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August 9, 2013

Omni-Channel Value Spaces

Posted by Vince Cavasin at 11:46 PM

Space-small.jpgWhen I talk to clients and colleagues about the notion of omni-channel, our conversations invariably focus on end customers. This makes sense, because of course any marketing or commerce strategy (omni-channel or not) should have customer value at its core. Value creation for the seller/marketer is a secondary but nearly inevitable effect of doing customer experience right. For an excellent and eye-opening study of the correlation between customer experience and company value, check out the Watermark Consulting 2013 Customer Experience ROI Study.

Customer value was the underlying theme of my omni-channel blogs here and here, but in this blog I want to dig a little deeper into how omni-channel operations can create value beyond the often obvious value they create for customers. The immersive, "channel irrelevant" environment that is (according to me in the aforementioned blogs, anyway) the goal of omni-channel interactions is one that can be applied to any stakeholder group--customers, employees, partners, whoever. And while most commentators focus on omni-channel commerce interactions, the omni-channel philosophy is encompassing enough to include virtually any kind of interaction: transactions (e.g. commerce), communications (e.g. marketing), coordination & collaboration (e.g. workflow).

At Infosys, we frame up omni-channel value spaces in terms of Customer, Employee, and Enterprise. These lend themselves very nicely to being organized in a simple Venn diagram:

VennDiagram.pngDespite its simplicity, the Venn diagram is a perfect framework for evaluating these three value spaces because beyond illustrating the spaces themselves, it illustrates their intersections--which, as it turns out, are where some of the greatest opportunities exist.

Let's look first at the primary value spaces:

  • Customer: Omni-Channel customer interactions are far and away the most intuitive and talked about of the three spaces, and the main focus of my previous omni-channel blogs. The customer value space is concerned, perhaps obviously, with creating value for customers by improving some aspect of their experience. In the omni-channel commerce world, perhaps the most foundational customer-value-enhancing capability is BAFARA--Buy Anywhere, Fulfill from Anywhere, Return Anywhere. Pioneering retailers have been building out this capability for several years, with recent examples including the same-day delivery services being rolled out by eBay, Amazon, and Google--with eBay's service promising 1-hour delivery and also encompassing returns. The customer value created by such initiatives is clear: customers get the online retailers' greater assortment breadth (and often better pricing), AND get the stuff they want when and where they want it. That's greater selection AND greater convenience--two variables that in yesterday's commerce business models were often inversely related.
  • Employee: This value space focuses on employee productivity. A great example of this is Intel's multi-platform initiative, which aspires to make employee applications available across a broad range of Bring Your Own (BYO) devices--eventually supporting emerging input methods such as touch, voice, and even gesture. This initiative provides employees value by giving them full control over the devices they use, and the cutting-edge interfaces will (at least eventually) allow employees to get more done in less time.
  • Enterprise: Value for the enterprise is primarily manifested in asset optimization. This almost invariably has customer and/or employee benefits as well, since the assets being optimized in an omni-channel context are typically being optimized in the service of customers or employees. These assets can range from traditional physical assets like inventory, shelf space, and devices to digital assets like customer data, brand assets, and content assets. For example, the Intel multi-platform initiative, in addition to its employee benefits, creates value by better leveraging existing device assets. For a digital example, check out how Diageo's Digital Marketing Platform is providing massive enterprise value through cross-channel leverage of digital brand assets--while at the same time providing employee value by increasing productivity.

Of course, when we contemplate omni-channel strategy we want to create as much value in as many spaces as possible, so the most interesting value space in our framework is where all three circles come together--where value is synergistically created for all three groups by a single capability.

The best example I can think of to illustrate this omni-channel value triple play comes from perhaps the most accomplished omni-channel pioneer, Nordstrom. Since they started their cross-channel journey in 2005, Nordstrom has built an entire business and technology ecosystem around omni-channel, all the elements of which facilitate not only an industry-leading customer experience and the associated value, but significant employee and enterprise value as well.

