The ecosystem of connection

We probably all realize that we are going through a connection revolution.

For many of us, scarcity of information, choice and access has given way to an abundance of stuff. The connection economy means we live in an era where we are literally one or two clicks away from nearly everything and everyone almost anytime we want. Relationships–with people, brands, causes, ideas–that were impossible just a few years ago are increasingly taken for granted.

As consumers, movements and things become more connected, many organizations that exist in their service aren’t keeping pace. Sure, plenty of brands have strong social media presence. Of course, monitoring online consumer sentiment is helpful. And yes, making it easy to share among peer-to-peer networks is a good idea.

Yet, far too many organizations remain internally disconnected in their data, information systems, marketing campaigns, processes, metrics and on and on. As Kevin points out, many brands still measure the success of customer contacts in isolation, not as part of a diet of interactions. But of course, it goes way beyond merely calculating marketing ROI.

Meaningful connection happens within an ecosystem. Seemingly disparate pieces weave together to become whole. Inter-relationships collide in both predictable and unanticipated ways. Relationships and trust build through cumulative effect.

As the pace of change accelerates, as consumers try to make sense of it all in an ever noisier world, brands that don’t line up their messages and capabilities to sync with the ecosystem of connection are falling further and further behind.

And once disconnected, once the customer sees your brand as a disjointed mess of disparate pieces, any hope for relevance is gone, perhaps never to be regained.

A dim signal amidst the noise

We’ve all been taught that successful brands need a unique value proposition and that we must craft a distinctive positioning. And certainly most organizations spend a lot of time honing their business models and churning out sales programs and marketing campaigns designed to one-up the competition and compel the customer to choose us.

But what if hardly anyone is listening? What if only a fraction of our efforts command any sort of attention? What if despite all our strategizing, designing, testing and refining most of what we put out there evaporates in the ether like so much steam from our morning coffee?

Unfortunately, for most of us, there is no what if? There is only what is.

Consumer choices are expanding, sometimes literally exponentially. Competition is only getting greater. The information available to the average person is overwhelming. The distracted, multi-tasking consumer is the norm. We all face a tsunami of stuff.

And, more and more, much of what we do is only a dim signal amidst the noise.

noise

Many companies confronted with this emerging reality respond by throwing more and more out there to see what sticks. Batch, blast and hope email strategies. Greater promotions and discounts. New or revamped–but still largely undifferentiated–loyalty programs. Vague investments in “building the brand.”

Prepare to be disappointed.

If you want to boost your signal you’ll need to do a better job of customer selection. You’ll have to deploy a unified “one brand, many channels” customer experience. You’ll need to learn how to treat different customers differently.

And everything you do must be amplified by being more relevant and more remarkable than whatever commands your customer’s attention.

In the meantime I hope you enjoy your coffee.

Pretending it’s new

When some leaders wake up to reality, when they slowly start to notice that things are in fact meaningfully different from how they were before, we often witness a self-absorbed, I’ve just found Jesus and I need to tell you all about it, kind of thing take over.

“Consumers who shop multiple channels are more valuable than single channel customers” they breathlessly announce at conferences.

“Stop thinking about e-commerce as a channel” becomes the title of a newly released white-paper.

“We need to differentiate ourselves on experience” the CEO implores a group of assembled executives.

Suddenly everything is about “seamless”and “omni-channel” and “the single view of the customer.”  Their sentences start to include a disquieting use of “integration”, “customer-centric” and “relevance.” Investor presentations and annual reports turn into games of buzz-word bingo.

I hate to drag you out of your pink cloud, but just because you took a long time to notice, doesn’t mean it’s a recent phenomenon. Responding energetically to a totally foreseeable crisis does not make you a great leader.

Pretending it’s new may prop up our ego or cast ourselves in a better light. Better late than never, huh?

Pretending it’s new may buy ourselves some time with a less than savvy Board. What they don’t know can’t hurt them, right?

Much of what passes for insight today has in fact been known for years if only we had taken the time to become aware, confront its import and accept the implications. It’s not new and we shouldn’t pretend it is. Of course, neither is this.

Now obviously we can’t go back and fix all the should of’s and could have’s.

But we can ask ourselves what of potential importance might we be missing right now?

We can go into understanding what our fear causes us to avoid.

We can accept that often our pretending creates the illusion of keeping us safe.

The drip method of irrelevance

At first, the shift is almost imperceptible.

With quarterly earnings expectations to hit, we tell ourselves we can easily save a few bucks by automating some of our customer service functions. Or perhaps it’s through simplifying our organizational structure or eliminating “non-essential” positions. Better yet, let’s close some “unproductive” stores.

And obviously technology enables us to take away a bit of decision-making from the front-line staff. After all, human beings are notoriously misled by their own intuition. And whoever got fired for praying to the God of Efficiency?

And running all those different marketing campaigns adds a lot of complexity. It would be much easier to boil things down to just the major stuff that we know moves the dial.

And our product line is just too diverse. Sure it’s interesting to have something fresh and innovative, but doesn’t that just increase the risk of slowing down inventory turnover and increasing markdowns? Safe is smart right?

Of course, over time, the top-line stops growing and the only way we know how to drive profits is through cost-cutting.

Over time, we’re proud of our low average talk times, yet customers can’t speak to a human being and our Net Promoter Scores continue their inexorable decline.

Over time, our one-size-fits-all marketing is, at best, indistinguishable from the competition and, at worst, a dim signal amidst all the noise.

