Digital Transformation @ GE

“We are transforming GE into the world’s premier digital industrial company using our scale and diversity to drive outcomes for customers.   The real opportunity for  change…surpassing the magnitude of the  Consumer  Internet…is the Industrial  Internet.” –  Jeff Immelt,  CEO GE

Recently, a client asked me a thought provoking question – which large firm is executing the most interesting and complex digital transformation today?

Took me a while to process this question.  The usual familiar list of suspects – Amazon.com, Facebook, Google etc. – ran through my mind.  But one firm – GE – stood out in terms of the boldness of their digital vision and complex multi-year digitization they are executing across various industrial businesses.

GE is among the most technologically complex and geographically diverse firms in the world.  GE is taking a data-driven approach to digital transformation (Industrial Internet project).

Specifically, their objective is to drive a “Better Customer Outcomes Using Innovative Data-Driven Apps On a Integrated Platform.”

The business outcomes being targeted include:

• Asset optimization – optimize performance with minimal downtime
• Operations optimization – Increased system and people efficiency
• Process optimization – lower waste (material and cycles)

GE calls this strategy “the power of 1% efficiency improvement”.  The context for this improvement is a world where the machines are not just intelligent but self-aware, predictive, reactive and even social.  The goal is to wring small improvements and the ensuing massive savings from all of them.

To understand this digitization better consider the following “What-If” use cases across Aviation, Energy and Transportation.

GE  Aviation Use Case

Advertisements

Marketing Technology Evolving Landscape

When you talk about Digital, you normally think of the front-office MarTech (marketing technology) – advertising, marketing, sales, commerce, service.  This is where most companies are investing as they race to deal with new customer experiences, better customer engagement, promotion effectiveness and more efficient commerce transactions.

MarTech is about platforms that help deepen relationships with customers, simplify and improve customer experience. They aim to increase digital engagement by delivering differentiated experiences.

MarTech is growing partly because the proliferation of “screens” goes well beyond phones, tablets and desktops. There are exciting new developments as “screens” extend to the TV, wrist, in-home automation or car.  The pulse of digital experience is speeding up as new technology like 5G, virtual and augmented reality become more feasible and viable.

MarTech is also evolving with data science, analytics, machine learning and AI. By applying intelligence to interactions, promotions and advertising,  market leaders are completely changing the “art of the possible”.

Augmented Reality and Virtual Reality, Speech driven interfaces (e.g., Siri, Cortona, Echo/Alexa) all represent catalysts to the next wave of digital marketing innovation.

As a result, the MarTech (marketing technology) landscape grew even bigger in 2016. According to Scott Brinker there are as many as 3,874 marketing technology solutions  — almost twice as many as 2015.  We will definitely see an M&A boom as vendor consolidation becomes inevitable.

Digital Operations: Robotic Process Automation

“Looking to the future, the next big step will be for the very concept of the “device” to fade away. Over time, the computer itself—whatever its form factor—will be an intelligent assistant helping you. We will move from mobile first to an AI first world.”  – Sundar Pichai, CEO Google

Software bots or Robotic process automation (RPA) is becoming   mainstream at leading corporations as C-Suite execs look at next generation digital transformation strategies to do more with less.

High-volume, repeatable tasks within existing processes are slowly but surely being automated by software bots. Bots can perform at or better than humans at repetitive tasks using lookup, scraping tools, recording actions, natural language processing, role based access controls and rules engines.

As a result, there is a growing strategic wave of activity around next generation workforce transformation.  The quest for operational efficiency and competitive pressures is driving this wave. Outsourcing, offshoring strategies have reached the point of diminishing returns so a new frontier enabled by a workforce of software robots is emerging.

The focus is not just on simple tasks like answering the phone in a call-center but on managing complex data-heavy business outcomes, such as NLP driven interactions via chatbots, preventing credit card fraud, or conducting compliance checks.

In the past year, I have seen a massive uptick of interest in RPA. Corporations like Citibank, American Express,  Bank of America are implementing this trend with vendors as they race to cut operating costs and ensure compliance. Everyone under pressure from Amazon is looking for ways to automate faster.

The market opportunity of AI across industries and business processes has been expanding rapidly, with analyst firm IDC predicting that the worldwide content analytics, discovery and cognitive systems software market will grow from US$4.5 billion in 2014 to US$9.2 billion in 2019, with others citing these systems as catalyst to have a US$5 trillion – US$7 trillion potential economic impact by 2025.

Digital robots ∼ Apple Siri, Amazon Echo/Alexa, Microsoft Cortana, IBM Watson, Google Home/DeepMind, Facebook ChatBots, drones and autonomous driverless cars ∼ are now mainstream. What most people are not aware of is the rapidly advancing area of enterprise robots to create a “virtual FTE  workforce” and transform business processes by enabling automation of manual, rules based, back office administrative processes.

