Brand and Commerce: Connected by Digital Transformation

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Digital transformation has become a hot topic, with CEOs talking about it every day and allocating significant budget for it in 2018. In the past, most digital transformation initiatives were about high-end and edgy technologies or solutions. However, now Digital Transformation ROI has been validated across many industries, C-Suites are understanding that it is more important to map out the right strategy rather than implementing complex tech solutions.

Let’s take a look from the perspective of branding and marketing. Under the trend of transformation, “Brand” and “Commerce” have gradually merged into one term, “Brand Commerce”, a term to describe the narrowing of the gap between brand inspiration and consumer transaction. The concept of Brand Commerce has become the ‘North Star’ for brand marketers when reviewing and evolving their own work and methodologies.

Take the example of a brand’s entry in to the Chinese market. In today’s climate, the brand will decide on an online and offline channel strategy, and the local brand channel planning teams work together in an agile way for rapid progress. This is the opposite of the linear and separate ways of working in the past.

To be specific, brand positioning in the Chinese market needs to be worked out in response to specific online channel strategies. Online and offline media strategies and campaign planning need to direct data to inform channel planning. When sales begin, media data, sales data and customer membership data needs to be consolidated and analyzed in time for optimizing the next round of brand and commerce strategy. The fast-paced and complicated way of working presents traditional organizations with many challenges.

From my point of view, Brand and Commerce go hand in hand, and have only previously been separated because of traditional ways of working — using digital to reach, communicate and interact with customers in real time.

A great example for this new era is the story of a female entrepreneur, who found out that her company’s reputation was being damaged by other vendors selling fake versions of her products, so she made the decision to invite whoever bought the fake products to store to swap them for genuine products from her company. Not surprisingly, a lot of customers went to the stores. She saved the company’s reputation, won back customers’ hearts and sales grew three times, driven by more store visits.

This story strongly demonstrates the benefit of Brand & Commerce working together. Imagine, if the same situation happened in your company, how long will it take to go through the discussions with the brand team, marketing team, legal team, operation team and channel team?

When developing a digital transformation strategy, is there a way to evaluate how well Brand and Commerce actually work together? This is where the original thinking framework — the Brand Commerce Digital Transformation Matrix — is used as a diagnostics tool for brand and marketing related professionals.

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Brand Commerce Digital Transformation Matrix

Studying this framework, there are few brands located in area (1) of the matrix nowadays. Most brands are moving toward mid-high level, in terms of digitalisation of brand building or digitalisation of commerce.

Take T-mall’s one-to-one brand commerce ecosystem and seamless experience as an example for type (5) in the matrix.

In terms of digitalisation of brand building, T-mall has been known for being a personalised one-to-one medium (Thousand Faces to Thousand People) on its marketplace. This year, the service has been upgraded to “Unidesk” service, which seamlessly synchronises all of Alibaba’s platform data, such as Alipay, Ant Finance and Cai Niao Distribution, in order to provide integrated services to customers in different scenarios. However, it still has some challenges and sometimes recommends irrelevant products to consumers, such as serving unrelated product categories to a given consumer, again and again.

When talking about the digitalisation of commerce, besides desktop and mobile channels, T-mall celebrates the concept of “new retailing” ­– such as T-mall automotive mall, shopping mall, self-service unmanned store and mini supermarkets — with the purpose of covering all online and offline touchpoints.

It’s only a matter of time until T-mall excels in omni-channel selling, but personalised interactions need to improve. From my perspective, truly personalised digital interaction is essential in selecting the right scenarios, targeting certain audiences and creating tailor-made interactions. Coca-Cola, for example, created an “invisible” vending machine that only showed itself to couples walking by for Valentine’s Day.

The incredible thing about it is that it could recognise couples, activate vending function and show a huge, romantic ad when necessary, while the whole experience was “invisible” for other passers-by. In addition, the vending machine would ask names of the couples and print them on the bottle, making the drinks unique to each couple.

There are several elements of this case worth considering. The context of Valentine’s Day, that only couples were targeted and the experience of personalising drink bottles. This is a case of a truly personalised customer experience.

