Omni-channel Retail Case Study shows how tech/I.T. is getting closer to customers in the race to omni-channel experience, and it is replete with lessons for CMOs. In 2014, customers are flocking to providers/brands that deliver relevant and friction-free digital+physical experience, the trend is accelerating, and CEOs that survive will make customer experience a priority because customer experience is multiplied by the digital network effect.
Marketing as traditionally practiced is at a crossroads: CMOs need to transform marketing or they will increasingly find themselves sidelined by other functions like I.T./designers/developers that provide digital customer experience. I met Crate and Barrel’s Project Owner for omni-channel last week, and she explained their digital transformation journey, so I’ll draw some points from her remarks and share a back-of-the-envelope guide for how CMOs can get started on omni-channel this year.
Astute CMOs can move into the digital transformation vacuum, but they must move quickly and decisively in 2014. This is a career defining proposition for many CMOs.
How Marketing Risks Losing the Authority over the Customer
Before many-to-many digital social technologies emerged, brands had poor information about what customers really thought, and they had even less information about customer behavior unrelated to purchase. Senior marketers know that focus groups and regression analyses have their limits, but they were the tools of the trade. That said, within firms and brands, marketing usually had the best information available, and it used marketing information and research to drive four (five) Ps.
Marketing’s key role was serving as the principal interface between the brand and the customer because it controlled incoming and outgoing communication.
Of course, I am generalizing greatly, but marketing lived in an ersatz world, talking about “features and benefits” and creating images and mass communications. It used to be the only world, and customers used these communications in their buying considerations because they had little other information. However, marketing did not address individual customer experience, and that is the cornerstone of influence now. Talking among themselves, customers have reset expectations about relevant information. Customers live in reality while brands live in fantasy because brand managers don’t use their products in the same way that customers do. For more insights on this, see Firms Are From Mars, Customers Are From Venus.
Digital technology, when designed and used well, enables an unprecedented level of intimacy between brands and customers. Developers using agile methodologies are delivering the interface with customers. Rather than commissioning Madison Avenue agency studies, brands are finding that small agile development teams can quickly build interfaces by involving real customers in real time to understand behavior in-context. Then teams test interfaces (i.e. apps, signage, websites, kiosks) with real customers and adjust until they get it right. This requires a fraction of the time and budget of doing it the old way. Customers respond better.
Brands do what works. Herein lies the opportunity and threat to marketing.
Although I think there will always be a place for mass communication and brand studies, I predict that those slivers of pie are going to get mighty thin—and then thinner. On the other hand, marketing is eminently qualified to lead digital transformation, but CMOs need to lead their teams in profound mindset change.
Crate and Barrel’s Experience
Omni-channel should be a top three agenda item for most CMOs as I wrote in the CMO Guide to Omni-Channel & Retail Transformation. Shehaam Flot is Crate and Barrel’s PO (project owner) for omni-channel. As a developer, she described C&B’s journey from a siloed, outsourced, waterfall development environment to dual track agile in-house teams. Their process began in the ecommerce team, which started using agile for web development and then brought mobile development in-house. Learn more about the mobile/omni-channel event here.
The culture change is complex, but agile is cross-functional, very collaborative, and less siloed than legacy project management; of special relevance to marketers is agile’s insistence on getting “real world” customer feedback, testing in real-world conditions, and iterating in short cycles. Agile is organized in short “sprints” in which teams meet goals. C&B’s are two weeks, and they want to shrink that.
To illustrate the difference, web development used to be mocked up in Photoshop, and then designs were vetted internally before developers built the site or functions. No customer saw the design. Now the web/mobile development teams go into the field and ask real customers specific questions. They use agile technologies to create several versions of the site/function, and then they do A/B testing with real customers in multiple interfaces (web, mobile, in-store).
Before agile, internal executives and agencies were the “authorities” on web and mobile designs—now real customers are.
Shehaam explained how the team worked through pockets of perceived channel conflict. For example, stores/divisions that sell furniture have sales associates on commission (implied was that lower ticket items did not), and they were afraid of mobile (“Ack, showrooming!”). However, development teams reached out to store operations at the beginning, and they demonstrated that mobile actually brought more people to stores because few customers want to buy big ticket items on a phone or tablet; they want to see them first.
Crate and Barrel is also experimenting with empowering store associates with company smartphones, and they are contemplating tablets but their experience is very limited so far. C&B apps help customers outside and inside the store, but it sounded like they are a responsive web design shop. Complicating this is stores’ practice of changing displays every day, which makes it difficult to use mobile to help associates and customers to find items in-store.