This emerging re-engineering of key back-office and front-office operations is called Robotic Process Automation (RPA).  Machine Learning (ML), guided ML, NLP and graph processing are becoming foundations for the next wave of advanced bot use cases. Speech recognition, image processing, translation have gone from demo technology to everyday use in part because of machine learning.

A whole new ecosystem has emerged – Automation Anywhere, Blue Prism, UIPath, Thoughttonomy, Workfusion, Redwood, Kyron Systems, Softomotive, Kofax Kapow and others.

RPA – What?

Customer Obsession via Product Management

“Consumers have elevated expectations based on everything they are doing their everyday world. What they see from Uber, they expect everywhere.”

We’ve entered an era when brands are racing to modernize, re-architect so they can to personalize experiences for their customers. The pace of change and digitalization of our world is accelerating.

Who are the most customer obsessed companies?  What are elements of a customer obsessed company? What role does world-class product management play in staying customer obsessed?

Amazon is definitely one of them. Google is another. Both firms are admired for their relentless innovation, experimentation and execution. So I did some research into what makes them unique.

Bezos focus has been the same for 20 years: “Start with the customer and work backwards.”

Google’s #1: Focus on the user and all else will follow. According to their philosophy…

“Since the beginning, we’ve focused on providing the best user experience possible. Whether we’re designing a new Internet browser or a new tweak to the look of the homepage, we take great care to ensure that they will ultimately serve you, rather than our own internal goal or bottom line. Our homepage interface is clear and simple, and pages load instantly. And when we build new tools and applications, we believe they should work so well you don’t have to consider how they might have been designed differently.”

Simple questions like ‘Where exactly is customer’s problem?’ and ‘What actions should we take to create value, convenience, and selection?’ are challenging for every organization. Most firms rely on McKinsey, Bain or BCG for this analysis. Doing this analysis with A/B testing, click-thrus, customer feedback and transaction data is the hallmark of Amazon product managers. I think that the product management structure of Amazon is their secret to success and differentiation.

The overall strategy of Amazon is shown here.  It’s not a secret for their competitors but something that is extremely difficult to execute globally at scale across multiple categories.

The diverse customer segments across our many businesses include:

• Books, Music, Movies, Video Games and Consoles, Software, and Digital Downloads
• Electronics and Computers, Home and Garden, Grocery, Health and Beauty, Toys, Kids and Baby, Clothing, Shoes and Jewelry, Sports and Outdoors, Tools, Auto and Industrial, and Digital Devices
• Amazon Web Services

See my complementary post Retailers and the Paradox of Digital for competitor execution challenges.

Customer Obsession @ Amazon

Amazon’s mission is to be the earth’s most customer centric company.  Both when scoping a new initiative and in every day decisions, they start with the customer and work backwards.

Amazon is customer obsessed, not competitor obsessed.

Retailers and the Digital Paradox

“Shopping is getting personal/easy/fast.  Machine learning is enabling interactions to become more targeted, relevant and intelligent.” Mary Meeker Internet Report 2017 

The challenges facing retailers are legion. Traffic at many shopping centers has dwindled, price competition is heating up, and 65+ million Americans are Amazon Prime customers — locking them into a system where they can get free delivery on millions of items and access to exclusive movies, shows and video games.

Digital induced pain for retailers is going to get worse in 2016 and 2017.  The gap between what consumers are expecting from retailers and what they are receiving is getting wider.  Consumers are spreading their buying activity across channels, forcing retailers to spread out their digital investments.  This puts significant stress on execution, product/platform management, design and leadership.

Evidence of this value migration from physical to digital is mounting every day.

Against that backdrop, Wal-Mart is closing over 269 stores as it retools portfolio. Macy’s said that it will shutter over 36 stores as store traffic declines faster than expected, and Finish Line said that it would close 150 stores by 2020.  Gap,  J.Crew,  American Apparel, Sears and Kmart, Target, Nordstrom are all facing similar headwinds.

Starbucks CEO Howard Schultz laid out his thoughts on the future of retail, “three years ago we began to envision that there would be a seismic change in consumer behavior, and that seismic change was due in large part to e-commerce and smartphone shopping.”  

It’s fascinating to watch retailers trying to shift tech/platform strategies to deal with digital disintermediation, showrooming, physical-to-digital channel integration, mobile shoppers, same-day delivery/fulfillment, programmatic targeting, online native models and now the new buzz.. virtual and augmented reality.

