Discussion with Catherine Heath From Huge Inc.

HBO Slideshow 3 300x171 Discussion with Catherine Heath From Huge Inc.

In late August this year Melbournes digital elite assembled at the citys public library. The event was the Australian Interactive Media Industry Associations V21 conference, and this years line up promised to be the biggest event yet.

One of the key draw cards was Catherine Heath, the Head of Strategy & Planning, US West Coast, for the digital agency Huge. Among digital agencies Huge, a member of the Interpublic Group of Companies, is one of the standouts on the world stage. Its renown owes much to recent Initiatives such as the development of the HBO GO platform, the TV anytime experience for HBO subscribers, the new website for the phenomenon that is TED, and the new immersive cross platform digital experience for one of the most beloved multi generational entertainment series: The Simpsons.

A couple of weeks after the Melbourne event Catherine and I shared a telephone call while she was in between meetings in Singapore. We spoke for some time about: what it was like to work in a company like Huge (by all accounts being surrounded by hundreds of very talented digital designers, technologists & strategists is pretty fun most of the time); what the youth of today were doing with digital technologies (the best way to sum it up is they are setting expectations on UX/UI, not following them); and where the world of digital marketing and branding was heading (digital is quickly becoming the lead player in the overall marketing mix, meaning other forms of marketing are having to support the digital strategy, a complete turn around of events).

The conversation then moved onto what companies have to do really become leaders in the digital space, a topic dear to my heart.

Catherine doesnt describe herself as a techie. She comes from a brand strategy background. But that is what’s now needed to provide meaningful insights in the field of digital communications. In the initial years of the digital marketing revolution the people with the power were the tech-heads. And they still are an inherently important, though its what surrounds them now with cross functional agencies that makes what they do really interesting on a broader scale.

For someone deft at writing code the logical side of their brain is the area that gets exercised most frequently. As a result conversations with talented technologists can become black and white, on or off. This is great when it comes to designing software, but it does not produce an engaged conversation with a business leader who is looking to transform his business.

And on reflection that was the interesting aspect of the conversation with Catherine. I dont think we talked about technology trends once. Data was only mentioned very briefly. The majority of what we discussed was about how digital thinking was now shaping the value around brands and the impact that would likely have in years to come.

We discussed what it meant for a business to go all into digital. That included the effort required from clients, and in particular the courage that leadership needed to transform a company to face the challenges of todays digital firstworld. its not about digital ideas, rather ideas for a digital world as she says. life first thinking is imperative in a world where digital is omnipresent, digital is no longer a channel or a medium its simply a way of life.

Huge is fortunate to have Catherine working for them. She is intellectually curious and very bright. And she leaves you with no doubt that the digital transformation that has been happening in world of branding, marketing and communications has really only just started.

There is a new wave of customer relationships and connections being invented right now – and she is in the middle of it.

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The next issue for CMOs to deal with is on the doorstep

The marketing industry has completely reinvented itself over the last few years. In fact it is difficult to think of an industry that has had to deal with so much change as marketing and advertising. But while many marketers may feel like they are finally getting on top of the technology and data needed to hit their targets, the truth is the marketing space is still being disrupted – driven by changes in consumer behaviour, as it has always been.

Major financial meltdowns and recessions force businesses to evaluate their spend on marketing and branding. As revenue and profitability become squeezed marketers are pressured to improve return on marketing investments. The recent Global Financial Crisis was no exception. The difference this time was the influence of a relatively mature internet and the way consumers chose to use it. 

As consumers completely altered their media consumption patterns marketing budgets began to focus increasingly on optimising consumers digital buying journey. This meant big investments in data driven awareness marketing such as search marketing, driven by Google, and social media ad placements led by Facebook. 

More recently, as businesses have become more comfortable with data driven targeting, major investment have been made into cloud-based Customer Relationship Management database solutions such as Salesforce, and Marketing Automation platforms to complement and integrate the awareness efforts. This – seems like a natural next step – collect as much data as you can about your customers, find out what makes them tick, use that information to send out highly targeted and personalised marketing messages. 

However many marketers are now realise that this form of data driven marketing can become nothing more than a pathway to delivering very smart spam to existing and potential customers, a surefire way of undermining value in the one thing they are meant to be protecting – the brand. 

So CMOs and marketing professionals are refocusing on the customer – who has always held the balance of power.  Having data is no longer enough. Marketers need to create a compelling customer experience, one that will integrate all of the digital initiatives around their company’s core brand values. And as they go through this process the focus changes from “collect all the customer data we can” to “what data will help our customers experience our brand?” 

