Retaining and delighting empowered customers requires continuous, technology-enabled innovation and improved customer insight (CI). The logic is simple in theory, but that doesn’t make it any easier to implement in practice.
In my recent report, entitled “Applying Customer Insight To Your Digital Strategy”, I highlight the top lessons learned from organizations in Asia Pacific (AP) that are successfully leveraging CI to fuel digital initiatives. It all starts by ensuring that data-driven decision-making is central to the digital strategy. With that in mind, I want to use this blog post to focus on two key lessons from the report:
Lesson One: Establish A Clear Mandate To Invest In Customer Analytics
Successful companies serve empowered customers in the way they want to be served, not the way the company wants to serve them. When building a mandate you should:
■ Expect natural tensions between various business stakeholders to arise. To secure buy-in from senior business decision-makers, start by illustrating the clear link between digital capabilities and data as a source of improved customer understanding. Identify measurable objectives and then link them to three to four scenarios that highlight where the biggest opportunities and risks exist. Continue to justify data-related investments by restating these scenarios at regular intervals.
Discussing with Asia Pacific marketers, I often hear that they struggle to find and recruit the right social marketing skills, including data analysts. While staffing is important insofar as tactics go, having a proper team structure to execute on these tactics is, in my view, even more crucial.
In fact, they can mitigate some of these HR challenges with a properly structured social team. My report on building a usable social team structure addresses how organizational models will evolve as social marketing matures. These models include the a) Hub, b) Hub and spoke and c) distributed hub and spoke.
The Hub, for example, is meant to help firms that are starting out on social marketing. This could be a firm that is beginning to get more serious about how social is used strategically to drive business outcomes, or one that operates in highly regulated industries like banking and finance. The centralized hub model puts all of the responsibility (and money) for social marketing in the hands of one small team. This model provides training wheels for marketers for social marketing — especially in learning how to coordinate or test social marketing campaigns in the early phases of social maturity. A centralized hub acts as an incubator for social marketing experimentation and allows other teams to focus on their own objectives until the social program can be implemented at scale with minimal risk. Execution can be in-house, but some marketers partner with an external agency for additional dedicated resources.
Asia Pacific marketers have moved from experimenting with social media in the recent past to integrating it into their marketing mix. However, a large number are guilty of setting and measuring metrics, such as vanity metrics, that do not inform the next course of action.
To increase your chances of social marketing success, you must:
Build an understanding of your audience. Brands all too often mistake social media platforms as a broadcast channel and rave about their own products and services without first understanding the conversations going around them. Astute marketers will first deploy listening platforms by studying the social behaviors of their target audiences and the context of their conversations. Forrester’s Social Technographics® will tell you both how social your audience is and the types of social behaviors in which they engage.
Invest in social marketing based on clear business outcomes. Many Asia Pacific marketers are still allocating media budgets based on user consumption of media — or worse, on how budgets were allocated in previous years. But this model is obsolete, thanks to new methods of accessing data and harnessing technology. Marketers must be able to answer which specific social activities drive specific business outcomes and boldly reallocate marketing investments based on these. For instance, marketers must show how their Facebook strategy has driven fans to their eCommerce site and helped stimulate them to complete a sale.
We have just published Forrester's semi-annual global tech market outlook report for 2015 and 2016 (see "The Global Tech Market Outlook For 2015 To 2016 -- Five Themes That Will Define The Tech Market"). In this report, we are projecting growth of 4.1% in 2015 and 6.3% in 2016 business and government purchases of computer and communications equipment, software, and tech consulting and outsourcing services measured in US dollars. These growth rates are distinct improvements over the 2.3% growth in 2014. The strong dollar is a key negative factor in these forecasts; measured in local currency terms, the growth track for the global tech market is higher with a gentler upward slope, from 3.3% in 2014 to 5.3% in 2015 and 5.9% in 2016.
Our global tech market outlook can be defined with five main themes:
Moderate 5% to 6% rates in 2015 and 2016 in local currency terms. While a stronger-than-expected US dollar has resulted in lower dollar-denominated growth rates for 2014 and 2015 than in our August 2014 projections, though a stronger-than-expected US dollar both years caused a downward revision in these growth rates.
The US tech market will set the pace for the rest of the world in 2015 and 2016. Not only does the US have the largest country-level tech market by far, it will have one of the fastest growth rates at 6.3% in 2015 and 6.1% in 2016. US businesses and governments are also leaders in adopting new mobile, cloud, and analytics technologies. Among other large tech markets, China, India, Sweden, and Israel will also have strong tech market growth, while Brazil, Mexico, Japan, and especially Russia will lag.
I had the pleasure of presenting to Singapore’s DBS Bank yesterday on customer experience and listening to CEO Piyush Gupta’s thoughts on the bank’s journey since he joined in 2009. He spoke about his conclusion upon joining five years ago that a critical challenge to be addressed was an inside-out perspective by the bank’s employees. Since then, he’s driven the bank through a successful transformation project Forrester wrote about in an August case study. Looking forward, he sees the bank working toward “joyful” banking and is seeking ways to embed more emotional connections into their customer experiences.