While most retailers seems to know what to do….they are unable to execute consistently or effectively. A talent gap in many cases. Others are hindered by legacy IT apps and infrastructure. Others by silos of data or necessary next generation technology capabilities like A/B testing, data science and machine learning.

This retail UX and shopper evolution is a continuation of the trend from 1960s.  

Analog to digital transformation

The Art of the Possible: Digital Masters

Amazon.com is the leading private label supplier of batteries (beating Duracell) and 3rd largest supplier of baby wipes (almost catching up with Huggies and Pampers).  Mary Meeker, Internet Report 2017

E-commerce is growing at 15% YoY.  We are right now in the middle of one of the biggest, most profound digital disintermediation in business especially retail.  What makes it challenging to execute is that there is no “one size fits all strategy.” if anyone claims they have the answers, they are probably exaggerating.

Seismic shifts are putting customers in control. As a result, there are many variants of digital:

• Digital add-ons to existing analog business
• Pure-play digital – Digital First
• Seamless consumer experience across web, mobile, physical channels
• Subscription stores with deeply personalized digital relationships
• Mass-customization of content and products
• Augmented Reality Experiences to complement retail experiences (e.g., Lowes)

CONVENIENCE and VALUE matter most to customers.  Digital is all about enabling corporations to leverage the power of new technologies to create new sources of value. However, most organizations are still grappling with digital basics or addressing technical debt that has accumulated.  But some leading edge firms (or digital masters) have figured out how to adapt to the fast arriving digital future.

So, who are these digital leaders and what are they doing to attract and retain customer attention?

• In content… National Geographic is considered a digital pioneer.  Others like New York Times, Financial Times, Time are innovating with metered paywall technology across many of their properties. Their objective is to drive anonymous visitors to become registered users and convert into brand product purchasers.
• In retail… Amazon.com, Walmart, Target, Apple and Starbucks  are often cited as digital masters, due to the significant investments they are seen to have already made both financially and in dedicated resources.
• In pharmacy… Walgreens is a digital master across different properties – Walgreens.com, Drugstore.com, Beauty.com, SkinStore.com (Cosmeceuticals), VisionDirect (Optical).
• In CPG manufacturing…. P&G, Pepsico, Coca-Cola, Nestle and Unilever and are often cited as digital center of excellence leaders,  allocating only shared resources to social marketing and e-commerce.
• In industrial… firms like GE, Caterpillar, John Deere are also considered digital leaders.  They are leveraging Internet of Things (IoT) to create novel experiences.

But, how are some other companies approaching digital customer experience and engagement? This is a very critical strategic issue as the average consumer spends more time on technology than sleep or eat. How firms grab this consumer attention will be key for future growth.

Source: Wal-mart Labs

Digitizing Customer Journeys

For the times they are a-changin’… Bob Dylan

Customer channel behavior and interaction model is evolving constantly.  Just when retailers think they have multi-channel figured out the channel/interaction game is shifting with chatbots, virtual assistants, speech shopping, and other innovation.

According to Gartner: “Conversational AI-first will supersede cloud-first, mobile-first as the most important, high-level imperative for the next 10 years.”

Basically, customers are not interacting with brands in a linear fashion… they are jumping around from channel to channel and expecting the experience to be seamless and relevant.

For instance, in online shopping, women are more likely than men to reach for their smartphones and tablets to research and make purchases. Of U.S consumers who say they’ve completed a purchase on a mobile device in the last month, 66.5% are women and 33.5% are men. Compare that to 2013, when a greater share of men than women completed purchases on mobile. [BusinessInsider, The e-commerce demographic report].

To better understand, customize and respond based on customer behavior/context/clicks, Fortune 500 companies are making large investments around Programmatic Marketing (“Marketing that learns”). Specifically, the objectives are:

• Visualize and map the 1:1 customer journey by personas.. Customer journeys are an illustration or visual representation of all points of interaction across touchpoints.
• Optimizing on the right journey attributes to increase yields  by >30% lift… Uncover the right combination of web, mobile and physical channels, content and experiences that  best achieves the target goals
• Enable marketers to identify journey bottlenecks for individuals and aggregates
• Leverage actual behavior data to enhance and personalize the experience for each individual customer

One of most often implemented use case in Programmatic Marketing is customer journey mapping and analytics.  Why? Because, deciphering the nuts-and-bolts” of individual customer journeys (and deducing intent) is core to improving customer experience and driving brand loyalty.

Digital Marketing + Data Science = Programmatic Marketing

Salesforce CEO Marc Benioff said at a recent conference: This is a huge shift going forward, which is that everybody wants systems that are smarter, everybody wants systems that are more predictive, everybody wants everything scored, everybody wants to understand what’s the next best offer, next best opportunity, how to make things a little bit more efficient.