Over time, the sad reality is that all we sell is average products for average people and there’s no reason to pick us over the guy with the lowest price.

Sears, RadioShack and a host of others that are on a long inevitable march to the retail graveyard didn’t get trumped by a disruptive competitor that emerged out of nowhere. An oppressive government didn’t regulate them out of business. They weren’t crippled by a series of specious lawsuits or hobbled by natural disasters.

Usually the brands that become irrelevant have made hundreds of seemingly small decisions, over many years, that prioritized the short-term ahead of the long-term, the numbers instead of the customer, mass rather than personal, safe not remarkable.

And once they are gone, once their fate is sealed and their previously storied histories are part of the record, we’ll look back and realize it happened gradually, then suddenly.

Digital first retail

Many traditional retailers are already living in a “digital first” world. If your brand isn’t quite there yet, it’s likely only a matter of time–a short time.

Digital first means that even if the customer ultimately buys in a brick & mortar location, their journey starts online.

Digital first means that the primary way prospective customers learn about your brand is through your website, social media or online peer-to-peer reviews.

Digital first means whether the customer comes to your store for a particular transaction or not is determined by how well your online or mobile presence meets their needs in a highly relevant and compelling way.

Digital first means that holding on to the customer relationships that matter is largely determined by how well your digital tools eliminate customer experience friction and are rooted in a treat different customers differently philosophy.

Digital first means that the way your customers activate their passion for your company and become true brand ambassadors is primarily by sharing their remarkable experiences via their smartphones, tablets and other digital devices.

Digital first retail profoundly changes the way we engage customers, the way we deploy technology and the way we re-envision the physical store experience. It causes us to break down our silo-ed thinking and organizations to put the customer at the center of everything we do.

It’s not easy.

It’s not inexpensive.

It’s not without risk.

But frankly we have no other choice but to embrace it and get on with it.

And I’d hurry if I were you.

You know what’s hard?

Customers say they want a more seamless experience across all channels and touch-points. “Sure” you say, “but it’s very expensive and complicated to implement that level of integration.”

Silo-ed data, systems, organizations and metrics are keeping your brand from being more customer-centric and relevant. “I know” is your response, “but greater centralization would be very jarring to our culture.”

In an increasingly noisy world, mass marketing and one-size-fits-all approaches fail to gain share of attention, becoming less effective by the day. You respond, “you’re right, but treating different customers differently is difficult to scale.”

Relentless price promotions and layering of discounts and reward points deteriorate profit margins, teach customers to only buy on sale and accelerate an inevitable race to the bottom. Your defense is to say “well that’s what moves the top line” and to point out how hard it is to justify full price.

In the inevitable battle between denial, defending the status quo and rationalization vs. acceptance, leaping and innovation, we tend to choose the former. And our fate is sealed.

Many of the things we avoid as too risky are, in fact, often just the opposite. The risk is in the failure to change, in the lack of passion to become intensely relevant, in being stuck in “me too” instead of choosing to become remarkably different.

What’s hard is to move where the customer is headed after the competition has already established a beach head.

What’s hard is to break through the clutter with undifferentiated products and tired messaging.

What’s hard is to acquire, grow and retain the right customers with average products for average people.

What’s hard is to catch up when you’ve fallen behind.

Mass or built for me?

All about price, or all about unique value?

Average or remarkable?

My guess is that every brand that’s gone through the work of closing stores, firing people and liquidating inventory might have a different view of what’s hard.

Why go to the store?

There are some who think that most brick & mortar stores are eventually going away and that e-commerce can have a compound annual growth rate of 15% until the end of time. To which I answer, “don’t be silly” and “of course not.”

There are many powerful reasons for physical retail locations to exist. In fact, we are already witnessing the limits of pure-play models as online only players are opening more traditional store-fronts (Warby Parker, Bonobos, Amazon and many others). Well established direct-to-consumer brands like LL Bean are doubling down on a commitment to retail store expansion. And even with the explosion of online shopping, close to 95% of transactions still take place in a traditional store.

When you take out products that can be delivered digitally (books, movies, games and the like) in most cases, for most consumers, there is value in being able to go see, try on, or touch the actual product. Having a live conversation with a well-trained sales associate can be extremely helpful. Physical stores offer a social experience that can’t be readily duplicated via the web or smart phone. And, typically, you can take the product with you, rather than having to wait.

Having said this, digitally enabled business models ARE disrupting every category and chipping away at many historical advantages of bricks & mortar. Websites often have better information than in-store sales people. Assortments can be much wider and prices are often sharper. Next day delivery may be either good enough or simply more convenient than having to drive to a mall and deal with the crowds. And we can be certain that future innovation will further eat away at traditional store advantages.

The fact is, in most instances, the future winners will be retailers that blend digital and physical offerings. They will deeply understand customers wants and desires and build a tightly integrated, highly flexible hybrid model rooted in treating different customers differently. That means a transformation, but not the elimination, of physical stores.

By contrast, the losers will be those that blindly adopt all things omni-channel.

The losers will be those traditional retailers that continue to run a bolted on and siloed e-commerce channel.

The losers will be those who fail to see the interplay between digital and physical stores and close too many doors–and turn the remaining ones into boring museums of best-sellers and “me too” products.

The losers will be those who hold on to one-size-fits-all customer and marketing strategies.

Consumers will continue going to stores for many, many years to come. Whether they will come to your store is a different question.