This is where the next big challenge for many marketers lies.  And this is because it’s highly likely that the data that will help customers experience their brand may not exist yet, or if it does it needs viewing with a very different lens. Of course companies like Nike realised this some time ago which is why they built the Nike+ platform. Their brand is not about selling shoes. Its about performance. And the Nike+ platform helps their customers track and improve their performance. The information Nike gets about who is using their products and why is almost a happy byproduct. 

Not many brands have the type of marketing budgets that Nike does. But the size spend is not really the issue. Much of the technology is now relatively cheap, and continually falling in price. The biggest issue is developing the strategic clarity to know what to do. 

So the CMO of today now has to be part data scientist, part creative technologist and part innovation strategist. Because creating and growing a market is now more difficult, and critical, than it has ever been. The stakes are high. But it is for this very reason that many of the CMOs of today will be the CEOs of tomorrow. 

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AIMIA Retail Research Report – Australian retailers fight back

Retail Research Report Slider Title 300x155 AIMIA Retail Research Report   Australian retailers fight back

It’s safe to say that the pace at which Australian consumers have adopted shopping online has taken some retailers by surprise. While many may have seen the writing on the wall during the years following the Global Financial Crisis, a turning point in online trade, some of the more traditional retailers were slow to accept the inevitable – and even slower to invest.

This is particularly true in Australia which seemed somewhat shielded from the financial crisis sweeping the world – why invest in digital innovation when the local economy seemed to be so robust? Fast forward to today, where we can look back with the benefit of hindsight, and it now seems obvious how the market was going to change. Innovation overseas would bring new waves of competition and the data driven marketing techniques that were reshaping the communications and media industries would forever alter the way that retailers connected with their customers. The Australian retail marketplace would be, and still is, going through a digital transformation.

For the last six years The Australian Interactive Media Industry Association [AIMIA] in partnership with Australian Centre for Retail Studies at Monash University, have been asking Australia’s retail professionals how they see this changing landscape. The report, of which I am this year’s Chairman, combines qualitative interviews and a quantitative survey to deliver deep insights into the state of Australia’s digital retail landscape. The 2014 release of the research report, downloadable here, reveals some of the clearest insights thus far.

It’s not omnichannel, it’s just retail

One of the strongest sentiments to come out of the report this year was the negative perception of some of the language that permeates the digital marketing space and the term omnichannel in particular. One retailer was anonymously quoted as saying “Omnichannel is just another term, it’s consumer expectations that have become omni if anything … Now customers expect to be able to research on their mobile, maybe even buy on the device, or at least then go to the store the next day and look at the product. There is an expectation for how retailers deliver on these channels, that is what is important – we need to to take commercial advantage of these expectations.”

Overall most retailers agreed that there was no “one size fits all” approach to retail promotion across so many digital and non-digital channels. Spending time to get the strategy right, and having clarity about what each channel was to be used for, is essential in creating optimal cross-channel experiences.

Think less about the channel and more about the experience

One critical evolution in tone that came through clearly in this year’s report was the role that digital tools and techniques play in developing a customer-focused business and leading changes in customer engagement. While no one respondent claimed to have all the answers, many were looking for ways to constantly improve.

A constant focus on the customer experience combined with the strategic use of customer data was seen as central to creating a sustained competitive advantage. Naturally, taking this approach across so many channels raises concerns around complexity. As such marketing automation was seen as the only scalable way to manage the levels of customer engagement initiatives that many firms sought to achieve.

Digital strategic importance is growing rapidly

Compared to when the AIMIA report was published in 2011 digital is now seen as “business as usual. It has become integrated part of normal business operations. And this clarity has seen it’s strategic importance grow quickly over the last 12 months. Another anonymous interviewee said “Because of the rapid growth of our [online and digital] performance we are making a material difference to our company’s overall year on year sales growth. So we’re not 50 percent of the business but contribution sales growth is significantly more than our sales as a percentage of the overall sales. For that reason we’re getting growing visibility because we’re basically helping the company grow quicker than it would otherwise… It’s about the customer, giving them great customer service and offering different service to a regular store. With digital we can provide more and more value added services, where a few years ago it might just be store locations and opening hours, now it’s personalised specials using data, just to actually help people shop and save money.”

Australian retailer are in a mature digital landscape

While e-commerce itself may still only make up a small percentage of overall sales for many retailers, the digital landscape touches every aspect of the retail marketing and branding journey. It would seem that Australia retailers are now fighting back against overseas competition by adopting digital marketing techniques and looking for new way of thinking through long term strategy, with customer experience and data and the centre.

The AIMIA Retail Research Report was conducted with many of Australia’s leading retailers and was focused on gaining insights from decision makers in the areas of e-commerce and digital marketing. The report is available for download here.

