Over the last couple of months, I have been observing some macro-trends that have prompted me to think again about what the future might look like. And that led me to clues which shine a faint light on what that future holds for brand/customer interaction.

These thoughts were running through my head when I began reading the recent, and fourth annual “State of Marketing” report published by Salesforce. If I hadn’t been thinking about some of the issues brands will be facing in the future, and what they could do to address them now, I may have simply taken the report at face value. There was a lot of very useful, but not altogether surprising, information about the adoption rate and focus on technologies like AI, how marketing and sales teams are starting to work more closely together, and how important connecting the customer journey is for marketers to become high performers. But the report revealed something else – a shift in business thinking that is going to speed up the pace of change dramatically.

In this article, I will draw out the key themes that I have been observing, the impact they are going have on business, and what needs to be done to make the most of them. The Salesforce report has provided a critical input to my analysis.

Disruption is the new normal

In 1965, a relatively unknown semiconductor researcher, by the name of Gordon Moore, published a brief article in Electronics magazine called “Cramming more components onto integrated circuits”. In that article, he predicted that the amount of processing power that could be bought for $1000 would double every 18 months. That prediction has held true to this day and has become to known as Moore’s Law.

The thing about numbers that double at regular intervals is that they create exponential growth curves. The exponential rate of growth of processing power has created the world that we live in now. What has been labelled “digital disruption” is in fact the world taking advantage of an increasing amount of computer processing power and connectivity. This “disruption” is not going to stop. It will continue to increase at an exponential rate. This changes the way businesses operate. In a stable environment business focuses on extracting value through applying disciplined internal processes and reporting silos. In a dynamic environment, such as the one we are in now, collaboration is critical for success.

This year’s “State of Marketing” report reveals a marked difference between the businesses that are embracing this collaborative approach and those that have yet to get there. 91% of high performing marketers (comprising 12% of the 3500 respondents) reported that they were empowered to collaborate closely with sales teams. In contrast, only 45% of the bottom 12% of respondents (the under-performers) reported the same freedoms.

This signals that businesses must plan to continually invest in technology and resources that allow divisions, units and partners to see the same information, tools that enable cooperation and in people who have a highly collaborative approach to problem-solving. This is not a once off “transformation” investment. It is a process that needs to be embedded within a company as “the way we work around here”.

AI reliance is approaching… quickly

A recent Wall Street Journal article called “The End of Typing: The Next Billion Mobile Users Will Rely on Video and Voice” analysed why millions of people in developing economies, such as India, are using cheap smart phones and internet connections at a dramatically increasing rate. Low literacy drives this new set of users to skip typing altogether and jump straight to voice activation. They are searching the internet by speaking and using intuitive experiences to navigate, communicate and purchase.

If a business wants to think and scale globally, this is a behaviour they need to be right across. And this is not just happening in emerging economies. It’s happening in our own back yard. There is a new generation of western consumers – teenagers right now – who are heavy users of voice activated assistants. They trust the information that is served up to them, often more than advice they receive from a human.

All of this is possible because of advances in AI and Machine Learning. The technology is speeding up rapidly. Consumers want to dispense with anything that wastes their time. Marketers and the caretakers of brands can take advantage of this by adopting AI technology to focus on delivering the best communication, in a personalised way, for each and every customer.

The “State of Marketing” report showed that 59% of marketers in the ANZ region had begun adopting AI technologies, roughly the same as the rest of the world. But some companies are going ‘all in’. In July this year Red Balloon announced they were restructuring and stated they were creating an AI-powered digital marketing division. This is likely to be the first of many such announcements.

Marketers need to start working out how they can use AI technologies to provide a more connected and better overall experience to meet evolving customer expectations and remain competitive.

Belief alignment is going to create huge waves

Call them what you will, Millennials, GenZ or whatever other label is currently on trend, but these younger consumers share a common characteristic – they think a lot about their values and beliefs. And they want the brands they interact with to do the same.

An interesting side note in the “State of Marketing” report states that “Customers increasingly have options about what a company stands for and how it behaves as a corporate citizen. Recent research has shown that 60% of consumers are likely to switch brand if a company isn’t socially responsible.” This is a signal of a huge shift taking place where consumers hold brands to account and vote with their wallet.

A recent app called Nudge for Change adds fuel to this fire. Once downloaded the user of Nudge for Change is prompted to explain what issues are important to her. A host of issues are covered including woman’s rights, marriage equality and race. Once set up the app sends the user a message when they come in contact with a business that has been reported for violating one of those beliefs.

Marketers today need to develop deep insights into what is really important to their most valuable customers and use technology to deliver messages that connect with those customers’ values and beliefs.

Proliferation of customer centric systems 

Marketers are no longer simply responsible for brand awareness and sales acquisitions. Increasingly businesses are turning to marketing teams to design and deliver connected end-to-end customer experiences. This will become increasingly important as autonomous systems, that the major technology companies are developing, evolve.

Apple, Google and Amazon are now starting to show us that beyond the time we spend in front of a screen, our homes, workplaces, cars and even our bodies are about to become highly connected systems. All of these technology companies have made moves into the home, and will increasingly do so in the next couple of years.

We are heading into a world where autonomous systems, like driverless vehicles, will start to know us better than we know ourselves. Constant monitoring of health and behavioral data will create even more highly detailed profiles of who we are, what we like and where we go. Businesses need to start focusing on how they remain relevant within these ecosystems.

What we already know is that interrupting the flow of these experiences is likely to be met with consumer distrust – particularly among the younger demographic who are more aware of technology and have a strong aversion to being a target for marketing. Now more than ever brands need to think about how they create connected experiences that remove friction for the consumer and provide value at every opportunity.

How do we grab this opportunity?

Developing capabilities now, both human and technological, that create focus and velocity among the resources and processes within your organisation has to be a priority. Analytics, collaboration, creativity, design and technical depth will separate the leaders from the failures.

The world is changing quickly. And most of your customers want it to. The question for you is, are you acting now to make the most of tomorrow?

Alice has just purchased a new phone which contains the next generation of digital assistants. This digital assistant (DA) has access to every piece of data that Alice generates. It knows who she has met, what she has bought, what she searches for, who she is connected to, where she goes and what she does. It can do this because she has given it permission to access all of her data including her financial information, her social networks, and loyalty programmes.

Alice’s DA asks one question; “What do you want to do?” – Today, tomorrow, next week or for the rest of your life. Everyday Alice tells her DA, what she wants to do and the artificial intelligence (AI) behind the scenes looks at all of her information to help achieve her desired goal.

On this morning Alice’s DA greets her with a message through an app that says: “Good morning Alice, what do you want to do?” After thinking for a couple of seconds Alice responds with “I’ve been at the office a lot recently and let my fitness slip. I’d love to get outside and do some exercise this weekend.” She continues: “Also, last night I was sitting up in bed looking at Facebook and saw a few of my school friends that I’d like to connect with – but I don’t know how to start the conversation so if you’ve got any suggestions let me know.”

But that is not the end of the journey. Alice had previously interacted with Nike. This allows Nike to send a message to her DA asking if she’d like a virtual tennis lesson from Roger Federer through her Xbox.

Every night after work leading up to the event Alice has a virtual tennis lesson from Roger Federer. Together they work on her forehand and her serve. After her lesson on Friday night virtual Roger says “Well done Alice. You have improved a lot this week. I think this tennis racquet would be perfect for you. Pick a colour and we’ll have it 3D printed and waiting for you at the court tomorrow morning.”

And this conversation is happening across multiple devices and touch-points. Think of as a chatbot that is everywhere.

This is simply a story of a possible future. Facebook, Google, Apple, Microsoft and Amazon all have Artificial Powered DAs that are evolving quickly. It’s only a matter of time before this is a reality.

According to Salesforces’ State of the Connected Customer Report, 58 per cent of consumers agree that technology has significantly changed their expectations of how companies should interact with them.

So if this is the world that your customers will soon be expecting what do you do about it? From a leadership perspective it’s vital to start asking your organisation the question, “how can we use emerging technologies like AI to deliver value to our customers and strengthen our brand?”

Collect and manage your customer data to build a rich profile of each and every customer

Most customers understand that personalised journeys are created by brands that collect and integrate data. The Connected Customer report found 57 per cent of consumers agree they’re willing to share data with companies that send personalised offers and discounts.

Keep your organisation focused on customer journeys and experiences

Connected customers expect consistent and intelligent experiences across every interaction or communication channel — and a large part of that is being recognised and remembered. 75 per cent of customers surveyed agreed that they expect companies to provide a consistent experience, whether it is online, social, mobile or in person.

Embrace and experiment with technologies like AI to build your ‘Digital Differentiator’

In the age of the customer, technology fundamentally changes the way they interact with companies. Connected customers want to be heard, understood, remembered, and respected. Ultimately, they want to be treated like people — and intelligent application of customer data can help companies deliver experiences with a human touch, at scale.

As both technology and personal connections with brands become more important, customer journeys will continue to be more sophisticated.

High-performing marketing teams need to create tailored, dynamic customer journeys. This starts with personalised and curated emails, social media interactions, landing pages, product suggestions, and in the near future, will be able about creating their very own Digital Assistants.

A smarter, more intelligent world is very rapidly evolving. The only question is; are you ready to make the most of it?

For more information on what a more connected customer looks like and how you can meet their expectations right now, check out Salesforce’s “State of the Connected Customer” report.

Produced in collaboration with Salesforce

Mass market media still plays a vital role, but highly targeted, personalised, data driven messaging that builds on an individual’s pre-existing biases is where the battle for dominance is to be won.

A report titled The Future of Advertising just released by Salesforce, reveals new data provided by Facebook, Google, eMarketer and Comscore, and looks at the case for providing a data driven, tailored advertising experience.

According to the report, about $200 billion was spent on digital advertising globally in 2016. While this signals significant growth in the digital, what is really striking is that click-through rates (CTR) remain very low. Facebook for example has an average of only 1%. However, when CRM data is used to power ad spend on Facebook, CTR performance improves by 47%.

What this signals to leading digital marketers is that focusing on the conversion goal is no longer enough. To build a brand, you must create an environment that completely immerses the target customer. The marketer must now design the journey, with milestones and interactions along the way.

Businesses that offer product or service that has a long and emotive buying cycle are particularly impacted. This is why there is so much focus on “digital transformation”, and with market leaders like Nike completely altering the way they interact with their customers over the last, we can expect this focus on data driven personalisation and innovation to speed up significantly.

Adding weight to this argument, the Future of Advertising report looked at retail consumers online behaviours. It showed that “66% of digital retail time is spent on mobile as opposed to 34% on desktop, and yet just 19 cents of every retail-specific digital advertising dollar goes to mobile.” This suggests that consumer behaviours are still shifting quicker than many businesses are responding to. It also suggests the gap between the “data literate” brands and the rest of the market is rapidly widening.

Having a detailed understanding of your target customer and their online behaviours, and being able to customise communications and offerings around these insights, forms the basis of creating a competitive advantage. For example, when the financial services sector in the US noticed that consumers were moving to mobile, they increased their digital advertising spend to $8.4 billion. They saw the use of mobile banking jump from 9% to 30% adoption over a five-year period ending in 2015.

This showcases how a sector successfully used data to understand their customers and adjusted their offering and associated marketing to build a more profitable customer relationship.

The overarching theme that I pulled from the Salesforce report is that tailoring messages to suit your customers’ behaviours creates cut-through and improves ROI. Within the broader context of brand building, this message flags the role digital channels should take to make a programme as effective possible. Traditional media will always have a place in passively raising awareness, but it is the digital channels that allow marketers to communicate to each and every customer in a personalised and scalable way.

What’s clear is that marketers must now take the data driven techniques that have made personalised, journey led, email marketing so effective and apply those lessons to all digital touch-points.

Understanding what your customer wants, and tailoring your messages to suit them creates high levels of engagement. But more importantly it puts your business on a maturity pathway that will enable it to make the most out data and technology, and be prepared for the huge shift that is still yet to come.

To learn more about how the future of advertising is changing, download the full report here.

Sometime in the months before July 2006, senior executives at Nike made a decision that has shaped its digital strategy. It created ripples in the world of personal electronics that are still being felt today. At that point in time, big data was being talked about worldwide as an emerging competitive advantage and many companies had started to dive head first into collecting customer data with a view to driving more efficient and targeted communications. But Nike took a different approach.

