In early March, Capgemini’s Applied Innovation Exchange ran its latest Insight Talk. These are sessions where we bring Thought Leaders from across industry to engage in thought provoking discussions on the latest trends and digital disruptions. The focus for this session was Customer Engagement through Digital.
If you are interested in how customer behaviours are shifting in the digital world and how brands are using technology to build better relationships with customers, then this was the event for you. For those unlucky enough to miss it, this post gives a summary of the key insights and discussion points.
The richness of the content makes this a fairly long post, so feel free to skip to the section that excites you most. Our excellent line-up of speakers was as follows:
- Terry Hunt (Partner, The Future Customer): The Loyalty Loop
- Sam Ellis (BD Innovation, LIDA): Customer Engagement through Virtual & Augmented Reality
- Shelley Kuipers (CEO, Better Ventures): The Rise of the Participant
- Kaustav Bhattacharya (IoT SME, Capgemini): The Rise of IoT and How It Can Be Used to Engage Customers
The presentations were followed by a lively debate where the panel of speakers engaged and answered the audience questions.
The loyalty loop
Terry Hunt (Partner, The Future Customer)
Loyalty is not dead. In fact, it is growing at an unprecedented rate. In the US, the average household is a member of 29 loyalty programs (a total of 3.3 billion), 12 of which are actively used. This membership has grown by 26% in the last 3 years (Colloquy 2015). In the past, loyalty techniques have been very transaction- and currency-focused.
But now customers are expecting more, and opportunities are emerging for how brands differentiate themselves from their competitors. So how can they do it?
During his talk, Terry explained that one thing that remains consistent with modern loyalty schemes is the need for a genuine exchange of value between the organisation and the customer. Some leading examples in the market include:
- The currency of product – Dropbox.com giving free storage space for referrals
- The currency of ownership – In exchange for good prices on great wines, The Wine Society sells shares in the mutual to members
- The currency of information and expertise – Tesco’s Baby Club added value to new parents with expert-sourced guidance and information
- The currency of frictionless service – Amazon Prime enables subscribing customers to receive the best service in the world plus exclusive content
However, modern loyalty schemes are shifting from the traditional focus on transaction (e.g. allocating points which can be accumulated in exchange rewards), to a broader offer of membership. These membership propositions contain elements of function (offers, discounts), privileges (exclusivity, recognition), and emotion (belonging, status, fun). The latter is the critical addition, moving from financial currency towards the so called “Kudos Economy”, creating the emotional engagement with customers that makes them feel personally recognised and understood.
Terry went on to discuss one of the leading innovators within membership, Strava, which is a mobile app for cyclists. At its most basic, Strava enables cyclists to track their route and times. But it does much more than this. It is an ecosystem of enthusiastic members that can connect with others along similar routes, challenge each other to races, compare top speeds, share tips and develop friendships.
The data that Strava generates is used, on a permission basis, both as monetisation method for Strava but also to improve cycling routes for customers, for example by locating Cafes and service stops popular with fellow members.
Terry closed by explaining that when business, brand and customer are aligned in this way, both in the passion that they share and the value that is created, a powerful sense of membership can be achieved. This balance, coined the “Passion Loop”, will be a key focus for creating loyalty in the future.
The latter is the critical addition, moving from financial currency towards the so called “Kudos Economy”, creating the emotional engagement with customers that makes them feel like a valued member.
Customer engagement through virtual & augmented reality
Sam Ellis (BD Innovation, LIDA)
Although the concepts have been around since as far back as 1968, Augmented and Virtual reality have struggled to gain traction. In recent years, the technology has swiftly moved through Gartners ‘Hyper Cycle’, with a host of bad examples such as augmented reality newspapers and other marketing gimmicks.
In 2016, however, this technology is beginning to gather pace. Largely powered by the games industry, this year will see the launch of multiple commercial-ready headsets from the likes of Oculus (owned by Facebook) and Playstation, with other key players investing millions in research and development.
From a customer engagement perspective, brands are beginning to experiment with how this technology can be used to create new and exciting experiences for their customers. One of the key industries Sam highlighted here was within automotive.
Car dealerships often struggle with selling cars that have not yet hit production, aiming to achieve down-payments months ahead of when the product is ready. How can you tangibly demonstrate the scale, aesthetics and experience of a car, without having one there to physically touch?
Virtual reality is being used to great effect in this space to create fully immersive experiences of cars in the showroom, allowing customers to compare shape previous models, demonstrate functionality and get a sense of size.
But, technology rarely comes without its challenges, and augmented/virtual reality has an abundance to tackle. Difficulties with creating 3D content, lag times, the abundance of available platforms to bet on, app store problems, and lack of skilled developers to name a few.
There’s also the somewhat more finical, but real issue, of people not wanting to mess up their hair with the headsets. Before widespread adoption is achieved, all these issues will need to be thoroughly addressed.
Sam closed the session by ‘wowing’ the audience with a video from Magic Leap, a Google backed start-up that is creating magical moments in this space. His mantra: “There are amazing possibilities with this technology, but let’s not fill the world with sh*t”.
The rise of the participant
Shelley Kuipers (CEO, Better Ventures)
Do you really know what your clients/customers think about you? Do you know what customer emotions are key to your future growth?
Henry Ford famously once said, “If I had asked people what they wanted, they would have said faster horses.” Undeniably, this approach was highly successful for the Model T car. However, in a world where organisations have instant access to billions of consumers worldwide, knowing what they want, need and feel has shown to be a proven success factor.
The case for customer participation is strong. Consumer generated product ideas have shown to create up to 3x greater sales revenues and 4x greater profit margins than designer generated products (Muji).
