Digital Channels can help Marketing Entry Barriers
Posted on: 09 January '12
In this post, we look at an interesting question: How can emerging digital channels reduce marketing entry barriers? While physical barriers such as access and communication across geographic locations are often the easiest to tackle using digital channels, there are other significant challenges that product and business managers face:
Should they extend the line or launch a new brand?
How do they create a new category where they can be first instead of being an imitator?
How do brands reinforce the power of what is on offer? How do companies sell more and deeper?
The Ecosystem Approach
With the rise of social media, mobile connectivity and easy access, seems like we should have resolved all the above challenges. However, the limitation of the human brain to process all that is being thrown at it, and its seamless ability to block only but the items it may consider most important is a bigger challenge for us. Today, we deal with another issue that research is bringing up: The human brain doesn’t always retain the most relevant considerations, nor does it reliably anchor its decision making on the most important criteria applicable and which is already known!
Recent research on human decision making and rational reasoning processes shows that the margin of error is substantial. There is a significant risk of creating indifference and thus price erosion, even when the value at offer is high. There is a need, more than ever, to assimilate what customers are already saying and thinking.
The ecosystem approach addresses this through a five step cycle:
- Understanding the context of interactions
The first step is to understand not just what makes people choose, but why and when these decisions are taken. Research shows that while conversion of mass campaigns remains in a measly 0.05% range, most conversions occur because customers had been looking for a similar offer at that time. This implies moving beyond point in time interactions. It’s not enough to know that a customer redeemed a coupon or responded to a promotion. In fact, the key is building an interaction model, which identifies when these needs may arise. In some cases, this is simple. For example, we know from someone shopping for insurance that the renewal may be up in the next six months. In other cases, mapping causal interactions is more involved. For example, how do we know that a vacation is being planned and that tickets or tour information may be required? As we traverse down this path however, the interaction model becomes more complex, but also, more lucrative. For example, family vacations are different from vacations with friends, and new parents are likely looking for lots of baby stuff. Reaching customers with the right offers first will establish you as the reference benchmark in the mind. That’s a happy place to be!
- Rediscovering the scope of the analytical model
Analytics and business intelligence are great tools to understand your customers and their behaviors. In the ecosystem model these frameworks go beyond the plain vanilla slicing and dicing. The ecosystem model triggers a wider search for critical independent factors that ultimately affect the desired behavior. For example, what makes the customers choose? Is it really because of their location and demographics, or because they just bought a new smart phone that increases the probability of them finding the promotion? How do we consciously model and include these causal factors?
An ecosystem driven analytical model continuously searches for causal factors, providing crucial inputs on ways to extend reach, to communicate and to connect. This extends the traditional models based on historical data alone.
- Reaching beyond the purchase cycle
The need for instant gratification and the pressure to quickly prove ROI of marketing and sales strategies forces us to reach customers with a “purchase now” message. The ROI is enhanced through the ecosystem approach. Tracking customers throughout their decision making trail helps ROI in two distinct ways; first, we improve the rate at which customers engage, and second, we reduce on-going costs by narrowing the target set with a higher uplift.
- Focusing the appeal factor
That brings up the necessary outcome of narrowing the intended message. With personalized information obtained about target segments, or even a single customer in some cases, the message sent is no longer “one size fits all”. It’s targeted, need based and hits home at the right time. We move from praying with fingers crossed to conviction and belief. Almost all offers will hit home at some point. But knowing when they will hit becomes an important differentiator.
- Getting back to step one
The ecosystem model always sends us back to start over from the first step. Searching for ways to boost the interaction set, querying influencing variables and learning from every interaction is a natural outcome of the ecosystem philosophy.
The Next Step
Most significant marketing barriers relate to the perception of the mind. Integrated Digital channels enable the determination of “context” and thus the right approach to marketing, distribution and sales. This is different from deriving static variables to train newer machine guns.
Finally, we must also note that business models and product offerings significantly influence the ecosystem approach. The first step is to assess and define the opportunity landscape for your business with its product / customer interactions, and then begin the cycle of continuous modeling and analysis. The results will be delightful.