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April 24, 2013

The Digital Enterprise Revolution: Some Subtle Implications

Posted by Vince Cavasin at 11:51 PM

In my last post I presented our Digital Revolution infographic. As I was pondering some of the data points it covers, I got to thinking about their implications for the fields of marketing and commerce, and their enabling technologies. Most of the obvious implications have been written about at length elsewhere, but today I'd like to take a look at some of the not-so-obvious ones:

  • New mobile customers: Everyone talks about the mobile web surpassing the fixed web, but it pays to look at the customers who are driving this. According to the International Telecommunications Union, this year mobile broadband subscriptions in developing countries surpassed subscriptions in developed countries. Beyond that, there's lots more headroom for growth and the mobile web is cheaper and easier to access than the fixed web in the developing world. The implication? While it's critical for global brands to have a mobile strategy, it's equally critical that that strategy comprehend the huge opportunity web-enabled phones are bringing to developing countries, and the challenges that accompany that opportunity: supporting price points that are affordable to these new customers, processing their payments, even the packaging and supply chain strategies required to ensure they get the right product at the right place and time.
  • The true power (consumption) of the cloud: We have good reason to have our heads in the cloud -- by virtualizing our infrastructure and hiring specialist providers to manage it we will reap enormous economies of scale, lower costs, and realize better scalability versus the old model of owned, physical infrastructure. On the downside, however, the geographic consolidation of physical infrastructure that comes with the shift to the cloud also implies more concentrated areas of increased power consumption. Luckily companies like Calxeda are beginning to address the power consumption challenge via innovative ultra-low-power servers. This may seem more like an issue for the CIO than the CMO, but CMOs who want to cultivate an earth-friendly image may want to make sure their CIOs are aligned to the marketing value of energy efficient compute cycles.
  • The Big in Big Data: Big Data holds enormous promise for marketers (and just about everyone else), but we have to put it someplace, and today that means hard drives. Lots of them. But unfortunately our storage needs are increasing much faster than the capacities of our devices. According to Forbes, by 2020 our data storage needs will increase 50 fold while hard drive capacity will only increase 15 fold. While we can place our bets on emerging storage technologies like bacteria, holograms, and diamonds, the reality is we will probably be stuck with hard drives -- and their significant space and power requirements -- well into the zettabyte era. For anyone trying to understand this data (e.g. marketers), the implication is that we will have to get much smarter about what data to collect. The seemingly cheap, limitless storage we took for granted until now will, over the next few years, become much more precious, driving up demand for data scientists who can optimize data collection schemes to exclude superfluous bits (pun intended), thereby making the most out of our old-fashioned storage devices until those hologram, diamond, and bacteria drives are online.
  • Cross-channel table stakes: Nearly everyone who can shop in the US is now shopping online, and while just about every major US retailer is there to sell to them, there are plenty of leading retailers and brands that still aren't taking any form of cross-channel seriously. With traditionally online-only retailers like Amazon and eBay (and non-retailers like google) quickly moving to provide same-day delivery, ignoring cross-channel is suicide. Single channel retailers who don't quickly take the big leap into cross-channel (or better yet, omni-channel) will have to be satisfied with becoming niche players -- or worse, showrooms for competitors.

How are these digital trends affecting your business? What other trends are you seeing that have not-so-obvious implications? Go ahead--hit "reply" and let's discuss!

April 19, 2013

Infographic: The Digital Enterprise Revolution

Posted by Vince Cavasin at 4:14 PM

Have you seen our Digital Revolution infographic? It first appeared on the cover of volume 2 of our management consulting practice's journal, Art & Science, which is well worth checking out online if you are interested in things digital (full disclosure: I edited this issue and if you called this shameless self-promotion I would not protest:^). Here it is:


The immediate implications of these stats are obvious: marketers and sellers better be thinking about mobility, sociality, the cloud, big data, online commerce. But there are a lot of subtler points buried in these and other digital trends. In my next post I'll delve into some of these subtler implications; in the meantime, what digital trends are most important to your business? Please share.

April 12, 2013

Creating Consumer Connections: The Omni-Channel Bath

Posted by Vince Cavasin at 9:17 PM

20090904232906!Baigneurs_a_Asnieres.jpgIn my last post I discussed how specific channels blend and morph in the omni-channel world. But when they do, what do they create?

Much has been written in an attempt to define the concept of omni-channel: Some descriptions focus on customers using multiple channels at once; some focus on integrating cross-channel data to get a seamless view of customer behavior which can then be analyzed to improve messaging and conversion. Like my description of channels morphing like wax in a lavalamp, these are necessary components of "omniness". But none of them singularly define it.

I think the main ingredient our definitions are missing is immersiveness.

You can wash your hands at the sink; you can take a shower and wash your various body parts. Those are two clearly distinct washing experiences -- but if you've used a sink, stepping into a shower is pretty easy to grasp. However, climbing into a tub is a significantly different tactile experience that involves a whole new way of interacting with the same medium (water).

