Targeting the Technology-Wise Customer

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The popular myth goes “one human year equals seven dog years. While this has proven inaccurate (Wikipedia says the first year or two years represent some 18-25 years, and the ratio varies with size and breed), the point still works for technology. Five years may not sound like a long time, but consider this: FaceBook, the well-known social-networking Web site, did not exist five years ago. Today it has more than 70 million members. In The Economist’s report: The Digital Company 2013: How Technology Will Empower the Customer, the Economist Intelligence Unit—drawing on a wide-ranging survey of over 600 senior executives worldwide, as well as several in-depth interviews with business leaders and independent technology experts—expected technology innovation to have the heaviest influence on their business in 2013.

The report notes that “the bursting of the dotcom ‘bubble’ early this decade seemed to herald a period of slower change in information and communications technology. Few if any ‘big bang’ technologies akin to the mobile phone have emerged since. Network speeds are nonetheless considerably faster, storage capacity substantially greater, and devices decidedly more functional and robust than just five years ago.”

The Economist report goes on to point out that while businesses have slowed when it comes to innovation, customers have not slowed in terms of their adoption of technology. Dave Lewis, newly appointed CMO for Message Systems agrees. “If you look at the way direct marketing has performed online in many respects all we have done is transplant our ‘batch’ methodologies—our ways of doing business in the offline world, to online. It is not just the channels or diversity of channels through which you have to reach people nowadays, but also how. It is a real-time world. If you look at how things have performed, even around email marketing, so much of what you are seeing is batch methodologies being adapted to a different medium and that is simply not efficient. We are going to have to think in terms of real-time data exchange and real-time data integration, because that is the customer expectation.”

Also seeing this shift is Stephanie Miller, global markets catalyst for Return Path, Inc. She recognizes that it is because of customers that the online world is changing. “The world is shifting from a commerce environment to a community environment. We as marketers need to keep up with that and it is not just a technical challenge. It is a philosophical challenge. Online marketers talk about trust—building trust and building loyalty. Today, we are moving from commerce, where trust is in the marketer, to community where I trust other customers—who are complete strangers to me. In fact, I trust them more than I trust the marketer. If we went down the litany of challenges that online marketers talk about today—it all comes back to this.”

In Forrester Research’s Relationships Write the Next Chapter for Email: Lessons Learned From Slower-Moving Email Marketers, Julie M. Katz discloses, “More than a quarter of online consumers have submitted a rating or review of a product or have contributed to a discussion board, community sites proliferate, and consumers trust their friends and family more than other sources for information. Email marketing is starting to take advantage of this trend by including polls, surveys, and consumer stories in newsletters and other messages.” Indeed it is not businesses that largely drive the multi-channel approach, but the customer. As Miller points out, “Customers B2B and B2C are buying and learning about us through multiple channels.”

The Economist report says that as organizations look forward to 2013, “such communities will generate ideas not only for consumer-facing companies.Business-to-business firms will make use of similar platforms to obtain feedback on existing products, as well as new product ideas. Manufacturers, for example, told the Economist Intelligence Unit in another recent study that online portals designed to achieve this would be among the primary ways they would seek to integrate customers into the product development process.”

Lewis suggests that since customers are communicating in real-time with businesses, customers will expect businesses to respond in kind. “You may not necessarily have a live communication,” clarifies Lewis. “It may be scripted to a large degree. But it does mean that you have to take the data and what you know about that customer and intelligently apply it and offer a response to what they have asked. And that has to be done in real-time”. Lewis offers the example of how information provided to the customer—maybe regarding a purchase made or product shipped—had better be posted in real-time to your customer care center. “So, if there is an inquiry, they are able to immediately retrieve it, and correspond as if they know what is going on. Otherwise, you are not only looking at a lapse in customer service, but at higher costs, as they place inbound calls and you try to figure out what is happening. It impacts both your service and your cost structure.”

The Social Role

Email, according to Miller, was the first social media. “The promise of email was this one-to-one dialog and it was going to truly be an interactive experience that would allow consumers and marketers to speak to each other directly,” she says. “That was the promise of it. Email marketing as a philosophy for 99.9 percent of the email marketers out there—B2B and B2C—is not social. It has been used as a broadcast channel.”

“Email can be 1:1,” acknowledges Lewis, “But it also allows for mass communications too. The technology has been there a long time to provide, at least on the content side, relevant messages to a million people simultaneously. You can customize a message to me, and customize one to you, and deploy them all at the same time, along with a million of our closest friends. But frankly, a part of the challenge is that it is so inexpensive, it is easy to just not care.” Lewis says that when he talks to CMOs their top concern is the user experience, and they know that to continue to blast their customer particularly through multiple channels is to erode customer loyalty and teach those customers to ignore their messages. “That is essentially what is going on,” he admits. “At some point we have to change the metrics that drives the marketer. We are never going to get rid of the profit motive in companies, and I am not suggesting that we do, but we need to be taking a longer-term view. It is a marketer beware message. The industry has to change or your access to those customers is going to be greatly diminished.

