters tell us that corporate boards are looking for more
people who can challenge and improve a company’s approach to social
media, big data, and the customer experience. Staying ahead of the
design, data, and delivery requirements of on-demand customers is much
more than a marketing issue—it will be a crucial basis for future
competitive advantage.
