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The Way Forward – Key Tips to Reimagine Your Business in Southeast Asia

The future lies in an agile operating model, diversified delivery models and reimagined stores.

his is the second article of our two-part series “Digital Transformation in Times of Turbulence” originally published on Brandberries.

“What’s next? The future of shopping will continue to be conducted largely from the home, while remote learning, gaming, cashless and proximity payments will all ramp up and become the norm.”

Thriving in the post-COVID-19 future will ultimately require changes in how companies think about staying relevant to consumers while managing increased operational complexity, as well as potential delays in the rebound of demand and customer traffic. Combined with sales migration toward online channels and the renewed focus on value, these changes could contribute to margin compression. Moreover, there are certain behaviors that are likely to shift fundamentally, requiring reconsideration of the consumer proposition and companies’ go-to-market strategy and operating model.

What’s the “New Possible”? Four Tips to Reimagine Your Business

New attitudes toward physical distance, health and remote working will create opportunities related to therapeutic properties and mental wellbeing. Companies will work to diversify supply chains while continuing to invest in digital tech and virtual experiences to maintain engagement. Based on our research, there are four tips to prepare for the Next Possible:

  1. Rethink Role of Physical Store
  2. Rethink and Diversify Delivery Model
  3. Double Down on Digital
  4. Embrace an Agile Operating Model

1. Rethink Role of Physical Store

Although digital shopping has accelerated, physical stores retain appeal. Consumers in SEA expressed the desire to return to physical stores, particularly to shop for apparel, mobile phones and domestic appliances. Clobbered by the crushing effects of the pandemic, thousands of retailers from Bangkok to Singapore have rushed to set up online shops on big e-commerce platforms to stay afloat this year. Now shopping malls across the region are going virtual for the first time. The pandemic has pushed retailers to move beyond the traditional view that physical locations are primarily for in-store customer engagement. Promising new models have begun to take hold.

New Replica Virtual Mall

In Singapore, Marina Square Shopping Mall — nestled among luxury hotels and popular tourist attractions — is taking more than 30 of its tenants online with Lazada, the Southeast Asian arm of Alibaba Group. It’s the first shopping center in the city-state to create a mini virtual replica of its physical mall. This follows similar moves by Siam Center, a landmark shopping mall in Bangkok built in the 1970s, which teamed up with Lazada to set up its virtual mall with about 40 tenants. In Indonesia, more than 100 tenants of three malls by developer Pakuwon Group are going live on Lazada. Lazada, which operates in six countries in Southeast Asia, launched its virtual mall called Lazmall in 2018, allowing brands to set up their own online stores.

Bring an In-Store Feel to the Digital Experience

The inability to engage customers in a physical environment has pushed some retailers to bring more of the in-store experience online. First, leading retailers have substituted in-store personalized interactions with offerings such as virtual appointments, where sales associates use videoconferencing platforms to offer personalized attention to customers. Similarly, retailers are using live streaming to engage with customers and increase revenue and loyalty by sharing experiential content. Second, retailers have been developing alternative engagement models to take the risk out of digital-purchasing decisions. In apparel and fashion, for example, one of the main impediments to online purchasing has historically been the inability for customers to see how items would look on them. Jewelry brand Kendra Scott is tackling that problem by launching a new platform, Virtual Try-On, which uses augmented reality (AR), machine-learning and computer-vision techniques. Shopify, which allows its merchants to add 3-D models to their product pages, found that conversion rates increased by 250 percent when consumers viewed 3-D products in AR.

2. Rethink and Diversify Delivery Model

COVID-19 has heightened the importance of safe delivery modes, including curbside pick-up and aggregator delivery. Retailers have scrambled to launch services to meet this demand. Retailers are also reassessing store formats to support third-party delivery services. Some groceries are creating “speed zones” near the front of the store and stocking them with the most popular items to enable delivery companies to accelerate pick, pack and delivery of orders.

New Partnership to Enhance Convenience

Many retailers have explored strategic partnerships to enhance convenience for customers and boost sales. These new ecosystems allow retailers to gain access to new capabilities and extend their brand reach to new customers. There will be higher expectations for offline experiences to create even higher value beyond what can now (mostly) be done online. Customers can order from food halls or PD Pasar Jaya (Wet market) through Whatsapp in Indonesia, and goods will be delivered via Gojek. The Singapore government also helps food and beverage owners go digital through the Food Delivery Booster Package. Aprindo, which groups about 150 local and national retail companies with a total of around 45,000 outlets across Indonesia, launched a novelty “Park & Pickup” feature. It allows customers to order their groceries via WhatsApp or the Hypermart online store and pick up their orders at the parking lot. There’s no need to get out of the car because staff will deliver the goods to the car.

3. Double down on Digital

As consumers use more digital channels, it is important for companies to ensure that their experiences at each touchpoint are consistent, generate delight and further enhance companies’ understanding of consumers. This requires brands and companies to not only be open to shifting their marketing messages but also invest in analytics capabilities and reallocate financial and talent resources as needed.

Dial up the Acquisition and Drive Traffic to Digital Assets

Retailers can partially offset diminished foot traffic in physical stores by boosting investments in online acquisition. With more investment in online marketing, winners are adapting their strategies to account for shifts in consumer behavior.

Extend Digital-Channel Presence and Engagement

Shelter-in-place orders have led companies to test new methods of customer engagement. Many retailers with established mobile apps have cited record downloads, while others sought to make up ground quickly. In addition, while building and nurturing online communities are not new ideas, they have gained significant momentum. Retailers are augmenting direct customer interactions with engagement in apps and other relevant channels. Nike, for example, activated its digital community by offering virtual workouts and saw an 80 percent increase in weekly active users of its app.

Ensure That the Digital Experience Is Truly ‘Zero Friction’

Customer expectations are rising for digital channels in terms of site loading speed, stability and delivery times. To keep pace, retailers should start by designing web pages that are optimized for digital shopping. For example, making the highest-selling (and ideally highest-margin) products easy to find helps to make the customer journey more seamless. The first page of Lazada listings receives nearly two-thirds of all product clicks. With more customers now engaging through mobile devices, retailers must ensure that all digital channels are integrated and offer consistent services (such as payment options) and experiences (such as shopping carts updated in real-time across devices).

4. Embrace an Agile Operating Model

The pace of change in the post-pandemic environment will force retailers to continually reassess their strategies. This approach requires more real-time insights on customers as well as a new agile operating model to harness these insights and put them into action. The next normal is still taking shape, and customer expectations will continue to shift in response. Retailers that focus on customer experience and respond with agility and innovation in their omnichannel experiences will fare better and strengthen their ties to customers.

Real-Time Behavioral Tracking

Before the pandemic, digital leaders were using data to optimize customer experience, gauge satisfaction, identify foot traffic trends and generate purchase recommendations. Winning retailers are moving beyond surveys as a mechanism for customer input and toward near-real-time tracking of consumer trends and behavior With the rise of digital in recent months, companies will have even more dynamic data at their fingertips, and they can use these data to extract immediate insights. For example, many retailers have seen an influx of new customers to physical stores (for essential retail) or digital channels. Winners will generate insights from these new customers and construct targeted retention plans, messages and offers to maintain the customer relationship in this era of brand switching and cost-consciousness. Social media is another channel that offers insights on rapidly changing consumer behaviors.

Agile Innovation and Test & Launch

By adopting agile practices alongside the generation of real-time consumer insights, retailers can more quickly re-calibrate their business model and offerings to meet consumer expectations. Retailers need to raise their metabolic rate—that is, the speed at which they process information and develop new offerings. The speed at which some retailers have been able to stand up new omnichannel models (for example, launching a new delivery business in three weeks) shows what a truly agile operating model can unleash. A rapid approach to tests and trials can enable retailers to launch offerings at scale more quickly and avoid losing share in the face of shifting consumer behavior.

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This is the second article of our two-part series “Digital Transformation in Times of Turbulence”. Read the first part of our series here to learn more about the emerging consumer trends in the new normal in Southeast Asia.

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FINAL THOUGHTS

As the saying goes, “disrupt or be disrupted.”

For those who think and hope things will basically go back to the way they were: Stop. They won’t. All businesses, especially retailers, that do not start embracing digital as part of their business strategy may see themselves left behind as their businesses falter.