So, how can the Brand Commerce Digital Transformation Matrix help find the right path for traditional firms’ digital transformation of brand commerce?

The banking industry is under strict supervision by Chinese financial departments, especially in terms of privacy, and with the increasing complexity of banking services, it is one of the most challenging industries for digital transformation of brand commerce.

As an example, China Merchants Bank made early progress in digitalisation in China. They created a range of differentiated services, such as the visionary VIP systems like Sunflower, to target different segments of customers. The bank also made attempts in marketing automation to support brand experience and reduce costs. Every month when receiving payments, customers would receive an SMS with contact information of tele-marketing representatives, reminding them to grab the opportunity of buying financial products specifically designed for their salaries.

However, the bank has quite a long way to go in enhancing engagement with customers and improving customer experience, so I’d place them in area 4 of the Matrix.

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Brand Commerce Digital Transformation Matrix

China Merchants Bank has the natural advantage of accessing data of customers with debit and credit cards, including all aspects of life, such as shopping, traveling, transportation and shopping area, shopping timing, etc. Customers’ records of income and expenditure naturally become shopping logs, reflecting all kinds of motivations and needs for shopping and financial management. Such data can be extremely beneficial for brands. How to dig out customers’ needs of next steps via data analysis is the question that brand builders should consider for digitalisation.

For instance, for customers who have purchased flight tickets for traveling abroad on tourism websites, they will be preparing foreign currency and completing budget plan in addition to itinerary planning. There’s so much more to guide customers besides promotion and discount messages. On the other hand, for a customer who constantly faces credit card overdraft, what they truly need is a well-rounded financial management plan instead of more promotional messages on loans and overdrafts. Different customers have different needs — we need to use technology, data and creativity to deliver on these expectations

Looking at China Merchants Bank from the aspect of digitalisation of business operations, its branches and communication channels cover a large area. By trying the services offered on different channels, services are neither consistent nor continuous.

Try opening a credit card at the bank counter of a branch in China. When you finish filling out the forms, the clerk will send them to the headquarters and someone will get in touch at some point. What if the mail never reaches the headquarters? Who should customers look for then? Or try calling the hotline and consult membership-related questions. Only one type of question can be answered per time the call is forwarded, i.e. representatives in charge of member events can only answer event-related questions, and your call has to be forwarded again if you want to ask about member login. Therefore, the level of digitalisation of business operation is in the middle, too.

Of course, a complete analysis of Brand Commerce needs in-depth research from both inside and outside the brand. The best route for development can also vary for different industries and brands, so there is not a one size fits all model to digital transformation.

So what actions can China Merchants Bank take in order to improve the level of digitalisation of brand commerce?

Suggestion 1:

Utilize the consumer data with more flexibility, look into their needs in-depth and explore more possibilities to interact with them with more personalized experiences.

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Types of analysis supported by UnionPay transaction data

Suggestion 2:

Based on a customer’s personal experience, analyze the business service journey, and prioritize key parts in order to renovate brand experience.

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Customer Journey Analysis

Article by Cecilia Huang, Senior VP of Brand Commerce Consultancy, Isobar China Group.

Originally published here.

Isobar Asia-Pacific’s Chief Strategy Officer discusses the ROI of Innovation

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Following Spikes Asia Festival of Creativity in Singapore last month, we spoke to Sandipan Roy, Chief Strategy Officer, Isobar Asia-Pacific to discuss the ROI of innovation.

You discussed the ROI of innovation at the recent Spikes Asia festival. Can you tell us more about your thinking on that?

There’s sufficient macro-economic and corporate data to indicate that innovation either isn’t working or there’s not enough of it happening. Here are some quick data points:

We are living in an era of economic stagnation. Our productivity rates are just about 1%. If the definition of productivity is maximizing output with minimum input, then the delta has to be innovation. But if productivity is only 1%, obviously innovation isn’t a big part of it.

Companies are sitting on massive cash reserves and distributing huge amounts of dividend every year. Trillions of dollars are trapped in low- to negative-yield financial instruments. And yet innovation is nowhere near getting its fair share of this cash. So, there is a lot of cash out there but it’s not finding its way into innovation.