Miller believes that only in the last year and a half are marketers finally starting to move away from pure batch and blast into more of a lifecycle email marketing approach. “Honestly, as email marketers we have not done such a great job of embracing the social capability of email as a technology. It is really that combination of technology and philosophy that makes this work.” Miller comments that customer views today are so powerful and that consumers will go to 15 sites and do research before contacting a company. “They are completely knowledgeable, but this is not new. It is happening. There are huge masses of consumers and business professionals who buy that way, so we as marketers cannot pretend that this is ‘in the future’, this is now. In some ways the customer is so far ahead of us. They are looking for opportunities to engage with brands and with products and it is our opportunity and our challenge to use the technology in a way that makes sense.”

The adoption of social media by customers is not surprising when you examine the demographics. Observes Lewis, “Look particularly at the younger generation and how their behavior is going to impact businesses. Look how they do business internally, as well as how they interact with their customers; it has huge ramifications for companies. What I find interesting is that consumer behavior is well in advance of how enterprises are responding to it. If you look at most enterprises they are still thinking in terms of email blasts. All of us, at least, have email and text messaging and often times IM, as well as Facebook accounts. There is some catch-up that needs to be done if enterprises are going to stay relevant and communicate with their customers through their channel of choice.”

Is Email Dead?

According to Return Path’s Fourth Annual Holiday Email Consumer Survey in January, “As people become more comfortable shopping on the Web, and using other channels like search, email is no longer the primary driver of e-commerce transactions. This year, for the first time, less than 30 percent of respondents to our survey indicated that they took advantage of email offers, down 20 percentage points from the prior year.” Does this mean that email as a marketers’ channel has lost its appeal?

In Katz’s study, she contends that the next phase for email marketing is to build relationships over time and that the value of email should be measured beyond sales. Katz’s writes, “Coca-Cola’s consumer relationship marketing manager said that it is ‘most challenging to relate email to increased sales.’ But because email builds consumer relationships beyond commerce, marketers must track more than just email conversions. By monitoring Web behavior and slowing click-through rates over time, Coca-Cola identiﬁed and emailed lapsing loyalty program members, re-engaging 65 percent of responding lapsed consumers before they became completely inactive in the program. As a measure of engagement for its email program, Black & Decker tracks click-through rates for links embedded deep in the message to gauge if subscribers read entire emails rather than just skimming the images.”

Miller also sees the role of email changing, “I think email as an industry has to step up and find our rightful place among that space and I think there is already a lot of connection points. If you are doing social networking, in any form, whether it is blogging or customer reviews or a forum or industry meeting place, alerts, updates, newsletter—those all are the email connecting points. It is up to us as an industry to make sure that we stay on top of that. From a deliverability standpoint ReturnPath is already advising clients what the risks are when you start to turn out a bunch of new mail from a social feature on your site, and what it means to the deliverability of all your mail. We have been working with clients for over a year on connecting points between email and some of these strategies.”

Keeping Up with the Tech-Wise Customer

Businesses need to embrace the “technology-wise customer”, which means understanding what is meant by that. “I look at what is being discussed today in the email marketing space and online marketing and generally we are still talking about relevancy, in terms of just the message,” says Lewis. “While that is extraordinarily important—that you get the message right and that you pay attention to what the customer wants to see and hear—time and place are equally important. And any marketer knows that. But it is going to become extraordinarily important as we move forward.” Lewis goes onto explain that time is about presence—where are you right now? Are you on your mobile device? Or are you in front of your PC? (Time) What is your preference for receiving this type of message? Do you want it at your email account? (Place).

According to The Economist report, the notion of the empowered customer, means that customers will have a greater impact on businesses than ever before, “Customer-driven innovation will become mainstream. Companies today tend to rely mainly on in-house R&D and other internal sources for their innovative ideas. In 2013 customers, empowered by technology, will represent the leading source of new product and service ideas, according to survey respondents. This will help make a reality of “prosuming”, a concept in which the line between consumer and producer becomes blurred and customers freely contribute value. Customers will, however, expect something in return, most importantly a better product or service.“

While it is generally acknowledged that multi-channel is a requirement to reach the customer of today, and certainly by 2013, there are not many examples of organizations there yet. “There are a handful of marketers that are testing these waters, but I think there is a swell behind that wave,” states Miller. “That swell is the many, many marketers that are talking, researching, and trying to figure out how to re-configure their businesses. By the late part of 2009 we will see a lot more effort in this way.” Miller notes that many people she has spoken with recently have this very topic on the mind, “Everyone is saying: I do not know what my social strategy should be and I am afraid of customer reviews because I do not control that content. The blogosphere—how many retail blogs are there? How many B2C blogs are there from companies? I can only think of four. All of those things are challenges that marketers are trying to get their arms around today, so that is what leads me to think we are getting closer to some testing.”