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We have big data, now we need big ideas

Big ideas 300x200 We have big data, now we need big ideas

I recently attended an event that focused on Big Data insights and techniques for retailers. It was well attended and had some great speakers presenting including Myer CEO Bernie Brooks. By the end of the two hour seminar it was clear that Australian businesses have been busy investing in Big Data technology thereby ensuring they have access to a large number of data sets.  But as my taxi pulled away from the venue I felt bothered by how little was actually being achieved with that data. We have the big data, but we seem to be lacking the big Ideas to make the most of it.

One of the major constraints on what organisations achieve with big data relates to their approach to the acquisition, ownership and use of big data. Companies have their own set of objectives and as a result, are currently viewing customer data as a resource to squeeze value from. I wrote about this in an article titled “Data is not the new oil, it’s the new soil” in October 2013 for the website of Smart Data Collective. In this article I suggested that businesses view customer data to a resource akin to oil: “Oil is valuable. If you find, collect and store oil it will remain valuable. Data is a very different thing. Data is generated when people do something. It is a record of an event. That means it starts losing value almost as soon as it is generated because it ages. We can see trends and obtain insights but to get real value from data, it must be used in real time. Simply gathering and storing data is a pointless exercise.”

Many businesses are now past the point of simply gathering and storing data. They are using it, but the focus is too heavily weighted towards simply deploying  it as a marketing tool. Using customer data as a tool to better target and personalise communications is extremely important. In a fragmented media landscape it is vital to invest in this kind of marketing to remain relevant. But it is not enough.

If a company views the data as a marketing and communications asset then they will naturally try and get as much value from it as possible. But think about what will happen in the longer term. If businesses  invest in big data systems and techniques they will have to show a return on this investment. As this return on investment starts to be proven and reported shareholders will come to expect consistent and even higher returns on this type of  activity.This means more data will need to be collected and even more messages (mostly in the form of emails) will need to be sent out to drive customer behaviour. This will then produce  a vicious cycle where customers  become fatigued at best, and completely distrusting at worst.

What businesses need to do now is start to shift their perception of data. It is an asset, but it is an asset they share with their customers. The only real way of creating true long-term value from customer data is to take a step back and say “how can we use customer data to generate value for the very customers who are generating it?”, or put another way, how can a business create amazing data-driven experiences that will develop their customer relationships?

To really make the most of data companies need to work with everything they have. They need to get the most creative people working with the data scientists to ensure data is used to benefit the customer. To do this, they must have  great digital and data strategists that know how to speak the language of business, technology, creativity and customers all at once.

There is a big opportunity for businesses to become much more than the sum of all of the data-parts they collect. They need to move back towards big Ideas-which now can be underpinned by big data.

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What can LinkedIn’s updates teach us about selling software?

s3.reutersmedia 300x182 What can LinkedIn’s updates teach us about selling software?

With above 300 million professionals on the platform worldwide, browsing LinkedIn is now the default way for keeping tabs on people in your professional networks. In fact, many professionals spend more time managing their LinkedIn profile than keeping their CV up to date. Recently the social network added a range of new features to their premium subscription service. Peeling back the layers of the new offering reveals something interesting about how they are building their overall value proposition. It also tells us something about the software industry in general, and the model commonly referred to as Freemium.

AS with many software-as-a-service (SaaS) providers, Linkedin employ a technique called “Freemium selling”. Put simply, they offer up basic features free of charge, and then promote additional, higher value features for a cost (usually a subscription fee). However, unless you are a recruiter or professional salesperson, the difference between a free and paid account was not clear. Recently though, LinkedIn has made some improvements to their premium accounts. These are mostly focused on increasing the visibility of the account holder, deeper analytics, and access to better search and communications tools.

For LinkedIn, converting members to the premium model isn’t their only revenue stream, but the recent updates suggest it is starting to become more important. It is likely that this most recent round of updates for its premium service is the start of a process that will widen the gap between the free service and the paid one. And looking at this progression tells us something about the Freemium model itself.

For software platforms that employ the ‘Freemium’ model, one of the most important questions that they must deal with is, “what will it take for someone to become a paying customer?” By default the platform promotes two sets of value propositions: the first focuses on getting customers to sign up, using the platform and providing enough value to “lock them in”; the second focuses on getting them to part with money for additional benefit. If the distinction between the two offers is not strong enough then the conversion rate will suffer and adjustments will need to made – as is the case with LinkedIn’s recent upgrades.

One of the difficulties in dealing with this problem is that the solution changes over time. Early adopters see value in the paid model and rapidly buy in. In LinkedIn’s case, this was primarily recruiters and sales professionals. But as this market segment approaches saturation point, new features must be developed to appeal to other, less obvious, audiences.

