Customers, Channels and Horseless Carriages

(Originally published August, 2012 in Retail Online Integration)

How digital is fundamentally changing traditional approaches to the marketplace

For those who don’t know, the very first cars weren’t called cars. People called them horseless carriages because that was their point of reference. The same happened with the invention of the “iron horse” (train) and more recently “snurfing” (snowboarding). All are examples of how legacy language attempts to describe entirely new paradigms.

It's happening again today as digital transforms the marketplace, brand positioning and traditional channel approaches. Some contend that digital is a channel unto itself. Others talk about cross-channel, and more recently omni-channel, in attempts to reshape traditional channel models to fit increasingly empowered, immediate and personal customer needs and behaviors.

Since digital is so pervasive and disruptive, it's far more than just another channel. The growth of digital is turning the whole notion of channel or even cross-channel into a horseless-carriage conversation. Legacy language is being used to describe entirely new paradigms:

• Digital is pervasive — channels are intentionally discrete.
• Digital is people-centric — channels are traditionally product and internally focused, driven by company objectives, structures and processes.
• Digital is dynamic, contextual and personal — channels seek to focus, organize and standardize.
• Digital enables community — channels optimize distribution.

From Channel Centric to Customer Focused

It’s perhaps easy to dismiss the discussion as simply a matter of semantics or buzzwords. Besides, marketers and agencies have been talking about being "customer centric" for decades, right? So how is this any different?

The issue isn’t just about labels. It’s about a fundamental change in the marketplace in which channel-focused companies are unable to respond efficiently and effectively to changing customer expectations and behaviors. Today’s customer-centric marketplace is driven by the right engagement at the right time and place, as well as critical “moments of truth.” In other words, there are often fleeting opportunities that can no longer be defined and controlled by marketing calendars, media plans, in-store programs or channels.

Forrester’s Welcome to the Era of Agile Commerce puts forth an excellent model of the customer-centric tomorrow. This research provides one of the more clear visualizations of the nature of customer journeys and the almost random manner in which customers choose to engage brands, businesses and products.  

In a practical sense, the concept of customer centricity plays out daily with an increasing number of consumers roaming retail aisles while getting advice from friends, reading reviews from other consumers, comparing competitor prices, or viewing ads while touching base with the babysitter and keeping up on the news (and then buying online to avoid the hassle of checkout). The question remains: Who owns that channel — omni or otherwise?

Even the easily defined separation of B-to-B and B-to-C is quickly unifying into B-to-X (i.e., an undefined audience), as our experiences as consumers often set expectations in the workplace. The shopping and buying behaviors of construction contractors, small business owners and bench scientists are looking more like the above retail shopper every day.

It’s a Business Problem That Marketing Alone Can’t Solve

This shift from a channel-focused to customer-centric business model is creating significant challenges for companies. Most responses start at the marketing department and the inevitable alphabet of strategies (m-, e-, t-, w-, s-) in an attempt to better synch multiple campaigns, messages and programs across brands, business units and markets.

But marketing alone can’t do what’s needed. Seamless brand experiences across products, solutions and portfolios are all but impossible to deliver in siloed, sandboxed business environments. Sustainable success depends on more than a marketing transformation or excellence in brand positioning. It often depends on significant business transformation to deliver the brand promise that impacts departments across the organization, including:

• brand management
• sales
• service
• supply chain
• technology
• intelligence
• products/portfolios
• innovation/R&D
• finance
• external partners

Building a Better Buggy Whip?

It’s easy to set a goal of adopting new paradigms and business processes that focus on the customer, but harder to execute successfully. The "horseless carriage" was derided by many as too noisy, too slow and too expensive compared to existing horse-pulled carriages. We can imagine that the buggy whip makers weren’t too keen on these new innovations either. But making better buggy whips didn’t drive the innovation of cars. 

Success is far from ensured, and the path forward is far from obvious. However, something is becoming increasingly clear: Continuing to ask channel-focused questions can’t deliver the customer-driven answers, ideas, innovation and fundamental change needed to build sustainable advantage and growth.

2012 and the Agility Advantage

This is usually a good time of year to make predictions; in the digital world the opportunities are endless.

But instead, I think this year is a better time for recognition, an affirmation if you will, that agility is not only important, but it’s becoming the primary digital business advantage.

(Digital) Business Advantage
We’re all pretty aware that the pace of business is moving faster. Companies have been talking about accelerating, optimizing and innovating for years. Agile software development has been around for over a decade, so what’s different now?

The difference is how disruptive agility is becoming to the core business and how unaware and ill-prepared most companies are for the coming change.

Top themes in our discussions with business leaders:

• Agility is the advantage: Companies can’t afford to be “done” with projects in a world where competitors can quickly copy (and nullify) whatever competitive advantage your new web site or mobile app was promised to provide. Agility itself is often the defining advantage in the marketplace.
• Change is the constant: Transformation, disruption and adaption are no longer single events to be managed. They are the new normal of business, and they are accelerating.
• Fast follower is a losing option: What value or advantage is created by examining what competitors have already done, particularly when it will likely change again before you can respond to their first effort?

If your primary focus and investment is in redesigning your web site or creating a new social media marketing campaign then it might be time to look a little further down the road.

The Paradox of Agility
Most initial efforts to increase agility will usually result in the company slowing…the paradox of agility. Not slowing in activity—that’s usually off the charts—but a slowing in the ability of the company to create new value, advantage or even fully complete one digital initiative before bouncing to the next in ever-increasing cycles (sales-driven companies, I’m looking at you).