As one the world’s most recognizable brands, Nike had more than enough resources to obtain, store and utilize data to drive their marketing communications strategy. But they also had the clarity and courage to realise that a digital strategy is most powerful when it is a true a representation of their brand. Nike’s brand isn’t about selling shoes. It is about optimizing performance. So instead of using all their resources trying to sell more shoes, Nike created a digital platform that focuses on and improves the athletic performance of customers wearing their products.

That platform was Nike+: a sensor built into the shoe of a Nike sneaker that measures how far you have run.  From this, the world of fitness tracking was born. Ten years later and the experience they pioneered is now a whole industry in itself.

This story is an illustration of how a company can create a significant competitive advantage by being true to their brand and focusing on their customers’ needs to design breakthrough experiences. We can learn from this that a focus on providing great experiences can take your business to the next level.

In this series of articles we have looked at a few of the key concepts covered in Pine and Gilmore’s book “The Experience Economy”, which builds on the concept of making customer experience a product in itself . Part One covered how customers perceive value and how businesses can better design offerings in order to move up the value chain. In Part Two, we looked at how businesses evolve and why building personalised products and experiences drives margin gains. In this article we will discuss what is required to lead the process of creating an exceptional experience.

The challenges of leading customer focused change

Most people within a business understand that focusing on the needs of the customer is vitally important for the longevity of the business as a whole. But actually achieving transformation of any sort is challenging. As a leader, these are the five key stages involved in leading customer focused change.

1. Communicate why this renewed focus on customer needs is important to the business. Help your team understand that remaining still is not an option. Your customer’s expectations are constantly evolving, creating the “burning platform” for transforming your business. Yes, there are risks associated with pushing the boundaries, but the opportunities are also great. Use both fear of irrelevance and the excitement of greatness to motivate your people.
2. Carefully pick your team. You need a team that will not get lost in complexity, and will deliver successes that create momentum. You’ll need digital strategists who can think about technology creatively. People who have a deep curiosity about your customer’s needs. People who can cut through the complexity to design simple and elegant solutions. People who are relentlessly and ruthlessly focused on delivering outcomes.
3. Understand the customer fully. Analyze your data. Observe your customers and talk to them. Validate your team’s hypotheses through surveys and workshops. Identify the unmet need, the job your customer is trying to do.
4. Create a narrative that articulates the vision clearly. Develop a detailed story that very clearly outlines the direction the business is going. Make sure it is understood by the whole business – and let them know the pathway to get there will need to be discovered through action.
5. Don’t try to boil the ocean. Start simple. Move quickly. Constantly show the business – and the market – your progress. Change happens through action and one small success after another. 

Designing the experience

Once you are sure that your business is all lined up in the right direction, then you can begin to design the experience and offering you want to take to market. A bold digital vision will be about creating a digital ecosystem that delivers a sustainable competitive advantage. The design stage needs to keep this vision in mind, while also delivering the first step in a longer journey.

These are the important points to keep in mind when designing the experience you want to take to market:

• Identify the type of experience you want to deliver. An experience is always going to create an emotional reaction. It is good to know what type of reaction you want out of your audience early on in the design process as this will help you understand how the audience will consume the experience. For a guide, refer to graphic.
• Theming your concept. For your experience to generate the maximum impact, all aspects of it need to be brought together though a unifying theme. An effective theme is concise and truly compelling. It is not a mission statement or a marketing tag line, and needn’t be publicly articulated in writing.
• Identify positive cues. The theme of your concept forms the design foundation. From there, the impressions left on the audience are the “takeaways” of the experience; they fulfil the theme. What are the positive impact points that your audience will talk about with their peers?
• Eliminate negative cues. Eliminate anything that diminishes, contradicts, or distracts from the theme.
• Deliver, learn, and improve. There is never an end point to designing exceptional experience. Always aim to learn more about your audience and push the boundaries in order to improve.

In this series we have looked at what is required to create a lasting competitive advantage. In short, the key elements can be expressed as follows.

• Understand your customer
• Identify the opportunity
• Know your business context
• Communicate and own the vision
• Design the change

Quite simple when it’s put that way. But the piece of the puzzle that wasn’t discussed in the series is the one that is most important – courage. To create something that is transformative you will need to have courage to listen to your customers. Courage to do new things. Courage to fight the resistance to change. And the courage to do something outstanding.

 The term “creative destruction”, coined by the Austrian American economist Joseph Schumpeter, refers to the “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one”. In other words, an innovation cycle that creates new organizations and market categories and destroys old ones.

The current trends of economic globalization, connectivity and rapid technological evolution have created an environment in which the concept of creative destruction is playing out in a very rapid and public way. This concept even has a name; Digital disruption.

In order to create or evolve your business’s product or service in a way that drives (rather than incurs)the process of creative destruction one thing is certain – you must understand the needs of your customers. As the great Peter Drucker said: “It is the customer who determines what a business is”.

This series looks at the concepts from Pine and Gilmore’s book “The Experience Economy” from a holistic business perspective in order to understand the customer’s point of view and use these insights to design new experiences. In the first article  we examined how business offerings progress through stages of economic value from a customer perspective. In this article we will turn our attention to the four phases of business transformation, which will help you get a sense of where your business is heading.

The fours phases of business transformation 

Businesses, and the markets they play in, are always evolving. By definition this means that if a business is not moving its offering (or its methods for delivering that offering) forward, it is moving it backwards. There is no such thing as standing still in such a dynamic environment.

The Experience Economy describes a model called “The Product-Process Matrix” which illustrates how businesses evolve and what drives each of the following four stages of transformation.

1 – Invention: In this stage a business is attempting to define its offering. There is a lot of focus on the needs of the market. It is highly dynamic in terms of process and offering change. There is a sense of chaos about this stage, as there is likely to be high levels of experimentation, failure and pivoting of direction.

To better imagine this, think of the days when cars were first being invented. The first cars ever built were weird, unreliable, expensive and seen mostly as curiosities. 

2 – Mass Production: Once a business has landed on its offering, the pressure is then on to extract as much value from that offering as possible. The business needs to scale. The business needs to create stability. Processes get standardized and organizational structures get put in place.

To continue the car analogy, this is the point in time when the Model T Ford came onto the scene and created a mass produced car at a reasonable price for everyday people. 

3 – Continuous Improvement: As the market in which a business operates matures and competition increases, the pressures continue to change. The business then needs to create variations of its offering at a reduced the price to remain competitive. This means implementing more dynamic processes and organizing teams to constantly improve on what they have.

Think of the impact that Toyota had on the car market with its much more agile and responsive approach to car manufacturing. 

4 – Mass Customization: Once a business has effective, streamlined production processes, it can then start providing customizations on those services.  This is where the business attempts to increase margins by developing the ability to customize its products to individual customer specifications while still maintaining the capacity to produce at scale.

These days, when you purchase a new car, customers can often choose from a list of customizations on their vehicle to make them feel like the car is uniquely “theirs”.

It is important to progress through these four stages sequentially. Trouble emerges when a business tries to tackle more than one stage at a time (lack of focus), or the business tries to skip a step (capability misalignment).

So what is the difference between mass customization and personalization? Personalization is the process of tailoring products and services to individual customers characteristics or preferences. Mass customization is a process for implementing personalization.

From a digital perspective personalization allows you to tailor a message to a customer more effectively, often through the use of data and profiling. Mass customization allows you to use the same tools and processes while giving the customer control, thereby creating an opportunity to further monetize that relationship. One is business as usual. The other is business evolution.

The current environment is both a threat and an opportunity to many well-established businesses. The challenge is to grab the “creative destruction” opportunity and be the disrupter.

In the last article of this three part series we will look at how you need to lead the design phase of creating an experience that can evolve your business model.

Over the last decade Australia really enhanced its reputation as “the lucky country”. While other economies were struggling with the fallout of the GFC Australia’s economy was strong. But this success has come at a cost. While many global businesses were rapidly transforming around the needs of the customer and the impacts of digital technologies, many Australian businesses were slow to react. There was no real “burning platform” for change.

As a result many market commentators now say that Australian businesses are trailing the major western economies when it comes to digital proficiency. This makes Australian businesses much more susceptible to new “disruptive” business models and non-traditional competitors. To deal with these perceived threats many Australian businesses have been scrambling to find a “silver bullet”, investing heavily in technology and data – sometimes at the expense of focusing on the overall competitive strategy.

For leaders who are looking to develop a new lens on their competitive landscape, and to discover where new opportunities may lie, investing in understanding the needs of their customers is a great place to start. Surprisingly, many businesses think of the customer experience as a mere piece of the overall services that they offer. But in this day and age, excellent customer experiences are now their own distinct type of economic offering – and they are one of the most valuable ways for a business to cut ahead of the competition. This concept is detailed in “The Experience Economy”, a book written by ex-IBMer and TED talker Joe Pine and his co-author James Gilmore. When it was first published it broke new ground by providing any type of business with new ways to improve the experiences it provides its customers, and demonstrated how this can drive new revenue opportunities.

As a certified The Experience Economy Expert, the only one in Australia in fact, I use many of the concepts, frameworks and models presented in The Experience Economy to design digital transformation programmes for our clients. In this series of articles I will discuss some of the key themes of the book and frame them up for the current digital world. This is not a series about the common tools for understanding your customer. We won’t be discussing design thinking, journey mapping or service blueprinting, although all of those tools are very valuable. This is about looking at your whole business from the customers viewpoint and using this perspective to design new engaging, memorable experiences.

Understanding the progression of economic value

Most businesses exist in a competitive environment. As the landscape in which they operate matures, businesses need to evolve the value of their offering, or risk becoming commoditized.

The Progression of Economic value is a model created by Pine and Gilmore to help business leaders understand how offerings move up and down the value ladder.

The progression of offerings starts with commodities, the lowest-value offerings, and progresses up toward transformations, the highest value offerings.  Low value offerings are material things, while the highest value offerings are intangible.  The dynamic forces of an ever-evolving economy, with its continual creative destruction, continually innovates offerings.

Here are some examples of business offerings at each level of the ladder:

• A commodity business charges for undifferentiated products. e.g. iron ore
• A goods business charges for distinctive, tangible things. e.g. a can of food
• A service business charges for the activities you perform. e.g. a delivery service
• An experience business charges for the feeling customers get by engaging it. e.g. Disneyland
• A transformation business charges for the benefit customers receive by spending time there. e.g. a university degree

Progressing to the next stage more or less requires giving away products at the more commodified level. For instance, to charge for a service such as new car warranties, one must be prepared to give away new cars to replace “lemons”. And to charge for transformations, one must be prepared to risk not being paid for the time one spends working with customers who don’t “transform”.

Discovering where your business’s offerings sit on the value ladder, and the upward and downward pressures on them, is a critical first step in understanding the needs of your customers and the opportunities in the market.

What follows is what you do about it and how you design experiences that change your business. This is what we will discuss in the next article in this series.

Recently I joined a select group of people who hold the qualification “Certified Experience Economy Expert”. I was the 225th person in the world to earn that title — and the first person in Australia. I’m now starting to share the key concepts I learned with businesses in this part of the world, concepts that brands such as Disney, Ikea, Benetton and LEGO use to create new experiences for their customers.

The Experience Economy Certification is a week long course held in Minneapolis in the USA. It focuses on providing frameworks and models that can help businesses understand their customers, analyse what high quality, profitable, customer experiences mean for their organisation and learn how to lead the change required to deliver those experiences.

So why go to Minneapolis, the home of the late Prince’s Paisley Park, to do a course on customer experience?

Sometime back in 2008 I started watching TED Talk videos. What started out as passing interest quickly became an obsession with learning from the bite sized chunks of knowledge in the online presentations. Many of the videos had a great impact on me but one that was published in 2009 really resonated and changed the way I looked at the work W3 Digital does. It was a video called What Consumers Want by Joseph Pine. The talk discusses some of the key concepts that Pine, and his co-author James Gilmore, put forward in their book The Experience Economy. What I took away from the TED Talk was a way of thinking that would allow businesses to take advantage of digital technologies to innovate and transform their activities around the consumer. So after meeting Pine a few years ago, reading his books, and using many of his frameworks, this year I decided it was time to dive into all of the thinking in much more detail.

The Experience Economy Course covers a lot of material, more than I could cover in an article, but I have highlighted below some of the key takeaways.

Do you know what your customers want?

For brands to differentiate in today’s market conditions they must orchestrate memorable events for their customers. Over time that memory itself can become the product — the “experience”.

Understanding your customers well enough that you can deliver an experience so good they would be willing to pay for it as a separate offering is at the core of the Experience Economy thinking. This understanding only comes from investing in analysing customer behaviours and insights and learning what they will and wont pay for.

