Consumers today have more information and options available to them than ever before. With multiple offline and online touch points, evaluating and comparing products is easier than ever. At the same time, there are more options to buy than ever before. To stay competitive in this fast-paced digital world, manufacturers must take a hard look at their digital marketing and e-commerce strategies.
The problem in reviewing these strategies is that companies often find themselves with more questions than answers: How can consumer companies manage the inherent conflict that exists between digital and e-commerce technologies and more traditional channels? Where should they place their bets and with what mix? What is the optimal pricing strategy across these different channels? There is a lot at stake and the available funds for digital marketing and e-commerce is often scarce.
Answering these kinds of questions and thriving in today’s rapidly changing environment requires an understanding of five distinct truths. These truths are the foundation for building a world-class digital marketing and e-commerce operation.
Truth #1: Technology has fundamentally changed the consumer’s purchase journey and buying behavior.
Each stage of the consumer purchase journey now incorporates online and offline “touch points” that affect how consumers browse, evaluate, compare and buy products online. Buyers consider and evaluate products based on “likes,” “tweets,” blog posts, web advertisements and other online sources. They then purchase, provide feedback, exhibit loyalty and advocate for a brand through similar channels.
Manufacturers need to incorporate digital touch points into their marketing mix while remembering that touch points can be friend or foe. They can help build brand awareness and equity at the early stages of the consumer purchase journey and then acquire customers and earn loyalty at the later stages. But they must be introduced to consumers as a component of the overall go-to-market strategy and not in isolation. Additionally, they need to be “valued” and measured for the impact at each stage of the path to purchase. Otherwise, organizations risk investing more in technologies that are the latest hype and less in those that are actually delivering results.
Truth #2: Former concepts of customer definition, segmentation, targeting, conversion, customer service and loyalty are no longer sufficient.
Previous methods of gathering consumer and market data cannot provide the factual depth and timing required to respond to today's consumers’ fast-changing demands and shopping behaviors. Instead, manufacturers must understand consumer demographics, personas, price sensitivities and channel preferences of target buyers for specific categories and products. Forecasting online growth must be thought of in terms of online addressable market size, segmentation, cost and time to acquire new consumers, trends and competitive threats.
Marketing efforts must shift from long-term campaigns to real-time response. For instance, monitoring and responding to social conversations and postings is critical to developing, growing and maintaining brand equity. So is developing actionable insights about a target market in a rigorous and ongoing way. Both approaches help manufacturers keep their fingers on the pulse of changing consumer trends and behavior.
Truth #3: Many consumer goods manufacturers are, by necessity, moving from pure B2B business models to a sophisticated combination of B2B and B2C and B2B2C.
This change is opening up a vast array of complex channel relationships, each requiring different financial and incentive arrangements from earlier models. New omni-channel marketing models offer a huge opportunity to create an end-to-end consumer experience. There are financial benefits as integrating investments across offline and online media can improve efficiency of spend, conversion rates and consumer loyalty. “E-tailers” have significant on-line scale and ability to leverage analytic capabilities to mine consumer data for better targeting.
But these opportunities come with challenges. While consumer product manufacturers now have the potential to sell not only through traditional distributors but also directly to consumers, many struggle to create online scale and manage channel conflict. Many are also seeing tension from retailers, who feel threatened by brands and e-tailers going direct to consumers. And with competition no longer limited by geography, companies everywhere are feeling pressure on margins.
Truth #4: Adjustments in tactics must be driven in near real-time.
Companies need to capture online performance data at the right level of detail and frequency to accommodate rapid course corrections. The “right detail” includes marketing costs, customer acquisition and conversion costs and rates, repeat buy/loyalty, site visits, page views, time on site, purchase frequency, online reviews/consumer sentiment, margin and other similar measures.
But to maximize revenue growth and profitability, companies must be able to draw insights rapidly from this data through best-in-class tools and comprehensive analytics. Delivery of actionable insights to key decision makers through a rapid and ongoing process can mean the difference between efficient online growth and costly stagnation.
Truth #5: Dramatically different skill sets, organizational models and partnerships will be required going forward to grow profitably in the digital marketplace.
Not everyone in the organization will be able to adapt to the realities of today’s digital marketplace. Companies must clearly define the profile of team members who will thrive in this new environment, hire to those profiles and nurture that talent. Successful e-commerce businesses manage change quickly and make innovation a priority — and those capabilities begin with the right talent.
Along with ensuring that the right skill sets are in-house, companies need to collaborate with channel partners to achieve synergistic growth. Leveraging partners’ strengths and resources can be a cost-effective way to mitigate risk and drive innovation and differentiation for both organizations.
In today’s swiftly evolving digital world, building an effective digital marketing and e-commerce strategy can seem like a herculean task. But it is a necessary undertaking — and a goal that can be reached by first embracing the Five Truths. Once manufacturing organizations understand these five realities, they can be successfully addressed — and a world-class digital marketing and e-commerce operation developed.
Corey Torrence is a Managing Director with Blue Ridge Partners.