————————–

People have a funny way of voting with their wallets. If marketers give customers something of value along the journey, they click, view, share and buy more.

The retail store that does not have a meaningful relationships with the consumer is dead or going to be dead.

But meaningful relationship are easy to engineer. Today’s marketer is faced with an almost impossible task: Create relevant, individualized journeys for a customer whose channel preferences, purchase behaviors, and tastes evolve with unmatchable speed.

The cutting edge in data-driven digital and mobile marketing is “marketing in the moment”, which is the ability to identify and optimize precise moments of marketing influence across multiple channels and devices. In digital advertising, firms like Facebook and RocketFuel are using continuous scoring algorithms that score each moment to predict whether an individual will react favorably to an ad shown (display ads, search, social media and video) at a given time.

So how do marketers (and advertisers) understand what their audience wants or will see as valuable? That’s where data science comes in. When you strip away the rhetoric, data science is just about finding meaningful insights through analyzing large datasets.

Data Science is increasingly fueling data-driven digital marketing strategies at cutting edge firms…. Marketing learns, acts, and evolves across the consumer journey. Programmatic real-time bidding platforms is growing to dominate ad spending.

“Marketing and Advertising That Learns” Strategies

Digitizing Wealth Management – The Rise of Robo-Advisors

Fintech stands for financial technology. It’s just a blanket term for technology that is disrupting the financial services industry. Payments, Blockchain, Robo-Advisors (or automated investment advisory services) are all segments in Fintech.

Why robo-advisors? We are in the early stages of a shift in wealth management, especially “plain vanilla” investing for the mass affluent and millennial segment.  Until recently, you had only two options when investing:

• Do-it-yourself (DIY)
• Hire a registered investment advisor (RIA)

Now there is a third option.  Robo-advisors are new a class of financial advisors that provides online, algorithm based portfolio management with minimal human intervention. Robo-Advisors going after the low-end of brokerage/RIA business with automated asset allocation.

The Robo-Advisors market leaders who are serving the mass affluent include are:

• Wealthfront (with over USD 2.6bn in assets under management (AuM) and 20,000 investors);
• Betterment (with over USD 1.4bn in AuM and 70,000 investors); and
•  FutureAdvisor (With over $600 million in AUM).

The timing for this market shift coincides with three trends: consumerization, digital tools, and disillusionment with status-quo investment advisors.  The gyrating stock market driven by program trading is increasingly bringing Robo-Advisors, algorithmic portfolio management to the forefront.  Investors are getting disillusioned with traditional investment advisors who simply track the market indices (SPY, QQQ or Russell 2000) by purchasing ETFs at best.

Many banks and brokerage firms over the years have shifted their focus to serve ultra high net worth (UHNW) and high net worth (HNW) investors, leaving an opportunity for firms to target the “mass affluent” investors, or those with less than $1 million in investable assets. Younger investors are increasingly interested in online digital advice, as opposed to hiring an adviser.

Digital Personas, UX and Customer Journey Mapping

Who are we designing for? What are we designing?  What outcomes are we targeting? What are the end-to-end user journeys as boundaries blur  between consumers, stores and consumer brands?

How do you approach the messaging and the storytelling, especially given the challenges of channel proliferation? How do you break through the clutter? The first step in every digital strategy is to develop personas that segment the audience and serve as the foundation for customer UX and journey mapping analysis.

The best practice firms start with the user. Working from the perspective of the client who consumes a product or service, they focus on personas or “one idealized digital user.”

The goal is to think about the prospect, consumer, user as a human being. What matters in his or her life. Why?  Because users do not wake up in the morning and think, “I need a new app today,” for example. People wake up in the morning and worry about getting to work, getting kids to school, where to meet friends for dinner, paying your bills and saving for the future.

Understanding the persona and the daily journey is critical in modern experience design.  If marketing is going to interrupt you with something that they think is important to you, they have to find a way to tell the user about it so that it resonates with the user. There has to be a benefit to user. There has to be substance. Hence the need for real-world story-telling and context.

What is a digital persona?

Personas are fictional characters used to represent specific segments that interact with the brand across a variety of touchpoints. Personas characterize attitudes, values and behaviors of customer segments, and draw from various inputs to accurately depict the customer. They are helpful in distilling key information into more succinct stories that can be quickly understood. Personas are developed using qualitative research interviews, ethnographic studies – talking to real people about their real needs, motivations and behaviors.

Why is digital persona development important? The new battlefield is the customer journey and its various touchpoints across the lifecycle: AWARENESS → CONSIDERATION → PURCHASE → LOYALTY → ADVOCACY.