An important part of this process is ensuring that the platform doesn’t go stale. Ongoing innovation and incremental product releases ensure that users don’t start to suffer from interface fatigue. On the other hand, having too many changes or interface updates that are too big a jump can cause user backlash, as Facebook has had to deal with many times. There is a delicate balance that must be struck.

Overall the Freemium model is one that requires constant user analysis and ongoing innovation. As the term Software-as-a-Service suggests, customers are being delivered a service that must be managed and matured to ensure it remains relevant – and that requires constant attention to developments that drive both customer acquisition and the conversion of existing customers to the premium service.

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How to win at digital transformation

The same economic and technological changes which expose weaknesses in existing business models also pose huge opportunities for those willing to embrace change and respond to evolving market demands. Joseph Schumpeter, a famous American economist, referred to this process as “creative destruction”. But being on the winning side of this process is rarely a simple matter.

The  disruption that the proliferation of online technologies is having on business activities such as marketing, communications and customer interaction and a wide range of business models is a prime example of the forces of creative destruction at work. Many businesses have moved quickly to become ‘digital leaders’ and are already benefitting from this process. Others are still coming to terms with what this change means for their business.

But the time for wondering if digital transformation is right for your organisation is now over. In July this year online retail giant Amazon.com turns 20 years old. The significance of this milestone is that e-commerce, and the digital space in general, is now firmly entrenched in the global economy. It is no longer a question “if” your business becomes digital but “how”. Digital transformation is now a matter of survival.

This is obviously true for industry sectors such as retail, where the move to the online space is plain for all to see. But it equally true for other sectors. We are relentlessly heading to a world where everything that can be digitised, will be digitised. The development and adoption of technologies such as 3D printing and further advancement in mobile technology will further increase the pace of change.

So let’s look at what is needed to become a leading digital enterprise. 

Develop a healthy obsession with your customer

Today’s customers are more informed and more empowered now than any other time in history. The rapid uptake of online social media, has done much more than just give people new tools for communicating. It has become the catalyst for rising customer expectations. This is pushing business to make improvement across all their channels to market as their customers are now expecting a seamless brand experience across all touch-points.

Spending time designing you customer experience, all the way from generating awareness through to the actual service and post-service stages, is a critical first step. It is easy to say “we want a unique customer experience” but operationalising that takes real effort and leadership support. Thinking through the challenges of securing and respecting your customer’s data is vital as trust can be eroded very quickly if customer data is misused. In this regard it is important to continually look at the information that your interactions with customers is giving you, and use it to refine the customer journey. 

A paper called “The seven habits of highly effective digital enterprises”, published by McKinsey&Company in May this year, highlighted Zappos as a market leading example of this customer focused obsession. The paper said that “[t]his mind-set is what enables companies to go beyond what’s normal and into the extraordinary. If online retailer Zappos is out of stock on a product, it will help you find the item from a competitor. Little wonder that 75 percent of its orders come from repeat customers.”

Be unreasonably demanding

Big aspirations and a clear vision of what you wish to achieve is essential precursor to developing a digital strategy that will compete and win in today’s landscape. Leadership teams need to become comfortable with new team structures and think differently about how their business needs to operate. Setting unreasonable targets and being overly aspirational is a way of “shocking” your organisation out of complacency. As the McKinsey report noted it “…is a way to jar an organisation into seeing digital as a business that creates value, not as a channel that drives activities… if your targets aren’t making the majority of your company feel nervous, you probably aren’t aiming high enough.”

The McKinsey report goes on to highlight case studies: “Netflix was another brand with an unreasonably aspirational vision. It had built a successful online DVD rental business, but leadership saw that the future of the industry would be in video streaming, not physical media. The management team saw how quickly broadband technology was evolving and made a strategic bet that placed it at the forefront of a surge in real-time entertainment. As the video-streaming market took off, Netflix quickly captured nearly a third of downstream video traffic. By the end of 2013, Netflix had more than 40 million streaming subscribers.”

Start small and move quickly

When it comes to digital transformation, strategy and planning are important, but just so is experimentation and simply “getting on with it”. The digital space moves very quickly so trying things out and allowing teams to feel comfortable with “failing fast” can be a highly efficient way transforming your business. Adopting methods such as agile development allows digital teams to respond to changing environments and unpredictable situations quickly. 

When digitising processes, such as rolling out a marketing automation programme, choosing the toolset is important but simply getting started with it is the best way of creating success. Start with small projects and build on successes quickly along a path toward your vision. Your higher activity level the more data will be generated, data that will enable your organisation to make better decisions. 

The McKinsey report highlighted P&G as a leader in this space: “P&G, for example, created a single analytics portal, called the Decision Cockpit, which provides up-to-date sales data across brands, products, and regions to more than 50,000 employees globally.” This focus on making data visible allows the organisation to make decisions, and define projects more quickly.

