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Marketing and communicating with consumers
in the digital economy. A discussion paper on the impact of Digital
tools and technologies.
Ask any typical business crowd to raise their hands if they are
involved in ecommerce on a daily basis. Typically, you might
get one or two in a crowd of forty indicate in the positive.
Then try rephrasing the question, “How
many of you send or receive e-mails to your customers or business
partners on a daily basis?” Now the response is likely
100%.
The question illustrates two points. Firstly, what we perceive
as commercial behavior doesn’t necessarily include activities
that become embedded into our normal daily routine. Secondly, e-mail
and other
such digital technologies have been particularly successful in
becoming ubiquitous in a very
short period of time. These communication mediums have made their
way
into our lives so quickly in fact, that we now don’t even
classify them as alternative channels, they are just normal.
So, how can you tell if a technology has become mainstream? The easiest
way is by measuring the rates of adoption and penetration. Take for
example, the fax machine. Scottish inventor Alexander Bain patented
the first fax machine in 1843 — 33 years before the telephone.
His device read text written in raised metal letters and transmitted
it through telegraph lines. A commercial fax system was later established
in 1865 by Italian Giovanni Caselli between Lyon and Paris in France.
In 1948 Western Union started its DeskFax service. 18 years later in
1966, Xerox introduced the first general-purpose fax machine, which
operated over telephone lines. But it wasn't until the late 1980s that
the digital fax machine became truly mainstream. Hey now everybody
had to have one!
In our personal and business lives we have become increasingly dependant
on new technologies to the point where our life seems like it is missing
something when they aren’t there. To illustrate, when you turn
on your mobile and there is no signal, when you call your spouse or
partner’s mobile and
can’t reach them, or when you go on holiday and don’t have
access to e-mail, how do we react? A recent survey in the United States
indicated many executives were suffering from increased stress levels
on family holidays because they weren’t actually getting downtime
from work. The increased requirements by employers to stay digitally
connected are creating a new meaning to the term “
working holiday”.
The genie is out of the bottle, as they say – we can’t
put the technology back into our past. Our behavior, our modus communiqué,
our way of life and the way we do business has been forever changed.
This has progressed to such an extent that when a person who doesn’t
have an e-mail address or mobile phone number on their business card
hands you the said card, they feel they have to explain why it has
been omitted – “I just joined the company
and they didn’t have time to print new cards with my e-mail address
yet.”
At first these changes occurred subtly, I personally first started
using a “mobile” phone in the early 90’s, it was
the size of a small car and the quality of reception would have made
the Apollo 11 transmissions
sound like CD quality. Now we are carrying around mobiles that double
as PDAs,
MP3 players, digital cameras and dictation machines (I’ll get
into the issue of convergence later). Now I might be atypical, but
I love
tech and
I’m definitely
in the early adoption cycle of most technologies. Some of you, on the
other hand, might see yourself in the opposite quadrant. The facts
are that technological
change is being met with less and less resistance these days. Critical
market mass for mobiles took around 12 years, and for Internet it was
less
than 7 years, predications on the adoption of Wi-Fi technologies are
around 3-4 years.
Yes, our
acceptance of new technologies is actually speeding up, giving
businesses less time to respond to our changing needs and behavior.
Recognizing the adoption of these new mediums is essential in building
business and marketing strategies in the so-called, new economy. However,
there
are also cultural nuances and market specific considerations
that have
evolved. All of these technological advances, whether we either adopted
them cheerfully or felt they were too compelling for us to resist,
have been a catalyst
for behavioral change in our communities. Both from a business and
personal perspective, digital behavior is now fully integrated into
our daily
routine.
What does this mean from a commercial point-of-view? Consumers interact,
they don’t just communicate. Interaction with your organization
digitally
requires a fundamental understanding of how customers will use the
tools and
channels you give them. It requires the ability to understand digital
behavior
and the creation of a digital version of the customer experience. Most
companies I meet and work with on a daily basis have little or no concept
of
this reality. Digital channels have become an ‘add-on’ to
their businesses, a
way of regurgitating the same old content and services in a new way.
So while
customer’s behavior has been changing rapidly, most businesses
have been
keeping the status-quo getting further and further away from where
their
customers are at.
To illustrate, we were doing a usability test for a Major Asian Bank's
future website and coordinated testing in the US, UK, Brazil and Thailand
for possible new looks. We had a cross section of Hong Kong people
as participants, particularly empty nesters...Old Couples whose children
have grown
and moved out.