Across every industry, consumerization is changing how People they interact with businesses. Traditionally, most businesses have followed the same marketing and sales playbook to generate leads, close sales and provide support to their customers as they did 10-15 years ago. Businesses need a more effective way to humanize the target audience in order attract, engage and delight customers who have access to an abundance of information and an ability to block traditional marketing and sales tactics. To do this, businesses need to deliver an customized experience, which enables them to be more helpful, more relevant and less interruptive to their customers.

I believe an effective way to illustrate how people have transformed the way they consume information, research products and services, make purchasing decisions and share their views.  You get a sense of this by reviewing these general personas – Digital Susan, Social Ashley, Introvert Dave,  Modern Meghan and Traditional Ted. 

Mobile Social Consumerization and “Buy Button” E-commerce

Mobile + social consumer is a new and growing market segment.  Making it easier for the mobile consumers and mobile social consumers to purchase is the new frontier of digital strategy and audience monetization.

Why? The millennials don’t socialize or buy the same way they did 10-15 years ago. They’re almost exclusively on mobile and social media.

The mobile + social media audience data is staggering. Facebook shared in its Q2 earnings report that they have 1.44 billion monthly active users. Of those, 1.25 billion were mobile users, an increase of 24 percent year over year. Facebook also revealed that it now has 936 million daily active users and 798 million mobile daily active users. This means about 65% of Facebook’s members use the service daily, and 64% of its mobile members use it daily on mobile.

Traffic monetization is the #1 priority for social networks. The blending of community and commerce is the new frontier. Google, Facebook, Twitter, Pinterest, Yahoo, Instagram, and others are testing new call-to-action button on ads and posts to go beyond advertising and close the loop – make it easier to purchase while viewing ads. This direct “interactive” commerce capability aims to reduce the friction in mobile purchases. This can be a game-changer that puts even more pressure on the existing consumer-retailer engagement.

Source: Business Insider

Implementing Digital Architecture: A CIO and CDO Roadmap

With digital, value is migrating from outmoded business models to new business designs that are better able to satisfy customers’ priorities. As digital permeates every nook of business, firms will need diverse set of digital leadership. CIOs who step up to a digital leadership role can expect to contribute in a number of valuable ways, perhaps even assuming the über digital role with responsibility for all things digital. Those who can’t will be relegated to play subordinates to the emerging roles of Chief Digital, Data and Analytics Officer, or to the CMO, CFO, or COO, their portfolio limited to the infrastructure and corporate systems.

People have transformed how they consume information, research products and services, make purchasing decisions and share their views and experiences.

So in every boardroom, the buzzwords are flying – omni-channel, mobile-first, digital engagement, digital transformation, multi-screen engagement, millennial marketing, digital operating models, and so on.

Every leader has a semi-clear idea of what the digital strategy needs to be (Increase digital innovation; Improve customer experience by providing access through preferred channels; and drive cost efficiencies) — but there is very little clarity/consensus in terms of how to crisply translate the digital strategy into a next gen engagement architecture and create tangible ROI.

In other words, there is a growing “knowing–doing” gap emerging.

The Chief Digital Officer (CDO) – Defining this Critical Leadership Role

“Today’s CEOs are starting to take active roles as the de facto chief digital officers within their companies. Digital transformation is  a CEO-level conversation, we’re in the board room, presenting to the board. In the last three weeks, I’ve had more conversations with CEOs around transformation than in my entire career.” Salesforce CEO Marc Benioff 

“Everything we (Starbucks) are doing in digital is about enhancing and strengthening those connections [with our customers] in only the way that digital can and only the way that Starbucks can. “ Adam Brotman, Chief Digital Officer

“Financial assets are all digital. That’s where your customers are and you want to be where your customers are.” Steve Ellis, head of Wells Fargo’s innovation group.

———————

New Technologies | New Possibilities | Design Thinking

Consumerization, data-driven digital engagement, insightful multi-screen and multi-channel user experiences are increasingly taking center stage. Companies are building up their Digital DNA to engage with customers, blend physical, digital and virtual elements, and interact via new channels.

There is often a big difference between the digital experience companies deliver and what the consumer is looking for. Most companies flat-out miss this point. As a result, there has been an exponential increase in executives being assigned Chief Digital Officer (CDO) titles.