Finally, shoppers still appreciate the “touch and feel experience” of physical stores. As such stores need to reimagine end-to-end consumer engagement on digital channels and seamlessly link online and offline experiences to radically accelerate in-store omnichannel integration. Companies that are both digital and offline, rather than one or the other, will be better positioned in the days ahead—especially if they can use both to create a mutually reinforcing customer ecosystem.

Contact us to learn more about what levers you can pull to reimagine your business for uncommon growth in the post-COVID-19 era.

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Four Consumer Trends Defining the New Normal in Southeast Asia

Companies are responding to regional demand for better experiences, more tech and a new look at wellness.

This is the first article of our two-part series “Digital Transformation in Times of Turbulence” originally published on Brandberries.

“With COVID-19, the pace towards digital adoption is now urgently accelerated and will reshape not only the future landscape of business but also transform lives of many consumers in Southeast Asia.”

Without a doubt, COVID-19 has caused unprecedented disruption with profound impacts on economies, businesses and consumers, changing the way we live, work and shop. While no one can predict what the new possible will be, it is clear that economies will not emerge unscathed. Not to mention, the daily routines and lifestyles of consumers, redefined by social distancing and a new contactless economy, will change consumer behaviors—some permanently.

As consumers continue to struggle with the spread of the virus, lockdowns and new daily regimes, they are also affected by rising unemployment and deteriorating earnings. In Southeast Asia, where more households fall into lower-income segments, there is growing anxiety that undermines consumer sentiment. Many are planning to delay or forego bigger-ticket purchases and seek better value. We also saw a shift in brand loyalty.

SEA’s underbanked & unbanked’s challenge:

One major phenomenon that has emerged from the COVID-19 pandemic is the higher demand for e-commerce and digital payments. This however poses a major challenge because of the 400 million adults in Southeast Asia, only 104 million are fully “banked” and enjoy full access to financial services. Another 98 million are “Underbanked”, while 198 million remain “Unbanked” and do not own a bank account. Nearly 70 percent of all businesses in Southeast Asia are driven by small and medium enterprises with millions of mom and pop shops scattered everywhere within cities and rural areas. These segments of the market are most adversely affected by the digital challenges of the contactless economy.

Despite years of rapid urbanization and industrialization with a huge growing young and tech-savvy population, the state of digital transformation in most of Southeast Asia has been rather slow. The pandemic has compelled companies to embrace the idea of telecommuting, pushing brands and retailers to go digital. Yet the massive change brought about by the pandemic also makes consumers re-evaluate their life priorities, giving rise to new values and spending criteria. Many of the behavior shifts, including a focus on family or community, health and digital solutions, are expected to last a long time, even in the aftermath of the crisis –particularly if the crisis itself endures.

For retailers, the starting point matters in a crisis. Organizations that can quickly reimagine their omnichannel approach to create a distinctive customer experience will recover faster from the pandemic. Analysis of the financial crisis of 2008 shows that customer experience leaders rebounded more rapidly, saw a shallower downturn, and ultimately achieved three times the total shareholder returns compared with the market average.

Emerging “New Normal” in Southeast Asia

Although the pandemic’s impact varies across Southeast Asia, we see Four Emerging Trends as consumer behaviors are settling into a new normal:

  1. New Meaning of Value and Loyalty
  2. Flight to Digital and a New O2O
  3. Wealth and Health Redefined
  4. Hometainment and the New Experiential Consumer

1. New Meaning of Value and Loyalty

As consumers hunker down for a prolonged period of financial uncertainty, they intend to continue shifting their spending largely to essentials, such as grocery and household supplies— cutting back on most discretionary categories. While purchase intent is increasing on a large set of categories for more developed markets like Singapore, the region will remain weak in discretionary categories such as apparel, footwear and travel.

New Value Economy

As with the previous financial crisis, SEA consumers are thinking about price and quality, with increased price sensitivity and more careful consideration of non-essential spending as countries re-open. However, based on surveys by McKinsey and Nielsen, shoppers in SEA intend to spend more on skincare and apparel in the future than they did before the outbreak, almost akin to “revenge shopping” due to the prolonged lockdown at home.

Emerging Value Polarization

We also see a trend of more consumers in the region making a distinction between price and value. While many will shift preference toward a low-priced value proposition in order to be prudent, they still expect superiority in quality and performance. Sustainability (reusable and recyclable) will continue to grow as would hygiene demands.

Shift in Loyalty

For certain products and brands, COVID-19 caused supply chain disruptions. And when consumers couldn’t find their preferred product at their preferred retailer, they changed their shopping behavior. Many consumers have tried different brands, shopped at different retailers, or even explored new shopping methods (with many trying online for the first time) during the crisis. Value, availability and quality (or organic products) were the main drivers for consumers trying a different brand. We expect these changes will shape consumers’ habits, even beyond the effects of COVID-19. Many consumers who tried a new behavior plan have already expressed a desire to stick with it post-crisis.

 2. Flight to Digital and a New O2O

The pandemic has spurned a new “contactless economy,” accelerating digital, such as the rise of online click & collect, frictionless retail, direct-to-consumer (DTC) and a new delivery partnership model. Across SEA, many categories are seeing huge growth in their online customer base. Many consumers plan to shop online even when brick-and-mortar stores re-open. Social distancing measures, which will stay in place for the foreseeable future after the market re-opens, will likely mean (in-store) shopper traffic in the new normal will be lower than pre-COVID. More people will choose to shop in the comfort of their own homes.

A New O2O is Born

In SEA where the majority of micro-businesses (mom & pop shops) operate primarily with cash and almost zero online presence, the pandemic proved to be a tough period. To help these micro-businesses, a new initiative by the Singapore government’s Infocomm Media Development Authority (IMDA) is helping stalls in wet markets go online. The initiative is currently being trialed by Tekka Market in Serangoon. Stalls in the market will use Facebook Live to sell their products and interact with their customers. The theme of the project is ‘Why jalan jalan (a colloquial term for going out) for your kailan (Chinese broccoli)?’ Customers can order products from the stalls during the Facebook Live video, confirm their details through Facebook messenger and make payment via PayNow, a local instant funds transfer service. Those who spend over S$20 will also be eligible for free island-wide delivery and produce will be delivered to them within the day. We see live “sales” streaming playing a bigger role in SEA, both engaging with consumers as well as selling products.

Legacy + Digital = Next Gen Partnership Model

Retail restrictions in place during the pandemic have fast-tracked the shift to digital distribution. Local delivery operators in SEA have adapted their services to better meet customer demand. During the Islamic holy month of Ramadan, GrabFood launched a contactless campaign that gives customers the flexibility to schedule contactless delivery in advance. Grab is also growing its partnership with traditional brick-and-mortar retailers and restaurants, with an uplift in delivery businesses such as GrabFood, GrabExpress and GrabFresh powered by HappyFresh/GrabMart. Online delivery services, contactless shopping and cashless transactions will be a major theme for the future retail landscape, with major chain stores already seeing customers opt for those services.

Rise of eWallet and Digital Payment

Digital payments are fast gaining currency in the SEA as consumers ditch cash to avoid physical contact. The COVID-19 pandemic, coupled with the implementation of cashless payments for public services, prompted non-cash transactions to grow rapidly during the first four months of 2020. In the Philippines, Mynt’s GCash and PLDT’s PayMaya expanded to contactless payments in taxis. In Thailand, AIS and Kasikornbank partner to launch VIA that helped micro-businesses vastly during the pandemic. In Vietnam, the number of transactions through mobile payments was up by almost 200 percent and the number of transactions by 22 percent respectively during the lock-down period. Tencent-backed ZaloPay, Warburg Pincus backed-Momo and Grab-backed Moca also saw huge adoption during this period. Grabpay (by Grab) and GoPay (by Gojek) who are already one of the largest adopted e-wallets by underbanked segments, further strengthened their super app businesses into delivery, health and retail during the same period.

3. Wellness & Health Redefined

Across SEA, consumers who are fearful of the virus have become more careful when deciding where to shop. They now look for retailers with visible safety measures, such as enhanced cleaning and physical barriers. In addition, they buy more from companies and brands that have healthy and hygienic packaging and demonstrate care and concern for employees.

Mental and Emotional Wellness Takes Center Stage

The notion of happiness has become a more tangible commercial prospect during the pandemic. Digital and tech-enabled self-care solutions have gained further importance in preventative health, alongside immune-boosting, de-stressing and soothing product credentials. Home as a health hub is re-emphasized; at-home gym; at-home therapy, home hygiene and healthy cooking practices now grow in precedence.

