Smarter Commerce: Beyond just buying and selling
The dynamics of commerce is changing. No longer is there a simple buyer and seller relationship. Today customers interact with companies in multiple ways – via social media, blogs, email, phone and yes, sometimes even face-to-face. At the same time, these customers are empowered with a deluge of information on who has the highest quality products, the lowest prices and the best customer service. Customer expectations are at an all-time high and companies are struggling to keep customers happy.
The upside for companies is that within each tweet, blog post, phone call and store visit, there lies the potential for incredible insight into the customer. Studying the way customers research and buy can help to build an understanding of what motivates them and how to best sell to them.
Yet companies today are just beginning to truly understand how to extract and use that data to its full potential. According to a recent IBM study which interviewed over 1,700 chief marketing officers, 71 percent of companies admitted they are underprepared to manage the explosion of available data. "Every day, new data is being created in various forms and across various channels," says Tadd Wilson, IBM Senior Managing Consultant. "Scouring through these channels and gathering data about what customers are doing and what people are saying is very challenging for companies, not least when they don't know when or if an online shopper, a mobile shopper, and a store shopper are the same person."
With nearly 15 petabytes – that's 15 million gigabytes – of data generated every single day, what can companies do?
The answer is not as complicated as we think. The concept of market demand driving a company is not a new one. What IBM calls the "smarter commerce" approach takes the concept one step further by realigning a company's operations in order to build a more customer-centric business.
The age of smarter commerce
The thinking behind smarter commerce is that by putting the customer first in all phases of a company's operations – from supply chain to marketing to customer service, the result is a consistent, positive brand experience for the customer, giving them what they want, whenever and wherever they want it.
"Smarter commerce," says Joel Reed, IBM Product Line Executive Director for B2B and Commerce, "is about better managing all of your processes to improve the value that companies deliver to the customer and improve the loyalty that they get from the customer." By analyzing all of its customer and operational data, a company can determine the most effective way to market and sell to a customer based on the individual's behavior and preferences.
Analytics solutions play a key role in providing companies with good information to make better decisions. By using seemingly unrelated data and information to predict customer needs, companies can increasingly delivering successful products and services – all the way from design to distribution. The appeal for companies is that they are now able to ensure that the right products are being created and that inventory always meets demand. In addition, they can immediately adjust what, when and where shipments are sent or services are applied.
But that may be easier said than done. A recent IBM study, "Capitalizing on the Smarter Consumer," found that 49 percent of consumers use two or more shopping channels during a single purchase. This puts pressure on companies to fulfill customer expectations across all channels accurately – providing access to the same information, managing inventory, and meeting promised fulfillment time – regardless of the nature of customer interaction.
But there is a great deal of upside to fulfilling those expectations across multiple channels. Wilson explains, "If you think about the impact of allowing the customer to order online and ship to store, you now have a customer that comes to the store to pick up their order and is now very likely to buy something else. The leverage that that applies to the business is very powerful - but retailers must make the experience seamless. The channel is disappearing; the brand is everything."
Beyond buying and selling
Delivering a positive customer experience goes beyond just the sales transaction. Sourcing, procurement and distribution are areas that can be fraught with bottlenecks that can result in out-of-stock inventory or unnecessarily higher prices for customers. Reed uses a transportation example to illustrate the point, "If I'm managing thousands of carriers to move my products to market, I need to think about the performance of each of those carriers and which one I should use to ensure that my items are getting to where they need to go. And on top of that, I need to create the best and most cost-effective route of taking the shipment to market."
In order to better meet customer needs, companies are looking to their supply chain for help. Imagine being able to design, source and deliver goods and services based on what your customers want, when they want it – all without waste or delays. Reed believes we are getting closer to that ideal. "There have been numerous advancements that have allowed companies to connect with trading partners and move information in a more automated fashion."
Not just for retailers
More than just retailers are looking at the smarter commerce approach for their business. "It's very important to understand the significance across all industries, whether it's a services type organization like financial services, banks, insurance companies or a B2B situation like a manufacturing company," says Reed. "All of these industries -- uniquely in some ways – but all of these industries face the same problems. They are all trying to improve their ability with their trading partners; they are all trying to improve their processes for fulfilling orders or services; they are all looking to improve their return on investment in marketing dollars."
Regardless of industry, it is midsize companies in particular that are increasingly interested in implementing the smarter commerce approach. Advances in everything from process improvement and marketing software to cloud-based delivery of those solutions are breaking down the cost barriers for midsize firms. "For any company and probably even more so for small to midsized companies, the whole ability to compete comes down to how agile you are and how responsive you are to the needs of your customers," says Reed. "To do that you have to access to good information and you have to be able to execute upon that information as well."
A holistic approach
Companies have an unprecedented opportunity to deeply connect with their customers and predict, rather than react to, their needs and preferences. But it'll take more than just technology to do the job. Reed says that smarter commerce is fundamentally a holistic approach that "combines solutions, information and strategy to build a positive, customer relationship." And in the era of the smarter, more empowered customer, companies will need to realign their operations just to keep up.