Up to 80% of reach from marketing campaigns now comes from amplification through advocacy (Ogilvy), and studies show that 70% of people trust recommendations from friends (Mashable). Yet organisations still struggle to effectively engage with their customers, and 76% of FMCG product launches still fail within the first year (Marketing Week).
One organisation that is beating these odds is LEGO, who have demonstrated the value of participation by launching their Ideas platform in 2008. With over 1 million active participants, it has become a key avenue for engagement and insights for LEGO (Wired), with crowdsourced ideas such as the Minecraft edition LEGO becoming some of their top performing products.
Other examples, such as My Starbucks Ideas, have demonstrated time after time how the power of the crowd can be used to maximise the chances of product success, reduce development times and increase profits. Shelley went on to highlight different models of participative commerce that are prevalent in todays market:
- Discover: Using open innovation crowd sourcing platforms to create new product or service ideas
- Collaborative: Setting specific challenges for the crowd to work on together, such as the Unilever Foundry aiming to make sustainable living commonplace
- Internal: What are the challenges you can set within your own organisations to rapidly generate new ideas? Give them a framework for the participation, the right incentives and motive, and they will innovate
- External: Non-organisation led initiatives set up by brand enthusiasts. An example of this is the IKEA Hackers community that came together to create ideas about how to use IKEA products in unique ways. Despite initial resistance from IKEA, a partnership was eventually formed after the value was recognised
After demonstrating a convincing argument for the value that participation models can bring, Shelley covered a series of recommendations for those wanting to embark on participation:
- Relevance: Don’t just ride shifts in culture, contribute to them
- EQ: Tapping into your customers’ emotional needs is one of the keys to your future growth and survival
- People: Find the people who are doing what you need and make them part of your team
- Customers: Embed the customer in your entire business ecosystem, not just marketing
- Participation: Co-create products and services that your customers and advocates want to talk about, share and buy
As parting words of wisdom, Shelley shared an inspiration quote from Jørgen Vig Knudstorp, Lego CEO, “I also tell customers that they fulfill another vital role: They are an avenue to the truth. And in today’s world, a CEO needs every avenue to the truth that he or she can find.”
The rise of IoT and how it can be used to engage customers
Kaustav Bhattacharya (IoT SME, Capgemini)
We are all familiar with the 1st and 2nd Industrial Revolutions, and we are currently experiencing the 3rd (The Information Age), but what comes next? Kaustav set the scene by discussing the 4th Revolution – a world of machine intelligence, where everything we own is connected in flux of constant communication. This is the so called Internet of Things (IoT), including everything from wearables to connected cars, houses and cities.
Over recent years, IoT has become prominent by a series of changing circumstance. These include cheap access to sensors, bandwidth, processing power, big data and of course smartphones, which act as a hub to bring the Things together. Whilst the development in this space is still in its infancy, there are some interesting ways in which organisations have begun to test ideas for engaging customers.
IoT technology is opening up a new portal directly into our lives, our homes and even our bodies. With the launch of new products such as the Amazon Dash for instant replenishment of items, Internet Connected fridges and washing machines, companies have new ways to engage and sell to their customers. To take things even further, the Healthcare industry have developed ingestible wearables – tablets that can track everything going on within our bodies.
The applications of these technologies are vast. Case studies are arising across all industries, whether that be finding new ways to cost Insurance premiums or helping customers to navigate through retail stores, the possibilities are endless. But, similar to Sam’s earlier sentiment, Kaustav left us with a heed of warning. “Companies need to provide a real solution to real problems. Avoid gimmickry and provide real utility to the customer”.
Before closing our session, Capgemini Consulting’s Mario Coletti hosted our panel discussion involving all the previous speakers, with the addition of Sam Hunt, Director of the Capgemini Innovation Lab. Having pondered on their thoughts throughout all the session, our eager audience had a long list of questions for the speakers, creating excellent discussions with divided opinions across a number of topics. As a final gift of Insight from this event, here are some of the key points discussed:
Question: Is technology driving consumer behaviour, or is it consumer behaviour that is driving technology?
Conclusion: A mixed opinion from the panel, with arguments for both technology and customer driven change. The happy medium was found where an existing behaviour or experience is made possible or more frictionless through the use of technology. It was recognised that one of the unique skill sets in the market at present are those who can look at new technologies and apply them in unique and different ways, to solve problems that they were never initially designed for.
Question: Who is the king of Loyalty?
Conclusion: Amazon was crowned the winner in this space. A key point, outlined by Terry Hunt, was that Loyalty can no longer be an afterthought technique used by organisations, it must be embedded deep within their operating model. Through the construction of a loyalty scheme whereby customers pay Amazon an annual fee, for which the main benefit is a frictionless service for them to buy more products from Amazon, they have created a model which generates huge benefits for both parties.
Question: How can old, large organisations make radical change in the business models and not remain stuck in their ways?
Conclusion: The diverse experience of the Panel made for an insightful discussion on this topic, with the conclusion coming down 3 main areas:
- Listen to your customers. An excellent example of this was found in Tesco Bank, which was only conceived after persistent feedback from users of the Tesco Clubcard asking, ‘Why can’t I pay with this too?’
- Buy-in at the right level. Although modern initiatives may be come in through the CMO, the right Executive buy-in will be required to create lasting organisational change.
- Make a real commitment. Companies such as LEGO (Futures Lab) and Unilever (The Foundry) are investing heavily in teams to solely answer the question, ‘What does our company look like in 20 years time?’ Empowering dedicated teams to trial new models can create a real capacity for change.
Hopefully you found some of the insights discussed in this session as exciting and thought provoking as we did. Stay tuned for more sessions throughout 2016 as we explore different topics in the space of Digital Innovation.