Growth of Telemedicine

Although telemedicine has been growing worldwide, it has always been less popular in SEA. During the pandemic, we saw a demand spike in the region. Patients who suspected they’ve caught COVID-19 could get a preliminary diagnosis and next-step advice. Patients with other medical needs could consult with physicians digitally when physical care facilities were unavailable. Two startups meeting medical needs in Indonesia during the pandemic: Alodokter and Halodoc (both names mimic “Hello, doctor” in a regional accent) link patients at home with physicians for online consultations. These startups have shown robust growth for two reasons. One, Indonesia has many citizens in remote rural areas, far from quality health care. And two, the nation’s government has put the firms on an official list of care sources that even big-city residents should use.

 4. Hometainment and the New Experiential Consumer

Groceries and food, together with indoor exercise equipment and gaming tools, have emerged as the most popular categories for online shopping. And the uptrend in online shopping is set to continue even after countries relax restrictions, with experts predicting that e-commerce will play an even larger role in the “new normal” than ever before.

Home is the New Hangout

COVID-19 forced consumers to adjust to home life being where we work, learn, shop, exercise, socialize, entertain and more. As stores re-open, they should not try to “compete” with the home, but rather complement it to enable desired behaviors at home. This new trend led Gojek, founded in Indonesia as a ride-hailing company, to accelerate the launch of GoPlay, a streaming entertainment because of the pandemic. A key part of the GoPlay play is to offer locally customized content such as the release of Gossip Girl Indonesia, licensed from Gossip Girl Similarly, many gyms started online sessions, with strong sign-up rates, and will likely continue even after the markets reopen.

Reinventing Home Digital Experience

The expanded cohort of experiential customers creates strategic opportunities across products and services, from personalized luxury to wellness routines, gourmet experiences, that further digitize education and entertainment.

Hometainment Is Here to Stay

Even though many countries have lifted stay-at-home restrictions, most consumers still believe they will stay home more. Most consumers across countries still feel they are not ready to be back to “regular” out-of-home activities. With the surge in e-commerce, raising brand awareness and customer acquisition via a variety of platforms, from e-commerce presence to sales via their own shopping sites and subscription models. SEA consumers are unlikely to go back to their old habits of frequently dining out and will instead prefer takeaways and eating at home after the COVID-19 pandemic, according to a study by Nielsen. The study also revealed that consumer has signaled their eating habits may change permanently.

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FINAL THOUGHTS

Once customers get used to doing things digitally, it’s going to be hard to go back.

It is better to accept the reality that the future isn’t what it used to be and start to think about how to make it work. To accelerate the road to recovery, leaders need to instill a spirit both of purpose and of optimism and to make the case that even an uncertain future can, with effort, be a better one.

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This is the first article of our two-part series “Digital Transformation in Times of Turbulence”. Stay tuned for the second and final part of our series to learn more about accelerating digital transformation in Southeast Asia.

Contact us to learn more about what levers you can pull to reimagine your business for uncommon growth in the post-COVID-19 era.

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Rethink Luxury – 7 Actions for Luxury Brands to Accelerate Growth Post-COVID-19

Today’s success stories are using direct-to-consumer thinking, surprising partnerships and new data strategies.

How digital transformation and COVID-19 are forcing the luxury industry to accelerate its transformation efforts and shift toward a new set of values and behaviors.

Building Resilience in Luxury is Both a Marathon and a Sprint

Luxury brands have long been masterful in building strong customer loyalty – many have even built a legacy through loyalty – offering more than just products, the values they embody differentiate them from their competitors and help customers to identify more closely with them while also establishing that elusive emotional bond.

And with COVID-19 putting an abrupt halt on many non-essential sales, the luxury industry should prepare itself by anticipating the societal and economic shifts that may well affect consumer sentiment and behavior. Particularly, if customers start to favor more sustainable and responsible consumption.

Now, more than ever, a luxury icon – like any other brand – needs to adapt, stay curious and constantly be looking for ways to exceed the expectations of its customers. In order to steer that effort, we put together seven actions luxury brands should take now to protect and accelerate their growth:

1. Revisit the Core

How relevant is your core DNA? Does it still evoke the same desire it once did? Have you stayed true to it and ensured your purpose – your reason for being – still resonates and holds strong in the modern age? Think of the stories you are telling, the themes that you associate yourself with. After a longer period of success, a unique heritage often gets cluttered by opportunistic moves and messages. Focus on what makes you strong and let go of the unnecessary noise. And it is not about a new logo, go deeper, find your guiding star, the differentiating quality that guided your previous success.

2. Define and Listen to Your Audience

This should actually be pretty easy because it is by definition a very limited amount of people, right? Unfortunately, the importance of product and service design still sits higher than market insights for luxury brands, lagging behind the approach taken by the FMCG industry with leading brands like P&G and Unilever placing higher importance on qualitative and quantitative customer insights.

Remember, what you offer is exclusive yet attainable and attractive to your target audiences – a group of individuals with unique and specific needs and expectations. Imagine their dreams, think in their context. What is driving those individuals or cohorts? You might apply your very own micro-segmentation, leaving standard sociodemographic or maturity segmentations behind. Take regional specifics into account and make sure that it’s not just a gut feel, but rooted in evidence. When have you last discussed and agreed on two to three core personas to inform your actions? Be sure to install the right antenna for market developments. Do not only try to envision future needs, look left and right to learn from the best. In the end, it is the combination of creative potential and insights that leads to the new edge.

3. Think Direct to Consumer (DTC) First

Luxury brands cater to a select number of clients, so why leave the relationship to intermediaries? Even if those third parties are meticulously curated, you will never be able to collect the entire customer feedback if you are not dealing directly with those individuals. Only that direct response assures you have your finger on the pulse of the market, both to adapt the products but also the service that complements the overall experience. Of course, you want to increase reach, but new business models allow for direct interaction even from afar. Imagine what you can do with the increased intelligence. E-commerce still has a way to go in luxury having been discussed for years and implemented rather hesitantly because of concerns in translating the authentic luxury experience in the digital realm. But concepts and technologies are developing fast and the traditional role of partners and channels are blurring. Accept that going DTC is a joint endeavor and will not be perfect from the start.

The fastest-growing brands like Chrono24, Chronext (watch platforms) or Tesla and Polestar in the electric mobility space are eliminating the middle man. Richemont was pioneering e-commerce with NET-A-PORTER and MR PORTER and they learned their way through, now also partnering with Alibaba’s Luxury Pavilion –  further pushing its Asian exposure. In the midst of the COVID-19 crisis, even Patek Philippe has allowed their authorized dealers to offer their watches online. Watches & Wonders, the Geneva watch fair with a strong Richemont backing, swapped to a virtual-only conference in just a few weeks. Everybody accepted it wasn’t perfect, yet still, it was a blast.

4. Curate the Experience

To provide luxury at scale, you need to tell memorable stories and be able to duplicate experience standards. Selecting and developing the right context and platforms has become as important as curating the living ecosystem. Doing all that without clearly defined experience principles? Impossible. Navigating through the ever-increasing stack of platforms? Necessary! For example, the meticulously curated Las Vegas resort The Cosmopolitan seamlessly integrates stories, guests, platforms and social media to continuously learn and adapt to changing needs and trends. Also, the auction houses like Phillips and Sotheby’s are masters in curation. The sale of the Rolex Paul Newman Daytona was a benchmark example of curation, storytelling, partnership and as a result, was also a game-changer for the whole auction industry.

Pick your core relationship platform – this might very likely be your website – impart your DNA and focus on your audience by constantly refining the platform. Again, make sure you understand every single move of your audience. There are plenty of tools out there to help you understand and optimize. And remember, the most successful luxury brands are not necessarily the most advanced in digital technologies, but they learned to curate an exceptional experience across platforms and channels. They tell the best stories and those stories can live in all formats.