Likewise, they are still wrestling with developing meaningful metrics to show the impact of mobile on store sales since mobile itself drives little direct sales. One example is C&B’s registry app, which enables groups to plan and organize large groups of purchases (usually a wedding use case).
Omni-channel Means Seamless Customer Experience
In Crate and Barrel’s case, I.T. has moved into the digital transformation vacuum by leading the brand’s customer experience development, even though Shehaam explained that it is a cross-functional team that includes store operations, marketing, ecommerce and mobile. Their mantra is “whole teams.” The cross-functional approach is critical because customers prize consistency in interfacing/relating to the brand. Everything must sync, and that doesn’t happen when functions work in silos.
I recommend learning as much as you can about agile development because it’s a much more effective project management methodology than legacy. Leading edge marketing teams have been using it for the last few years. Going agile entails significant transformation, but the rewards are huge: better projects—as defined by provider and (internal) customer—done more quickly and at lower cost. As chief marketer for two agile development firms, I have observed this transformation and results from the inside at clients.
Results of agile project management are remarkable when leadership is enlightened and the organization is committed.
Insights for Chief Marketers
- The Chief Digital Officer trend is indicative of CEOs’ and boards’ growing realization that all is not right at the farm. Few CMOs or CIOs have the bandwidth or competency to lead the digital transformation brands need. Many brands will not survive if they don’t discover how to engage in time to remain relevant enough to maintain or grow market share. The good news is any CMO can fix this. See The CMO’s Guide to the Chief Digital Officer.
- Silos add no value to customers; they are an artifact of the 20th century, during which communication was analog and collaboration was expensive and slow.
- There is no substitute for real-world experience. Synthetic is acceptable when real world isn’t feasible, but real world is increasingly feasible. I have found in client work that digital social interactions and behavior are increasingly proxies for most behavior, as digital becomes more pervasive. See The Social Business Enabler of Digital Transformation.
- Most brands and firms have a vacuum in which marketing and I.T. scramble to provide digitally powered experience, but these organizations are accustomed to incremental change, so CIOs and CMOs need to think broader and deeper. See the CMO Guide to Marketing in the Digital Social Age.
- Customers don’t care about brands, CEOs, CMOs, or consultants. Once they realize what they want, they take it from providers that give it. Increasingly, customers want an immersive experience that is considerate of their needs, and that means seamless digital/physical experience. One CMO client of mine talked about his goal for customer experience: “I want people to use our service so seamlessly that they don’t even remember the service, only that they got the result with no friction” (transport company).
CMO Action Steps for 2014
- You may feel that you are digital and getting more so. Relative to yourself and other CMOs, that may be true. You are certainly lagging behind customers who have not the burdens of organizational entropy that you have. Up your game. Use the scenarios in The CMO’s Guide to the Chief Digital Officer for career planning. Get out of your comfort zone.
- Just as important, nurture astute members of your team. Remember, the sea change is that customers respond to interactions about their individual outcomes, not mass messages. The 20th century “creative marketing” mantra is maladaptive, so don’t promote “creative marketers” that are motivated by communicating creatively and winning awards. Hire people from sociology and anthropology backgrounds that appreciate and make sense of human behavior in groups. Diversify your agency mix; most agencies are incented to keep you in the “creative marketing” mindset because content development and distribution is their gravy train.
- CEOs will reward agents who get results, and customers increasingly vote for brands that listen to them individually and respond. In Crate and Barrel’s case, developers using agile have pivoted quickly. If you are fortunate to have a similar I.T. team, knock yourself out to collaborate with them. Remember, the brands that immerse themselves in customer outcomes will win. That can be you, but you must reorient your teams away from product and toward the customer’s use of the product.
- Customer service is a huge opportunity to get close to customers. Social Business: Customer Service Is the New Marketing gives you the rundown on this.
- Likewise, task team members to explore ways to collaborate with “store operations” if you have stores. Customers, without realizing it, want seamless experience, and every touch is an interface. You create friction when you force the customer to interface differently via different interfaces (mobile, telephone, web, store…). Just think of yourself as a customer. This all makes sense when you approach your brand from the customer’s point of view which is grounded in an outcome (of using a product/service). Agile developers use this to design experience. You can use it, too.
- Realize that omni-channel applies to every person or organization, not only retail. Every stakeholder wants seamless experience, not only retail customers. If you’re B2B, that means your channel, your employees, your investors, your regulators…anyone who interacts with you.