Is your company prepared to deliver great experiences?

In delivering value to customers companies are always moving through various stages of development . Initially there is a stage of invention, where a product, service or experience is designed. Then the company must extract value from the invention, so structure and efficient process are put in place. Then, as the market evolves, the business must create cross functional teams and agile processes to remain competitive. Finally, businesses can increase profit by delivering high margin customisations for individual customers, otherwise known as mass customisation.

Knowing where your business is on this continuum is vital for creating and delivering your customer experience. From a digital perspective these stages are reflected in the design of a “digital maturity model”.

In the rush to deliver “personalisation” some businesses don’t spend the time required to create the structure and processes necessary to succeed.

What it takes to lead customer experience change

High quality, integrated, customer experiences have become the battleground for differentiation and business model evolution in today’s marketplace. Designing experiences requires a business to focus on the needs of the customers, take risks and reward innovation. In many cases this means programmes of business transformation.

Leaders in this position need to address all the core aspects of successful organisational change such as clear communications, capability development, well designed reward programmes and employee engagement and participation. Leaders need to be active, visible and accessible.

There also needs to be a strong narrative around the customer and experience design process. Programmes like customer journey mapping help this but not all stakeholders can participate in those workshops. What is needed is a set of simple frameworks that all stakeholders can connect with. This is where the Experience Economy material becomes so powerful. The thinking can be applied to any market or area within a business.

Combined with digital innovation the Experience Economy has the power to transform organisations and connect with customers in entirely new ways. It contains the concepts that enable businesses to design a clear, simply communicated path, in a very complex environment.

Many new data driven, targeted, marketing techniques are now possible, but recent evidence suggests that some may actually do more harm than good.

Developing a simple and effective digital communications strategy isn’t easy. Getting it right requires the leadership of a business having a clear understanding of customers’ needs, the experience they want to create and the steps required to get there. For many businesses this process will take time. To do it well they need to focus on the long-game. However, the pressure of short term performance reporting and demonstrating “quick wins” distracts businesses from the longer term, more strategic view.

An example of this is the current reliance on behavioural targeting. Most of us have had the experience of searching online for a product or a service, visiting a company’s website and then being bombarded with advertisements from that company. This is behavioural targeting. It gives advertisers the ability to target and personalise messages to consumers based on browsing history and demographic information. It’s now very cheap and easy for businesses to collect and track this type of information and use it to drive short term activity.

But a new paper from Stanford Graduate School of Business Professor Pedro Gardete and Yakov Bart, a professor at Northeastern University, has found that highly targeted and personalised ads do not translate to higher profits for companies. Their research shows that consumers find those ads frustrating and eventually meaningless.

The research used game theory to build a mathematical model that enabled them to look at the impact of a variety of advertising scenarios. It shows that in many cases the most effective strategy for consumers is to keep information private and for businesses to track less of it. As Gardete says: “It might seem counterintuitive to say to a business, ‘collect less data and disclose it,’ but being open about what data a company collects is actually to its advantage.”

The insights from this research suggests that many businesses should rethink their digital strategy and tactics.

When we are talking to clients and marketing professionals we describe the approach discussed above as the treadmill of creating “smarter and smarter spam”. It might work for a short period of time but eventually it will erode brand trust.

The only real way of creating true competitive advantage in the digital world is to focus on generating long term trust with your customers. Companies need to focus on what customer data they really need and, importantly, how they are going to use it to deliver value back to the customer.

It also means that those responsible for shaping and driving digital change need to be freed up from the demands of quarterly sales reporting. Leadership should allow them to develop a long term vision but insist on setting the KPIs that they will hit along the way.

Some suggestions to help sell-in a long term strategy are:

• Develop a clear customer centric financial model
• Demonstrate which techniques will positively impact that model in short and long terms
• Clearly show where the risks lie (many of the techniques that will provide a short term gain may present great long term risks)
• Map out a staged “maturity model” that creates a narrative that stakeholders can support
• Report on progress frequently

The world has changed. Now is the time to be bold. Focus on the customer. Design for the long term. And remind your management team to resist the temptation of chasing “quick wins” that erode the trust of your customers.

Three central factors are at play. First, economic. We have lived through the biggest economic crisis of modern times and it has forced business to fundamentally reevaluate the value they provide to their customers and how this links to shareholder value creation. Second, social. We have a rapidly expanding population that is putting a premium on unique experiences relative to mass produced goods. Third, technological. Technologies are evolving and maturing more rapidly across all industries than at any other time in history.

To respond to these external pressures, meet their customer expectations and reduce costs many organisations are about to, or have started to, embark on journey of digital transformation. Many of the clients we work with, from government organisations to private companies, are realising the potential gains digital transformation can bring to their organisation — and the potential threats if they do nothing.

Working with companies and business leaders who are focused on digital transformation we have identified four key challenges the need to be addressed to drive business transformation through digital means. I outline them below.

1 – Understanding the Customer

Companies like Amazon, Uber, Airbnb and Google have changed the expectations of the market forever. The average consumer now expects brands to be able to understand their unique wants and needs and create a tailored experience to suit. Most business leaders understand this principle but often find themselves caught in a discussion about technology.

Customer focused digital transformation essentially involves understanding customers and where their expectations are heading — rather than a conversation about technology. If a business doesn’t bring this lens to a digital transformation programme and develop a strong internal narrative about the customer, then projects will inevitably become internally focused.

The most vital element in ensuring the success of a digital transformation project involves your company developing empathy with your customers by using research, journey mapping and data analysis.

2 – The Always-On Business

Becoming a digitally driven business has many advantages but it also creates new set of challenges. Leaders will need to think about new, potentially unconventional team structures, and acquiring resources with skill sets that have not yet been completely defined. However one of the greatest challenges can be the reality of becoming an “always-on” business.

In many ways this ties in closely with altered customer expectations. As an organisation or brand becomes increasingly digital its customers will expect to be able to interact with that brand in any way they want. At any time they want. Many digital transformation projects have gone off track as the reality of delivering a service 24/7 becomes apparent.

It is critical that business leaders facilitate early on the discussion about what meeting customer’s service expectations really means — ideally before project teams form and work begins.

3 – Business Model Velocity

Simply implementing technologies is not a digital strategy. Some organisations get confused about technology implementation and fail to define a clear and simple focus for digital transformation. Today’s environment is seeing business models evolve at an incredible pace. Businesses that are leveraging technology to address unmet customer needs are redesigning whole markets and disrupting the status quo.

It is critical that a company embarking on a journey of digital transformation keeps the business model conversation very seperate from the technology one. The two may be interlinked but the model needs to be anchored in a discussion about business strategy and competitive advantage. Technology is an enabler but it cannot transform the way you do business, or the way you connect with your customers.

Businesses that recognise where the market is heading, understand the opportunities that it presents, and move quickly stand to profit most from digital transformation.

4 – The Data Dialogue

Almost every company is now awash with data. When used properly it has the power to provide insights and actions that can transform businesses. The biggest issue is no longer about getting access to data, but knowing where to focus.

The best businesses develop a conversation about data that is focused on delivering a service to customers. Yes, it is possible to analyse all the data available and use it to create better segmentation and targeting. But that can be a costly and difficult place to start. The best approach is to ask “how do we find and use the few data points that will provide value to our customers?”.

Digital Transformation is, by definition, the use of digital tools and techniques to transform business. That requires new thinking and working in new ways. The biggest digital transformation challenges, therefore, are not about technology at all. They are leadership and communications challenges.

In June 2009 a company was created that would forever alter a market that had been mostly unchanged and unchallenged for nearly a century. The environment was perfect for this company to come into effect. On one side of the equation it provided a means for people to earn a living, or a few more dollars, on their own terms and in their own time. On the other side it directly addressed an entrenched customer dissatisfaction and provided a service that the market desperately wanted.

That company is Uber and seven years on it has grown to the point where it has operations across the world and is valued at over $60 billion USD.

Putting the all of the technology, venture capital and media stories to one side what is obvious about Uber’s rise to global dominance is that it is an extremely customer centric organisation. Across the globe the taxi industry is renowned for delivering a poor quality service. Uber stepped in to fulfil a need in the market. Safe travel at a fair price from a person you can trust. Everything Uber does revolves around this. It is a company that will live or die on the back of customer trust.

Uber has taken on a powerful adversary in the taxi industry. It is an industry has been protected for a long time and unexpected and unregulated competition has driven debate all over the world. Lobbying from bodies representing the taxi industry has seen Uber’s legality being called into question. But it seems the new for of transport is here to stay.

It is easy to assume that it is technology that caused the disruption that the taxi industry is now having to deal with. The truth is technology has only been what it always is; and enabler. The real disruption comes from the market, the customer. If an industry exists where a customer is routinely dissatisfied then the environment is right to make significant change.

My personal experience comparing the service from taxis and Uber is a great example of why a company like Uber needed to happen. When I first moved to Australia in 2001 I caught a taxi from the airport to the apartment I was renting in Melbourne’s CBD. Once we arrived, I exited that taxi, paid the fare and started to think about my new life in a new country. Just then I realised that I left a bag full of camera gear in the cab. I started to chase the cab up the street who had just left. The cab pulled over and I saw the drier look at the bag in the back of the cab. Realising what the bag was, the cabbie then sped away as fast as he could. I was later told that kind of event was a regular occurrence.

In contrast to that I recently caught an Uber home from an event and accidentally left a footy ball in the car (I had won the ball at the event). Later that day the Uber driver called me to say he was driving over to my home to drop the ball off. He had no reason to do so other than protecting he reputation and the reputation of Uber. Of course when he did drop the ball off I went out of my way to give he a very positive review. It’s events like this that people remember. Reputation is built on trust and a focus on the relationship.

Technology has given people more choice than there has ever been before. This choice has created an environment where excelling at delivering an outstanding and integrated customer experience is now the new battleground for differentiation. The market now demands that businesses create an integrated and personalised approach to customer experience.

So think very hard about the industry you work in. Is there any part of it that uses control to maximise profitability at the consumers expense. If so, then there’s a very good chance someone is already working on replacing that control with technology, transparency and benefit to the consumer.

Your customer’s world has become increasingly digital. This has dramatically changed the way she connects with brands, researches products and makes purchase decisions.

To address this change and avoid becoming irrelevant, many businesses have invested heavily in digital assets.  These assets commonly include:

• Scalable CRM systems
• A range of tools such as marketing automation
• New capabilities such as those needed to drive content marketing initiatives
• Online loyalty programmes to increase engagement and data acquisition

This type of investment means that almost all businesses now have a lot of data on their customers, or at the very least can get access to it if they wish.

But, this ever expanding universe of customer communication and data collection has also created an environment that is tricky to navigate and manage.

The challenges business commonly face are:

• Internal systems and tools that don’t work efficiently together
• A view of the customer that is disjointed across the different parts of the business
• A digital experience for the customer that is confusing and needlessly complex
• Data within the business that isn’t fully leveraged, properly valued or ‘untidy’
• No clear metrics to measure what is working well and what isn’t.

A major implication for this disjointed approach is that it makes it difficult to take a holistic approach to customer experience and it hinders innovation. Organisations need to step away from simply focusing on the technology and take an integrated approach to customer experience and engagement.

W3 Digital is a market leading digital consultancy specialising in Customer Engagement Platform strategy, design and delivery. We offer strategic advice and executional talent to help you build an integrated digital Customer Experience Platform. We help our clients get their digital assets running intelligently, fluidly and harmoniously so they can begin to innovate quickly around what their customer wants.

We will design a bespoke system that ensures your brand stands out in a crowded market.

The steps required to get this right are:

• Analyse your data – build a value framework to guide investment decisions
• Create your strategic approach – Focus is the key. Technology can do a lot, but this often lures business to try to do it all – and do nothing well.
• Design the service that will differentiate your brand – once opportunities have been identified, co-creating with customers to deliver the best service will ensure success.
• Align the technology – finally choose the technology that will enable the desired experience.

W3 guides you through this activity as a step to an innovation driven process with a longer term view. Not only will you get the foundation to your data, customer and digital strategy right, but you’ll go beyond that to develop a unique and innovative competitive advantage.