5. Combine Intuition with Hard Data

For centuries, those in the know were able to better serve the needs of the demanding. That has not changed. Nowadays, each and every individual is expecting nothing less than a perfect personalized experience. Data collection has gone way beyond retailers with transaction and credit card data. Loyalty programs and search behaviors are now used to complement the data set and social media is increasingly used to contextualize this data. Despite a reluctance or even allergic reaction, to giving away more intimate data, luxury clients expect you to understand and anticipate what they want, tailoring offers and solutions that will seduce them and lock them into your own proprietary ecosystem. Having the right data strategy in place to combine demographic, transactional and behavioral data has become as necessary as having a content strategy. Leveraging your expertise and intuition with a new set of quality data allows you to anticipate the upcoming moves and outmaneuver the competition.

“Having the right data strategy in place to combine demographic, transactional and behavioral data has become as necessary as having a content strategy.”

The hospitality and travel industry has a longstanding experience with their loyalty programs like Bonvoy by Marriott or Miles & More by Lufthansa. They combine guest insights with agile processes to come up with unique propositions that increase loyalty way beyond awards. Similar to the FMCG brands on customer insights, the luxury industry can learn a lot from the Amazons in the West and the Alibabas in the East when it comes to collecting and using data. Imagine where Rolex, Patek Philippe or Audemars Piguet could go if they leveraged their already rich data set that they collected with their product and client register by enhancing the data quality and using the insights to have a deeper, more direct interaction with their loyal following.

6. Grow with the Right Partners

Partnering along the brand experience has become another high-performance discipline. Originally something that goes back to the Fifties and Sixties, when luxury distributors like Asprey, Cairelli, Tiffany or Beyer were double signing with Rolex, Patek and the likes, new technologies and new consumer generations are supercharging partnerships. Dealers, ambassadors, authorities, celebrities, influencers, brand partners and many more specialized partners are involved to deliver that high-end curated experience. And it’s not just about the next transaction, it’s about creating stories and experiences that you would simply not be able to deliver on your own. It is now widely accepted to collaborate along any step of the experience chain, from comms to product to after-sales and, of course, also in the wider ecosystem of any brand experience. Your customers don’t care whether you do everything by yourself, they just expect the perfect experience from your brand. Lately, fueled by social media, the trend of co-branding has again proved to be a successful way to expand into new segments or reposition your core, like Louis Vuitton with Supreme, Caran d’Ache with Paul Smith or Rimowa with OFF-WHITE. Collaborate with the best.

7. Be bold, stay focused and stick to your plan

Your marketing budget is limited, so be focused. Stick to who you are and whom you are catering for. What is the content that inspires your demanding clientele? Where do they indulge, how do they escape and feel good? Where do you touch them, what are the right messages? Besides extreme value creation, it is also about the right voice and tone at the right time – always like ‘a first date’. Have a clear plan, stick to it, be creative, surprise! And remember, you got rid of a lot of clutter in the first place, do not add any unnecessary noise now. You cannot and you do not want to please everybody. Stay focused.

It was a brave decision by the Swiss watch brand Breitling to reposition and also to step out of the traditional watches & jewelry fairs. Investing more in its own innovative global experience platforms. Launching a new collection via webcasts was obviously also a lucky decision, now that everybody struggles to go virtual at high speed.

The car industry is struggling a bit here. New electric vehicle concepts for example are only very slowly getting traction. BMW, a bold inventor with the presentation of the i3 series concept at IAA in 2011 was not really able to sustain the momentum and stay ahead of the competition, Tesla was.

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FINAL THOUGHTS

Get serious about taking a stand and nurture the new luxury. Conspicuous consumption goes out of favor and we’re witnessing a call for a new, silent, meaningful and humble approach to luxury. We saw that trend growing long before COVID, but the crisis has definitely served as an accelerator. Purpose and experience rather than prestige and status are set to take precedent. Removing consumer guilt, living ethically and leaving a positive mark instead of excessive consumption.

But again, always link your activities to your customers’ needs and expectations. Your targets are shifting too, increasingly from emerging markets, female and younger audiences. What will the increasing dominance of Chinese consumers mean for your value proposition?

Now is the right time to pause, re-adjust, focus and then accelerate with a refined proposition. In the end, it is about creating something that we have not imagined before. Something luxuriously new.

Our experts are happy to share more insights on how the current situation impacts the luxury sector and what businesses need to do next. Reach out today!

This article was co-authored by Roland Ott, an expert in Luxury Brand Management. He was part of the successful growth teams at the Richemont Maisons IWC Schaffhausen and Roger Dubuis and the relaunch of Carl F. Bucherer in Brand, Marketing & Communications Management. He is an Alumni of the University of St. Gallen and the Stanford Graduate School of Business.

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Reimagine Your Business for Uncommon Growth in the Post-COVID-19 Era (Part 2)

Learn about the underlying consumer trends, social and technological enablers leading to new opportunities.

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The COVID-19 pandemic will have a long-lasting impact on businesses and their customers. Some industries have been disrupted, while others thrive despite the crisis. Leading through disruptive times requires businesses to consider new consumer perspectives, rethink their value propositions and further accelerate their digital transformations.

At Prophet, we have identified two imperatives that will help businesses achieve uncommon growth in the post-COVID-19 world: adapting to the new normal consumers and accelerating digital transformation. In this report, we delve into the underlying consumer trends, social and technological enablers, as well as emerging patterns of digital transformation that all work to point out new opportunities.

In this report, you will learn:

  • Key consumer trends that will impact future business growth in the new normal
  • Major enablers that will accelerate digital transformation post COVID-19
  • Emerging patterns across industries that reveal the state of digital transformation in Asia
  • What business leaders can do next to seize the transformation opportunity

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Five Enablers Accelerating Digital Transformation Today

Partnerships, 5G and contactless delivery can speed the pace of change.

The post-COVID-19 era provides a unique opportunity for companies to reimagine their businesses and accelerate digital transformation. In Asia in particular, companies were already prioritizing digital transformation companies – COVID-19 has sparked an acceleration and scaling of digital efforts as consumer behaviors evolve. According to a recent Prophet survey, acceleration of overall digital transformation is the second most impacted area for companies by COVID-19, following business continuity and employee safety.

In this article, we have identified five major enablers of digital transformation that businesses should consider and capture.

1. Accelerating 5G: Fueling Innovations & Greater Connectivity

The new normal has catalyzed the need for smarter and more integrated solutions, all of which demand greater connectivity enabled by 5G. The effects on businesses are far-reaching, changing the way we approach manufacturing, logistics, public security, healthcare, entertainment and more. We have seen many industries tapping into 5G to accelerate automation. For example, mining companies across Asia have deployed intelligent unmanned mining trucks to maintain productivity and safety during COVID-19.

5G also unlocks the potential for a seamless and immersive shopping experience, making the shopper’s journey more efficient and entertaining. Chinese e-commerce player JD (京东) accelerated the implementation of its automated logistics and delivery system during the pandemic. Packages were automatically sorted in their smart warehouses and delivered to shoppers via robots and drones 24 hours a day. Alibaba’s Tmall (天猫) launched a 3D virtual shopping experience at the 618 Shopping Festival. Over 100 brands have participated in the initiative, among which, IKEA has created a 1:1 virtual showroom, bringing its 3,000 sq m Shanghai store to consumers’ mobile phones.

As 5G is being more widely deployed in China and across Asia, companies have an opportunity to reimagine their businesses from both an operational and a customer experience standpoint.

2. Virtual Business: Digitally Enabled Selling and Customer Servicing

Consumers have become comfortable with going online to fulfill needs that are traditionally served in person. Seizing this opportunity, companies have to re-design their end-to-end customer experience to enable digital engagement from discovery and purchase to after-sales service to capture and retain these new ‘digital natives.’

Retail companies have to upskill their sales employees as they adapt and migrate their sales force online. Cosmo Lady (都市丽人), one of China’s largest underwear and lingerie companies, transformed its employees into a WeChat salesforce with the aim of achieving closer proximity to consumers.

Financial institutions are also evolving their traditional way of interacting with customers through digital tools. In May 2020, Citibank HK introduced its industry-first remote video insurance application service, where financial advisors can recommend and sell insurance products through virtual meetings.

Coming out of the COVID-19 crisis, many companies have an opportunity to rethink their selling and customer service processes to be far more digital and in tune with customers’ new expectations.

3. Unexpected Partnerships: Creating New Value for Consumers

Companies across industries have shown tremendous resourcefulness during the pandemic in creating new solutions through partnerships. To create new and integrated customer experiences, they looked beyond ancillary partnerships to combine capabilities, resources and technologies in innovative ways.

