Consultant, IBM Center for Applied Insights
Derek Franks 1100007YTJ firstname.lastname@example.org Tags:  merchandising elana_anderson customers merchandisers marketing cp consumer-products jay_henderson cpg retail consumers retailers demandtec analytics 1,165 Visits
I came across this Smarter Commerce video a couple of weeks ago and I really like because it gets to the core of what Smarter Commerce is and why you should care about it. If you take a few minutes to watch it, what you’ll notice is that it keeps coming back to the customer as a central theme.
And at the end of the day, that’s really what Smarter Commerce is all about. It’s taking all of that data you’re collecting, helping you develop insights about your customer and the marketplace, and then applying all of that to every aspect of your business.
We recently conducted some research on a couple of specific areas with our colleagues from IBM DemandTec. Specifically, we looked at retail merchants and CPG sales organizations. The retail merchant research was conducted in collaboration with Planet Retail and the CPG sales org research was conducted in collaboration with Kantar Retail.
As we looked at the data from these research projects, we kept coming back to the same central theme as the video above: the customer. Everybody talks about being customer-centric. It’s almost a cliché. But what we found was that while everybody talks about it, most aren’t actually doing it.
Merchants tend to be product and category oriented, and CPG sales orgs tend to focus on their customer, the retailer, rather than the end consumer. Now we’re not saying that merchants should forget about product categories or that CPG sales teams should ignore the retailer, but we found that groups that placed a strong focus on the customer (or more specifically the consumer when talking about CPG) tended to outperform those that didn’t.
These “leaders” were customer-focused and collaborative, both within their enterprises and externally with vendors and partners. And they also made much greater use of analytics to uncover insights about their customers and the marketplace. The differences were really quite striking. For example, Leading Merchants were 1.6x more likely on average to use analytics to drive merchandising decisions, while Leading CPG Sales Organizations were more than 1.7x more likely to use analytics to improve product innovation.
If you’d like to learn more, our CPG paper, Putting consumers at the heart of the consumer products industry, is now available for download, as is our Retail paper, Understanding leading retailers. Take and look and let us know what you think. We're always happy to talk about our research and maybe your question or comment could be the basis of our next blog post.
Derek Franks 1100007YTJ email@example.com Tags:  cloud retail customer_experience retailers 1 Comment 543 Visits
This week, at the annual National Retail Federation conference, “customer experience” is a hot topic. Whether they’re doing anything about it or not, retailers instinctively know experience impacts loyalty, and loyalty keeps customers buying. Forrester Research analyst Harley Manning has long argued it’s the only thing that matters. His premise: “The only source of competitive advantage is the one that can survive technology-fueled disruption: an obsession with customer experience.”
While there’s a lot of truth in Manning’s assertion, I have a corollary – one reinforced by the research we’ve done recently at the IBM Center for Applied Insights: The only way to provide a superior customer experience is with technology-fueled delivery. In other words, fight fire with fire.
Take showrooming, for example. Mobile phones have clearly disrupted the traditional shopping experience. And some retailers are still wringing their hands about sales lost from shoppers checking competitors’ prices and assortments via smart phones while in their stores. Meanwhile, other retailers are finding ways to capitalize on all those devices in shoppers’ hands – through real-time analysis of in-store shopping behavior and merging real and virtual experiences.
What will the next retail disruptor be? Will Square and Paypal do away with POS terminals? How will retailers re-imagine the cross- and up-sell process when checkout counters and wrap-stand displays disappear?
Will cognitive systems like Watson sell products and field customer service questions? What about augmented reality? Wearable technology? Rather than view emerging innovations as threats, smart retailers will see these as opportunities to improve the customer’s shopping experience.
Although Manning might consider IT “table stakes,” I disagree. Obviously, there’s a certain technology bar retailers must meet to stay relevant, but IT – executed well – can still be a differentiator when it comes to the retail customer experience. Admittedly, I’m a bit biased (given where I work). But my opinions are backed by a fair amount of evidence too.
IBM’s annual State of Marketing study – involving more than 500 organizations across 15 industries – showed companies that effectively integrate technology to influence the customer experience are outperforming financially. These leading companies are experiencing 3.4 times the net income growth – and 1.8 times the gross profit growth – of their peers. The study outlines a suite of differentiators that set these leading companies apart, but two fundamental IT capabilities stood out to me.
First, these leaders have tackled the tough job of integrating all their channels. Unlike many of their peers, they’re equipped to deliver a consistent omni-channel experience. This behind-the-scenes plumbing allows them to accomplish the second feat – adjusting those customer experiences as they happen, often based on cloud-enabled data analytics (Listen to IBM Distinguished Engineer Frank DeGilio discuss how cloud is changing the customer experience).
Through integration and contextual insights, these leaders are building the muscle mass they need to tackle technology-fueled disruption. As new possibilities emerge – even when disguised as threats – leading companies will be ready to turn the tables, using technology to reinvent the customer experience.
Shubham Jain 270003FVPN firstname.lastname@example.org Tags:  cpg customer retailers price focus leader technology consumer 1,235 Visits
Consultant, IBM Center for Applied Insights
Let’s start with some startling facts about the consumer products and goods (CPG) industry. Failure rates of new product innovations are estimated to be higher than 70 percent globally. Still, more than 80 percent of traditional marketers make decisions based on gut feel and past experiences, instead of using scientific approaches that unlock new insights (for example, advanced analytics).
These are all important challenges worthy of attention for the market participants, in order to survive and compete in the marketplace. Still, the manufacturers should start focusing on the one thing that can inform their product development, improve their operational effectiveness, increase their competitiveness and boost their profits - the consumer.
The presence of today’s technology-enabled empowered, omni-channel consumer affects how CPG companies control costs, grow sales, coordinate a wide variety of trade activities, manage time and manage the customer (retailer) relationship. These consumers are empowered by an abundance of information, technology and choices. Their expectations from the companies have increased in terms of ongoing engagement and constant experience across channels. And they can champion or sully the reputation of a brand at the click of a mouse. Their constant online and offline engagement with companies and their products generate a lot of data about their shopping behavior and preferences. That is why, manufacturers should start taking their end consumers more seriously as this knowledge can inform various functions like sales, supply chain, IT etc. across the companies (and not just marketing) and help companies transform their entire value chain. This would help them to anticipate consumer need s and proactively plan for them. This can also help them collaborate with retailers and gain a seat at the decision maker’s desk.
Many CPG companies, globally, have started to realize this need of strong consumer focus and are deploying dedicated resources and advanced analytics to develop consumer centric capabilities. For example, in its 2011 category leadership study by Kantar retail, when retailers were asked which manufacturers ranked among the top three in consumer/shopper insights and category management, Procter & Gamble (41.9%), Kraft Foods (37.1%) and PepsiCo (27.0%) came out on top, with General Mills a hair width behind (26.9%).
We, at the IBM Center for Applied Insights, have been working on a comprehensive global study of over 350 CPG senior executives to gain more quantitative and qualitative insights about the increasing consumer focus of these CPG companies. The focus of this study would be to understand market trends, the need for consumer orientation, who are the leaders, how they are doing it and the results achieved.
Watch out this space for more insights and information on the release of forthcoming executive presentation, info-graphic and white paper.
I look forward to your comments and observations. Please click “Add a Comment” below or “More Actions” to share this with others.