Our Customer Engagement Platform strategy will give you a clearly articulated and actionable plan that delivers the technology, process and capabilities to provide:

• A consistent customer experience to increase customer love and loyalty, such that your customers stick with your brand, and become active advocates – whether on a website, app, e-commerce store, online game or engaging in a loyalty program.
• Integrated technology platforms that work together providing significant internal efficiencies
• Integrated internal systems and processes that speak to and inform each other, providing efficiency gains and a single view of the customer throughout your business
• Centralised, cleansed and valued data to help you understand how much your data is worth and how to best extract the value out of it to take your customer to the next level of engagement.
• Measurements and metrics that will be able to attribute the utilisation of your customer data with rises in customer satisfaction and assess impact this will have on your revenue.

W3 Digital helps you create a ‘system’ where you can easily and rapidly imagine and test what your future might look like, where attractive opportunities may lie and where new revenue streams may be generated.

What will one of the brains behind some the world’s most iconic customer experiences have to teach us? That is the first thing that sprung to mind when I was recently asked to host an event in Melbourne featuring Tim Kobe.

For the small group of professionals who are focused on understanding, designing and delivering outstanding customer experiences Tim Kobe is something of legend. However many have not heard of him. To the majority of people he is best known, like a true artist, for his work. He has worked with many of the world’s biggest brands, such as Nike, Citibank and Virgin, designing retail, real world and integrated experiences. However he most famously know as being one of the key thinkers behind the Apple retail store design.

The team responsible for putting on the event was a networking group called My Alumni and Kobe proved to be quite a draw card. After a short presentation of the work he has done while leading his company, Eight Inc, Tim and I sat down for a discussion on stage. During the 30 min or so that we spent talking we discussed what it was like working with Steve Jobs, his views on what Apple needs to do to keep evolving it’s cult-like status and a couple of stories he has had working for the world’s most successful and eccentric people.

There was a lot to discuss but it was Kobe’s experience of working with Steve Jobs that most in the crowd were there to hear about. What we learned was that Jobs’ attention to detail was absolute. For example one of his demands when the Apple stores were being designed was the lighting on products had to be exactly the same as it was in their adverting material.

On reflection the one topic that Kobe kept coming back to was how focused on the customer a leader, and an organisation, needs to be to be outstanding. Having worked with many of the world’s most known brands he has seen what it takes first hand. In his view, a view I share, a business needs to be somewhat fanatical about it’s customers.

Towards the end of the talk Kobe told a story that really struck a cord with me. He was describing the process of working with Jobs on the launch of the first Apple store. The night before it was due to open a clearly nervous Jobs asked a question of the team that had spent the previous few years working on the project. He asked “What of nobody shows up?”. Clearly he was afraid his new project would fail.

It is worth remembering that at this stage Jobs was at the height of his power. Yet his primary concern was what would Apple customer think. His was emotionally involved in the project and knew it was a big risk.

When I heard that it was clear to me what made Jobs so successful. He was obsessive about delighting Apple’s customers and exceeding expectations. His success was never about him, it was only ever about his customer.

It won’t be easy, but that is what it takes to be the market leader.

Transforming a business is always challenging. New organisational arrangements, processes and capabilities need to be introduced in quick succession. It always requires a change in company culture. When the transformation is “digital” it can be particularly demanding.

So how do some of the world’s best businesses manage the process?

As you might expect, facts and figures play an important role in developing the insights necessary to shape the strategy that lies behind transformation. But that never deals to the human and cultural demands of transformation. Best practice management of these elements involves “stories”. People connect with stories. Stories are a central human experience and have been throughout the development of our species. They entertain, educate and create a shared experience.

When an organisation is looking to become more customer-focused – a critical aspect of a digital transformation project – story-telling becomes a powerful way for your staff to understand your customers and develop empathy for their needs.

In today’s complex world, leading brands like Apple and Nike and disruptive brands like Uber and Air B&B need to develop a story around their customers to stay in front. Companies who are on the receiving end of digital disruption need to create a very strong customer narrative to facilitate transformation. One of the key ways of creating and embedding this narrative is to develop customer journey maps.

What is a customer journey map?

A customer journey map allows your organisation to develop empathy with your customers. It is a tool that allows you to step through the customer experience and understand what it is like to interact with your company.

Customer journey mapping begins with identifying and cataloguing the touch points where your customer interacts with your company as a whole. Once these are catalogued you will then be able to group them in stages and plot them on a timeline.

Identify what is onstage and what is offstage

Not all touch points are visible to the customer. It is important to know how the hidden, or ‘offstage’ touch points impact the customer experience. Backend processes that may create a positive or negative experience need to be clearly identified and connected to the ‘onstage’ touch points they may impact. This allows you to separate the customer’s actual experience from the operations that support it.

Understand the touch point impact

Understanding the journey in detail uncovers the fact that every touch point is important. But, from a customer’s perspective, some are more important than others. These are the moments of ‘truth’ – the touch points that can make or break the experience for the customer. Firms following best practice focus on these points first.

Gather insights from across the business

The customer journey is a complex system. To truly understand what happens at each touch point it is critical to get feedback from as many stakeholders as possible, including qualitative insights from your organisation’s point of view. You can then go beyond what happens at each touch point to understand how it happens.

Include customers

This is the most important step of all. Data and internal observations will never be enough to allow your organisation to build up a complete picture of the customer. Make sure you talk to customers in whatever way makes the most sense.

Mapping is only the start. Learn and improve.

The mapping exercise allows you to understand the customer but its real value lies in the improvements you subsequently make. Use the mapping exercise to identify the most impactful touch points and start your change process there.

Get started

A customer journey mapping exercise is a complex task but the insights and opportunities that come from it will enable you to achieve the transformation you are targeting. Don’t expect the process to be easy. Just make sure you get started.

A recent announcement by Facebook CEO, Mark Zuckerberg, has seen technology focused crowds chatting away this week. During a “Townhall” Q&A session at the social media giant’s Menlo Park headquarters Zuckerberg revealed that Facebook was testing alternatives to the “Like” button. “People have asked about the ‘dislike’ button for many years,” Zuckerberg said “Today is the day that I actually get to say we are working on it.”

For some the immediate response to this was surprise that Facebook was finally going to give users the feature many have joked about for years; a “Dislike” button. In truth, this update is very unlikely to deliver an actual button called “Dislike”. Why? Because if Facebook’s users were given the option to “Dislike” a piece of content this interaction could be easily misconstrued as a sign of rejection. This could start to erode the stickiness of the Facebook platform – which is bad for content creators and very bad for business from Facebook’s perspective.

What Facebook is more likely to do is test a range of buttons that allow people to show different types of emotions other than a simple like. For example, when a friend’s parent dies nobody wants to “Like” the event, but providing a way to show sympathy would be beneficial.

Of course underneath all of this is Facebook’s business model – delivering ultra-targeted advertising. What this latest announcement tells us is that Facebook is now ready to create even more complex psychometric profiles of it’s users. Knowing all the brands, pages, people and posts someone “Likes” gives Facebook an amazing view of each of it’s users – adding an additional level of behavioural interactivity allows this to get even more sophisticated.

In the short term this will give advertisers even more data to use to deliver messages. Using the earlier example, it is very easy to imagine a world where someone, after seeing the post about a friend’s parent passing away, hits a button that expresses “I’m sorry” and is then is presented with an ad for flowers delivery.

In the longer term this more complex view of Facebook’s users is going to help drive the progression of its artificial intelligence personal assistant, currently called simply ‘M’.

These new buttons will begin being tested very soon, but it will be only as they are refined and exposed to the whole Facebook user base that we will see the full impact of what a simple button, with a simple word on it, could actually be.

On the 9^th of September Apple held its latest product release event. Apple are masters of the great reveal. They are the gold standard for creating brand buzz.

But under all of the hype and excitement there is a deeper story starting to develop. Yes, it is do with the new phone models and AppleTVs but is not the hardware itself. These will no doubt be great product releases but the truly interesting part of the announcement is how the personal assistant, called Siri, has evolved.

There is a battle shaping up between Apple, Facebook, Google and Microsoft. Each of these companies plan to make our data useful and they will do that through evolving their version of Artificial Intelligence. Apple has “Siri”, Google has “Google Now,” Microsoft has “Cortana” and a few weeks back Facebook announced that they are testing their digital personal assistant, simply called “M”.

The idea behind a digital personal assistant is that the system can see and analyse all the data you create. It understands what you like, what you want to do, and help you make better decisions, find products more easily or simply make a reservation at a restaurant.

Creating a digital personal assistant which is as useful as a human is no small task. It needs to be able to understand you deeply and then be able to not only make useful recommendations but then do something about them quickly. Facebook’s current approach is to blend computers with humans. Apple and Google are taking a much more scientific approach to artificial intelligence.

We are currently part of the testing phase of these products. They are somewhat basic compared to the omnipresent artificial intelligence described in recent movies such as Her and Ex Machina. But the technology is evolving very, very quickly.

The reason so much effort is going into this space is that the potential payoff for the technology companies would be massive. Currently these companies have a lot of information about us. But they are only scratching the surface in how they use it.

Google and Facebook mostly use our information to target advertising to us. Apple and Microsoft use it to lock you into their world of products and partnerships. Each company has their own take on how to use the data consumers create. What they all have in common is they have access to a lot of our history. What we bought, where we have been, and what we searched for.

The next big step is to work out what we want to do next. A personal assistant will help this happen. We will start to tell them what we want to do. They will begin to understand not just our behaviour, but our intent.

This is where the next big battle is actually being fought. It’s not really about phones or tablets. It’s about our data. And the company that can reliably work out what we want before we even know it ourselves is going to change the world.

A recent Forrester study called ‘Mind the Gap’ discovered that one of the biggest challenges facing businesses in realising their digital strategy aspirations are the “…huge political battles between IT organisations and businesses”.

If this sounds familiar, and I assure you it’s common, then it’s worth exploring ways to minimise the risk of implementing a digital strategy. In our experience at Working Three, digital strategy success is driven by three key principles: leadership to create alignment; the use of analytics and sharing of information; and creating a customer-obsessed culture.

LEADERSHIP TO CREATE ALIGNMENT

Sales and marketing teams are not getting what they need from their organisations’ IT departments, so they’re going elsewhere to find it – hiring their own technical specialists and creating their own units. This creates inefficiencies and political infighting.

Leadership to address this challenge means welding these units back into a unified whole. Developing KPIs that show each unit how it impacts the customer experience helps to quickly create alignment. Making the customer metrics transparent and visible across the organisation will help start conversations and team-work.

Spend time finding out where disconnects are happening. Our organisation has consulted with many companies which have allowed disconnects between marketing and IT teams to develop unchecked. This creates an adversarial culture which is at odds with delivering an outstanding customer experience.

It is much better to deal with communication issues and frictions as they arise rather than trying to re-engineer a broken model at a later date.

USE ANALYTICS AND SHARE THE INSIGHTS AND INFORMATION

The delivery of a digital initiative is not an end point in the digital strategy process, it’s a waypoint in a journey of continual improvement.

Developing a centralised view of analytics across the business creates dialogue and collaboration. The sports drink brand Gatorade famously pioneered the NASA style “Mission Control” analytics suite as part of a digital transformation project. According to its then senior marketing director Carla Hassan, Gatorade aimed to “take the largest sports brand in the world and turn it into largest participatory brand in the world.”

We recommend that those directly involved in digital initiatives – marketing, customer service and IT units – share analytics and insights. But we go a step further. We urge our clients to create a set of shared customer experience dashboards. We call this process the creation of the ‘customer command centre’. It is best practice for everyone to see how any and all digital activities impact the overall customer experience.

DEVELOP A ‘CUSTOMER-OBSESSED’ CULTURE

This doesn’t need to be a complex process. Training and consulting advice will help. The key element in achieving this culture is for the organisation to be constantly asking itself “How will this impact our customers?” That simple question, asked over and over, will focus everyone on why most digital strategies have been developed in the first place – to create outstanding customer experiences that deliver a sustainable competitive advantage.

The most notable example of a customer-obsessed company is Amazon. In fact the first ‘Leadership Principle’ it lists on its corporate website is ‘customer obsession’. The site goes on to say “Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.”

So if your organisation is struggling to see a measurable return from a digital strategy, by all means examine the technical and communications resources and ensure you have the right skills in place. But ultimately success will come from leadership which aligns resources, the sharing of quality analytics and a culture that is relentlessly focused on the impact of every initiative on your customers.

Business strategy and digital disruption

Recently I was asked to predict what forces, industries or businesses would be causing the most business disruption. While it is is hard to really predict what the next big disruption will look like it is possible to see forces at play right now that are going to have a major impact on the way businesses are run.