The three guidelines discussed above all point to a common theme. Winning at digital transformation is not simply about the technology adopted, but rather how leaderships teams communicate and execute the transformation. And this leadership is the most critical element in determining if a digital transformation project is going to be a success.

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Digital innovation in retail

10424439154 ed0712e60c z 270x226 Digital innovation in retail

The way we shop has changed forever. E-commerce sales continue to climb. A 2013 Forrester report stated that Australian e-commerce sales in 2010 were worth $27 billion and by the end of 2013 had jumped to more than $37 billion.

Over the past few years, major retailers overseas saw strong currencies and economies as an opportunity to expand into the Australian and New Zealand markets. These changes in consumer behaviour and competitive landscape took many local retailers by surprise. Many have been struggling to combat and capitalise on the shift towards online purchases.

This year that is all changing. Australian retailers, big and small, have stepped up their level of investment in online sales. The beauty and fashion industries, in particular, have come under intense competitive pressure and, as a result, they are leading the charge in maturing the e-commerce landscape in this part of the world.

The digital world can be confusing. There is an endless list of software products to invest in and getting the timing and combination right can have a huge impact on the return on investment. So if your business is one of the many retail organisations that is about to make a significant investment in e-commerce, it is worth identifying the most important elements you need to think about.

GETTING YOUR STRATEGY RIGHT

The digital marketing space is awash with software vendors touting amazing products. Most are effective if used in the right way, but the trick is to know which ones are right for your business and how to prioritise and organise your investment “schedule”. And that is all about ensuring your digital strategy is aligned to your business objectives, your customers’ expectations, and where your business sits on the “digital maturity curve”.

An article entitled “The Four Types of Digital Marketer” published in Strategy + Business highlighted four types of digital marketing companies and described them in the following way:

“Leaders are a small but growing group of companies, including Nike, Burberry, 3M, Apple, L.L. Bean, and Coca-Cola, that have mastered the two main capabilities involved in maintaining an online presence: insights and analysis on the one hand, and platforms and activation on the other.

“Scholars are skilled at consumer insights and analytics; some of them, for example, have developed sophisticated forms of market segmentation based on deep insights about the way people make purchases. But they have not yet converted these insights and analyses into profitable action.

“Pioneers have established a robust presence in digital media, with viable forms of electronic commerce, their own media platforms, or other kinds of web, mobile phone, or app-based services. But these activation platforms are not sufficiently customer-centric; they are not grounded in insights about their customer base and therefore they do not engage consumers as well as they might.

Novices are still coming up to speed in the practices of digital marketing, and (in many cases) discovering which facets benefit them and which may not.”

Once you have determined where your business sits on the digital maturity curve, you need to determine where to go from there. A Booz & Company report, entitled How to Choose the Right Digital Marketing Model identified three categories of digital strategy:

DIGITAL BRANDERS are often consumer products companies, retailers or other marketers that focus on building brand equity and deeper consumer engagement. These companies are moving away from traditional linear advertising and investing in digital experiences that connect with their customers. They are focused on recruiting new consumers to the brand, increasing advocacy and driving loyalty.

DEMAND GENERATORS, such as retailers, play the numbers game. They are focused on driving traffic and converting leads in the fewest steps possible. To quote the report, ‘All elements of the digital marketing strategy – website design, search engine optimisation, mobile connected apps, and engagement in social communities – are tailored to boost sales and increase loyalty.’

PRODUCT INNOVATORS use digital marketing to help identify, develop, and roll out new digital products and services. Booz explained that ‘. . . these companies employ digital interactions with consumers primarily to rapidly gather insights that can help shape the innovation pipeline’.”

Your digital strategy is about understanding and designing the entire digital customer experience journey. So your digital “plan” should be a well-thought-through expression of your customer experience strategy.

DATABASE GROWTH

 A database of active, qualified leads and customers is a vital strategic asset for an online retailer. It gives you the options and insights necessary to design effective communications.

The key is to make sure the database entries, or “leads”, are qualified. Buying a list won’t work. Make sure you have a separate marketing program designed to grow your database. The amount you invest in this area should be constantly assessed and aligned to the value the database is generating. The more data you have about the contacts, the better qualified they will be and more they will worth to you. Invest wisely and communicate strategically.

CONVERSION RATE OPTIMISATION

Conversion rate optimisation is a key component of any digital program. You need to have people on your team who can look at sets of data, assess them against best practice and identify opportunities to do better.

Conversion rate optimisation focuses on the conversion performance of all your digital touch-points with potential consumers including email open rates, content marketing engagement rates, search marketing performance and e-commerce website performance. It then seeks to optimise the path to purchase.

