web 4.0 the era of online customer engagementIn the prophetic words of Bob Dylan, “for the times they are a changin’”.  Right on Bob, right on!  The one constant is change.  And nowhere is this more the case than the way buyers are using the internet.  2012 is ushering a new era where companies who don’t get customer engagement will be left to compete for the scraps.

I’m not talking about luddites holding your company back.  After all, you have a web presence.  You’ve been dabbling with social media for a few years now.  You proactively work on your customer experience strategy.  Well, it’s not enough.  You will be left behind.

You see, as quickly as social media got here, the times they are a changin’.  We’re moving into the era of Web 4.0.  In case you missed Web 1.0-3.0, here are the periods loosely defined:

  • Web 1.0 (circa 1997-2003): Content creation by the few; web participation is a luxury; software on the local machine; product pages and limited e-commerce; desktop computers.
  • Web 2.0 (circa 2004-2006): Content creation by the many; web participation is a privilege; advent of social; software local and web-based; everything commodity can be purchased online; desktop computers and mobile phones.
  • Web 3.0 (circa 2007-2011): Content creation by the majority; web participation is a right; social layers horizontally available; software in the cloud; e-commerce overtakes offline retail; desktop computer, mobile phones and tablets.
  • Web 4.0 (circa 2012-???): Meaning creation by the majority; web participation is a necessity; customer engagement enablement; operating system (OS) in the cloud; ‘considered purchase’ products and services (once thought only saleable offline) join the Internet party; desktop computer, mobile phone, tablets and iTV; augmented data layers.

But don’t take my word alone on these matters.  Look to the wisdom of analyst Paul Greenberg who is also announcing the era of customer engagement and anticipated the end of the social customer era.  You can read Paul’s two-part series here:

Where I break away from Paul is on the subject of automation.  It is my belief that for too long the pendulum has been swinging in the extreme direction of automation.  Don’t get me wrong, for companies of all sizes we’re trying to do more with less, so marketing automation has a role to play in our businesses in order for us to keep us.  Here at Workface we automate a large part of our inbound content strategy through HubSpot, for example, because it’s simply more efficient without being disrespectful to our target market (audience).  However, I am anticipating that the pendulum will swing back towards humanization.  That is, business is fundamentally about people (employees and customers) and automation doesn’t offer a comparable replacement for human.

Social Customer Relationship Management (SCRM) has been a developing science over the last three years with the goal of integrating social media systems in the web-based CRM system.  Salesforce.com has been driving efforts like Chatter forward with the goal of helping organizations become more social. Yet, SCRM still falls short for a number of reasons, some of which I’ve been espousing for the last several years:

  • Social media, by design, is based on a system of known connections.  I know Tom, he knows me, thus we connect on LinkedIn.  Mary knows me, I know Mary, so we connect on Facebook.  Steve is a potential customer, we don’t know each other, therefore we can’t connect on LinkedIn.  Sarah wants to buy my product and is doing her pre-purchase due diligence on my company Facebook page, we are not connected and she doesn’t want to be my friend on Facebook, she simply wants questions answered so she can buy, and I can sell.  The point is, there are different ties that bind us.  From a commercial standpoint social connections can both bring us closer together with customers, but can also be a barrier to commercial transactions.
  • CRM is a means for companies to manage information about prospects and customers. It’s great for managing data about known targets.  However, the customers you don’t yet know are not in your CRM system.  There remains a pre-CRM problem of creating engagement with the customer you do not yet know.  My business mentor Doug Burgum helped name this area Prospect Relationship Management (PRM); it’s about a multichannel strategy (art) of getting to know a customer before they’ve been identified.
  • It is disrespectful of customers (and prospects) to think the tools we use to engage them are the same tools in which they choose to engage us. Rather, companies need to enable customers with the tools to engage with us in their preferred method.

This era of customer engagement – Web 4.0 – is vitally important.  Similar to how businesses with telephones allowed customers to contact them gave those businesses a leg up on the competitors without phones, and the way companies with websites were differentiated from companies without websites, so too will companies that integrate customer engagement capabilities also reap the customer harvest.  Customers don’t want to be limited in where and how they engage with your business.

Automation is a beautiful thing.  If I want to buy a book, I can visit Amazon.com, compare prices, purchase, and have that book arrive at my doorstep without ever having to interact with a human being.  The near-automated sale of commodity products on the web has, for all intents and purposes, been figured out.  But, for ‘considered purchase’ products and services (representing 80% of offline commerce) engagement will be the key to online sales.  Let’s talk about the Web 4.0 problems and opportunities for commodity and e-commerce products and services.

When it comes to commodity products, there is no more griping tale today than that of Best Buy.  This retail giant who lives in my backyard accounts for over 30% of all consumer electronics sales.  Over ten years ago Larry Downes, in Unleasing the Killer App, wrote that while transitioning to the Internet was revolutionary for retailers, it was merely evolutionary for customers.  Larry recommended ensuring continuity for the customer, “not yourself.”

In a recent Forbes article Larry said that what he meant was that,

“consumers easily adapt to alternative retail channels. Before the Internet, there was catalog

shopping and home shopping from television. For customers, buying online was just the next step in an obvious progression of more convenient ways to buy.

For brick-and-mortar retailers, however, the shift was jarring.  Moving online required new thinking, new management structures, and new strategies.  It would also require integrated front and back-end information systems.  Customers would expect inventory to be transparent between the web and the stores, and that specials and “exclusives” would be consistent across all channels.  Whatever attributes they associated with a retailer’s brand—whether price, quality, convenience, expertise, service—would need to be translated to the online experience and enhanced.”

BestBuy hasn’t done a good job of replicating the offline (retail door) experience to the online world.  Never before have I had so many conversations with people about how they gamed Best Buy as I did during the 2011 Holiday shopping season.  One of my close friends was bragging about how he was in a Best Buy store, found the new television he wanted, asked the store associates all the questions he needed answered, then found it at a better price online, and placed his order with an etailer, all while standing in BestBuy store.  In this example, BestBuy was relegated to perform the role of high overhead (but knowledgeable) product showroom, while the web-based competitor made the sale.  BestBuy is failing at engaging the offline customer with a combination of service and pricing the customer expects.

For ‘considered purchase’ products and services – products and services that we once thought could only be sold in the offline world – engagement has become the essential ingredient to selling in the online world.  Take for example our client Titan Machinery (Ticker: TITN) who is a leading retailer of construction and agricultural equipment.  The products they sell are thousand, tens of thousands, and even millions of dollars; products like tractors and harvesters.  You’d think that their customers (farmers for example) would do all of their shopping in person.  Well, ten years ago they did.  Today however the customer is starting their pre-purchase due diligence on the web.

The way that Titan Machinery is engaging the Web 4.0 customer is by presenting sales and service staff to customers at their website. When the customer visits, the control is provided to the customer to self-initiate an engagement session with a trusted representative at Titan Machinery through a combination of real time text, audio and video communications.  Sure, the customer may still visit a retail center to kick the tires but, before that happens, Titan Machinery has enabled the customer with product information, has formed a meaningful connection with the customer through engagement, and has effectively gone upstream in the sales process to address the customer at the web-based need-state aperture.  All that remains is closing the sale.

Web 4.0 is about empowering customers with the tools to engage your business in the right place, at the right time.  It’s about closely replicating the customer experience in the offline world on the Internet. The result is your ability to get your sales and service force to the customer earlier in their need-state, improving your web-based reaction time to customers, and entering into meaningful dialogue with the customer on their terms.  Those companies who adopt Web 4.0 will be in a position to effectively cut off their competitors at the pass.

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