A few years ago, if you said that digital systems would make it ridiculously easy to communicate your message to customers you would have been laughed out of the room. The idea that authenticity and engagement drive sales is nothing new. However, the way we go about discussing business ideas or even engaging with potential customers has radically shifted in the past few years. This shift has been seen most dramatically in the music industry. The idea that an aspiring musician would need to ‘get their name out there’ in order to find a record deal is rapidly becoming a thing of the past. Now, a musician need only share that music, spend a small amount of money on promoting their content and they stand a good chance of gaining enough supporters to live from their craft. What this change means though is right at the heart of digital transformation and is something that bigger more traditional businesses can take lessons from.
When we consider traditional ideas about marketing using digital systems we inevitably end up at the ‘marketing funnel’ shown below:
The marketing funnel is an old idea but remains a useful heuristic for understanding how marketing works from a brand awareness to ‘conversion’ perspective. At the heart of this process is the idea that if I offer enough scarcity, say the right words and offer the right bonuses for my product then I will increase my sales ala the Wolf of Wall Street. As it relates to digital transformation there are two major problems with this. Firstly, it has never been easier to for a potential customer to learn more about you than you would comfortably like them to. People can search, read reviews, check out your social media and so on. Secondly, most marketing efforts that still rely on this kind of thinking have shifted from the traditional idea of posting ads to posting content on digital platforms. The experience for the user is completely different now. The funnel has become a megaphone as popular author Seth Godin says. So again, what does this have to do with digital transformation for a company?
The potential growth for a company now has no real barriers. You could run a store from your living room that has a fulfilment centre in Japan. The downside of having no real barriers is there are no ‘barriers’ between you and the customer. Marketing has shifted from the creation of demand to the co-creation of value. This happened because the way we communicate in marketing spaces changed from a uni-directional system like a ‘google search’ to be interactive and engagement based. This is an entirely different strategy altogether. It’s about engaging, discovering and learning through smart use of digital systems as opposed to responding to direct mail. The digital transformation here is making companies, like Gillette for example, realise they need a genuine human connection with their customers rather than relying on FOMO (fear of missing out) tactics as we have seen in the past. Real connection means real meaning and real sharing.
This could be as simple as messaging would be customers to give real answers. Using Facebook or Snapchat to respond to comments on ads or running Facebook Lives or YouTube lives in order to gauge interest in areas of importance to potential customers. What starts this co-creative process is the decision to engage first using these digital platforms and using clever metrics like data pixels to follow up with precisely the right people. The right people are then included, the wrong people are excluded and growth happens in an authentic and meaningful way.
The digital transformation here was that the platform is used to create a real bond with customers first, engage in meaningful interactions and then create the channel for the product after we know, according to our analytics that we are talking to the right people. Imagine that digital platforms can serve content in context to segments of our audience who actually want to hear from us because our message is something they want to co-create with us?
This could be a Unilever offering free product innovations to the public, IKEA offering the chance for customers to design the product or even Tesla creating software changes based on personal interactions with the founder. The difference for digital is, every interaction gets recorded and stored in your analytics. Measurement in this sense and context is the promise of digital systems. The transformation is the potential of businesses to create that engagement. Digital platforms give the power back to the customer but at the same time open up a whole world of possibility for cost effective contextual communications from big companies.
Dr Luke Houghton, Department of Business Strategy and Innovation, Griffith University.