The trick is to test and refine in a scientific and disciplined way – develop a hypothesis, predict the results, test, and report the findings to the entire digital team to ensure insights can be adapted to others areas.

CONTENT MARKETING

Content marketing is a buzzword, gathering momentum because of the results it is getting. A report published in 2012 by Kapost showed that per dollar spent, content marketing produced three times more leads than paid search. And it cost less than paid search: 31 per cent less for small- and mid-sized companies and 41 per cent less for large companies.

The proliferation of social media platforms has both added complexity and changed the focus for marketers. Content marketing is less about campaigns and more about a constant flow of engaging content – although it should always support campaign activity.

Content marketing is about tailoring messages to suit specific segments and designing the content to get as much reach as possible.

The content marketing initiatives within your organisation will most probably become the engine room for all marketing activity. It will be the program that determines focus and directs activity.

MARKETING AUTOMATION

An accurate marketing automation program ensures all of your digital marketing activity operates at maximum efficiency and that all the elements link together coherently.

A report published in July 2012 by Aberdeen Group called Marketing Lead Management Report showed that companies using marketing automation see 53 per cent higher conversion rates than non-users, and achieved an annualised revenue growth rate 3.1 per cent higher than non-users.

Marketing automation is more than a sophisticated email delivery platform. It is a combination of the tools, processes and resources needed to ensure that you can capitalise on opportunities wherever they arise.

E-commerce is quickly moving out of the trial and experiment stages and becoming a central part of the growth plans for many businesses. My prediction is that 2014 will be seen as the year that Australian retailers stopped fighting digital disruption and started using technology to make their mark on the world.

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The Wu-Tang effect – Innovation in the entertainment industry

wu 300x300 The Wu Tang effect   Innovation in the entertainment industry

Image source: WuTang Clan Twitter account

Few industries have experienced more disruption from the advancement in digital technology than the entertainment industry. From the moment the peer-to-peer music sharing service Napster came onto the scene in 1999 the writing was on the wall for the existing business models of the music, film and television industries.

They initially resisted the change but are now succumbing to the impact of digital innovation. But not all innovation potentially impacting this industry is purely digital.
Just recently I read about the model that USA based hip-hop band the WU-Tang Clan are about to try out. They have decided to combat the impact arising from the ability to instantly share music brought about by digital advances by making and releasing just one copy of their new album “Once Upon A Time In Shaolin”. What on earth they are thinking? Let’s explore.

The story starts with the Wu-Tang Clan commissioning a one-of-a-kind engraved silver-and-nickel box by British-Moroccan artist Yahya. The box will soon encase the one and only copy of the new album the band has been creating in secret for the last two years. One of the members of the band, RZA, recently said, “We’re about to put out a piece of art like nobody else has done in the history of music. We’re making a single-sale collector’s item. This is like somebody having the sceptre of an Egyptian king.”

At first sight this appears to be a monumental mistake. Even if they sell the album for a million dollars or even two this still wouldn’t match what they made from their earlier album sales. But the true genius is in what they plan to do before the album is sold. The album is going to go on a world tour, focused on around the types of organisations that normally show high profile artworks; museums and galleries. And like the exhibits that normally are the start of the show at these public buildings there will be a price to attend and listen to the “artwork” – after going through a heavy security screening of course.

Once the album has finished its “tour” then it will be put up for sale. Assuming the album is not leaked it is likely that youth culture focused brands would be the first in line to buy the album – which is likely fetch millions of dollars. And once it has been purchased the owner is free to do what they want with it. In other words the plan is to create a unique, exclusive and valuable music “property”.

There are risks to this strategy. As album’s main producer “Cilvaringz” put it: “One leak of this thing nullifies the entire concept.” But it is a bold and courageous experiment in inventing a new way for music to find value. As Cilvaringz said “I know it sounds crazy, it might totally flop, and we might be completely ridiculed. But the essence and core of our ideas is to inspire creation and originality and debate, and save the music album from dying.”

What I like most about the great Wu-Tang experiment is the fact they have clearly spent time thinking about how they can reframe what music is to their customers. It is a fact that music is social and something to be shared. But it is also a source of excitement – a special experience – especially in that moment when you hear a tune that grabs you for the very first time. What Wu-Tang Clan are trying to do is create a lot of “first times”, while also positioning their music as a work of art. They are reengineering the music listener’s customer experience.

Will it work? I don’t know. But I applaud the band for being brave in the face of an industry confronted with dramatic change. It is encouraging to see radical new ideas being tested in the market. That’s true innovation.

Now it’s up to the rest of the entertainment industry to step outside of its old world paradigms and take on the challenge to be truly innovative.