In fact, there have been a tremendous proliferation of new XO titles that all focus on the customer, innovation, omni-channel platform and revenue growth in some form or fashion:

• CDO – Chief Digital Officer
• CDO – Chief Data Officer (data is at the heart of  digital today)
• CCO – Chief Consumer Officer or Chief Creative Officer
• CXO – Chief Experience Officer
• CIO – Chief Innovation Officer
• Cross Channel Customer Officer (also Chief Revenue Officer is title i am coming across more)

In this article, we focus on the Chief Digital Officer (CDO), an executive who is in charge of emerging digital customer experience and next generation experience (e.g, Augmented Reality or Speech Driven UI). Wikipedia describes the CDO as an executive who helps a company drive growth by converting traditional “analog” experiences to digital ones, and by overseeing operations in the rapidly-changing digital channels: mobile applications, social media and related applications, as well as web-based information management and digital marketing.

CDO roles are permeating every large consumer facing organizations.

Health Exchanges, Consumerism and Payers – Digital Transformation Underway

Employee Benefits and HR are going digital. New firms like Workday and Zenefits are transforming HR into the multi-tenant Cloud.  New firms like BenefitFocus, Liazon (acquired by TowersWatson), Healthcare.gov and others are moving employee benefits to the cloud.

Employee benefits and health insurance in the U.S. is at the cusp of a major transition from an employer-driven payer model to a employee driven digital model.

Private and public health insurance exchanges with a defined contribution approach represent a significant step in this journey. There are also clever risk shifting strategies emerging where employers are moving part-time workers onto public exchanges.

The spend on employee benefits in the U.S is staggering. In 2011, employers spent on $1.64 trillion on employee benefits alone.  Healthcare benefits are the 2nd costliest line item for companies in the U.S. So, companies are taking aggressive steps to reduce this spend.  Employers are digitizing HR and moving employees to private exchanges at faster than anticipated rate. Consider this:

• IBM moved to a private health exchange…Extend Health private exchange will be handling plan options for 110,000 IBM retirees
• Walgreens moved employees to a Corporate Health Exchange.  Of the 180,000 Walgreen employees eligible for healthcare insurance, 120,000 opted for coverage for themselves and 40,000 family members. Another 60,000 employees, many of them working part-time, were not eligible for health insurance.
• Trader Joe’s  — decided to send some employees to the new public exchanges. Trader Joe’s has left coverage for three-quarters of its work force untouched but is giving part-time workers a contribution of $500 to buy policies. Because of the employees’ low incomes, the company says it believes many will be eligible for federal subsidies to help them afford coverage.
• Time Warner will direct retirees to an exchange to get health coverage

The move to patient-centered, consumer-driven, and value-based models is real. The market size is enormous.  Healthcare spending is forecasted to be ~$3.1 trillion in 2014, with $620 Bln of this paid by U.S. employers.  In 2013, employers contributed 32% more in health care expenses than 2008.  More recent data about the changing insurance and delivery landscape.

Mobile Marketing Automation: Insight Driven Consumer Engagement

Mobile devices are ubiquitous and people glued to their phones throughout the day account for more than half of all internet traffic.  Influencing the mobile consumer requires understanding the “context” in real time to make an impact and add value to their life. Four facts about him/her are necessary to engineer unique experiences:

• Who is the consumer?
• What do they want (to meet both her emotional and functional needs)?
• What have they purchased in the past?
• When and where do they shop?

The Rise of Mobile Marketing Automation (MMA)

The state of the art in digital marketing is the integration of social, local, mobile — or frequently called mobile marketing automation (MMA).  MMA is a hot emerging areas that leading Chief Marketing Officers are focused on for mobile apps, precision targeting, and test & learn campaigns.

What makes MMA different is the focus on the propensity to purchase coupled with location intelligence. Segmenting and reaching audiences based on demographics, psychographics, content or cookies has its uses, but these methods don’t make the association that matters most – propensity to purchase and actual purchase behavior.

Just a few years ago, the category didn’t even exist. The tremendous migration of consumers to mobile as their primary interaction channel has fueled the need for new sophisticated B2C marketing tools.  CMOs focused on digital consumer engagement are aggressively piloting new initiatives in this area.

Why? Because Digital shifts power to Consumer. Mobile isn’t the future – it’s the present.  With over 2 billion Smartphone users and growing, mobile channel usage is growing exponentially.  Consider these statistics….the number of Facebook mobile daily active users recently crossed 800M; the number of mobile-only monthly actives is 600+M users; % of users who only login from mobile devices crossed 30%.

Mobile-first, mobile-only are new behavior patterns in consumer engagement across all demographics.

Consumers – Gen Z, Millennials, Gen X, and Boomers – all expect brand interactions to be relevant to their immediate context.  Established brands are scrambling to appear relevant in this mobile-first world, and brand-specific mobile apps are popping up with never-before-seen speed. Marketing requires meeting consumers where they are with laser-like targeting of offer & message – and mobile is a key place to do so.