1 – When your data becomes your data

What is happening with the vast amounts of data we are creating on a daily basis? The average person has bank cards, credit cards, social media accounts, loyalty cards, and smart phones all of which can create a detailed picture of that person – a picture that should be able to make our lives better.

Imagine a world where all of your data was in one place and it was used to help you. Arrive in hospital with a fever and the doctors could instantly see every place you have been, everything you have eaten and every person you have interacted with. Not only could they diagnose you quickly and accurately but they may be able to stop a pandemic before it started.

Currently companies view the data they have about you as their property. And this means that all the data you create can’t work together effectively. There is a new type of technology company emerging that is addressing this issue. It is being loosely tied together by the term VRM, which stands for Vendor Relationship Management – the opposite of CRM. VRM technologies work on the principle that all the data a consumer creates is far more valuable if it is held in one spot, and that spot should be controlled by the consumer that created. It has taken a while to arrive at this point, but the world is now poised for a massive leap forward and many of the companies playing in this space will be the ones leading the charge.

Read more about this here

2 – Software writing software – Artificial Intelligence starts to automate the knowledge economy

The different disciplines within the field of Artificial Intelligence (including Machine Learning where software adapts to new situations and recognises patterns, and Automated Reasoning where software uses stored knowledge to draw conclusions) are quickly maturing and evolving. In the very near future these systems will be able to write software programs of their own, and that will enable them to evolve to a point where they can take on many of today’s ‘knowledge’ based jobs.

Research conducted by Oxford University suggests that 45% of all current jobs will be automated in the next 15 – 20 years. This will include professions like medicine, marketing, finance, software development and many others. That same research also suggests that it is very unlikely that the creation of new jobs will match the erosion of old jobs.

What will people do with all of this new spare time they have on their hands? What will happen to the world when so many jobs that comprise repetitive tasks are able to be automated? How will business evolve when it takes far less human and financial capital to meet the needs of their markets and customers?

Based on our experience of the last decade, as receptive tasks become automated more time can be spent on creative jobs. We can expect the pace of innovation to explode and whole new industries to be developed.

3 – Data utilisation – When data stops being about analytics and becomes the product

Over the next two to four years companies will start to really examine the massive volumes of data they have been storing over the last decade or so. Currently the tools for data storage and analysis (commonly grouped together within the term “big-data”) are becoming far cheaper and more commonplace. As companies get more comfortable with viewing the insights that come from massive data sets the next stage in data utilisation will pick up steam.

The data that organisations are storing about their customers and networks is currently being used to develop customer insights. It will soon move to becoming the raw material for generating revenue. This doesn’t mean such organisations be selling the data, as this would degrade its value almost immediately. Instead companies will design new products and services that allow their customers to make use of the data they have created.

The banking and finance industry is an example of an industry that is already well down this pathway. Insurance companies can now use data to provide a more tailored package. Track your driving behaviour and auto insurers can offer you a package that suits your exact risk profile. Health insurers can now offer incentives for healthier behaviours tracked through mobile phones and fitness trackers like FitBit. It’s not a great leap to expect a banking app that helps you stick to a budget by helping you make better financial decisions in real time.

Expect the next generation of digital experiences that brands offer up to their customers to be come much, much smarter.

4 – The “all in” digital company – new business models that will eat the world

In February 2015 Gartner published the results of survey that analysed the effects of the “connect Economy”. The survey showed that 89% of the companies surveyed by Gartner believe that customer experience will be their primary basis for competition by 2016.

Although many companies have been slow to adapt to the changing environment,the period of being “nervously immobile” has come to and end. There are a number of companies which are already going “all in” – integrating the customer experience through scalable, digital solutions.

The pace of change is making many business leaders nervous that they will be unable to keep up.But the more courageous companies are reforming their companies to make the most of new opportunities. These companies are doing more than just replacing one form of marketing with digital techniques .They are looking for completely new ways of interacting with their customers, and developing new business models in the process.

The first wave of “digital disruption” was owned by the silicon valley startup. The next wave may well be owned by big brands who start acting more like venture capitalists than monolithic organisations looking for investments within their market.

Read more about this here

5 – Chief Digital Officers – The role that is changing every aspect of business

The digital revolution is already generating “internal disruption” within many firms and will soon produce organisational change. It will take the shape of a new senior management position with an entirely new role and dedicated resources.. That person will be the Chief Digital Officer (CDO).

Last year Forrester research told us that 39% of CEOs believe that they personally set digital strategy for their firms, but only 26% of their direct reports from within the executive team believe that is so( that their CEO actually does own digital strategy). With the ever increasing importance of digital in everyone’s lives it is clear that many organisations will require someone at the senior management level to lead the charge on digital.

It is possible that the current CIO or CMO roles evolve into the CDO. But it is equally likely that this will not happen. Companies are rapidly shifting away from maintaining operational systems to implementing the digital capabilities that attract, convert, serve, and retain customers. This suggests that the role of CDO will need to have influence over marketing, technology, strategy, customer insights and product development. In short they will be at the pointy end of total business transformation.

As digital marketing techniques have gained acceptance and matured over the last few years the momentum to collect and utilise data has rapidly gathered pace.

In the customer experience and communication space ‘data’ has become the catch-all term for anything digital including contact details, transaction history, behavioural information and even content such as images or video. This has inevitably led to speculation about the value of these data.

So here is the way we think about this issue at Working Three.

The value of data doesn’t come from collecting and storing data. Rather, it follows from the process of analysing the data, developing deep insights and taking actions based on those insights. It comes when brands provide better outcomes for the creator of the data – the customer – through improved engagement or better-tailored goods and services.

In an environment where it is becoming increasingly difficult to get people to engage with marketing messages this process can generate considerable value for brands. Customer data utilised in this way can help make marketing efforts more engaging, efficient and tailored – and, thus, valuable.

Broadly speaking, there are three types of models that marketers can employ to utilise data, better optimise the marketing spend and drive marketing-focused innovation. These are:

• Improving segmentation through the use of pattern recognition algorithms
• Making accurate predictions through propensity modelling
• Filtering information served to a customer to make recommendations

Segmentation

Customer segmentation, otherwise known by data professionals as clustering, becomes far more sophisticated when algorithms are used to analyse customer data sets. Humans can only process a few variables related to customer segmentation. Software is not bound by that restriction. This is particularly important when a business is trying to calculate the real value of a specific customer.

Additionally marketers can rapidly break out of traditional segmentation models, which are usually based on a small number of basic demographic data points and look for far more meaningful segmentation models. These include product-based segments (algorithms that discover the type of products, and groupings of products, which people do and do not buy from), brand-based segments (algorithms that discover the type of brands, and groupings of brands, people do and do not like) and behavioural segments (the type of behaviours which people display such as purchase frequency, time spent on site, high or low engagement with marketing content and the degree to which they are influenced by discounting).

Propensity modelling

Propensity models allow you to predict the future behaviour of an individual customer or customer segment. Assuming you capture the right data, it is possible to use algorithms that compare one customer to many others to predict how much that customer is likely to spend with you over their ‘lifetime’. For example, while one customer may make a higher initial purchase they may not be as valuable as another customer who makes more frequent but smaller purchases. In this case it would make sense to focus acquisition marketing spend on the customer with a higher overall lifetime value.

It is also possible to predict a customer’s propensity to engage. Understanding how likely it is that a certain customer will click on your content marketing efforts or email communications can result in significant efficiency gains.

Another valuable propensity model measures the propensity to buy. This tells you which customers are ready to make a purchase, enabling you to target these customers with the right kind of offer. This kind of model also highlights the customers who are not ready to purchase, so that brands can target them with a more aggressive offer.

Recommendations

Amazon made automated recommendations famous with their ‘people who bought this product also bought…’. Employing recommendation algorithms it is now possible to go beyond the simple up-sell and provide a digital service that really helps customers discover new products and services that they will like.

Cross-sell recommendations can become one of the most useful to consumers. Rather than trying to sell a bigger version of the same product you can suggest what type of products are bought with it, thereby bundling a set of products up. This works well for apparel but can work equally well for the entertainment industry (‘pre-purchase your refreshments with your movie ticket to get express service’) and many other markets.

‘Next sell’ recommendations take into account a broader set of data to suggest the next item a customer may wish to purchase. This works best when it is presented as a value-added service. For example, if a bike company knew a customer had just upgraded her bike they could then offer a range of tools and accessories to help that customer get more use from her purchase.

Using the types of models described above companies can, and are, starting to realise the true value of the data they are collecting. As they start to understand what insights the data can generate they will begin to uncover even more value.

Ultimately, this is how the value equation needs to be thought about. It is not storing data that is valuable but the act of doing something based on utilising the data that creates value.

Some of that value can be guessed at, but in most cases, the biggest leaps will only be discovered once you actually get started.

Life is not easy for a marketer these days. The media landscape continues to be reinvented and fragmented, affecting the ability of marketers to capture the attention of their target audience.

The power of the mass-media model is waning, so attention is turning to digital innovation and data-driven direct communications. Yet, as many brands have found out, relying too heavily on technology can turn your advertising campaigns into nothing more than smart spam with a decreasing return on investment.

To further complicate matters, research data shows word-of-mouth recommendations are now disproportionately influential in a purchaser’s decision-making process, especially those from friends and family. The“Global Trust in Advertising and Brand Messaging” report published by Nielsen in late 2013 said 84 per cent of global respondents said this source was the most trustworthy.

Consumers are becoming harder to reach, and gaining their trust is becoming much more difficult even if you do reach them.

To manage this challenge organisations and marketers have been looking to better understand the entire customer journey to enhance the customer experience. But this approach comes with an inherent conflict best summed by the following question: “Do want your customers talking about your products or your advertising?”

It is true that advertising provides a direct line of communication to your existing and prospective customers. But a customer experience advocate, on the other hand, will ask; “why not let the customer experience speak for itself?” So how should brands think about this issue?

Reframe the question

I recommend taking a long, hard look at your customers and your organisation to identify opportunities to greatly improve the customer experience. In today’s world almost every consumer-facing company should be doing that in some way. Customers’ ability to be heard en masse is far too powerful not to.

Inevitably, when companies do seek to improve their customer experience, many of the outcomes become innovations and new digital communication channels.

But should these replace the need for advertising? Not at all. However, what they often do is reframe the question, “What are we advertising?” After all, if your company has invested heavily in creating a great customer experience, shouldn’t you tell the world?

Take Medibank for example. It sells health insurance but its current advertising campaign is focused on raising awareness for its GymBetter mobile app. This app allows the user to pay to use a gym, without having to pay regular membership fees. It’s not Medibank’s core business but it is brand-aligned and delivers great experience, and it gets even better if you happen to be one of its customers.

Market trends are maturing in a way that will start to impact on how brands interact with their customers. Here are some examples. The way consumers understand and use their own data is creating a whole generation with very different expectations about the way companies should interact with them. Social media is now reaching ubiquity, but there are still significant jumps in online communication that will be made in the next few years. Technologies such as 3D printing will dramatically alter traditional value chains.

These are just a few examples of near-term trends that will bring further rapid change. These cannot be ignored – and businesses cannot advertise their way around them.

Creating a unique and fantastic customer experience is a way for businesses to stand out. But how the consumer interacts with the product or service, or how they discover that product or service for that matter, is part of the overall experience. Deeply integrating advertising into the way a customer experiences a brand is becoming an essential aspect of the overall marketing mix.

Do we want people talking about the product or the advertising? Neither. We want people talking about an outstanding customer experience, of which both are a part.

In late August this year Melbourne’s digital elite assembled at the city’s public library. The event was the Australian Interactive Media Industry Association’s V21 conference, and this year’s line up promised to be the biggest event yet.

One of the key draw cards was Catherine Heath, the Head of Strategy & Planning, US West Coast, for the digital agency Huge. Among digital agencies Huge, a member of the Interpublic Group of Companies, is one of the standouts on the world stage. Its renown owes much to recent Initiatives such as the development of the HBO GO platform, the “TV anytime experience for HBO subscribers”, the new website for the phenomenon that is TED, and the new immersive cross platform digital experience for one of the most beloved multi generational entertainment series: The Simpsons.

A couple of weeks after the Melbourne event Catherine and I shared a telephone call while she was in between meetings in Singapore. We spoke for some time about: what it was like to work in a company like Huge (by all accounts being surrounded by hundreds of very talented digital designers, technologists & strategists is pretty fun most of the time); what the youth of today were doing with digital technologies (the best way to sum it up is they are setting expectations on UX/UI, not following them); and where the world of digital marketing and branding was heading (digital is quickly becoming the lead player in the overall marketing mix, meaning other forms of marketing are having to support the digital strategy, a complete turn around of events).