The latest addition to Nordstrom's omni-channel ecosystem is their Mobile Point Of Sale (MPOS) device, which these days can be seen in use by employees in virtually any Nordstrom store. The MPOS device is fully integrated with Nordstrom's commerce and inventory systems, allowing store associates to use it to not only find inventory (say, the size and color shirt you are looking for that's not available in the store you are shopping in) anywhere in any Nordstrom DC or store, but to then order that inventory to be delivered wherever the customer wants it--and to process payment and complete the transaction. All without ever leaving the customer's side or having to mess with a cash register.

This creates value at the intersection of our three spaces:

  • For the customer, he or she has access to literally every item in Nordstrom's aggregate inventory, and the experience of interacting with the associate--who may be an oft-visited personal shopper--is never interrupted.
  • For the employee, not only is their relationship with the customer deeply reinforced, but not having to go back and forth to a register makes them more productive AND allows them to focus more on cross-sell and up-sell, which creates more value for the enterprise.
  • For the enterprise, in addition to the above-mentioned potential for increased AOV, inventory assets anywhere in the network can now be used to fulfill demand wherever it exists, increasing velocity and contributing to markdown avoidance.

Using the omni-channel value space framework is a powerful way to think about the full impact of omni-channel investments, to ensure you're designing and measuring the full impact of their value, and to ultimately quantify that value in a more detailed business case that can be used to prioritize those investments based on your strategic goals.

Which value space are you focused on? I'd love to hear your thoughts, especially as they relate to omni-channel strategies in the less-frequently-discussed employee and enterprise spaces.

Space image source: NASA

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July 26, 2013

Digital Marketing Technologies: A Prescription for Global Pharma Companies

Posted by Vince Cavasin at 2:04 PM

PharmaGuyCloseUpAs discussed here, a key theme of our Creating Consumer Connections dinner was the common set of challenges faced by both CPG and Pharmaceutical industries. However, it's worth taking a closer look at some of the industry-specific challenges as well. The pharmaceutical industry is currently facing one challenge that can be uniquely addressed by digital marketing: the transition away from blockbuster drug development.

The pharmaceutical industry's transition from focusing on major blockbuster drugs to focusing on more targeted "nichebuster" drugs is well known; according to IMS Health, specialty pharmaceutical sales are soaring while other prescription revenues declined for the first time in twelve years recently.

Luckily for pharmaceutical marketers, this shift in focus coincides with the emergence and maturing of digital marketing channels which--unlike traditional Direct-To-Consumer (DTC) media channels--lend themselves quite well to the kind of consumer targeting needed for marketing targeted therapies. In fact, Pharmacy & Therapeutics reports that digital pharmaceutical marketing yields an ROI of 5:1, vs traditional marketing ROI of approximately 2:1 to 4:1.

And according to research, pharma companies are taking advantage of this. Cegedim reports that in 2012,  pharma digital spending rose 30% and is taking up an increasing proportion of pharma companies' marketing budgets, while reports that healthcare digital advertising spending is expected reach a record high of $1.19 billion in 2013 and increase to $1.33 billion by 2016.

While pharma companies are not quite on the cutting edge of digital marketing--and the regulatory environment in which they operate is far more constraining than in most industries--they do manage to uniquely innovate in the medium. For example, Sanofi provides Diabetapedia, the CDE HELP Team Portal, and the DiscussDiabetes blog--sites aimed at building community and offering helpful information, while carrying only subtle branding and marketing content.

That's three separate web properties--in addition to multiple branded product pages and sites--dedicated to a single disease in a single country. And Sanofi offers dozens of products in over 100 countries, each of which has its own unique regulatory environment.

Add to this the further complications of prescriber vs end consumer segmentation and targeting, drug usage approvals that can vary by country for a specific drug, the need to work with multiple agencies to localize messaging, and channel specific (e.g. mobile and social) marketing efforts, and you end up with a digital marketing ecosystem that may exceed the complexity of a CPG company's.