The start-up failure rate is high. The success rate of new products is abysmally low.

There is a Harvard Business School study that says over 84% of CEOs sees innovation as a board-level agenda but only 6% are satisfied with the success of their companies’ innovation.

So obviously, something is going wrong somewhere.

Why are businesses and brands unhappy with the success of innovation?

Fundamentally, there are a couple of problems with the way innovation is being done. One, innovation is more of a solutions-first approach, which means you build solutions that then have to find problems to solve, as opposed to the other way around. Two, even when big companies are doing innovation on the side i.e. skunkworks, startups, innovation teams, they find it difficult to integrate these outputs with their core business. So, when integration between the core and innovation sides results in failure, innovation is always seen as guilty before being proven innocent and in the core business, it’s exactly the opposite.

In spite of this, the disruption of legacy incumbents is inevitable. It’s not a question of ‘if’, it’s a question of ‘when’. It’s not an event called disruption, it’s a process of disruption. Every sector of the economy has already stated getting disrupted, the speed depends on how mature the technology in that sector is — so while technology may impact the speed, it is not the reason for disruption. GPS and mobile has existed for a couple of decades, but that never disrupted anything by itself. Uber had to put a business model around it to disrupt the transportation industry. Streaming has existed for a couple of decades, but Netflix had to put a business model around it to disrupt the entertainment and media business.

So where are companies going wrong?

The thing about disruption is the fact that more often than not, companies are not getting disrupted as much as they are destroying themselves. The crucial factor there is that they aren’t organising themselves around the customers’ needs. When companies are startups, in the stage of disrupting, the focus is always on customer needs for e.g. “how can I meet customer needs?” Once these startups start becoming bigger and better, they remove the focus on customer needs and on to their products instead i.e. “how can I make my product better?” The final nail in the coffin is when they feel their product is better, then they focus on their operations — “how can I make my company more efficient?”

Kodak is the poster child for how a big company got disrupted. But interestingly, they did do a lot of innovation — they improved their print quality, film quality, etc. But they were innovating on the wrong end of the business. They were innovating on their core processes and systems, while the disruption was happening on the consumer side of the business with new developments like Instagram and iPhones.

So, I think there’s a lot of fear amongst legacy incumbents — they dread cannibalization. They think that if they embark on innovation, they would cannibalize their own business. But I don’t believe companies can disrupt themselves. Very few companies have managed to disrupt themselves successfully such as Netflix, Facebook, or General Electric. But by and large, disruptive innovation is best done in another zone of the business and then integrated with the core in a systematic manner.

Is innovation still important to businesses and brands, or should we shift the focus?

Innovation is fundamental not just to success, but to the existence of any business because essentially innovation is about meeting customer needs in a new and different way, and not necessarily a better way. Innovation is fundamental to neutralize risks of disruption to the core business as well as to seek opportunities to be disruptive.

Where do you see the next opportunity for disruption?

I am very hopeful and passionate about healthcare. It contributes to a fifth of every economy’s GDP. Not disrupting healthcare means a big sector of the economy isn’t being impacted. We do see some progress, such as IBM Watson’s AI work with oncologists at Sloan Kettering, but it’s not happening fast enough for a number of reasons — regulatory, safety and security. The other area is education. With increased importance around re-skilling due to unemployment caused by automation, transformation of the education sector is of massive importance.

Finally, what’s your one piece of advice to businesses and brands on innovating?

Ultimately, there’s a demand and a supply side to every business and the successful existence of any business is to organise themselves around newer and different ways to meet unmet customer needs. Strategy is about value creation so identifying areas where value can be created or destroyed and then developing frameworks and mechanisms to institutionalize it is key to long-term success.

This piece was originally published on Isobar’s global blog.

Isobar’s innovation experts reveal the deal with Experiential Tech

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Innovation has been a focus for our Singapore team this year, with their most recent innovation being the V-Showroom, a first-of-its-kind mixed reality dealership for our global client General Motors. We spoke with the minds behind this work, Stan Lim, Regional Creative Director and Chye Yong Hock, Innovation Director as they stepped off the stage at Spikes Asia 2017.

