Empowered and smarter consumers

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By Victor Silvino Today, we live in the age of smarter consumers. Consumers are departing from their demographic and socioeconomic roots and are using technology to control their own experiences. A recent study from IBM Institute of Business Value reports that more than 70 percent of consumers no longer rely on advertising as the main source of information for products and services; this means that push strategies, like one-way advertising campaigns, have grown ineffective. This makes it more challenging now for retailers to reach and sell to target customers. Most have not recognized the need for change in their marketing and sales initiatives but some have certainly excelled. Ford, in the midst of a severe downturn in 2010, decided to drive home a drastic transformation of their launch campaigns. The global automotive company based in the US provided one hundred individuals who were active in the social media space ? with the European version of the Ford Fiesta 18 months prior to its release in the US. These individuals were encouraged to share their ?on-the-road? experiences with the car over 6 months on their blogs, Twitter, Facebook, Flickr, and YouTube channels. The teaser campaign reflected Ford?s acknowledgment of the need for change in customer engagement. About 11 million social networking impressions and 5 million shares were achieved, 11,000 videos and 13,000 photos posted, and 15,000 tweets (not including retweets) generated. A post-campaign survey also showed that almost 40 percent of Gen Y customers were aware of the product. So what can retailers do? They need to understand that consumers want to be served and not sold to. Consumers are asking retailers to listen, know and empower them. Start listening In an IBM Smarter Industries Symposium (2010) held in Barcelona, a retailer shared how listening drove better sales. The company was experiencing a unique problem — women did not want to patronise a store in a specific location, despite repeated promotional efforts. By examining local trends and analysing unstructured data in social media conversations, the company made an interesting discovery: women in the area were dropping their children off at school early in the morning and didn?t like waiting until 10am for the store to open. In response, the company simply changed opening hours, and sales went up. Other businesses have taken listening to the next level by adopting solutions that analyse customer data and provide a holistic view of behaviour, interactions, and loyalty across multiple sales channels. According to a study jointly conducted by IBM and the MIT Sloan Management Review, organisations that utilise analytics outperform those that are just beginning to adopt analytics by a factor of three. One retailer that has outshone the competition is Best Buy. The US speciality retailing giant realized that its customers left clues behind about their wants and needs every time they went to the company?s website, made an inquiry at a contact center, or purchased goods at stores. By taking note of customer purchase histories and preferences, the retailing giant developed an email campaign that followed up customer activity with targeted offers. Customers who had made a CD or mp3 player purchase online, for example, were sent music-related emails; DVD purchasers fell into the ?movie? category, along with offers for related products. Within a short period of time, Best Buy reported a 17 per cent increase in operating profit, and a 20 per cent rise in online shopping basket size. Of course, listening is just the start. It is also essential for retailers to show that they know their customers by providing a personalized shopping experience. Personalized ?dialogues? The first aspect of personalized engagement is converting information gathered into action that predicts customers? needs, producing tangible results that drive satisfaction and loyalty. Yansha, one of China?s largest upmarket retailers adopted a supply chain management platform from IBM that provided suppliers with information on real-time, rapidly changing customer buying behaviours and sales. This empowered suppliers to adjust and optimise their operations, reducing order lead time from 2.5 days to 4.5 hours. This demonstrates how customer insight can be used to predict customer needs, and to automate business processes for flexible delivery. Consumer empowerment Retailers have to empower their customers by making it as easy as possible to complete the shopping process, which includes providing the right services and letting consumers choose how they interact. When Tesco realized that working South Koreans had too little to go grocery shopping on a regular basis, the supermarket chain operator decided to take brand interaction out of the grocery store and into the subway. Wall-length digital billboards in train stations displayed the images and prices of popular products normally found on Tesco?s physical shelves. While waiting for the train, a commuter could buy a bottle of milk and a bag of oranges simply by scanning the relevant product barcodes with his smartphone, and anticipate delivery to his home by the end of the day. Within three months, sales at Tesco stores increased by 130 percent, while the number of registered online shoppers went up by 76 per cent. Smarter conversations Smarter retailing starts with the recognition that consumers are conducting a conversation many retailers know nothing about. Listening to this digital dialogue will help retailers understand and serve their customers better. Smarter retailing also entails leveraging customer data. That?s actually the most powerful weapon in a retailer?s armory because it uncovers when consumers are buying products for themselves, when they are buying products for others and when they are experiencing life-changing events. Retailers must embrace, manage and analyze a vast amount of data to personalize consumer interactions. Finally, smarter retailing allows organizations to leverage this intelligence to allow consumers to shop when they want as they want ? and that requires a totally different mindset. Recognize that customers are not passive recipients but active participants in the shopping process. Give them facilities they need to participate in that process, and make it feel like a pleasure to serve them. How can IBM help? We all know that the Philippines is considered a retail capital in Asia. Our retail industry is experiencing significant growth. It is also an important contributor to the Philippine economy as it accounts for roughly 15 percent of the country?s total Gross National Product (GNP) and 33 percent of the entire services sector. Employing some 5.25 million people, representing around 18 percent of the country?s work force, the industry has a huge potential to become better and smarter. In the age of the ?empowered and smarter customer? where consumer expectations have accelerated rapidly over the past 10 years — like no other time in history, consumers are demanding greater flexibility and choice, creating opportunities for companies of all sizes to innovate and change the way consumers connect, interact and transact. Successful companies are staying competitive by transforming their approach to commerce. At IBM we call the path forward: Smarter Commerce. Smarter Commerce is a strategic approach that places the customer at the center of a retailer?s business operations. The author is the country manager for software group of IBM Philippines ]]>

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