The conversation then moved onto what companies have to do really become leaders in the digital space, a topic dear to my heart.

Catherine doesn’t describe herself as a “techie”. She comes from a brand strategy background. But that is what’s now needed to provide meaningful insights in the field of digital communications. In the initial years of the digital marketing revolution the people with the power were the tech-heads. And they still are an inherently important, though its what surrounds them now with cross functional agencies that makes what they do really interesting on a broader scale.

For someone deft at writing code the logical side of their brain is the area that gets exercised most frequently. As a result conversations with talented technologists can become black and white, on or off. This is great when it comes to designing software, but it does not produce an engaged conversation with a business leader who is looking to transform his business.

And on reflection that was the interesting aspect of the conversation with Catherine. I don’t think we talked about technology trends once. Data was only mentioned very briefly. The majority of what we discussed was about how digital thinking was now shaping the value around brands and the impact that would likely have in years to come.

We discussed what it meant for a business to go “all in” to digital. That included the effort required from clients, and in particular the courage that leadership needed to transform a company to face the challenges of today’s ‘digital first’ world. “its not about digital ideas, rather ideas for a digital world” as she says. “life first thinking is imperative in a world where digital is omnipresent, digital is no longer a channel or a medium – its simply a way of life”.

Huge is fortunate to have Catherine working for them. She is intellectually curious and very bright. And she leaves you with no doubt that the digital transformation that has been happening in world of branding, marketing and communications has really only just started.

There is a new wave of customer relationships and connections being invented right now – and she is in the middle of it.

Major financial meltdowns and recessions force businesses to evaluate their spend on marketing and branding. As revenue and profitability become squeezed marketers are pressured to improve return on marketing investments. The recent Global Financial Crisis was no exception. The difference this time was the influence of a relatively mature internet and the way consumers chose to use it. 

As consumers completely altered their media consumption patterns marketing budgets began to focus increasingly on optimising consumers digital buying journey. This meant big investments in data driven awareness marketing such as search marketing, driven by Google, and social media ad placements led by Facebook. 

More recently, as businesses have become more comfortable with data driven targeting, major investment have been made into cloud-based Customer Relationship Management database solutions such as Salesforce, and Marketing Automation platforms to complement and integrate the awareness efforts. This – seems like a natural next step – collect as much data as you can about your customers, find out what makes them tick, use that information to send out highly targeted and personalised marketing messages. 

However many marketers are now realise that this form of data driven marketing can become nothing more than a pathway to delivering very smart spam to existing and potential customers, a surefire way of undermining value in the one thing they are meant to be protecting – the brand. 

So CMOs and marketing professionals are refocusing on the customer – who has always held the balance of power.  Having data is no longer enough. Marketers need to create a compelling customer experience, one that will integrate all of the digital initiatives around their company’s core brand values. And as they go through this process the focus changes from “collect all the customer data we can” to “what data will help our customers experience our brand?” 

This is where the next big challenge for many marketers lies.  And this is because it’s highly likely that the data that will help customers experience their brand may not exist yet, or if it does it needs viewing with a very different lens. Of course companies like Nike realised this some time ago which is why they built the Nike+ platform. Their brand is not about selling shoes. Its about performance. And the Nike+ platform helps their customers track and improve their performance. The information Nike gets about who is using their products and why is almost a happy byproduct. 

Not many brands have the type of marketing budgets that Nike does. But the size spend is not really the issue. Much of the technology is now relatively cheap, and continually falling in price. The biggest issue is developing the strategic clarity to know what to do. 

So the CMO of today now has to be part data scientist, part creative technologist and part innovation strategist. Because creating and growing a market is now more difficult, and critical, than it has ever been. The stakes are high. But it is for this very reason that many of the CMOs of today will be the CEOs of tomorrow. 

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It’s safe to say that the pace at which Australian consumers have adopted shopping online has taken some retailers by surprise. While many may have seen the writing on the wall during the years following the Global Financial Crisis, a turning point in online trade, some of the more traditional retailers were slow to accept the inevitable – and even slower to invest.

This is particularly true in Australia which seemed somewhat shielded from the financial crisis sweeping the world – why invest in digital innovation when the local economy seemed to be so robust? Fast forward to today, where we can look back with the benefit of hindsight, and it now seems obvious how the market was going to change. Innovation overseas would bring new waves of competition and the data driven marketing techniques that were reshaping the communications and media industries would forever alter the way that retailers connected with their customers. The Australian retail marketplace would be, and still is, going through a digital transformation.

For the last six years The Australian Interactive Media Industry Association [AIMIA] in partnership with Australian Centre for Retail Studies at Monash University, have been asking Australia’s retail professionals how they see this changing landscape. The report, of which I am this year’s Chairman, combines qualitative interviews and a quantitative survey to deliver deep insights into the state of Australia’s digital retail landscape. The 2014 release of the research report, downloadable here, reveals some of the clearest insights thus far.

It’s not omnichannel, it’s just retail

One of the strongest sentiments to come out of the report this year was the negative perception of some of the language that permeates the digital marketing space and the term omnichannel in particular. One retailer was anonymously quoted as saying “Omnichannel is just another term, it’s consumer expectations that have become omni if anything … Now customers expect to be able to research on their mobile, maybe even buy on the device, or at least then go to the store the next day and look at the product. There is an expectation for how retailers deliver on these channels, that is what is important – we need to to take commercial advantage of these expectations.”

Overall most retailers agreed that there was no “one size fits all” approach to retail promotion across so many digital and non-digital channels. Spending time to get the strategy right, and having clarity about what each channel was to be used for, is essential in creating optimal cross-channel experiences.

Think less about the channel and more about the experience

One critical evolution in tone that came through clearly in this year’s report was the role that digital tools and techniques play in developing a customer-focused business and leading changes in customer engagement. While no one respondent claimed to have all the answers, many were looking for ways to constantly improve.

A constant focus on the customer experience combined with the strategic use of customer data was seen as central to creating a sustained competitive advantage. Naturally, taking this approach across so many channels raises concerns around complexity. As such marketing automation was seen as the only scalable way to manage the levels of customer engagement initiatives that many firms sought to achieve.

Digital strategic importance is growing rapidly

Compared to when the AIMIA report was published in 2011 digital is now seen as “business as usual. It has become integrated part of normal business operations. And this clarity has seen it’s strategic importance grow quickly over the last 12 months. Another anonymous interviewee said “Because of the rapid growth of our [online and digital] performance we are making a material difference to our company’s overall year on year sales growth. So we’re not 50 percent of the business but contribution sales growth is significantly more than our sales as a percentage of the overall sales. For that reason we’re getting growing visibility because we’re basically helping the company grow quicker than it would otherwise… It’s about the customer, giving them great customer service and offering different service to a regular store. With digital we can provide more and more value added services, where a few years ago it might just be store locations and opening hours, now it’s personalised specials using data, just to actually help people shop and save money.”

Australian retailer are in a mature digital landscape

While e-commerce itself may still only make up a small percentage of overall sales for many retailers, the digital landscape touches every aspect of the retail marketing and branding journey. It would seem that Australia retailers are now fighting back against overseas competition by adopting digital marketing techniques and looking for new way of thinking through long term strategy, with customer experience and data and the centre.

The AIMIA Retail Research Report was conducted with many of Australia’s leading retailers and was focused on gaining insights from decision makers in the areas of e-commerce and digital marketing. The report is available for download here.

I recently attended an event that focused on Big Data insights and techniques for retailers. It was well attended and had some great speakers presenting including Myer CEO Bernie Brooks. By the end of the two hour seminar it was clear that Australian businesses have been busy investing in Big Data technology thereby ensuring they have access to a large number of data sets.  But as my taxi pulled away from the venue I felt bothered by how little was actually being achieved with that data. We have the big data, but we seem to be lacking the big Ideas to make the most of it.

One of the major constraints on what organisations achieve with big data relates to their approach to the acquisition, ownership and use of big data. Companies have their own set of objectives and as a result, are currently viewing customer data as a resource to squeeze value from. I wrote about this in an article titled “Data is not the new oil, it’s the new soil” in October 2013 for the website of Smart Data Collective. In this article I suggested that businesses view customer data to a resource akin to oil: “Oil is valuable. If you find, collect and store oil it will remain valuable. Data is a very different thing. Data is generated when people do something. It is a record of an event. That means it starts losing value almost as soon as it is generated because it ages. We can see trends and obtain insights but to get real value from data, it must be used in real time. Simply gathering and storing data is a pointless exercise.”

Many businesses are now past the point of simply gathering and storing data. They are using it, but the focus is too heavily weighted towards simply deploying  it as a marketing tool. Using customer data as a tool to better target and personalise communications is extremely important. In a fragmented media landscape it is vital to invest in this kind of marketing to remain relevant. But it is not enough.

If a company views the data as a marketing and communications asset then they will naturally try and get as much value from it as possible. But think about what will happen in the longer term. If businesses  invest in big data systems and techniques they will have to show a return on this investment. As this return on investment starts to be proven and reported shareholders will come to expect consistent and even higher returns on this type of  activity.This means more data will need to be collected and even more messages (mostly in the form of emails) will need to be sent out to drive customer behaviour. This will then produce  a vicious cycle where customers  become fatigued at best, and completely distrusting at worst.

What businesses need to do now is start to shift their perception of data. It is an asset, but it is an asset they share with their customers. The only real way of creating true long-term value from customer data is to take a step back and say “how can we use customer data to generate value for the very customers who are generating it?”, or put another way, how can a business create amazing data-driven experiences that will develop their customer relationships?

To really make the most of data companies need to work with everything they have. They need to get the most creative people working with the data scientists to ensure data is used to benefit the customer. To do this, they must have  great digital and data strategists that know how to speak the language of business, technology, creativity and customers all at once.

There is a big opportunity for businesses to become much more than the sum of all of the data-parts they collect. They need to move back towards big Ideas-which now can be underpinned by big data.

With above 300 million professionals on the platform worldwide, browsing LinkedIn is now the default way for keeping tabs on people in your professional networks. In fact, many professionals spend more time managing their LinkedIn profile than keeping their CV up to date. Recently the social network added a range of new features to their premium subscription service. Peeling back the layers of the new offering reveals something interesting about how they are building their overall value proposition. It also tells us something about the software industry in general, and the model commonly referred to as Freemium.

AS with many software-as-a-service (SaaS) providers, Linkedin employ a technique called “Freemium selling”. Put simply, they offer up basic features free of charge, and then promote additional, higher value features for a cost (usually a subscription fee). However, unless you are a recruiter or professional salesperson, the difference between a free and paid account was not clear. Recently though, LinkedIn has made some improvements to their premium accounts. These are mostly focused on increasing the visibility of the account holder, deeper analytics, and access to better search and communications tools.

For LinkedIn, converting members to the premium model isn’t their only revenue stream, but the recent updates suggest it is starting to become more important. It is likely that this most recent round of updates for its premium service is the start of a process that will widen the gap between the free service and the paid one. And looking at this progression tells us something about the Freemium model itself.

For software platforms that employ the ‘Freemium’ model, one of the most important questions that they must deal with is, “what will it take for someone to become a paying customer?” By default the platform promotes two sets of value propositions: the first focuses on getting customers to sign up, using the platform and providing enough value to “lock them in”; the second focuses on getting them to part with money for additional benefit. If the distinction between the two offers is not strong enough then the conversion rate will suffer and adjustments will need to made – as is the case with LinkedIn’s recent upgrades.

One of the difficulties in dealing with this problem is that the solution changes over time. Early adopters see value in the paid model and rapidly buy in. In LinkedIn’s case, this was primarily recruiters and sales professionals. But as this market segment approaches saturation point, new features must be developed to appeal to other, less obvious, audiences.

An important part of this process is ensuring that the platform doesn’t go stale. Ongoing innovation and incremental product releases ensure that users don’t start to suffer from interface fatigue. On the other hand, having too many changes or interface updates that are too big a jump can cause user backlash, as Facebook has had to deal with many times. There is a delicate balance that must be struck.

Overall the Freemium model is one that requires constant user analysis and ongoing innovation. As the term Software-as-a-Service suggests, customers are being delivered a service that must be managed and matured to ensure it remains relevant – and that requires constant attention to developments that drive both customer acquisition and the conversion of existing customers to the premium service.

The  disruption that the proliferation of online technologies is having on business activities such as marketing, communications and customer interaction and a wide range of business models is a prime example of the forces of creative destruction at work. Many businesses have moved quickly to become ‘digital leaders’ and are already benefitting from this process. Others are still coming to terms with what this change means for their business.