In the tub, the spigot becomes irrelevant to the washing experience -- the water completely surrounds you. In the omni-channel world, individual channels will cease to be relevant -- the brand will completely surround us.

Brands that want to succeed in leaving behind the sinks of multi-channel and the showers of cross-channel must do the following:

  • Nurture customer Fanatics who want to be immersed in the brand -- customers who derive as much value from associating themselves with the brand as they derive from using the company's products or services.
  • Create a brand identity that is consistent across all customer interactions but that leverages each interaction moment to its fullest potential. Focus on interaction moments rather than channels because remember, in the omni-channel  world, the channel becomes irrelevant (think about Google Glasses).
  • Throw out the old customer llifecycle. In the omni-channel world, the concept of Awareness>Engagement>Transaction>Fulfillment>Retention lifecycle phases is replaced by a continuum that ranges from Nonfanatic to Fanatic. Focus your efforts on converting the former into the latter and the rest will take care of itself.

In order to make your channels "omni" -- and therefore irrelevant -- you must understand them intimately, leverage them brilliantly, and evolve them constantly, as I touched on in my last post. You must also, of course, do the very hard work of getting the technology and organizational infrastructure right:

  • Develop unified and comprehensive views of all data from all channels: customer (Nonfanatic and Fanatic alike), product, inventory, digital assets, baskets, orders. Expose these views appropriately to customers.
  • Develop the real-time analytical capabilities required to constantly improve your understanding of customer behavior and sentiment in order to continuously improve the customer experience at every interaction (thereby converting more and more Nonfanatics into Fanatics).
  • Break down organizational walls -- for example, between IT and business, or marketing and commerce -- to create an organization that is as seamless and integrated as the omni-channel experience you are trying to create.

I assert that no company is fully omni-channel yet, and the above advice is a tall order even for those that are pioneering in the space. I have my own list of these, but I'm curious to learn what you think; is omni-channel just another incremental step in the ways customers interact with companies -- or something more like the revolution I describe above? In either case, what are today's most omni-channel companies? I'd love to hear your ideas.

Image: Georges-Pierre Seurat, Baigneurs a Asnieres (public domain)

April 5, 2013

Creating Consumer Connections: The Omni-Channel Lava Lamp

Posted by Vince Cavasin at 7:56 PM

One of the major topics of conversation in our recent Creating Consumer ConnectioLavalampe.jpgns executive roundtable was related to the emergence of a tablet channel--independent from the mobile channel that many companies have viewed tablets as a part of since their introduction. This is unsurprising given tablet adoption trends: according to a recent Gartner report, Tablet shipments are growing at a CAGR of 32% vs. mobile phone growth of only 4%.

While the history of digital technologies is full of similar channel formations, it's equally full of channel combinations--a bit like the wax blobs in a lava lamp, which form, separate, and reform constantly. Okay, maybe that's a bit of a stretch, but you get my drift. :^)

In today's "omni-channel" world we find that the rate of emergence of distinct new channels is equaled only by the rate of innovation in combining them. Some examples:

  • Social is now its own channel, distinct from but strongly affiliated with online--and agnostic of physical medium, even migrating into physical channels via wearable devices (see below), and of course apps like foursquare, yelp, and meetup.
  • Physical channels are converging with digital channels in ways that range from obvious (QR codes) to innovative. At the innovative end are efforts such as Tesco's virtual stores and Diageo's Brazil pilot of technology that ties a unique, personalized online message to a bottle of booze.
  • The rapidly evolving wearable channels which currently don't even carry outbound messages but are more about brand experience and gathering data to create deeper customer connections. Think about Nike's Fuel Band, which Mark Parker hints is just the tip of the iceberg of ways Nike will be digitally interacting with their customers in the future. Customers love its functional and community aspects; Nike loves the customer insights it gives them and the intimacy it creates--both of which will only increase as the device evolves.
  • The embedded channels, which hold perhaps even greater potential for gathering marketing data. For example, the potential marketing value of automotive telemetry--via which terabytes of information per day are already transmitted from cars to their makers-- is staggering and auto makers have barely scratched its surface (for more on this, see this article in our latest issue of Art & Science).

While this is far from a comprehensive list, even more channels and more interesting convergences are on the way. Google Glasses, for example, are expected to be released by the end of this year. These clearly represent the most advanced wearable channel, and perhaps the most impressive example yet of convergence--of the physical world with multi-way communication, search, storage, reality augmentation, and location awareness--all of which have significant business value potential on their own. It seems almost inevitable that wearable "experience enhancing devices" like google glasses will soon be seen as a "distinct channel" for marketing and selling purposes.

In my next post I'll further explore the omni-channel concept, and some key attributes of omni-channel organizations. In the mean time, what current and emerging channels are important to your business? In what ways are you using them and what kind of value are you realizing? Please post a comment and join the conversation.

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