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Innovation in sport – understanding the Fan Experience

veikkaaja sports fan 300x170 Innovation in sport   understanding the Fan Experience

Few businesses get the passionate brand engagement that sporting organisations enjoy. In fact, many businesses would give their proverbial right arm to have available the intensity of fan engagement, rich sources of content and “pulling power” of sporting organisations.

So why is it that many sporting organisations are struggling financially?

Sporting organisations, ranging from clubs to high profile teams and venues ,are currently undergoing a period of rapid evolution and pressure to change the way they do things. This has become most pronounced for organisations who govern sports at a national level. As the media landscape has become increasingly competitive and fragmented many of the traditional sponsorship opportunities available to sport have become more difficult. And sponsors are now demanding much more for their sponsorship dollars than ever before. Brand exposure alone is no longer enough to warrant long term sponsorship.

To take full advantage of their significant brand assets and to stay relevant and exciting, sporting businesses need to think and act differently. The more visionary sporting bodies-and there is a number of them – now recognise that digital innovation is both their biggest challenge, and their greatest opportunity.

But how does an organisation go about ‘digital innovation’? Most sporting organisations are filled with very talented people who have a passion for the sport they represent. But this can create it’s own set of challenges. When an organisation has spent much of its time focusing on high performance athletes and major sporting events, and has never really had to battle to capture the attention of the public, then seeing the world through the customers’ eyes (in this case that of the fan base) can be difficult to do.

At Working Three we are committed to helping sports organisations drive systemic change. We usually have three key objectives in mind at the outset: to help find new opportunities for revenue; to provide better value for sponsors; and last but not least, to provide better experiences for customers.

By beginning with customer experience disciplines, and using the Fan Experience Framework that we have developed through our work with many sporting bodies, we can help them achieve these objectives.

So if you are involved in a sporting organisation what can you do? Begin with customer insights. What do you already know about your customers? What pockets of data do you have that would allow you to develop a deeper understanding of the people in your fan base? It’s often surprising how much data your company has available. Use that as a basis for building a map of the customer experience. Even at this early stage opportunities for doing things differently become clear.This should be mapped against key business objectives to provide focus for your effort.

Next find out what your fans really want. Fans are often willing to pay for more value. The trick is finding what that value proposition really is. It might be access to content and other assets that have already been created, but don’t assume that. There are other models and many opportunities for generating revenue so don’t let current thinking hold you back. Remember, you are designing a service so allow yourself the freedom to make that service as good as it can possibly be.

Validated opportunities can then be used to design an optimal fan experience and innovation roadmap. Delivering this this may require organisational change and that typically is not easy. In fact stakeholder management issues can be one of the main factors that inhibits sporting organisations from rapidly evolving. So get your people involved. Take them on the journey and spend time listening to their ideas. And ask your advisor to help you build a “stakeholder management plan” that helps you anticipate and navigate the challenges you are likely to face.

My experience tells me that the most successful organisations are those avoid the temptation to rush the innovation process. Spend time allowing everyone to come up to speed. Develop a programme that will allow your organisation to get the most out of fan engagement and smooth out the issues that can arise from focusing too heavily on a single major event. Fan experience innovation is about finding out what your ‘customer’ needs, and is willing to pay for every day – not just the day of the event.

From music to movies and television, the entertainment world has been irreversibly altered by the rapid evolution of digital technologies. Sports is one of the oldest forms of entertainment and it too is part of this changing landscape. But unlike many other industries, sport has a culture and passion associated with it that makes it uniquely positioned to benefit from these changes. The key to unlocking this gain is seeing the world through the eyes of the most important participant – the fan.

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Recognise a broken customer experience and do something about it

As a consultant I sometimes spend more than a reasonable amount of time on planes. Recently I travelled between New Zealand and Australia several times over the course of one week. During one of my many visits to an airline lounge I met the chief executive of an Australian retailer. He asked me what I did for a living. And I explained that our company is a customer experience and digital innovation consultancy. His response was as follows: “I hear people talking about customer experience a lot but don’t businesses already know everything about their customers? Isn’t the experience obvious?”

He had a point. It should be obvious. But in fact many companies have become so disconnected from their customer base that delivering a wonderful customer experience is a very hard thing to do – or even worse very low on their priority list.

It shouldn’t be. A recent report commissioned and published by customer experience software vendor SDL found that “60 percent of global consumers are willing to pay more for a product if the brand delivered a positive customer experience.” Another report by Watermark Consulting, released in April last year, showed that “for the 6-year period from 2007 to 2012, Customer Experience Leaders… outperformed the broader market, generating a total return that was three times higher on average than the S&P 500 Index.”