[For the people who didn’t make it to Singapore for your presentation]

What were key takeaways from your talk at Spikes Asia?

Stan: The key thing that we wanted people to take away from our session is to think deeper about what you can actually do with experiential tech and not just limit it to consumer-facing implementation. Where innovation started out was really to create nice brand experiences and delight consumers. But there’s so much more to experiential tech than that, and if done right, I believe it can create real business value.

Chye: A lot of people at Spikes were talking about how experiential technology and machine learning have influenced the marketing landscape in general. But fundamentally, we wanted to show people that technological advancements will be more prevalent in the future as long as we focus the end point on delivering something of tangible value to the client. We also shared best practices for Innovation projects, for example how we approach them, and what was the process is for kick-starting these projects with clients based on our past learnings. It’s a very different process from pure-play marketing projects.

[Please can you include the best practices so we can link to them?] — Actually the GM work is probably the only best practice that we can share.

With AI and data advancements dominating industry conversation, does creativity still matter?

Stan: Of course it still matters, but AI & Data has changed the process involved in creativity. AI and data will impact how we have to be creative in order to solve a client’s problem. But AI & Data isn’t the end point — we will still need to create delightful experiences for people.

Chye: These days there are a lot of companies in the tech and innovation space, so it’s creativity that sets an agency apart. If digital agencies didn’t own creativity, we would be just like any other tech solutions provider or vendor, where everyone is selling just one product. But we tell clients “don’t think about the tech you want to use. Rather, think about the problem you want to solve” and from there, we can figure out what we need to create, and what tech we use.

And it’s no longer just about creative marketing alone — we need to blend it together with tech solutions and services in order to be truly effective. But the challenge a lot of agencies face is how much clients are willing to invest — proper implementation of some of these new technologies are big investments. And to use tech for only one campaign is just not worth it. That’s why we are focused on experimenting with technology that has longer-term potential, for example improvements that can be made to the customer service industry just makes more sense. Strategically choosing areas of experimental focus is an agency’s biggest opportunity for delivering great value to clients.

What’s the latest in the digital and creativity in Asia-Pacific?

Chye: It’s shifting; the advertising landscape is changing a lot, and it’s to do with how APAC clients are spending their money. For example, in Asia social has largely become a low investment staple of the marketing mix. Clients have set how much they want to spend and how they want to do it. So, they’re less open to new ideas.

Clients’ investment is slowly diverting to experiential tech to help them retain customers — this client demand has increased a lot more this year. Many companies now have innovation teams, and they are treating it just like a marketing division. So, they are definitely going to spend more on innovation and experiences in the near future.

Stan: Generally, I think APAC clients have matured in their approach to innovation and in some cases the clients are more aware of what technology can do but not how to deliver it. But when you’re facing a client who might be thinking “there’s no use for tech beyond marketing” not many agencies can jump in and leverage the opportunity. In APAC, we still have a lot of catching up to do.

Why should businesses and brands investigate what innovation can do for their business today?

Stan: It’s the risk of being disrupted. Entire categories are getting replaced on a monthly, and sometimes, weekly basis.

Chye: Brands and businesses need to understand that tech and innovation is a part of the working world today, and it is not something you buy off the shelf. They need to understand how it can power their business.

Lots of brands and businesses are already investing in creating an innovative culture. They are rethinking and maturing in the way they approach innovation projects. And companies like Kickstarter have helped foster the start-up culture to make brands and businesses more accepting of trial and error, and the mantra “fail-fast”.

Also, the customer demand is there. Take the car industry for example, people want the latest technology in their cars now, so automakers have put more innovation into producing cars in the last two years than they have in the last twenty. But this takes learning and can’t be completed overnight. So, you need to start the innovation process early.

Stan: Disruption is not an event, it’s an ongoing process. So, the day you realise you are being disrupted is the day it’s too late to do anything — As Chye mentioned, innovation needs to start now to prevent yourself from being disrupted six months down the road.

This entry was originally published on Isobar’s blog.