Global FMCG giants are exploring partnerships across industries to create new offerings, especially when traditional channels are faltering. In India, P&G partnered with Swiggy, a food delivery app, to deliver essential household products to consumers, in the absence of a delivery supply chain.

Companies are also sharing their consumer ecosystem as a new media platform to amplify their reach to a broader audience. Back in March this year, H&M granted the Red Cross access to its official Instagram account to spread health and safety messages to the brand’s 120 million followers, compared to the health organization’s 300,000 followers.

Companies that are constantly seeking out new ways to create value through various resources and capabilities will be the leaders of tomorrow.

4. Data Exchange Unlocked: Mainstream Acceptance

Big data has been an invaluable tool for companies to identify and respond to consumer needs in creative and agile ways. While privacy concerns have always been a sensitive issue, the pandemic has made consumers become more comfortable with sharing data and having it tracked across platforms, in exchange for safety, health, transparency and efficiency. The many success stories of government-led, data-driven contact-tracing programs implemented in South Korea, Singapore and China, have shifted consumers’ perceptions and opened up their minds to what is acceptable.

But there is a caveat. Consumers now hold even higher expectations for the value they get in return from the data they share. Therefore, companies must find ways to deliver greater value in exchange for more data. For example, gaming hardware company Razer is giving out free surgical face masks to every adult Singaporean. In exchange, consumers are required to download the Razer Pay app and register their personal info for verification.

In the world of finance, global financial institutions are creating new, appealing offers in exchange for customers’ personal data. DBS Bank in Singapore launched a 30-day free COVID-19 relief insurance for its customers. To enjoy the free coverage, customers needed to provide information about their demographics, finance and health. DBS saw 52,000 sign-ups within a day, showing that customers are willing to share data in exchange for the desired value.

Thinking of the post-COVID-19 era, companies need to reconsider how they access and collect data and whether value they provide in exchange makes it worthwhile and acceptable to customers.

5. Contactless Economy: A New Mindset Towards Customer Experience

For years, advances in digital technology have been raising the expectations for convenience. But in a post-COVID-19 world, convenience is no longer simply about speed or being frictionless, it is also about being contactless – eliminating the need for any human contact or interaction.

Prominent service providers in Southeast Asia like Gojek and Grab, have become a critical node for the e-commerce business during COVID-19 as consumers opt for contactless delivery due to health and safety concerns. Hotels and restaurants that were previously shielded away from a direct-to-consumer delivery service are now partnering with Gojek and Grab to sustain their business.

The new normal consumers have embraced the contactless experience and are expecting more value beyond safety and hygiene. To respond to these needs, global retailers are investing in technology to deliver superior experiences. To address the frequent issue of buying the wrong shoe size online, Nike introduced the app Nike Fit for customers to find the right size by scanning their feet, eliminating the need to go to a physical store.

There is a new mandate for businesses to adopt a ‘contactless mindset’ and to rethink their operations and customer experiences, even after the pandemic is over.

“The post-COVID-19 era provides a unique opportunity for companies to reimagine their businesses and accelerate digital transformation.”

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FINAL THOUGHTS

There is no doubt that businesses will have to stay digitally agile in this new normal. By understanding these important enablers that have come to shape digital transformation, business leaders can identify new opportunities and map out their next growth moves.

What to do next to spark uncommon growth in the new normal? Stay tuned for the final part of our series, in which we will discuss the distinct patterns emerging across industries and the unique opportunities for businesses to accelerate their digital transformation agenda.

Download the full PDF report here, or read the first part of the series, where we explored the new consumer perspectives and habits to have emerged in the post-COVID-19 era.

Connect to learn more about what levers you can pull to reimagine your business for uncommon growth in the post-COVID-19 era.

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Social Distancing Doesn’t Have to Interrupt B2B Customer Relationships

With the right tools and skills, remote selling can be just as effective as meeting face to face.

Firms reluctant to make the shift to digital selling are finding that their hands are being forced as social distancing makes traditional interactions between suppliers and customers impossible.

The COVID-19 pandemic is changing the ways suppliers and customers interact with remarkable suddenness and scale.  B2B companies that rely on large sales forces, networks of intermediaries, call centers, and visits from technical support teams are particularly vulnerable to having their customer relationships interrupted. Making a shift to digital selling is an important way to sustain supplier-customer relationships throughout the pandemic and to exit it with capabilities to accelerate revenue-building once customer demand improves.

B2B companies that have successfully made the shift to digital selling – organizations such as integrated logistics giant Maersk and the commercial arm of ING bank – have reoriented themselves and are now using data and digital tools to acquire new customers; sustain and grow share of wallet among established customers; expand the number of buying centers within existing customer organizations.

“Making a shift to digital selling is an important way to sustain supplier-customer relationships throughout the pandemic.”

These companies have taken advantage of recent B2B advances in digital targeting, personalization, outreach, content creation, account-based marketing (ABM) and always-on marketing, to position themselves well in today’s uncertain times. A digital selling shift involves moving to a selling approach that relies extensively on digital marketing and data-driven selling. It integrates sales and marketing in a tightly linked partnership that is data-driven, digitally powered, and foregoes the need for person-to-person contact.

During a digital selling shift in the current environment, B2B leaders pursue revenue-generating paths to address the parts of the sales funnel that at immediate risk and provide the greatest growth opportunity once recovery begins. The risks and the opportunities will vary by company and industry. For established leaders in mature industries, the greatest risks and opportunities will often occur in the parts of the funnel dealing with renewal, cross-sell and supporting existing relationships. For insurgent companies or rapidly growing sectors, the opportunities and risk may reside primarily at the top of the funnel in acquiring new customers and encouraging them to make an initial or trial purchase.

Our study of successful digital transformation in B2B has uncovered several paths leaders can take to reduce their risks of selling disruption and boost their opportunities to build demand as economies begin to recover:

Demand Generation to accelerate customer acquisition

The explosion of data and a rapidly expanding set of vehicles for reaching B2B decision-makers is making it possible to create direct relationships with end customers without cutting out their sales representatives, channel partners, distributors, advisors, or other middlemen. These channel and content alternatives are enabling established sellers to generate leads for their sales as well as for their intermediaries. Engaging in demand generation provides an added benefit: it creates a direct relationship with the customer that enables suppliers to learn from users and buyers, test alternatives, and more effectively probe for new opportunities. This path may be particularly important to insurgent companies or companies in rapidly growing sectors.

Digital Sales Enablement to accelerate cross-selling and boost value

Here, companies use digital tools and digitally collected data to sell more effectively. Sales engagement and relationship management platforms, including those of Salesforce.com, Oracle, and SAP are so well established that Gartner reports that the market reached $48.5 billion in 2018 and represents a quarter of all corporate purchases of enterprise software. Sales enablement platforms, networks, and apps help individual salespeople achieve more and help sales teams work more effectively together. In the past few years, these platforms have shifted from individual customer relationship management to helping the sales teams engage more fully with their customer’s entire decision-making team. The payoff is immediate: better equipped and coordinated sales teams perform better. They generate more revenues, strengthen customer relationships, and stay with companies longer. This path may be particularly relevant to leaders in mature industries.

Digital Relationship-Building

New, more targeted vehicles, such as LinkedIn advertising, along with compelling content (such as video and virtual reality) have paved the way for Account-Based Marketing (ABM). ABM is more personalized and tailored to the needs of individual decision-makers than traditional push email and digital advertising campaigns. As an integrated approach, it combines salesperson interactions and digital engagement for maximum efficiency and impact. Its digital components extend engagement into an anytime, anywhere experience through the 24/7 advantage of online and mobile vehicles. This path is likely to be relevant to all companies with sales teams whether they are leaders or insurgents.

Digital Customer Support

Companies are also using digital technologies to shift more of the routine chores online. B2B companies are now using advanced AI bots in combination with live person-to-person chat to enable customers to easily order parts and accessories and get problems resolved online. Companies are also shifting their technical support and client-learning functions to digital formats. These new tools boost team efficiency and effectiveness through improved resource deployment and enable customer 24/7 customer support. This path is helpful in any industry where technical support or customer training is an important part of the supplier value proposition.