Listening to Piyush speak reminded me of my interactions with another regional CEO this year who has driven a successful company transformation: Telstra’s David Thodey. David also joined in 2009 and has driven Telstra’s success through a focus on the customer. He has given his customer focus organizational teeth by linking it to Net Promoter Scores (NPS) that determine part of the compensation system at Telstra. The importance of measurement is the key reason we recommend our clients leverage Forrester’s CX Index.
I had the good fortune of moderating a panel on the state of digital business at the Chief Digital Officer Global Forum in Singapore yesterday morning. The event showcased a who’s who of digital business leadership in the region, including my panelists Veena Ramesh of Johnson & Johnson, Jerry Blanton of Citi, and Veronique Meffert of Great Eastern Life.
Organizational issues are the greatest hurdle. There was not a single dissenting voice on the fact that organizational challenges represent the biggest impediment to digital business progress. The greatest organizational challenges are functional silos, business unit resistance, a lack of clear guidance from the CEO, rigid backward-looking mindsets, and a shortage of the skills needed to drive change. One approach — shared by Rahul Welde of Unilever — is to drive “digital experimentation funds” and “foundries” to drive co-creation innovation.
Media command centers are becoming critical marketing assets. Both representatives from Unilever and Philips spoke of the critical role that media command centers now play in their marketing campaigns. In the case of Philips, I was surprised to learn that its social media command center in Singapore employs 200 people — and that it is planning for expansion!
In a previous blog entry, I argued that everyone needs to digitize their business, but not every business knows what to do. Transforming into a digital businesses, especially if you’re a traditional enterprise, is hard work. However, we believe that Asia Pacific is already primed for digital disruption.
In my report, The State Of Digital Business In Asia Pacific In 2014, we found that, while the highest-profile digital business pioneers are headquartered in North America, market demand in Asia Pacific is more conducive to long-term digital disruption. Asia Pacific has five times as many Internet users and smartphone subscribers as the US and almost as much online retail spending as the US and Europe combined. You just need to look at regional powerhouses like Alibaba.com and Commonwealth Bank of Australia and their multibillion-dollar businesses to grasp the rewards of digital business success in Asia Pacific.
However, knowing what these firms have accomplished is insufficient; knowing how to get there is more critical. You should:
Every business must transform into a digital business. Digital businesses continuously exploit digital technologies to create new sources of value for their customers and increase their operational agility to serve those customers. In Asia Pacific, CIOs have had limited success in driving digital business transformation. Organizations taking an early lead in transforming their business include Commonwealth Bank of Australia, China’s Ping An Insurance Group, and DBS Bank in Singapore.
A true digital business needs to integrate two sides of a digital strategy: digital customer experience and digital operational excellence. My colleague Nigel Fenwick has written extensively on the topic; this infographic, for example, sums up our thinking. Becoming a truly digital business requires a radical overhaul of organizational structures, technologies, measurement frameworks, and operating models. And it’s ongoing.
The organizations coping best with digital disruption are creating:
A digital strategy as a defense mechanism against disruption. The pace of consumer change poses the biggest threat to any traditional businesses that have yet to experience the impact of digital disruption, regardless of whether they’re in the telecommunications, media and entertainment, transportation and travel, or other industry. For example, Australia Post has set up a A$2 billion kitty to aggressively pursue a digital strategy to tap into new revenue sources, including building a new center for the digital delivery of mobile and online products and services.
It’s a fact: Marketers in Asia purchase digital technologies without involving the tech management department. They do it because they believe that:
Digital technologies are key enablers of successful marketing strategies. Customers in Asia Pacific in general, and in Singapore in particular, are always connected and empowered by technology to access the right information in their moments of need. They increasingly value — and do business with — organizations that provide them with experiences that are effective, easy, and emotional across all customer touchpoints. It’s not a surprise, then to see marketing professionals — just like their colleagues in sales, product management, and customer service — source digital technologies to enable such experiences.
The tech management department hinders their business success. This is the more worrying part, but if you take a step back, as a technology management professional, you understand why. You work with technology life cycles that are oriented toward core business, back-end systems like enterprise resource planning and therefore are risk-averse and slow. However, marketers need tech management professionals who are open to innovation, experimentation, and moving toward a risk-tolerant, agile life cycle that supports digital experience delivery.
It’s hard to believe almost a year has passed since our last Summits for CIOs in Asia Pacific. Our team is ramping up preparations to this year’s CIO Summit series and I’m looking forward to meet you at the events which will kick off in Sydney on August 14, Singapore on August 19 and Mumbai on August 21. Themed “Beyond IT: Empower Digital Business in the Age of the Customer”, Forrester’s 2014 Summits will focus on the significant shift we’ve seen in CIO’s traditional focus from the design and deployment of internal systems focused on process control to digital products and services for their customers.
Of particular importance on the digital journey are three domains: customer experience, the mobile mind shift and the transformation of big data into actionable business insights. Each of these topics will feature prominently at the Summits with select analysts flown in to delve deeper into how CIOs can overcome some of these challenges through Forrester guidance.