One motherly lady was looking at the website and she
saw the picture of Jenny, the customer service rep on the website with
the standard
headset and friendly smile. The lady turned to us and said, "Doesn't
Jenny get tired? She's always working since I always see her picture." We
were a bit dumbfounded since “Jenny” was just an abstraction
of this institution’s
customer service reps around the world. For this Hong Kong consumer,
who was in her 50's, going to her bank was about a face-to-face transaction
and sometimes
a relationship that spanned many years. She assumed that the website
worked under
the same
principal as well, and her expectations of such were reflected
in they way she perceived and intended to work with the bank digitally.
The fact is that consumers like her are increasingly being disappointed.
There are multiple considerations for the digital strategy of today.
For example, it could be that the channel you choose for your customers
is not well suited to them and therefore when you expect channel migration,
it doesn’t come – Take for example the myriad of Banking
Institutions in countries like Australia that believed if they raised
transaction
fees
it would shift low profitability customers to both ATMs and the Internet
channel.
They failed to realize that such low-income earners probably were the
last
to get online because of the relative cost for earlier adopters; in
fact,
the higher probability was that their high-value, high net-worth customers
would
move online first. The problem that then arose was the service levels
online were
far worse than customers were used to receiving through traditional
channels,
so the shift had the potential to damage the relationships the institution
had with their most valuable customers. Reducing loyalty, increasing
churn,
while also failing to decrease costs as the institution had anticipated.
Bad experience
for customer = worse experience for institution.
In contrast, HSBC in Hong Kong recently survey customers on their expectations
of their general insurance capabilities online. HSBC thought they were
doing very well with 2% of their total general Insurance applications
being processed through the online channel. However, the survey showed
that
customers trusted the brand online and when they went looking for travel
insurance,
home
and contents insurance, etc. they objected to being sold to. They
knew
what they wanted, they expected the quickest and easiest way to
purchase the products, after all – isn’t that what online
is about “quick
and easy”. By applying this learning and usability testing the
revamped site, HSBC implemented a “instant approval” feature
on the insurance homepage. The result, general insurance applications
online shot up
to 20% of all insurance applications – a 1,000% increase in performance
of the channel!
In consideration of creating alternative sales and service channels
do you need to motivate or educate customers in order to shift their
usage towards the digital channel, or are they already telling you
how it should
be done? How does the rapid adoption of such technologies apply pressure
to
the business environment for change, and how can such change be introduced
in the least disruptive way? What specific market considerations are
there,
or what have we learned from the way users have already responded to
the digital
revolution?
The answers are
already there. In the cultural melting pot that is Asia, we have all
the necessary ingredients. We have in Asia alone,
almost twice the number of mobile phone users as in the United States
of America,
growing rapidly in markets like China who already has more mobile users
that the US.
We have the cultural phenomenon of iMode in Japan, SMS in the Philippines,
Hong Kong and Singapore, and broadband in Korea. We are among the highest
penetration rates of mobile cellular phone users in the world (Hong
Kong, Singapore,
Taiwan, and Korea all in the top 10 with ranges of 70% or higher).
Internet
usage via mobile devices (iMode) in Japan, is higher than
through traditional web channels, and the rest of Asia is expected
to follow
this trend
with
mobile based access to the internet being 3-4 times higher than
PCs by 2005 (Source: The Strategis Group, Merrill Lynch). In addition,
Asian markets
are
already amongst the highest Internet penetration rates in the world.
South Korea leads the world, with 54.7% household penetration. Singapore
ranks fourth, Hong Kong fifth, and Taiwan is in eighth place (Source:
Nielsen/Net
Ratings Nov 2001.)
Why is Asia so important? In most of the markets in Asia users and
businesses started late in the adoption cycle, but already we have
outstripped the rest of the world in both penetration and cultural
impact. The
Asian region is the greatest melting pot of digitally motivated behavioral
change
in the world today. In most cases it is far less expensive to trial
and perfect
the digital customer experience in Asia, as compared with the rest
of the world, due to reduced operating costs. If you want to do business
globally,
you must be leveraging off digital mediums for both access to customer
and for
costperformance benefits. If you want to do business digitally, the
most logical place
to start is in Asia. It is cheap, digital is already
mainstream and
you can test experiences on smaller markets without “betting
the farm.” But
be ready for the cultural and behavioral challenges that await your
organization! Understand Digital Behavior
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