Direct Digital Commerce to accelerate acquisition and cross-selling

One of the biggest opportunities digital has created for customers is allowing them to make purchases directly from suppliers and bypass intermediaries. As more customers demand 24/7 access, intermediaries’ have become increasingly open to allowing suppliers to directly engage with customer segments that are hard to access, fulfill offers that are costly to serve, or supply information directly that enhances the customer experience. Direct commerce can be valuable at renewal, upgrade or cross sell occasions in addition to initial purchase. It’s important that suppliers determine how they will integrate direct digital commerce solutions with their intermediary relationships or their own salespeople. This path has broad relevance for both incumbents and insurgents but the scope of bypassing the intermediaries will vary based on the power of the intermediaries and the willingness of the supplier to challenge them.

Our 4 Step Approach

By examining case studies in successful transformation by B2B companies we’ve identified a step by step approach to following each path and generating measurable impact:

  1. Choose where to play by understanding where in the sales funnel to sustain or grow customer demand and by understanding the barriers customers face in achieving their goals.
  2. Determine how to win by building a compelling digital strategy based on clarifying the target, capturing the target’s attention, cultivating their interest, and converting them to buy, buy more, or recommend to others.
  3. Accelerate what to do by using scrum agile methods to conduct a series of sprints to pilot new digital selling approaches, scale previously piloted approaches, or build capabilities required for digital selling.
  4. Ensure you have who is needed by setting up and enabling a customer data team with the resources they need to put in place a system to undertake the shift and maintain progress through continuous customer-driven improvement.

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Making the digital selling shift makes sense in ordinary times.  At a time when in-person contact is extremely difficult it is even more important.

Joerg Niessing, a faculty member at INSEAD and Fred Geyer, a consulting partner at Prophet, are authors of  The Definitive Guide to B2B Digital Transformation upon which the conclusions in this article were based. Visit this website to learn more and get your copy of the book here. 

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REPORT

The Conversational Brand: Strategy for a Digital-First World

Digital assistants—whether embodied in a voice agent, a bot or both—change the way we think about brands.

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Foreword

The evolving COVID-19 pandemic has thrust us all into a new, urgent reality, one that—perhaps permanently—is challenging assumptions about how we live and work. From a business perspective, the pandemic is rapidly exposing the vulnerabilities in our strategies, systems and processes, and accelerating our reliance on digital systems that scale and connect where people cannot.

In this context, digital assistants such as chatbots and voice agents have a valuable role to play. They can support business resilience and reduced operational expenses, freeing up service and support representatives to focus on higher urgency, more sophisticated customer interactions; deliver needed information and services; become a source of “voice-of-the-customer” insight; or provide a moment of humanity and helpfulness when customers need it most.

The report that follows lays out strategic and brand guidelines for designing and activating digital assistants. We hope you find it valuable as you navigate this challenging time.

Susan Etlinger & Darcy Muñoz
April 8, 2020

Executive Summary

Digital assistants — whether embodied in a voice agent, a chatbot, or a combination — change the way we think about brand, from a generally static and visual experience to one that is dynamic and conversational. They unlock new strategic possibilities for customer and ecosystem engagement, and, as a result, raise questions about how brands should sound and behave in dynamic, often unpredictable situations. Finally, they compel us to address questions of brand architecture, identity, behaviors, language choices, movement, and tone in an unprecedented way.

This report, based both on independent research and direct consulting experience with global brands, addresses the opportunities of digital assistants and the conversational technologies that make them possible. We focus on conversational brand strategy, the key elements of persona development, and how to build engaging and trustworthy conversational experiences. Finally, we include a checklist to help business leaders plan for the risks and opportunities of incorporating conversational technologies into a well-considered brand strategy.

This report includes the following:

  • How to build a conversational brand that supports business strategy
  • Key elements of a conversational brand identity
  • Fundamentals of a trustworthy conversational experience
  • A checklist & assessment to guide planning efforts and gauge progress

Is your organization well-positioned to deliver strategic, on-brand and trustworthy customer experiences using digital assistants?

Take our assessment to find out.

Download the full report below.

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BOOK

The Definitive Guide to B2B Digital Transformation

FRED GEYER

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Summary

Sustained, profitable growth is increasingly uncommon for B2B companies as they face changing market dynamics and the threat of digital disruption. This book guides B2B leaders along a step-by-step path to uncommon growth through three transformative shifts:

  • The Digital Selling Shift to digital demand generation
  • The Digital Experience Makeover to digital customer engagement
  • The Digital Proposition Pivot to data-powered, digital solutions

Prioritizing customers over technology is the key to success.

The current paradigm of technology-led transformation is a recipe for failure. Successful digital transformation puts technology at the service of customers.

Rich case studies from Maersk, Michelin, Adobe and Air Liquide with best practices from IBM, Salesforce.com, Johnson & Johnson, ThyssenKrupp, and scores of leading B2B companies to illustrate in this book how putting customers at the heart of digital transformation drives uncommon growth.

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Why B2B Leaders Need This Book

Endorsements

Vincent Clerc
CEO, Maersk Ocean & Logistics

“A thought provoking exploration of three crucial transformational shifts for B2B companies.”

David Aaker
Renowned brand strategist and bestselling author of Owning Game Changing Sub-Categories

“This book illuminates the secret sauce of digital transformation in the B2B space: the thrust should come from customers and how digital could improve their experience and relationship with the brand.”

Dr. Lars Brzoska
Chairman of the Board of Management, Jungheinrich AG

“This is a great guide to applying best practices to the formidable challenge of digital transformation in complex markets and supply chains. It provides the tools leaders need to move ahead.”

Lindy Hood
Chief Customer Experience Officer, Zurich Financial North America

“By providing case examples and step by step assistance in determining where to play, how to win, what to do and who to win, this book fulfilled my need for inspiring and pragmatic transformation guidance.”

About the Authors

Fred Geyer is a senior partner at Prophet. He has helped B2B clients in the financial services, healthcare, and technology industries – including Zurich Financial, AXA, Johnson & Johnson Medical Devices, Medtronic, and Avery Dennison – undertake customer-first transformations and address the challenges of digital disruption. Fred’s prior experience as president of Crayola Canada and chief marketing officer, North America, of Electrolux Floor Care, enables him to bring a practitioner’s perspective to making digital transformation work in the real world.

Joerg Niessing is a member of the faculty at INSEAD and is a globally recognized expert and strategic advisor on digital transformation, digital strategy, customer-centricity, and data analytics. He is the program director of INSEAD’s flagship programs “B2B Marketing Strategies” and “Leading Digital Marketing Strategy.” Over the past five years, Joerg has engaged with more than 3,000 executives from a wide range of companies in Europe, the Americas, the Middle East, and Asia, including Google, Kone, Roche, Maersk, Michelin, IBM, Thales, PwC, and Kion.  Joerg’s prior experience as head of Prophet’s Insight and Analytics practice, along with his previous work as a marketing data scientist, inform his insights on ensuring that digital transformations are data-driven, customer-centric, and drive sustainable growth.

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Want to speak to Fred about how to become more consumer-centric and implement the essential shifts needed to unlock growth? Contact us today. And if you’re a leader looking for more insights into the B2B sector then visit the B2B Digital Transformation resource hub here.

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The Secret to Transformational Leadership

Why courage–a trait long discouraged by many companies–is now an essential component of cultural change.

“You cannot swim for new horizons until you have courage to lose sight of the shore.”

– William Faulkner

A System of Fear

Following the 2008-2009 financial crisis, the pendulum of decision making swung firmly to conservatism and the avoidance of risk became the key focus for many industries and organizations. Many would say it was long overdue but it was a relatively binary and extreme reaction. It led to a nervousness to act and a clampdown on experimental activity in many quarters. Armies of people were hired, especially in financial institutions, to hard-wire risk avoidance into their processes and systems. This also surfaced in many other industries outside of financial services, with systemic fear not only preventing people and organizations from stepping forward and innovating but paralyzing daily progress through red tape and lack of decision making.

Fear-driven protectionism is not a modern phenomenon, in fact, it’s natural. From our prehistoric origins, we’ve relied on survival instincts, humans have barely evolved beyond their preponderance to scan their environment continually for threats. Yes, we all seek reward but we are much more motivated by loss aversion. Our brains have roughly five times the receptors for threat as we do for reward. This leads us all to constantly look for comfort and familiarity because that is more likely to lead to survival. Humans are also influenced by the group they belong to (read organization here) and the need to continue to belong to the group. Building systems of risk avoidance helps conservatism take hold and the tendency to slow down spreads at the speed of light.

