Simon Smith, our European Head of Digital, has a mantra–“Everything is digital.” He also believes that “Digital is the most misunderstood word in business today.”
In 2011 we surveyed more than 800 companies about their digital strategy. Some 16% described their company as “digitally inactive.” And of those who had a digital strategy, two-thirds confessed to implementing it in a fragmented way.
Here’s an overview of why–and how–you should catch up and build success in our post-digital world.
Digital media have triggered profound shifts in consumers’ interactions and relationships with businesses. The language of B2C and B2B is no longer relevant. At Interbrand, we use the terms business and consumer (B&C) and business and business (B&B) to describe how businesses and consumers now work together to create brands. And for brand, read: business.
Consumer-created content and conversations are driving organizations’ image, reputation and bottom line. This represents a significant shift in dynamic. As consumers become increasingly influential, businesses are becoming less powerful.
This means that you need to focus more on understanding, engaging and staying relevant to consumers, and less on regimenting or controlling them. Vitamin Water and Pepsi have both demonstrated how stronger engagement with their markets can create more successful products and services. Others would do well to follow their lead. In contrast, BP failed to engage with the debate after the Gulf of Mexico oil spill in 2010. Trying to “shout” back with big budget advertising only served to alienate people and further damage the company’s reputation.
It’s time to tear up the traditional “funnel” model of consumer purchasing. Consumers now go through a dynamic, non-linear decision-making process. What other consumers say about a brand is becoming the most important input in consumer choice. More than two-thirds of global consumers, young and old alike, seek online reviews or recommendations from others. And we’ve all been put off a product or service by a lone bad review.
A fluid and uncertain market is the new normal, which means traditional marketing strategies are no longer effective. In this world, responsiveness trumps efficiency. The ability to engage with customers one-on-one, particularly after purchase, is vital to long-term business success. Doing this adds value, generates revenue and–most importantly–builds customer loyalty.
Yet a quarter of companies don’t solicit post-purchase feedback from customers. They could learn from the way Amazon uses feedback and digital tools to engage customers through its recommendation system, one-click shopping button, loyalty program Prime, credit card and app.
Just as Amazon simplifies life for customers, digital media can be used to smooth their way through potentially disjointed experiences. Our online and offline worlds are now merged into one ongoing experience. That experience–how audiences encounter and perceive your business–increasingly determines its vitality.
Consumers have become used to buying online, returning in-store and instantly receiving product updates. And they expect each interaction to reflect your brand in a consistent and engaging way. Every aspect of your business, across all departments, experiences, environments and communications (‘touchpoints’ as we call them at Interbrand), should feel the same. Think of Disney’s commitment to magic, Apple’s to humanizing technology or BMW’s to driving experience.
This seamlessness is the holy grail in building relationships with customers, and digital media offer huge opportunities in this quest. So, a fashion retailer can be browseable anywhere, quickly replicate communications across all outlets, offer purchase via QR codes, connect customers to other fans, turn their “likes” into product previews, reward introductions to other customers…
Digital media form an intrinsic part of consumers’ interactions with businesses. So it follows that digital should be central to building relationships with your customers and enhancing their experience. Yet rather than taking a holistic approach, many businesses just use digital media as a promotional or idea generation tool.
Many of us have inboxes full of Groupon or CouponsDaily voucher codes. While this may drive short-term sales, over time it can dent brand perceptions, and ultimately business value. In a few cases, these kind of promotions have led to unsustainably high-volume, low-value demand–with catastrophic results for reputation and revenue.
Crowdsourcing can be a boon for business innovation and public engagement–or a disaster. It all depends on whether you have the systems and knowhow to manage a torrent of ideas effectively.
Well-planned digital activities enable more meaningful connections with consumers. Adidas’s engaged its young target audience through its limited edition Originals sneakers in 2010. Each shoe was embedded with an augmented reality (AR) code, which unlocked access to an online gaming environment. In a clever twist, the sneakers also acted as game controllers.
In 2011, Tesco created a virtual supermarket on a South Korean subway billboard. Waiting commuters could scan the QR codes of products on the billboard, purchase them and have them delivered within 24 hours. This reinforced Tesco’s focus on convenience and brought real benefit to customers. Interestingly, the retailer has had a bumpy ride in the UK during 2011/12 because it resorted to old-fashioned price cuts rather than adding value.
So digital has changed the way we all live our lives and make consumer choices. It also has far-reaching implications for business communication, decision-making and structure.
There is a growing disconnect between the increasingly flexible social networks we all enjoy and the rigid structures and hierarchies in which most of us work. Departmental and divisional silos made sense when efficient production was key to business success but responsiveness is the name of the game now.
In today’s world, anything that hinders speed and agility contributes to failure. To keep up with rapidly changing markets, businesses need to gradually move their structure from a “vertical” approach to a more “horizontal” one.
The way forward is to use digital innovations to bring the outside in. The brightest businesses are creating tools and processes that enable employees to connect and collaborate across the organization. Procter & Gamble’s Clay Street Project, for example, creates multi-discipline teams that focus on market needs, rather than divisional performance.
In terms of business innovation, IBM has developed Beehive, an organization-wide networking and idea-sharing hub to facilitate employee contributions. And Innovation Pipeline, AT&T’s internal idea generation tool, has significantly changed the company’s structure. It has also resulted in around 50 new patents.
Just as business success depends on brand strength, digital is central to successful brands. Brands create value and drive business success. And you need to use digital to make this happen. So Simon is right–“Everything is digital,” and digital is here to stay.
It’s easy to be put off by the apparent complexity of digital media, but success comes down to understanding people and behavior. If you can engage consumers and enhance their experience, you will build long-term business sustainability and value.