The Death of Digital Distinction
"Companies that treat digital as a discrete strategic objective or work stream are in danger of being left behind."
Digital has long been a corporate buzzword. But as Diageo’s CEO Ivan Menezes said, “it’s not about doing ‘Digital Marketing’, it’s about marketing effectively in a digital world”. The digital distinction is behind us. What does this mean for business strategy and structure?
Many traditional consumer facing companies have struggled to keep up with a rapidly advancing world. As a result, ‘Digital Transformation’ has been high on C-suite agendas; initiatives in e-commerce, digital marketing, AI or 3D Printing proliferate.
However, it’s a constantly moving target, and confidence in organisational Digital IQ is at an all-time low. For organisations to thrive in a digital world, more expansive transformation is needed to form a truly integrated approach.
STRATEGY TO MAKE IT HAPPEN
Diageo’s marketing strategy used to focus on strengthening loyalty amongst their consumer base; but consumer habits now change at pace, compounded by a blurring of digital and physical brand touchpoints. Given this, Menezes says, Marketing must recruit and then re-recruit consumers, so it’s critical to be relevant to them and the occasions where they interact with the brand across channels. Smoothing the distinction between them means brands like Tanqueray and Guinness are gaining relevancy with consumers. If Diageo’s latest results are anything to go by, this strategy appears to be paying off.
Taking a more integrated approach to digital not only applies to marketing channels, but sales too. Establishing a seamless, omni-channel route to consumer is already a pre-requisite for successful retail brands. However, some digitally native organisations understand integration better, pushing omni-channel retail into new places, by truly positioning customer’s interests at the heart.
For example, Amazon Go’s mission is to make shopping a completely frictionless experience. Digitally enabled supermarkets allow shoppers to walk straight out with the goods, no lines or checkouts. Therefore creating physical stores that emulate the convenience shoppers have come to expect from e-commerce.
Farfetch are creating an ‘augmented retail’ experience in digitally enabled physical stores, named ‘Store of the Future’. The store is built using Farfetch’s new operating system for retailers, which offers third parties the chance to build their own applications and further merge the physical / digital shopper experience, making it easier and more personalised.
Without an understanding of how to integrate, it’s tough to ensure improvement to customer experience. Many companies in Stage 2 (Fig.1) fall victim to introducing tech prematurely, without having the right processes cross-functionally to make it a success. Consider Target in the US, whose customer tracking algorithm worked out a teenage customer was pregnant before her parents did.
For traditional companies, digital integration is not an overnight process. It takes time and commitment. To be successful, companies need appropriate ways of working to support the strategy.
ORGANISATIONAL DESIGN TO MAKE IT STICK
Digital disruption is outpacing organisational advancement. Here are some ideas to try and close the gap:
A decentralised approach to digital was seen as a benefit in the past (when it was about ad hoc initiatives/innovation and sidestepping legacy systems). This no-longer suffices.
Warner Bros recognised the need for cross-company alignment and coordination. Every division makes use of customer data to create and distribute content, so they now use shared resources to avoid over investment in analysis, distribution platforms and new technology.
According to IBM, 88% of enterprise firms still don’t share their own customer data internally among their teams. To give this a greater chance of success, overarching visibility and control is key to lead the agenda, ideally headed up by a CMO that can speak the language of different functions. This enables direct information gathering from teams as diverse as product, supply chain & finance.
Devolved decision making
To fully reap the rewards of digital integration, decision making must happen fast.
With full transparency on customer feedback, instant results from social engagement and visibility of audience behaviour, marketers are now able to learn and adjust tactics in days, not months. To make this work, allow Marketing managers to be close to the customer, with a clear mandate that empowers them to make decisions and adapt quickly to changing trends.
Most businesses still need to comply with rigid yearly or quarterly budget setting and meet tight budget lines. However, adopting a more flexible budget approach can enable more effective decision making. This could involve ‘earning your way’, or tracking ‘working vs. non-working’ budget ratios. Introducing more flexibility enables real time tracking, tailoring & adjustments to get the greatest efficiency from spend.
It’s easy to sit back, comfortable in the knowledge that your company have launched a new chat bot or built up a digital marketing division. But in reality IBM research discovered 4 out of 5 CMOs are overwhelmed by the challenges they face over the next five years. Companies that treat digital as a discrete strategic objective or work stream are in danger of being left behind. To really position consumers at the heart of your strategy, an integrated approach is urgently needed.