It's no surprise, then, that major pharma players are turning to technology solutions to help manage the complexity and gain competitive advantage and higher ROMI. For example, in 2009 Pfizer launched CUE, a closed-loop marketing platform designed to provide customized information to physicians and healthcare providers based on their unique needs. Besides cost scalability, CUE gives Pfizer the ability to ensure a consistent experience (across brands and markets) for physicians and healthcare professionals.

It is just these sorts of complexities that led Infosys to develop BrandEdge, the first cloud-based platform that simplifies global digital marketing ecosystems by automating and governing the functions that make them complex:

  • Aggregation, indexing, and management of digital assets and content
  • Governing workflow and regulatory approval processes across multiple internal and external stakeholders--even when they vary widely from geography to geography
  • Aggregating and analyzing customer data from multiple sources to enable better personalization and targeting
  • Providing highly configurable, real-time analytics on campaigns and site usage

For global pharma companies with complex brand ecosystems, BrandEdge can enable speed-to-market improvements of up to 50%, and cost savings of up to 30% compared to traditional digital marketing deployment processes.

I believe the trends we are seeing in pharma:

  • The increasing complexity of global pharma companies' digital marketing ecosystems and regulatory environments
  • The significant pressure pharma companies are under to lower costs
  • The trend toward more niche-oriented drugs (which require more targeted marketing)
Are creating significant incentives to adopt marketing automation solutions--perhaps more significant incentives than in any other industry.

What kinds of marketing trends are you seeing in your industry, and what are their implications? Is a Digital Marketing Platform or another type of marketing automation technology on your radar?

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.

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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)

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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.

Image credit

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March 28, 2013

Creating Consumer Connections

Posted by Vince Cavasin at 9:00 AM

Recently, Infosys hosted a dinner event in New York on the topic "Creating New Consumer Connections: The Digital Way," which looked at how to drive brand advantage through innovative digital marketing.

The guest speakers were Rob Brosnan, Senior Analyst, Forrester, and Markell Bridges, Director, Information Systems, Global Marketing, Mondel─ôz International (formerly Kraft Global).

Seventeen executives from leading Consumer Packaged Goods and Life Sciences organizations were in attendance. The agenda included presentations from Rob and Markell, dinner, and a lively roundtable discussion moderated by Peter Sieyes, Head of Consumer Marketing and Innovation--Retail, CPG, Logistics, and Life Sciences, Infosys Europe.

The roundtable discussion yielded some fascinating insights into the worlds of CPG and Pharmaceutical marketing--and significant overlap in the opportunities and challenges being addressed by both groups. Some of the more interesting industry-agnostic discussion points included:

  • The growth of mobile channels globally, the emergence of the tablet channel as distinct from the mobile channel, the proliferation of possibilities for leveraging various kinds of mobile devices for customer engagement--even in emerging economies, and the untapped value that these channels hold
  • The opportunities created by the proliferation of digital channels, the new customer interaction models they facilitate, and the increasing quantity and specificity of customer data they provide--along with, of course, the challenges associated with making sense of that customer data
  • The rapidly--and radically--evolving structure of the digital marketing organization. Perhaps the topic the group spent the most time discussing, this covered:
  • The increasing prevalence of cross-functional digital marketing teams which blend strategy, technology, and channel-specific competencies that have historically been organizationally separate
  • The specific example  of Mondelez's International Front Office organization which brings together marketing and IT expertise to drive top-line revenue growth.
  • The need for marketing-related IT groups to evolve away from focusing on process management and cost reduction, toward  promoting ideas that drive agility and improving readiness to meet the business's constant, often unpredictable innovation needs--and ultimately to become innovation partners with the business
  • Some ideas on how IT organizations can respond to the emerging challenges of the digital world

CPG companies are specifically interested in the increasing opportunities offered by emerging digital channels and technologies to facilitate a better view of the customer, to distinguish between consumers and shoppers, and to more accurately (and profitably) target customers based on their position in the purchase path.

Over the next few posts we will be exploring each of the above points in more depth, by looking both at more of the details discussed during the dinner, and other sources of current thinking on the topics. Please stay tuned.

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