Digital Marketing Architecture: CMO Martech Playbook

“i don’t think retail is dead. Mediocre retail experiences are dead.”   Neil Blumenthal, CEO @ Warby Parker

“In e-commerce, lines are blurring fast across Ads/Content/Products/Transactions.” Mary Meeker, Internet Report, 2017

Seismic shifts are putting customers in control.  New innovations like mobile Augmented Reality (AR), Conversational-AI are changing the landscape of what’s possible in terms of consumer experience.  This is truly an exciting time to be in marketing technology (MarTech) and data-driven marketing. Lot of innovation, experimentation and chaos.

Marketing technology (MarTech) is composed of the following: data, analytics, sales and marketing automation, email, predictive tools, commerce technology, shopper marketing and payments.

Why this tremendous growth in Martech? The customer lifecycle around acquisition, engagement, commerce and retention is going through a major upheaval. Changing buyer behaviors forced companies to change how they market and sell. Instead of the classic CRM and “inside-out” approaches, a new wave of “outside-in” fresh rethinking around engagement, experience and micro-targeting is taking place.

Chief marketing officers are already outspending CIOs on tech as they race to bring marketing to the B2C and B2B digital world. According to Gartner’s CMO Spend Survey, marketing budgets remain steady at >10% of company revenue. However, the growth and investments are all in digital marketing space as firms focus on millennials,  online customer experience, micro-targeting and multi-channel engagement.

Marketing technology budgets appear to be growing  faster for revenue-related capabilities than more internal efficiency improvements.  Also cutting-edge marketing technology is becoming legacy quickly.  The effectiveness of the generation #1 digital marketing playbook is eroding with mobile-centric usage patterns, ad blockers, and  spam filters. Consumers are now empowered with new and better control over interruptions from marketers. Buying lists, blasting emails, and cold-calling were no longer effective.

A new digital engagement playbook enabled by next generation martech is needed.

Good -> Great… Marketing Technology Architecture

As the race to become digital and engage prospects/customers gains momentum in every industry, CMOs are faced with an interesting challenge they never had to deal with before:

• What is an efficient and effective digital architecture?
• What does a “good” architecture look like?
• What does world-class mean with respect to sales, marketing, service and commerce technology?
• What is an effective mobile engagement architecture? What is the best way to systematically approach Mobile Onboarding, Activation and Retention (MOAR)?
• How to make investments that align with a strategic customer engagement plan and not a tactical “plug-the-hole” gap fillers?

Digital Health and Wellness – New forms of customer engagement

Digital health and personalized wellness is about to reach escape velocity and transform the way millions of people  achieve their health and fitness goals. Self-tracking, quantified self,  connected fitness and personalized notifications (customer engagement) is the new frontier.  What was considered visionary a few years is now possible.

Consumer Health and Wellness management is a huge market opportunity in the U.S:

• $2.6T – $2.8T annual spend on healthcare in USA, 18% of GDP in 2010, up from 5% in 1960, and 2x OECD average;
• 100MM Americans (30%) of Americans considered obese in 2012, up from 15% in 1990.
• $147Bln estimated medical costs associated with obesity in 2008, up from $79Bln in 1998
• Diseases like diabetes currently affects more than 8 percent of the U.S. population, at a cost of $245 billion annually, and is projected to rise sharply over the coming decades due to obesity and an aging population.

In 2014,  the Affordable Care Act and readmission penalties, we saw the transformation of healthcare in the US market to a value based reimbursement model impacting payers, providers, pharmacies, technology vendors and more. The next phase of evolution of healthcare delivery is around getting customers more interested in managing their own health by changing lifestyles and healthier living.

(Source: American Heart Association, Center for Medicare & Medicaid Services, 2012, OECD)

Trends Driving the Connected Health and Consumerization

Preventative healthcare is really about the getting the participant to be active in their own healthcare management and change behavior.  The change around consumer driven healthcare spend are staggering:

• IDC expects the market for wearable devices will reach 114.0 million units shipped in 2018, representing a $33.7 billion worldwide revenue opportunity.  Compare this to   2014, shipments of wearable devices more than tripled compared to the prior year, reaching a total of 21.0 million units shipped.

• Consumers spent over $200 billion in 2014 on health and fitness services  (industry sources – Fitbit S1)

Virtual wellness coaches, loyalty incentives, social gamification and personalized goals are all elements of this growing digital ecosystem.  Technology is a key enabler of this ecosystem with advances in wearable (e.g., Apple Watch) and sensor computing (e.g., clip-on activity trackers).