Forrester Research offers in its June report Interactive Marketing by Shar VanBoskirk that “marketers of all levels of sophistication in all industries are spending more on interactive marketing as they try to better distribute their investments into the media their customers actually use. In fact, more than 60 percent of marketers expect interactive tools—like interactive display ads, email, search, or mobile marketing—to increase in effectiveness over the next three years. This means that to stay ahead of competitors and be relevant to end consumers, marketers can’t afford not to use interactive media—a market expected to grow at a compound annual growth rate of 27 percent to $61 billion (USD) over the next ﬁve years.”

Did The Economist report find that companies will be able to accommodate this higher level of customer integration into their business in 2013? The authors note, “Several firms cited in this report have begun to experiment with new platforms for customer interaction. Few, however, have yet to review their processes, organizational structures and workforce skills with the technology-savvy customer of 2013 in mind. In certain respects it may be early, as some opportunities and risks will only come into focus as the level of interaction grows. But one thing is clear: enterprise processes and technologies, as well as the employees that use them, will need to be far more flexible and responsive to change than they are today.”

Customer Service and Marketing

As online marketing continues to evolve, a tighter integration between customer service and emarketers is anticipated. Miller believes the two will be more closely aligned than ever before. “Customer service using email, using online channels for customer service, this has become inextricable from marketing,” states Miller. “You are doing a little marketing and a lot of servicing in your marketing. I think there is a merging of those two things because the technology allows that and frankly that is how consumers and business professionals are buying.”

Lewis thinks for good marketers, it has always been so. “You have always known that the best marketing or the most successful marketing is in response to a specific event. Now it is paramount that you consider it very carefully so that is why. if you are talking about confirming a transaction, whether that is done through email or done through another way of communicating with your customer, you need to be recognizing that the purchase transaction constitutes an event. A powerful event that is a marketing opportunity and you better figure out how to leverage it.” Lewis adds that it is much more effective to talk to a customer about ancillary products and services that relates to something just purchased than to three weeks or three months later communicate with them in a form letter format through an email blast. “You need to be thinking about how to leverage those things more effectively and not just the positive things, but also the negative things, like resolving complaints successfully, and converting that complainer into a brand-loyal customer. The better customer service reps and marketers have always done those things, but they have done them in a kind of 1:1 format, where it is person to person. What we are talking about now is being able to make intelligent use of data in the digital channels.”

The Role of IT

Once a social strategy has been determined, the next step will be integrating the variety of digital messaging into the business processes. “I think the challenge for technology companies and marketing services companies that might utilize that technology, is to deliver it in a way that enterprises can easily use it and integrate it,” continues Lewis. “That is the challenge. You cannot be asking them to completely throw out the way they do business. It is not only costly, but also extraordinarily disruptive. It has to be done in a way that is easy to use and integrates well, and quickly into their existing process. That is where the challenge is in terms of their adoption. I think the first mover here—the providers that figure it out, as well as the companies that use the technologies to improve the experience of their own customers—both of them are going to have powerful advantages.”

The Economist report notes, “Online communities will proliferate. Web-based customer communities will play a much greater role than today in gathering—from customers and others—innovative ideas for products and services, and also to assist in providing product support. Voting and other mechanisms will help to channel customer input and filter for the best suggestions, but firms will need to be wary of according too much influence to communities, lest the latter’s suggestions prove unprofitable to implement.”

Finding the balance will be key as we move towards 2013, as Lewis says, “It is not just a technology issue, it is about how you use technology to improve your interactions. The technology is the enabler of best practices that can enrich the experience for customers and enrich the company that does business with them. But the motivation to use the technology in that area, in that way has to be a company that is customer aware. It ought to start with the customer. Do a good job in targeting the customer, not the message to the target. Frankly, the channel used to reach them should be secondary. It shouldn’t be the driver, but it is today. Why not change that paradigm? Apply the channel on the fly closer to the actual deployment of the message, perhaps the message goes to email, perhaps it is an SMS message. I am not suggesting that you spam across multiple channels, just that you keep the customer preference in mind.”

Miller agrees with Lewis in that organizations should allow technology to enable but not control the marketing message. “We are in a community-based world, it is not broadcast and it is not commerce in that way. Commerce, in its true form, is I put up a product and you buy it. There is too much competition, and too much dialog to pretend that that is how people shop anymore.”