Instead, the faster you want to go, the more strategic and dedicated to the long term you (and your leadership) need to be.

• Want the agility of Amazon?  CEO Jeff Bezos often talks about planning 4-5 years out for “new” digital game changers
• Innovate like Apple? Former CEO Steve Jobs described his vision for the iPhone and iPad in 2001, talking about the Digital Hub
• Change the game like Barnes & Noble? They invested in creating an entirely new (and separate) digital team dedicated to redefining their future

Digital Agility Requires Forgetting about Digital
Rather than focusing on how to do more digital initiatives faster, first put digital aside.  There are three foundations you’ll need before digital discussions will be helpful

1. Understand customer needs—the problems you solve, not the products or services you sell.
2. Understand how your company can consistently differentiate and win, given customer needs.
3. Define what business capabilities you need to deliver on points 1&2.

Get through these are you’re ready to start talking about how the design of your people, process and digital platforms can enable new capabilities, accelerate innovation and growth, and (of course) increase your company’s agility and advantage in the market.

Mobile is Dead. Long Live Mobility!

Scan and Scram. Digital Wallet. Social Shopping. 3-Dimensional commerce, Augmented Reality, Showrooming, Virtual Assistant, Location-based Search

Question:  What do all of these have in common?

If your answer is “mobile,” you’re missing major (digital) business transformations that are changing the game across every industry.

• Channel shift as customers increasingly turn to smart phones and tablets instead of sales reps and service centers
• Value Transformation as real-time references, recommendations, specifications and instruction become an integrated part of “product”
• Disruption as manufacturers are able to leap-frog distribution and retail to connect directly with customers right at point of sale

The Answer: they’re all behaviors (“capabilities” is also acceptable and most relevant to business).

“We need a mobile strategy.”  

In most cases, this is just business-speak for saying “We want a mobile app.” The focus almost invariably, and mistakenly, starts with the platform.

The good news is that mobile apps are cheap and easy to make. There are few barriers to checking that box. Of course, the likelihood that this approach would provide much value for your business or your customers isn’t very high either, as evidenced by success rates of mobile apps.

• Nearly one in three downloaded apps are used just once
• About half of mobile consumers delete apps within the same month they buy the app. Up to 90% are eventually deleted
• Most (68%) of smart phone owners use five or less apps on a regular basis
• The top 10 Android apps (of 250,000 total apps) account for 43% of all app usage

In the healthcare space alone there are already over 4,000 apps, including drug databases, medical calculators, reference programs, decision support for physicians, nurses, tracking (weight, blood pressure, etc.), patient history (accessing, managing, and documenting), collaboration tools and payer tools.

At the same time, combined smart phone and tablet sales are passing desktop and notebook sales. The “third screen” is already the first choice of highly integrated, connected experiences. Morgan Stanley is also predicting that mobile will be the primary platform for small business by 2015. Based on the current pace of adoption, they may have underestimated.

And the bar is being raised every day as customers and partners try and integrate newer, more innovative mobile capabilities into their everyday lives.

It’s People, Not Platforms

What’s missing in all these scenarios is a clear understanding of people, their needs and behaviors. Without this foundation, the probability of failure is high. Benchmarking competitor mobile efforts won’t ensure success. Neither will reading Fast Company, studying Forrester and eMarketer, doing a workshop or checking out the Marketing VP’s cool new app.

The focus needs to be on value, utility, immediacy, relevancy and context, anytime, anywhere and continually (re)defined by each individual.

Like any other business or marketing initiative, mobility efforts must be grounded in core customer (unmet) needs.

Key questions that need to be answered:

• What need does this satisfy for this individual?
• How is this substantially better, faster, easier than what our customer already does?
• How does this interaction provide the customer seamless interaction with the brand across all touchpoints?
• How does this provide differentiation in the marketplace?
• How sustainable is the advantage we expect to gain? (read: how fast will competitors copy us and catch up?)

Three Signs You’re Headed Down the Wrong Path

1. Trying to create a smaller version of your web site. Most companies tend to start with their Web presence (it costs the most so it must be most important, right?) and adapt it for a smaller screen. Yes, the brand experience needs to be consistent, but mobility is fundamentally different. Today, many companies are already designing for mobility first, then adapting that solution for the web. Forget the smart phone and think customers and magic wands. What do your customers care about in their lives? What if there was some way you could solve some need anytime, anywhere? Could technology be (part) of the answer?
2. Being “Done.” Mobility is a journey, and a fundamental expansion of the relationship with your customer. Any initiative or app, no matter how brilliant, will ultimately fail if you don’t commit to a long-term strategy. The landscape is changing too quickly, competitors can copy you too easily and customers get bored with your solution too soon. Continuing – and accelerating – intelligence and innovation are the keys to success.
3. It’s just an app. The actual mobile applications are just the tip of the iceberg. Complex integrations and interaction of systems and information are required to deliver the personalized experience customers expect today. One client invested heavily in an advanced mobile commerce capability – a very slick app that customers loved – only to find that their back-end systems and architecture was never designed for the “chatter” of mobility. Performance suffered, the app failed and the company alienated customers and lost tens of millions in potential sales.

Like all transformational changes before it (cars, TV, Internet), success in mobility requires a fundamental shift in paradigms and approaches. And while change will continue, starting from a people- and needs-based foundations and making strategic commitments (instead of app-based leaps) are required first steps toward building sustainable success and realizing the full potential and benefits of mobility.

(Originally posted February, 2012 @ Acquity Group)