We Need Courage, Not Heroes

It takes courage to break out of that cycle. You have to be brave to take a risk and swim against the organizational tide. Most definitions of leadership include a notion of being at the front, bringing others into a new reality. It’s vital to be clear on what you are doing, where you are going and why, especially if you are going to take a leap forward and risk personal and professional capital on your ‘unusual’ decisions and actions. As Nelson Mandela learned: “Courage was not the absence of fear, but the triumph over it.” Unfortunately, courageous behavior often becomes riskier for leaders the more senior they get. They have more to lose. And consequently, fear rises.

Courage is not a new phenomenon in leadership but we don’t see it as a prominent focus in many organizations today – it’s seemingly lacking from many organizational values or leadership behaviors. Perhaps because we are trying to get away from the traditional, machismo image of a hero leader – so often portrayed as male – courage is not fashionable today. That’s a shame because now is the time that we need it most. Now and in the future.

Courage in leadership can be about being part of a team. It can be about backing other people to give their ideas traction – it doesn’t have to be about direct personal delivery. We often put our favorite sports teams on a pedestal because of the courage they demonstrate in fighting together to the end against their arch-rivals and being able to win as a team on the biggest stages, under unbelievable pressure.

Courage Is a Core Competency for Leaders

In 2018, research for one of our global clients into the requirements to lead their transformation journey revealed the missing link to being courageous. They knew the changes ahead would be difficult and instilling the courage in their leadership and culture was central to raising performance, increasing accountability and driving greater innovation. Equipping leaders with the techniques and permission to show bravery and listen fearlessly is playing a significant part in their turnaround story.

In today’s world of constant change and digitization, leadership is becoming even more important. Our 2019 global research examining the cultural levers for growth demonstrated that in digital transformations, leadership’s role is elevated to be even more fundamental than during a traditional transformation. In fact, building a culture of empowerment and innovation came in the top three priorities for transforming the employee experience – an increase of 65% from the previous year. The transformational levers we uncovered that related most to leadership were setting the ambition and roadmap, role modeling, aligning incentives to break down silos and pushing decision rights downwards – each requiring courage to challenge the status quo, push forward, stay the course and trust others to deliver. And all of these create very uncomfortable situations for a leader to face.

A Culture of Bold Moves

What can you do to build courage into your leadership cadre, your change leadership, and your entire organization? Most of our leadership work is in transformation leadership. There is no silver bullet. The answer lies in the specifics of your situation and ambition. However, there are three things that set the foundations for courage:

  1. Coupling purpose with ambition so that your transformation has a clear meaning and a North Star – making it easier to be brave in pursuit of it.
  2. Equipping leaders with mechanisms to be bold, for instance, developing personalized trigger plans where they focus on their style, their routine and their big decision-making moments, enabling them to prepare for and be courageous at key moments.
  3. Focus on a culture that inspires courage, where leaders and the organization make bold growth moves – creating safe experimentation spaces, valuing improvement ideas, championing customer experience and balancing purpose with profit. Courage is part of your personal character but it is also part of your corporate character, and thankfully it is possible to build it.

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Courage is a very powerful and engaging force in any organization. People love to follow brave leaders. It’s difficult to take a bold step into the unknown but that is what’s required if you are to lead lasting transformation. Don’t take it all on yourself. Take a deep breath and take people with you.

Interested to learn more about honing your leadership skills for the digital age? Get in touch. 

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Defining the Digital Future of Financial Services

Asset-light thinking, “little” data and bundled services are all responding to changing customer needs.

Remember when “digital”, to most banks and financial institutions, simply meant getting online? Mobile apps, online banking, digitized systems for claims, servicing, etc. – this was the first wave of the digital agenda. But those days have quickly moved into the rear-view mirror, as new enablers and disruptors present opportunities, and challenges, for financial services firms to tackle.

“New enablers and disruptors present opportunities, and challenges, for financial services firms to tackle.”

Here, we’ve highlighted the four differentiators that financial services organizations should be considering over the next 5 years and beyond. We have identified the A, B, C and D of disruptive forces seen from the perspective of the customer, the key shifts affecting them, and consequently how financial services companies can adapt to these disruptive factors to drive their business forward.

A: Asset-Light: From Ownership to Access

Banks that will succeed in the next 5 years will make the pivot towards being asset-light. First, this will require becoming asset-light as a company, e.g., smaller real estate footprint, fewer branches, less human staff in place of e-tellers, and so on. It used to be that you had to build it all yourself. Then, you could rent IT-as-a-service (IaaS), and over time you could rent products-as-a-service (PaaS), and eventually software-as-a-service (SaaS). Today, you can pretty much “rent” the entire business-as-a-service (BaaS), freeing you up entirely to focus on your core business. This is why asset-light companies have an advantage – they focus their full attention on their core business while building and scaling faster than ever.

Why Build the Foundation When You can Rent it?

But beyond the physical footprint, asset-light also means adapting to a customer who is more asset-light than ever – fewer houses, mortgages, cars, etc. Creating a more flexible and adapted product range to meet the needs of today’s asset-light customer will require a re-think of your firm’s product and service offerings.

B: Bundling: From More to Less

For years, big banks were a one-stop shop for all your financial needs – from your first savings account to credit card investments, mortgages, loans, and wealth management. These financial institutions had advantages in size (assets under management and customer count) and their global networks added a multiplier effect. They also had strong, globally-minded compliance systems in place to manage the difficult regulatory environment. So, they were hard to disrupt…if you tried to disrupt them in aggregate.

To overcome this competitive advantage, companies disrupted piece by piece, niche by niche, service by service. In the past 10 years, we’ve seen an emergence of niche players who entered the market and disrupted a very specific part of the value chain — Monzo (debit), Robinhood (investing), WeChat and Momo (payments), Revolut and Transferwise (FX), Stripe (B2B), etc. And they won share by being asset-light, freeing them up to deliver a better, more convenient (and sometimes affordable) experience.

But these niche players are no longer babies – they’ve grown up, raised billions, acquired millions of customers, and over time, have begun offering more comprehensive bundling of services.

For the first time since the fintech market took off 10-15 years ago, the big banks are no longer being disrupted in niche areas, they’re facing bigger threats as these formerly-niche-players bundle a more comprehensive set of services. It’s a global trend that customers are far more likely to refer a friend to a fintech than to a traditional bank.

So, today, who’s David and who’s Goliath?

C: Community: From Insular to Interoperable

For nearly a century, banks have thrived as closed systems, keeping data and assets in-house. But the rise of digital gave way to a new way: open source. It started in software, but over time open source became foundational to pretty much all businesses, none more so than financial services.

Meanwhile, openness isn’t just a customer nice-to-have, it’s becoming a regulatory norm. APIs that build and bridge communities and financial ecosystems will become a must. In this environment, financial services firms will need to strategically identify which data sources to share, based not only on what they can monetize, but what customers expect from a financial experience today.

But take note: openness is NOT about creating connections. It’s not simply enough to connect player A to player B.

Success comes down to creating community, which is about much more than connections. It’s about experiences. It’s sticky. Connections are a commodity – anyone can get access to APIs and connect things. But those who really create community do so in a way that creates stickiness, retention, loyalty. There’s a real value exchange, a real reason to come back time and time again.

D: Digital Identity: From Big Data to Little Data

For the past decade, the hype has been on big data. Collecting as much data as possible, storing it, and analyzing it. But the value actually lies in the “little” data — the data exhaust that you as a n=1 give off every day. Your daily schedule, shopping choices, patterns of travel, temperature preference in your home or car, physical health, emotions.

Google coined the term “ZMOT” a few years ago, with the idea that there was a single/zero moment of truth. That critical point when a decision is made. However, the reality is with little data, there are millions of moments of truth. When viewed in aggregate, they provide a much more compelling and interesting perspective of a person’s overall digital identity.

Millions of Moments of Truth

Companies that track, analyze and engage around “little data’ will be – and already are – the big winners, because they know you fully, not just in the realm of their industry or one-off interactions with you. They are becoming stewards of your digital identity.

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As we undergo a shift from placing value on share of wallet to share of data, financial services companies are uniquely positioned to be those stewards of our digital identities. What we spend, where we travel, what we save, who we transact with, financial services companies are entrusted with millions of data points. And as trust in social media firms erodes, financial services firms are strongly positioned to be the owners of our digital identities for years to come.