Clearly there is a strong business case for optimising the customer experience across a multitude of touch points. There is always something that can be done to improve the customer experience from a process perspective but currently the big wins are coming from significant innovation projects in the digital space – where new and exciting touch points can be taken to market quickly, and at scale.

Innovation can be a tricky beast to tame, especially in the digital space. It’s far too easy to get excited about ideas early on and jump into a project without understanding what impact it may have. The real trick is to find the areas of your customer’s journey that are beginning to break down and focus on innovating around these areas.

So how do you know if your organisation has a need to commence a customer experience innovation project?

There are a few key indicators that would suggest that your organisation is need of rethinking its customers’ experiences.

Customers are complaining
It can’t be much more obvious than this. If customers are complaining about an issue or some aspect of a process then there is an opportunity to innovate. The trick is to treat complaints as opportunities and use the information they generate. And go beyond industry norms. Just because your Net Promoter Score is on par with other companies in your industry it doesn’t mean that it couldn’t be greatly increased with the right focus. Why not try and be an outlier than average?

Internal silos creating communication “black holes”
When one department isn’t speaking to another in your organisation the end result can frequently be a broken customer experience. Take a critical look at the way your organisation operates. Has there been years of organic growth within company silos? If so then there is a good chance that you may be creating communication “black-holes”.

Inconsistency across channels
How many customer facing channels does your business manage? Retailers for example may have stores, e-commerce sites and partnerships with third party retailers. Service providers may have their core service, a customer service business function, digital value adds and other key touch points. If there is any inconsistency in the way that customers are treated and managed across these touch points then the typical journey will not be a smooth one.

Social media is viewed as risky
Social media is not right for every organisation but if your company is a consumer facing one there is very good chance it will have or be having an impact. Think about how social media engagements are viewed in your organisation. If it is seen as too much of a risk because of “what people will say” then you have to step back and think about why that is and what you can do to fix the overall experience.

Internal KPI’s are not linked to customer satisfaction
Measurement and accountability create focus. Are the key leaders in your organisation measured against a customer satisfaction metric? If not you are probably developing issues for the way that customer interact with your brand.

Now that you have identified within your organisation the need to address customer experience , what do you do next? Here’s my suggested list.

Use data to develop a 360º view of your customers
The world is awash with data. Social media, website interactions, in-store behaviours, email opens, product usage and every touchpoint in-between is generating data that you can use to understand your customers from every angle. The key is to spend time knowing exactly which data points are important to the relationship between you and your customers – then collect and use them effectively.

To do this marketing, customer service and IT must work together with shared goals. And data collection and usage is not just about sending out marketing messages. It is about creating real value for the customer. Use it wisely to generate deep relationships with your customers.

Focus on behaviours first – then transactions
When you are trying to redesign your customers’ journey it is essential to think about every touchpoint your customers will interact with – and not just the ones that are generating revenue. Taking this broad, holistic view of the world is essential to viewing people as more than simply the sources of a financial transaction. To create a fantastic customer experience you need to think about the behaviours that people are currently exhibiting at each touchpoint, and the behaviours you want your customer to exhibit.

Break down internal silos
This point is important, and it won’t be the last time I comment on it. Make sure that internal silos are working together well and, in particular, sharing data and insights. This will ensure customers have a constant and reliable experience. One of the best ways to improve customer satisfaction is to ensure you meet expectations consistently.

Map the CX
A very important item on my list is ensuring that you have mapped out the entire customer journey. This means looking at the stages your customers go through while interacting with your brand, mapping out and understanding what your customers are thinking and feeling at each touch point. This map will serve as your guide to help identify and map each and every touch point. This, in turn, allows you to begin to design an innovation pathway.

Use human centred design processes to innovate
One you have mapped and understood the customer experience and decided where you want to take it you need to start designing innovations. Using design thinking or service design methodologies you can explore opportunities and build out concepts into prototypes – always keeping the customer at the centre of what you are trying to achieve.

To quote Kerry Bodine from Forrester “Unlike customer experience firms that take an approach akin to management consulting, service design agencies leverage human-centered design practices like ethnographic research, co-creation, and low-fidelity prototyping. The combination of these practices enables service design agencies to more quickly — and cheaply — identify the real customer and corporate problems that they need to address and develop effective solutions. These activities also serve as potent communication vehicles, exposing assumptions and marshalling early buy-in from employees and stakeholders.”

I didn’t explain all of this to the man I met in the airline lounge. I didn’t need to. All I had to say was “Would you pay more to fly on your favourite airline?”. That started him talking about why he loved flying with Virgin and how he would pay a extra for the privilege. I could almost hear the penny drop when he realised what value a well thought through customer experience could deliver.

And now you now know what to look for in your organisation.

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