CxO Transformation Dilemma: Digital Businesses and Innovation Clockspeed

“The retail industry is in the midst of a seismic shift. We can bemoan changes in the marketplace or embrace them.”  Target CEO Brian Cornell 

Every CEO today must have an answer to the question, “What is your digital strategy?”

Consumerization, prosumerism, crowd sourcing, sharing economy, millennial experiences, omni-channel services and other digital-enabled transformations are challenging the status-quo.

Few things have jumped into the consciousness of business executives as quickly as digital business. Executives realize that their companies must succeed in creating transformation through technology, or they’ll face destruction at the hands of their competitors and next generation “unicorns” –  Uber, Airbnb, Netflix, Amazon.com, Pinterest, Google/Nest etc. – that do.

TechTarget’s Tom Goodwin had an insightful observation:  “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.” All are Asset-lite digital businesses.

These new-age firms have an inherent advantage. Digital startups  by their very nature tend to be more user-centric, for several reasons:

1. They are often founded on the premise of improving or simplifying the lives of end users;
2. Their business is built from the user’s perspective, rather than on an established business model;
3. The digital platforms (applications and infrastructure) on which they build their products and services enable a much higher degree of user centrism;
4. They lack the legacy infrastructures, bureaucracies and operating models that force many traditional companies to continue thinking from the “inside- out” rather than from the “outside-in”.

There in lies the classic Innovator’s Dilemma made famous by Clayton Christensen. 

The Notification Economy – New Contextual Experiences for Mobile Engagement

Mobile is rapidly expanding opportunities to engage customers and increase stickiness. There is incredible amount of innovation taking place around Mobile Engagement, Messaging and Notification platforms. Messaging + Notifications = New mobile engagement toolsets.  New capabilities are emerging to: power push notifications, sophisticated audience targeting, message centers, digital wallet programs, and location analytics.

Notifications are growing rapidly and becoming increasingly interactive.  This is driving new touchpoints with messaging platforms and other apps.

Source: Mary Meeker, Internet Trends 2015

Wearables are increasingly become a central part of mobile engagement enabled by push notification strategies. Many retailers, CPG firms are experimenting with new micro-targeted contextual experiences  leveraging proximity beacons, push messaging to integrate coupons, recommendations and next best offers into the watch apps to monetize push and in-app messaging.

The Apple Watch, for instance, is a long-term megatrend that we believe will transform user engagement via notifications and alerts.  Unlike the tablet, phone or desktop, wearables, like Apple Watch, are built for quick interactions e.g., notifications and alerts.

A study by Kleiner Perkins found the average user checks their phone over 150+ times per day (Facebook, Twitter, WhatsApp etc.).In its 2014 annual Internet Trends report, KPCB  found that people check their phones, on average, 23 times a day for messaging, 22 times for voice calls, multiple times to see if there are Facebook updates and 18 times to get the time.  We expect many of these 150+ “interrupts” are naturally going to migrate to the Apple Watch.

The Apple Watch’s small screen size enables a fundamentally new user interface (UI) and user experience (UX). There are new inputs (force as well as touch), subtle vibration, digital “crown” control, new inter-device communication modes, and new data points that phones have never been able to collect (e.g. heartbeat).

Customer Engagement Architecture: A Quick Reference Guide

As technology moves faster, customer’s patience grows thinner. A survey from UMass Amherst of 6.7 million users, showed that viewers tend to abandon online videos if they take more than 2 seconds to load. Most users stay on a single web page long enough to read only 20% of the text on that page, according to Nielsen Norman Group.

Instant gratification is the driver of next generation customer engagement architecture. Consumers and customers expect real-time responses. They are being conditioned for this. On an emotional level, posting a Facebook status, a tweet, or an Instagram photo feeds on and reinforces the need for instant approving feedback.  This trend creates incredible challenges for corporations who have to re-engineer, re-factor and re-architect their existing and legacy applications. 

It’s no secret that consumerization is disrupting, eroding and challenging how businesses operate.  Being customer-obsessed or “walking in the customer’s shoes” means putting customers at the core of the business, even if that means disrupting the existing platform architecture.  Easier said than done. In fact, it requires an entirely new engagement toolset at all levels – Systems of Record, Systems of Engagement and Systems of Intelligence.

Yet while most management teams understand the significance of the pace and scale of these customer experience and engagement changes, few companies have determined exactly how their organization’s strategy and architecture needs to change in response.

In response to disruptive digitization vendors have modernized, re-engineered and re-architected comprehensive frameworks to help customers. Here we examine the inter-connected “systems of engagement” and “systems  of intelligence” architecture proposed by various vendors.

• Salesforce.com Customer Architecture
• Oracle Customer Experience (CX) Framework
• Teradata’s Interactive Customer Engagement