But the time for wondering if digital transformation is right for your organisation is now over. In July this year online retail giant Amazon.com turns 20 years old. The significance of this milestone is that e-commerce, and the digital space in general, is now firmly entrenched in the global economy. It is no longer a question “if” your business becomes digital but “how”. Digital transformation is now a matter of survival.

This is obviously true for industry sectors such as retail, where the move to the online space is plain for all to see. But it equally true for other sectors. We are relentlessly heading to a world where everything that can be digitised, will be digitised. The development and adoption of technologies such as 3D printing and further advancement in mobile technology will further increase the pace of change.

So let’s look at what is needed to become a leading digital enterprise. 

Develop a healthy obsession with your customer

Today’s customers are more informed and more empowered now than any other time in history. The rapid uptake of online social media, has done much more than just give people new tools for communicating. It has become the catalyst for rising customer expectations. This is pushing business to make improvement across all their channels to market as their customers are now expecting a seamless brand experience across all touch-points.

Spending time designing you customer experience, all the way from generating awareness through to the actual service and post-service stages, is a critical first step. It is easy to say “we want a unique customer experience” but operationalising that takes real effort and leadership support. Thinking through the challenges of securing and respecting your customer’s data is vital as trust can be eroded very quickly if customer data is misused. In this regard it is important to continually look at the information that your interactions with customers is giving you, and use it to refine the customer journey. 

A paper called “The seven habits of highly effective digital enterprises”, published by McKinsey&Company in May this year, highlighted Zappos as a market leading example of this customer focused obsession. The paper said that “[t]his mind-set is what enables companies to go beyond what’s normal and into the extraordinary. If online retailer Zappos is out of stock on a product, it will help you find the item from a competitor. Little wonder that 75 percent of its orders come from repeat customers.”

Be unreasonably demanding

Big aspirations and a clear vision of what you wish to achieve is essential precursor to developing a digital strategy that will compete and win in today’s landscape. Leadership teams need to become comfortable with new team structures and think differently about how their business needs to operate. Setting unreasonable targets and being overly aspirational is a way of “shocking” your organisation out of complacency. As the McKinsey report noted it “…is a way to jar an organisation into seeing digital as a business that creates value, not as a channel that drives activities… if your targets aren’t making the majority of your company feel nervous, you probably aren’t aiming high enough.”

The McKinsey report goes on to highlight case studies: “Netflix was another brand with an unreasonably aspirational vision. It had built a successful online DVD rental business, but leadership saw that the future of the industry would be in video streaming, not physical media. The management team saw how quickly broadband technology was evolving and made a strategic bet that placed it at the forefront of a surge in real-time entertainment. As the video-streaming market took off, Netflix quickly captured nearly a third of downstream video traffic. By the end of 2013, Netflix had more than 40 million streaming subscribers.”

Start small and move quickly

When it comes to digital transformation, strategy and planning are important, but just so is experimentation and simply “getting on with it”. The digital space moves very quickly so trying things out and allowing teams to feel comfortable with “failing fast” can be a highly efficient way transforming your business. Adopting methods such as agile development allows digital teams to respond to changing environments and unpredictable situations quickly. 

When digitising processes, such as rolling out a marketing automation programme, choosing the toolset is important but simply getting started with it is the best way of creating success. Start with small projects and build on successes quickly along a path toward your vision. Your higher activity level the more data will be generated, data that will enable your organisation to make better decisions. 

The McKinsey report highlighted P&G as a leader in this space: “P&G, for example, created a single analytics portal, called the Decision Cockpit, which provides up-to-date sales data across brands, products, and regions to more than 50,000 employees globally.” This focus on making data visible allows the organisation to make decisions, and define projects more quickly.

The three guidelines discussed above all point to a common theme. Winning at digital transformation is not simply about the technology adopted, but rather how leaderships teams communicate and execute the transformation. And this leadership is the most critical element in determining if a digital transformation project is going to be a success.

The way we shop has changed forever. E-commerce sales continue to climb. A 2013 Forrester report stated that Australian e-commerce sales in 2010 were worth $27 billion and by the end of 2013 had jumped to more than $37 billion.

Over the past few years, major retailers overseas saw strong currencies and economies as an opportunity to expand into the Australian and New Zealand markets. These changes in consumer behaviour and competitive landscape took many local retailers by surprise. Many have been struggling to combat and capitalise on the shift towards online purchases.

This year that is all changing. Australian retailers, big and small, have stepped up their level of investment in online sales. The beauty and fashion industries, in particular, have come under intense competitive pressure and, as a result, they are leading the charge in maturing the e-commerce landscape in this part of the world.

The digital world can be confusing. There is an endless list of software products to invest in and getting the timing and combination right can have a huge impact on the return on investment. So if your business is one of the many retail organisations that is about to make a significant investment in e-commerce, it is worth identifying the most important elements you need to think about.

GETTING YOUR STRATEGY RIGHT

The digital marketing space is awash with software vendors touting amazing products. Most are effective if used in the right way, but the trick is to know which ones are right for your business and how to prioritise and organise your investment “schedule”. And that is all about ensuring your digital strategy is aligned to your business objectives, your customers’ expectations, and where your business sits on the “digital maturity curve”.

An article entitled “The Four Types of Digital Marketer” published in Strategy + Business highlighted four types of digital marketing companies and described them in the following way:

“Leaders are a small but growing group of companies, including Nike, Burberry, 3M, Apple, L.L. Bean, and Coca-Cola, that have mastered the two main capabilities involved in maintaining an online presence: insights and analysis on the one hand, and platforms and activation on the other.

“Scholars are skilled at consumer insights and analytics; some of them, for example, have developed sophisticated forms of market segmentation based on deep insights about the way people make purchases. But they have not yet converted these insights and analyses into profitable action.

“Pioneers have established a robust presence in digital media, with viable forms of electronic commerce, their own media platforms, or other kinds of web, mobile phone, or app-based services. But these activation platforms are not sufficiently customer-centric; they are not grounded in insights about their customer base and therefore they do not engage consumers as well as they might.

Novices are still coming up to speed in the practices of digital marketing, and (in many cases) discovering which facets benefit them and which may not.”

Once you have determined where your business sits on the digital maturity curve, you need to determine where to go from there. A Booz & Company report, entitled How to Choose the Right Digital Marketing Model identified three categories of digital strategy:

“DIGITAL BRANDERS are often consumer products companies, retailers or other marketers that focus on building brand equity and deeper consumer engagement. These companies are moving away from traditional linear advertising and investing in digital experiences that connect with their customers. They are focused on recruiting new consumers to the brand, increasing advocacy and driving loyalty.

“DEMAND GENERATORS, such as retailers, play the numbers game. They are focused on driving traffic and converting leads in the fewest steps possible. To quote the report, ‘All elements of the digital marketing strategy – website design, search engine optimisation, mobile connected apps, and engagement in social communities – are tailored to boost sales and increase loyalty.’

PRODUCT INNOVATORS use digital marketing to help identify, develop, and roll out new digital products and services. Booz explained that ‘. . . these companies employ digital interactions with consumers primarily to rapidly gather insights that can help shape the innovation pipeline’.”

Your digital strategy is about understanding and designing the entire digital customer experience journey. So your digital “plan” should be a well-thought-through expression of your customer experience strategy.

DATABASE GROWTH

 A database of active, qualified leads and customers is a vital strategic asset for an online retailer. It gives you the options and insights necessary to design effective communications.

The key is to make sure the database entries, or “leads”, are qualified. Buying a list won’t work. Make sure you have a separate marketing program designed to grow your database. The amount you invest in this area should be constantly assessed and aligned to the value the database is generating. The more data you have about the contacts, the better qualified they will be and more they will worth to you. Invest wisely and communicate strategically.

CONVERSION RATE OPTIMISATION

Conversion rate optimisation is a key component of any digital program. You need to have people on your team who can look at sets of data, assess them against best practice and identify opportunities to do better.

Conversion rate optimisation focuses on the conversion performance of all your digital touch-points with potential consumers including email open rates, content marketing engagement rates, search marketing performance and e-commerce website performance. It then seeks to optimise the path to purchase.

The trick is to test and refine in a scientific and disciplined way – develop a hypothesis, predict the results, test, and report the findings to the entire digital team to ensure insights can be adapted to others areas.

CONTENT MARKETING

Content marketing is a buzzword, gathering momentum because of the results it is getting. A report published in 2012 by Kapost showed that per dollar spent, content marketing produced three times more leads than paid search. And it cost less than paid search: 31 per cent less for small- and mid-sized companies and 41 per cent less for large companies.

The proliferation of social media platforms has both added complexity and changed the focus for marketers. Content marketing is less about campaigns and more about a constant flow of engaging content – although it should always support campaign activity.

Content marketing is about tailoring messages to suit specific segments and designing the content to get as much reach as possible.

The content marketing initiatives within your organisation will most probably become the engine room for all marketing activity. It will be the program that determines focus and directs activity.

MARKETING AUTOMATION

An accurate marketing automation program ensures all of your digital marketing activity operates at maximum efficiency and that all the elements link together coherently.

A report published in July 2012 by Aberdeen Group called Marketing Lead Management Report showed that companies using marketing automation see 53 per cent higher conversion rates than non-users, and achieved an annualised revenue growth rate 3.1 per cent higher than non-users.

Marketing automation is more than a sophisticated email delivery platform. It is a combination of the tools, processes and resources needed to ensure that you can capitalise on opportunities wherever they arise.

E-commerce is quickly moving out of the trial and experiment stages and becoming a central part of the growth plans for many businesses. My prediction is that 2014 will be seen as the year that Australian retailers stopped fighting digital disruption and started using technology to make their mark on the world.

Image source: WuTang Clan Twitter account

Few industries have experienced more disruption from the advancement in digital technology than the entertainment industry. From the moment the peer-to-peer music sharing service Napster came onto the scene in 1999 the writing was on the wall for the existing business models of the music, film and television industries.

They initially resisted the change but are now succumbing to the impact of digital innovation. But not all innovation potentially impacting this industry is purely digital.
Just recently I read about the model that USA based hip-hop band the WU-Tang Clan are about to try out. They have decided to combat the impact arising from the ability to instantly share music brought about by digital advances by making and releasing just one copy of their new album “Once Upon A Time In Shaolin”. What on earth they are thinking? Let’s explore.

The story starts with the Wu-Tang Clan commissioning a one-of-a-kind engraved silver-and-nickel box by British-Moroccan artist Yahya. The box will soon encase the one and only copy of the new album the band has been creating in secret for the last two years. One of the members of the band, RZA, recently said, “We’re about to put out a piece of art like nobody else has done in the history of music. We’re making a single-sale collector’s item. This is like somebody having the sceptre of an Egyptian king.”

At first sight this appears to be a monumental mistake. Even if they sell the album for a million dollars or even two this still wouldn’t match what they made from their earlier album sales. But the true genius is in what they plan to do before the album is sold. The album is going to go on a world tour, focused on around the types of organisations that normally show high profile artworks; museums and galleries. And like the exhibits that normally are the start of the show at these public buildings there will be a price to attend and listen to the “artwork” – after going through a heavy security screening of course.

Once the album has finished its “tour” then it will be put up for sale. Assuming the album is not leaked it is likely that youth culture focused brands would be the first in line to buy the album – which is likely fetch millions of dollars. And once it has been purchased the owner is free to do what they want with it. In other words the plan is to create a unique, exclusive and valuable music “property”.

There are risks to this strategy. As album’s main producer “Cilvaringz” put it: “One leak of this thing nullifies the entire concept.” But it is a bold and courageous experiment in inventing a new way for music to find value. As Cilvaringz said “I know it sounds crazy, it might totally flop, and we might be completely ridiculed. But the essence and core of our ideas is to inspire creation and originality and debate, and save the music album from dying.”

What I like most about the great Wu-Tang experiment is the fact they have clearly spent time thinking about how they can reframe what music is to their customers. It is a fact that music is social and something to be shared. But it is also a source of excitement – a special experience – especially in that moment when you hear a tune that grabs you for the very first time. What Wu-Tang Clan are trying to do is create a lot of “first times”, while also positioning their music as a work of art. They are reengineering the music listener’s customer experience.

Will it work? I don’t know. But I applaud the band for being brave in the face of an industry confronted with dramatic change. It is encouraging to see radical new ideas being tested in the market. That’s true innovation.