If you would like to assess where your financial organization sits on the path to transformation, and where it can go next, connect here.

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4 Examples of Digital Transformation’s Role in Strategic Growth

E-commerce, social media and branded communities are all intensifying the pace of innovation.

A second big idea in David Aaker’s new book, Owning Game-Changing Subcategories: Uncommon Growth in a Digital Age is digital’s role in the dramatic increase in subcategory competition.

Digital transformation is on the minds of most marketing executives.  Digital’s purpose is often assumed to be tactical in nature–generating customer leads, data analytics or making the customer experience more efficient.  But digital has a key role in strategic growth as well.

The Owning Game-Changing Subcategory book posits that the only way to grow is to create “must-have” subcategories, become the exemplar brand, and build barriers. That has always been true. But in the last decade or two, digital has put subcategory creation on steroids.

“In the last decade or two, digital has put subcategory creation on steroids.”

The frequency of new subcategories emerging has increased by an order of magnitude.  A firm that might have seen a new subcategory every half-decade might now see one every year or every quarter.  Digital is without question the driver of strategic growth and market dynamics. Let’s take a look at four ways in which digital has emerged to play this role:

Digital Technology

Digital technology in the form of sensors, microcomputers, voice recognition, smartphones, cloud computing, analytics and much more provides new avenues to “must-haves.”  Artificial Intelligence (AI) has unleashed new or changed capabilities throughout the value chain. The Internet of Things (IoT) has created smart cars, smart appliances, smart hotels and so on. Nest Thermometer, for example, created a new subcategory by using AI and IoT to control the temperature of homes, offices and industrial buildings.

E-commerce

E-commerce has provided fast, inexpensive market access that bypasses the cost of storefront retailers and personal sales teams. Nearly every product arena has a subcategory created by brands like Dollar Shave Club, Warby Parker, or Casper Mattresses that brought products to market via e-commerce. Even Amazon has developed its own subcategory with a host of digital-enabled “must-haves” surrounding its e-commerce model.

Social Media and Websites

These tools enable communication with reach and impact that is more effective and budget-friendly than traditional advertising or event marketing.  Dollar Shave Club shot out of the gate with a two-minute video that went viral largely because of its humor, establishing a customer base in a matter of weeks.  There was no advertising creative that required specialists and no media budget involving TV and magazines. The Dollar Shave Club experience has been replicated by many of the successful new subcategory entrants.

Brand Communities

Brand communities are groups of people that bond because of shared involvement or even passion in some activity, goal or interest area connected to a brand, and are enabled by digital. This provides a high level of involvement and social benefits resulting in loyalty to the subcategory and its exemplar brand.  The Sephora Beauty Insiders community, for example, is a magnet for people to gather and exchange information about skincare and beauty.

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Digital has a tactical and operational role for sure.  But it also has a role to enable strategic growth and thus should be a key business priority.

The e-book version of Owning Game-Changing Subcategories is now available. The book will be available wherever books are sold in early April.

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How Dove Real Beauty Uses Digital Marketing to Stay Relevant

This long-running campaign has converted an authentic and inspiring purpose into tens of millions of shares.

In 2004, Dove provocatively widened the definition of beauty through its landmark Real Beauty campaign, challenging airbrushed stereotypes established by the personal care industry and rallying around the “real beauty” of women everywhere.  Originally positioned as a functional soap brand, Dove’s campaign leveraged digital marketing to provide a new opportunity for social discourse and community building, elevating the brand beyond the product line. Dove didn’t just sell beauty, but self-esteem and acceptance, becoming a brand grounded more in social and emotional benefits than functional ones.

How Far Dove Real Beauty Has Come

A primary reason for the success and resonance of the Real Beauty message was its deep rooting in digital activation at a time before digital marketing was commonplace.  For example, Dove used compelling and provocative videos to provide energy around the campaign, including its 2006 “Evolution” video – one of the earliest viral brand videos on YouTube. Its “Real Beauty Sketches” video also became one of the most-watched videos of all time.  It also launched the Dove Self Esteem Project, a web portal intended to improve the self-esteem of young people by engaging viewers in forums, workshops, articles and videos that educate on topics like body positivity and bullying.

“Digital engagement has become table stakes, audience touchpoints and expectations are changing in profound ways”

Now, nearly 15 years after the initial Real Beauty effort, Dove exists in a digital world that looks very different from the original.  Digital engagement has become table stakes, audience touchpoints and expectations are changing in profound ways and the “cause marketing” space has become increasingly crowded and noisy.  It would have been fair to question whether Dove’s brand message was at risk of fatigue.  However, Dove has continued to maintain energy around its brand and sustain relevance as we enter 2020 – using digital to continue to power its message and positioning.

Improving Brand Relevance Through Digital Transformation

The numbers back this up.  In the Prophet Brand Relevance Index® (BRI), Dove remains the most relevant brand in the Household & Personal category – a position it’s held since reclaiming the top spot from Crest in 2017.  Additionally, the gap between Dove and its category is growing, with a 2019 Brand Relevance score that is 35 percent higher than the category average, compared to 32 percent higher in 2016.  Dove’s score for “Customer Obsession” puts it in the top 10 percent of all brands and above noted customer-obsessed stalwarts such as Chick-fil-A and Southwest Airlines, validating the continued strength of the brand’s emotional connection with its audience.  The brand has also seen a steady increase in purchase consideration from 2014 to 20191, and as more and more brands position themselves more explicitly around a cause, Dove has managed to stand out, with the highest association with a social cause among all brands2.

Examining the moves Dove has made the last few years, it’s clear that it has accomplished this in part by investing in unique, thoughtful and more sophisticated digital marketing strategies.  These digital marketing campaigns – which range from stunt marketing to larger content creation strategies and partnerships – continue to reinforce Dove’s brand positioning, while leveraging more digital touchpoints that audiences interact with.  The approach allows the brand to build off of its earlier momentum by broadening and deepening its exposure with audiences.

Some of Dove’s Best Digital Marketing Strategies

  • In 2015, Dove partnered with Twitter to identify negative tweets about beauty and body image, and then respond to these tweets in real-time as part of the #SpeakBeautiful campaign. This was coupled with a creative advertisement about the ramifications of body shaming during the Academy Awards pre-show.
  • In 2017, Dove teamed up with award-winning photographers to take striking pictures of “real women” – pictures that spotlighted women’s strength, grit and talent. Through a digital back door, these pictures were uploaded to Shutterstock with a search tag of “beautiful” that flooded results for a search term that historically had yielded photoshopped, airbrushed pictures.  Dove then encouraged other photographers and brands to join the cause, and in turn, created a host of informal ambassadors for the Dove message.
  • In 2018, Dove introduced its “No Digital Distortion” mark – a symbol indicating that a picture hasn’t been digitally altered. This symbol runs across all branded content – digital advertisements, social media content and print – and serves as a consistent reminder of the Dove message across both digital and non-digital channels.
  • In the same year, Dove announced a two-year partnership with the Cartoon Network series “Steven Universe” to educate young people on body confidence and speak to the next generation of consumers.
  • In 2019, in partnership with Getty Images, Dove collected over 5,000 images on the Getty website that featured 179 different women, all of which were women from a variety of underrepresented backgrounds. These images were made available for public use, and like the Shutterstock stunt marketing campaign from 2017, created a sense of ambassadorship for users of the pictures.

1 YouGov

2 Do Something Strategic: A Social Impact Consultancy

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FINAL THOUGHTS

Dove originally built strong brand equity by repositioning around social and emotional benefits, capturing topical consumer concerns and executing on an integrated marketing approach with a distinguished digital strategy and content.

Now, Dove has broadened its digital footprint through multi-channel campaigns, new-age content creation strategies and partnerships and crowd-sourced stunt marketing, all while maintaining its singular focus around its support of “real beauty” in an increasingly loud “cause marketing” space.

These strategies have been flanked by its legacy digital marketing touchpoints like viral YouTube content and the Dove Self Esteem Project web portal, creating a rich, layered marketing strategy.

Looking ahead to a new decade of digital possibility, Prophet’s team of digital marketing experts will be keeping a close eye on how Dove and others continue to build relentlessly relevant brands through excellence in digital marketing. And we’re excited to see what 2020 will bring.

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