February, 2013 Newsletter
I recently attended the Yale Center for Consumer Insights Conference, themed “Engaging Consumers in Complex World.” The assembly of distinguished speakers really brought this topic to life through their different perspectives, but one major theme stuck out: modern technology can be used to not only understand consumer behavior better—but to better engage with consumers.
Simply stated, the impact of technology, consumer connection, and engagement is an ever-evolving relationship. And in just a few short years, it has changed and grown so much that it can make a marketer's head spin. (Remember corporations didn't adopt e-mail as its main form of communications until the 1990s and Facebook didn't exist more than a decade ago.) But the fact is, as technology continues to grow, companies have little option but to grow with it. No matter how far along the technology path your company has traveled, it is vital to ask these questions (and take some guidance from those at the YCCI Conference who are doing it well):
1. Are we focusing enough of our marketing efforts to keep up with the changing face of technology?
Kevin Ryan’s philosophy when launching Gilt Groupe—an online shopping club for clothing, household items, travel, activities and more (with over 6 million members)—was to not do any advertising, but instead make it a “members only” site, launched completely through e-mail. As he pointed out, it was to be a members-only site with no members! So, they started by sending the link to 8,000 of their “closest friends,” 2,000 opted-in, and the business was born. Over time, they learned a lot about how to grow their business—and how to leverage technology for learning about and connecting with consumers—including:
- Digital research showed that 60% of their members were referred by a friend—so they used that data to incent friends to refer people and gave them a $25 sales credit.
- With 50% of their revenue from their e-mail list, optimizing the effectiveness of e-mail became a high priority. They in turn created 2,000 different versions (yes, 2,000!) of their emails—based not only on the consumers’ purchasing behaviors—but also on what they last looked at on the site.
- They tailored their website so that different customer groups saw a different version of the site. This was based on the notion that theirs is not a search-based site like amazon.com, so they put “what’s important to you as the consumer in front of you.” And ultimately, though customers don’t know it, they are more likely to make purchases because of the way the site is tailor-fit to them.
- Using technology to track who was invited into the site by who allowed Gilt Groupe to see who their most valuable customers were. Imagine if you could value a customer not only by their total sales, but also by the total business they actually brought to you?
2. Could we be doing even more to incorporate mobile in our brand experience? Are we really capitalizing on mobile technology in ways that will ultimately drive purchase?
When Gilt Groupe started, “mobile” didn’t exist. Now, 50% of their traffic is from an iPad or iPhone. They learned that people were browsing on mobile devices because of boredom, but not purchasing from the devices. So, they started having flash sales which prompted people to buy when they were on their mobile devices so they wouldn’t miss the sale. What a great way to not only use technology to understand your consumer, but also to encourage them to make a purchase.
To further illustrate the importance of mobile, Anil Menon President of Globalisation and Smart+Connected Communities at Cisco Systems focused on the changing global economy. He also stated that in a given year, 5 billion cell phones are sold worldwide—in comparison to only 4 billion toothbrushes. That's a lot of potential consumer engagement with your brand right at their fingertips (especially if you sell toothbrushes).
We also heard from Tom Arrix, VP of U.S. Marketing Solutions for Facebook, who shared that they are experiencing a 56% increase in engagement amongst users because of mobile. I am definitely one of those people. For me, it’s a combination of capturing things in the moment, as well as having something to do when I find myself waiting for anything…anywhere.
According to Arrix, there are currently 1 billion Facebook users. With a goal of 5 billion in their sights, they’re hoping that mobile—the fastest growing technology segment—will help get them there. Just look at the stats: the Pew Research Center* found that nearly a quarter of U.S. adults own a tablet device (double from the previous year) and nearly another quarter who didn’t own a tablet planned to buy one in the next six months. Couple that with nearly 50% of surveyed adults that have Smartphones, and the possibilities for real engagement with consumers through mobile is a goldmine.
3. Beyond learning about their behaviors, how else can technology help us engage with our consumers?
Multiple speakers at the Yale conference mentioned that their companies follow up with people, or at least track posts by people, who make negative comments as a way to handle damage control. (Every time I heard this I was amazed. I have no idea how they all managed it.) The power that technology has put in the palm of consumers’ hands is amazing. Think about all of those people you know who go on tirades about X company or product on Facebook. You might want to say, “Tell someone who cares.” But if they’re dealing with a tech savvy company, it’s very likely they were heard by someone who cares. One speaker, Beth Hirschhorn the EVP & CMO of MetLife, alluded to the fact that the follow ups on that negativity often leads to long-term customer loyalty.
4. How are we ensuring that our products are front and center during the research phase of the buying cycle?
Marc Speichert, CMO of L’Oreal, talked about how in the beauty industry, while 20-25% of purchases are completed online, about 50% of research is done online before a purchase is made in-store. This contrasts with the electronics, software and gaming industries—where not only are more purchases done online, but the research-to-purchase gap is much narrower. L’Oreal wanted to figure out how to get into the online research game.
This led the company to launch a YouTube-sponsored channel: Destination Beauty. While the site is not L’Oreal specific (with only about 30% of the channel featuring L’Oreal products)—it provided them an opportunity to capitalize on a behavior that put them in front of the consumer earlier in the buying cycle. Added bonus? It also cast L’Oreal as a leader in the arena where their consumers were seeking information.
So what was my final takeaway? Consumer engagement isn’t complex—but sifting through the endless data available in a way that’s not only meaningful, but also allows companies to really capitalize on it, can frustrate even the best marketers. With so much going on within the tech landscape, the best thing to do is just jump in the digital trenches with your consumers. Because it's ever-changing, you may never actually catch up. But, as their behaviors, online patterns and continuous connectivity evolve, you can follow along and evolve right along with them.
Beth Storz is the President of Ideas To Go, an innovation agency that works with Fortune 500 companies in ideation and concept development to incorporate the voice of the consumer.
©2013 Ideas To Go, Inc. All rights reserved.
Beth Storz is President and Innovation Process Facilitator at Ideas To Go. She co-authored the book, "Outsmart Your Instincts: How the Behavioral Innovation™ Approach Drives Your Company Forward." Beth has been a guest on many innovation podcasts and her work has been featured in media outlets such as HuffPost and Fortune. Beth holds a BS in Business Management from Cornell University and a MBA from New York University’s Stern School of Business, and has worked in brand management at some of the premier consumer packaged goods companies—including Unilever, Kraft and Nabisco. Since joining Ideas To Go, Beth has established herself as a leader in the Innovation landscape and designed and facilitated projects for hundreds of companies—from CPG to financial services to pharmaceuticals.