Now it’s up to the rest of the entertainment industry to step outside of its old world paradigms and take on the challenge to be truly innovative.

Few businesses get the passionate brand engagement that sporting organisations enjoy. In fact, many businesses would give their proverbial right arm to have available the intensity of fan engagement, rich sources of content and “pulling power” of sporting organisations.

So why is it that many sporting organisations are struggling financially?

Sporting organisations, ranging from clubs to high profile teams and venues ,are currently undergoing a period of rapid evolution and pressure to change the way they do things. This has become most pronounced for organisations who govern sports at a national level. As the media landscape has become increasingly competitive and fragmented many of the traditional sponsorship opportunities available to sport have become more difficult. And sponsors are now demanding much more for their sponsorship dollars than ever before. Brand exposure alone is no longer enough to warrant long term sponsorship.

To take full advantage of their significant brand assets and to stay relevant and exciting, sporting businesses need to think and act differently. The more visionary sporting bodies-and there is a number of them – now recognise that digital innovation is both their biggest challenge, and their greatest opportunity.

But how does an organisation go about ‘digital innovation’? Most sporting organisations are filled with very talented people who have a passion for the sport they represent. But this can create it’s own set of challenges. When an organisation has spent much of its time focusing on high performance athletes and major sporting events, and has never really had to battle to capture the attention of the public, then seeing the world through the customers’ eyes (in this case that of the fan base) can be difficult to do.

At Working Three we are committed to helping sports organisations drive systemic change. We usually have three key objectives in mind at the outset: to help find new opportunities for revenue; to provide better value for sponsors; and last but not least, to provide better experiences for customers.

By beginning with customer experience disciplines, and using the Fan Experience Framework that we have developed through our work with many sporting bodies, we can help them achieve these objectives.

So if you are involved in a sporting organisation what can you do? Begin with customer insights. What do you already know about your customers? What pockets of data do you have that would allow you to develop a deeper understanding of the people in your fan base? It’s often surprising how much data your company has available. Use that as a basis for building a map of the customer experience. Even at this early stage opportunities for doing things differently become clear.This should be mapped against key business objectives to provide focus for your effort.

Next find out what your fans really want. Fans are often willing to pay for more value. The trick is finding what that value proposition really is. It might be access to content and other assets that have already been created, but don’t assume that. There are other models and many opportunities for generating revenue so don’t let current thinking hold you back. Remember, you are designing a service so allow yourself the freedom to make that service as good as it can possibly be.

Validated opportunities can then be used to design an optimal fan experience and innovation roadmap. Delivering this this may require organisational change and that typically is not easy. In fact stakeholder management issues can be one of the main factors that inhibits sporting organisations from rapidly evolving. So get your people involved. Take them on the journey and spend time listening to their ideas. And ask your advisor to help you build a “stakeholder management plan” that helps you anticipate and navigate the challenges you are likely to face.

My experience tells me that the most successful organisations are those avoid the temptation to rush the innovation process. Spend time allowing everyone to come up to speed. Develop a programme that will allow your organisation to get the most out of fan engagement and smooth out the issues that can arise from focusing too heavily on a single major event. Fan experience innovation is about finding out what your ‘customer’ needs, and is willing to pay for every day – not just the day of the event.

From music to movies and television, the entertainment world has been irreversibly altered by the rapid evolution of digital technologies. Sports is one of the oldest forms of entertainment and it too is part of this changing landscape. But unlike many other industries, sport has a culture and passion associated with it that makes it uniquely positioned to benefit from these changes. The key to unlocking this gain is seeing the world through the eyes of the most important participant – the fan.

He had a point. It should be obvious. But in fact many companies have become so disconnected from their customer base that delivering a wonderful customer experience is a very hard thing to do – or even worse very low on their priority list.

It shouldn’t be. A recent report commissioned and published by customer experience software vendor SDL found that “60 percent of global consumers are willing to pay more for a product if the brand delivered a positive customer experience.” Another report by Watermark Consulting, released in April last year, showed that “for the 6-year period from 2007 to 2012, Customer Experience Leaders… outperformed the broader market, generating a total return that was three times higher on average than the S&P 500 Index.”

Clearly there is a strong business case for optimising the customer experience across a multitude of touch points. There is always something that can be done to improve the customer experience from a process perspective but currently the big wins are coming from significant innovation projects in the digital space – where new and exciting touch points can be taken to market quickly, and at scale.

Innovation can be a tricky beast to tame, especially in the digital space. It’s far too easy to get excited about ideas early on and jump into a project without understanding what impact it may have. The real trick is to find the areas of your customer’s journey that are beginning to break down and focus on innovating around these areas.

So how do you know if your organisation has a need to commence a customer experience innovation project?

There are a few key indicators that would suggest that your organisation is need of rethinking its customers’ experiences.

Customers are complaining
It can’t be much more obvious than this. If customers are complaining about an issue or some aspect of a process then there is an opportunity to innovate. The trick is to treat complaints as opportunities and use the information they generate. And go beyond industry norms. Just because your Net Promoter Score is on par with other companies in your industry it doesn’t mean that it couldn’t be greatly increased with the right focus. Why not try and be an outlier than average?

Internal silos creating communication “black holes”
When one department isn’t speaking to another in your organisation the end result can frequently be a broken customer experience. Take a critical look at the way your organisation operates. Has there been years of organic growth within company silos? If so then there is a good chance that you may be creating communication “black-holes”.

Inconsistency across channels
How many customer facing channels does your business manage? Retailers for example may have stores, e-commerce sites and partnerships with third party retailers. Service providers may have their core service, a customer service business function, digital value adds and other key touch points. If there is any inconsistency in the way that customers are treated and managed across these touch points then the typical journey will not be a smooth one.

Social media is viewed as risky
Social media is not right for every organisation but if your company is a consumer facing one there is very good chance it will have or be having an impact. Think about how social media engagements are viewed in your organisation. If it is seen as too much of a risk because of “what people will say” then you have to step back and think about why that is and what you can do to fix the overall experience.

Internal KPI’s are not linked to customer satisfaction
Measurement and accountability create focus. Are the key leaders in your organisation measured against a customer satisfaction metric? If not you are probably developing issues for the way that customer interact with your brand.

Now that you have identified within your organisation the need to address customer experience , what do you do next? Here’s my suggested list.

Use data to develop a 360º view of your customers
The world is awash with data. Social media, website interactions, in-store behaviours, email opens, product usage and every touchpoint in-between is generating data that you can use to understand your customers from every angle. The key is to spend time knowing exactly which data points are important to the relationship between you and your customers – then collect and use them effectively.

To do this marketing, customer service and IT must work together with shared goals. And data collection and usage is not just about sending out marketing messages. It is about creating real value for the customer. Use it wisely to generate deep relationships with your customers.

Focus on behaviours first – then transactions
When you are trying to redesign your customers’ journey it is essential to think about every touchpoint your customers will interact with – and not just the ones that are generating revenue. Taking this broad, holistic view of the world is essential to viewing people as more than simply the sources of a financial transaction. To create a fantastic customer experience you need to think about the behaviours that people are currently exhibiting at each touchpoint, and the behaviours you want your customer to exhibit.

Break down internal silos
This point is important, and it won’t be the last time I comment on it. Make sure that internal silos are working together well and, in particular, sharing data and insights. This will ensure customers have a constant and reliable experience. One of the best ways to improve customer satisfaction is to ensure you meet expectations consistently.

Map the CX
A very important item on my list is ensuring that you have mapped out the entire customer journey. This means looking at the stages your customers go through while interacting with your brand, mapping out and understanding what your customers are thinking and feeling at each touch point. This map will serve as your guide to help identify and map each and every touch point. This, in turn, allows you to begin to design an innovation pathway.

Use human centred design processes to innovate
One you have mapped and understood the customer experience and decided where you want to take it you need to start designing innovations. Using design thinking or service design methodologies you can explore opportunities and build out concepts into prototypes – always keeping the customer at the centre of what you are trying to achieve.

To quote Kerry Bodine from Forrester “Unlike customer experience firms that take an approach akin to management consulting, service design agencies leverage human-centered design practices like ethnographic research, co-creation, and low-fidelity prototyping. The combination of these practices enables service design agencies to more quickly — and cheaply — identify the real customer and corporate problems that they need to address and develop effective solutions. These activities also serve as potent communication vehicles, exposing assumptions and marshalling early buy-in from employees and stakeholders.”

I didn’t explain all of this to the man I met in the airline lounge. I didn’t need to. All I had to say was “Would you pay more to fly on your favourite airline?”. That started him talking about why he loved flying with Virgin and how he would pay a extra for the privilege. I could almost hear the penny drop when he realised what value a well thought through customer experience could deliver.

And now you now know what to look for in your organisation.

Qantas has had a lot of press recently, and for all the wrong reasons. When the Treasurer signalled that the Government sees Qantas as so entwined into the Australian economy that it has become “too big to fail” the airline’s mounting debt problems became an issue for the Australian taxpayer. The question many people are now starting to ask is; what will happen if the airline does get a bail out? Could it ever regain its market leading position?

As I write this article I’m sitting in a Qantas lounge waiting for my plane to commence boarding and with the benefit of this pleasant environment here is what occurs to me.

Qantas has an amazing asset in its brand. It is one that everyone in its home country and many people around the world identify as uniquely Australian. It is both grand and powerful. But it feels like it is part of the 20th, not the 21st century.

A good example of this is the way that Qantas have handled social media over the last few years.
As many brands have discovered social media can be a minefield. Qantas learned this when it set up its Twitter and Facebook accounts with a customer service focus. One can only assume they had seen case studies from around the world that demonstrated the ability of brands to monitor social media for mentions of their name then jump in and address customer issues and complaints. For Qantas things went wrong fairly quickly. The negative interactions got all the attention and people who complained got sorted out quickly. Indeed this happened to me. I was on a delayed flight, complained on Twitter and several minutes later got an upgrade.

Qantas had created a perverse incentive. The loudest complainers got the most attention, incentivising ever higher level of complaints. Fast forward today and look at the Qantas “Follow Us” page . You can now see they are using even more social media channels – but in a much more controlled and broadcast focussed way.

Notwithstanding this progress the way that Qantas has dealt with emerging technologies and how its customers interact with its brand across all digital touch points makes it appear out of touch and slow to respond. The company has an extensive digital network of websites, apps and online promotions but they all feel like disconnected projects, detached from the needs of the customer. As a digital observer, commentator and strategist, it looks to me like Qantas has taken outdated customer engagement thinking and applied it to its online presence.

Qantas is not alone in this approach. Many businesses are now having to deal with the fact that being “customer-centric” in the highly connected, always on, social media driven world means something quite different than it did before everyone had a smart phone in their pocket.
But most of those businesses don’t have the powerful brand that Qantas does.

That differentiator gives Qantas an exciting opportunity. With a robust digital strategy that focuses on the entire customer experience it has the ability to not only match what some other airlines are doing but to leapfrog them and develop a world leading approach to customer engagement.

In particular Qantas has an asset that it could be using to change the way that consumers interact with them online – their frequent fliers loyalty programme.

When Qantas experimented with social media and it went wrong the company reverted to a command and control model. Instead it should have stepped back and asked itself, “if we have been so effective at incentivising behaviours we don’t want , what could it mean for us if we started incentivising the behaviours we do want”.

You could imagine a world where Qantas invites you to connect your social media accounts to your Frequent Flyer membership. Once you do Qantas then starts to reward you for positive interactions online. Engage with an online campaign and earn couple of air-points. Download the new Qantas app and get a few more air-points. Actively promote their pages or offers and get even more air-points. Become an influential referrer and get some status credits. You could even imagine a time where someone, who doesn’t necessary fly that often but is graded as ‘highly influential’ because of their impact on the purchasing decisions of other customers, gets the First Class treatment when they finally do decide to fly with Qantas.

There is complexity to rolling out a programme like this – but it can be done. My company, Working Three, is doing just that for a number of brands. We call it Customer Royalty and it focuses on the idea that consumer advocacy is not random and chaotic – it can be managed and developed as programme.

The rapid adoption of online communications platforms and online tools has presented a range of challenges for large brands. But it is also opening up a world of possibilities and allowing old business models to be rethought.

While managing advocacy and customer engagement is not the fix- all solution to Qantas’ woes the airline is one of those few brands with the ability to do the unthinkable. It can redirect a proportion of it’s massive marketing budget to focus on incentivising and interacting with its customers – and leave its competitors scrambling to catch up.

Image source http://www.youtravel.com.au/