The transformation is just beginning, but it's happening so fast you can't waste any (more) time.
I have to laugh and shake my head when people tell me they are working on the digital strategy for their business, or reluctantly ask me to help them figure out what they should be doing about social media--as if it's a new form of head lice or psoriasis or something equally disgusting, contagious, and unavoidable. It's a little like saying that you've decided you're going to spend some time each day breathing, even though you’re busy with other commitments, because it seems like the smart thing to do.
Digital technologies and social-media channels, and the new degrees and depth of “connection” that they enable, are so pervasive and mission-critical these days that you have no choice but to add them to your arsenal, and the sooner the better. It's a binary situation: You can engage or you can become extinct. You can face the facts or you can be like an old fax machine, just about ready for the scrap heap.
There is a lot to say on this topic, but for the moment I just want to list the 5 major dimensions of enablement that digital is bringing to the game. You can get a head start on your peers and competitors by asking yourself what you are doing, or about to do, to take advantage of these new resources, tools, technologies, channels, and perspectives. It’s not easy but it's a process that's already well underway, so keep reading.
One crucial aspect of this ongoing and highly-disruptive transformation, often overlooked in most media, is that the most critical attribute of the Internet is NOT its immediacy or its low cost; it's the heightened direct access to identified individuals, the ability to accurately measure and react to their engagement in real time, and the media spend direction and accountability that it enables.
Here are the 5 vital vectors:
1. Superior Customer Targeting and Offer Optimization I've talked before about hyper-personalization (customer demographics) that morphed quickly into determining and tracking interests and attitudes (customer preferences and desires), and now we're moving forward again to anticipatory actions that let us drive and leverage future customer behaviors. This is a page right out of the canon of Steve Jobs, who basically said that consumers don’t know what they want until we create it and show it to them. Or, as Henry Ford might have said about consumer demand for the Model T, "If I had asked people at the time what they wanted, they would have said they needed faster horses, not automobiles."
2. New Levels of Analytics & Insights Based on Speed & Scale Size is nice, but in today’s world speed is what kills. It’s not the big guys who are moving the needle today, it’s the fast and responsive guys. Everything we’re doing in marketing is time-compressed, and the rate of required change continues to accelerate. You won't see smart marketers buy 12-week campaigns any longer and then sit back and hope things work out. We have tools to see how things are trending on a minute-to-minute basis and today that’s the standard for reacting to those behaviors as well. We’re not talking about an A/B testing world anymore. We’re talking about A-Z systems that can launch 20 alternative offers to a small (and inexpensive, but representative) segment of a target list; collect and collate the responses in real time (minutes rather than months); prioritize the winning pitches and kill off the losers; and then launch the winners against the larger lists and continue this iterative process all day long. No one said it was gonna be easy, just essential. And the ante keeps getting upped.
If you haven’t started to use Google Product Listing Ads (PLAs), you’re late. But what’s important to understand is not so much how much more appealing a Google search response is that features multiple responsive product images and pricing from local merchants but to appreciate how much more work this represents for each local merchant. Every product has to be imaged, catalogued, loaded, and priced (realistically, the pricing almost needs to be dynamic for your particular offerings to remain competitive) and the whole thing needs to be actively managed and updated constantly. It's a 24/7 job just to stay in the game, and increasingly it's going to have to be machine-driven and informed, much like programmed stock trading. But who’s going to create and supply these kinds of tools for SMBs? I see this whole area as another amazing set of opportunities for entrepreneurs. But even if you’re not building the new tools for the rest of us, you’d better be doing something in your business to respond.
3. Ability to Change Consumer Behaviors in Real Time If you’re always reacting (regardless of how quickly) to the behavior of the consumers you’re trying to reach, in today’s world of high-velocity computing you’ll always be behind the curve and behind your competition. The game now is to get ahead of the consumer and to “know before they go” so that you can be there when they arrive. Sites like chango.com offer these kinds of tools with response and reaction times in the area of 10 milliseconds--faster than a webpage can load. As you can imagine, if I’m trying to launch offers to you in response to your searches I need tools and technologies that enable me to determine what you're looking for and present you with those choices, rather than wait for you to ask me or find the answers on your own. It’s a world moving from diagnostics (historical analysis) to prognostics (anticipation and prediction) and you need to get your business on the bus.
4. Two-Way Channels for Ongoing Consumer Conversations The ability to have ongoing, long-term, unmediated and bi-directional conversations with customers on a massive scale provides us with the tools and channels we need to increase the lifetime value of each customer (LCV). Nothing is more directly connected to profitability than growing your share of each of your customers' spend and improving your retention of those customers. You now have the ability to determine not only whether your customers are seeing or hearing your messages but whether they are listening to them and responding to them in meaningful ways. We’ve moved from a broadcast world (call it "spray and pray") to improved and more targeted unilateral communications, and now we’re moving forward again to two-way talks and credible conversations.
5. Concrete and Readily Available Metrics (CAC, CSI, CRM) Data is the Oil of the Digital Age. If you don’t already understand how critical access to (and constant measurement of) the data that drives your business has become to your survival (not simply your success), there’s not much I can add to the discussion. As Louis Armstrong used to say: "If you have to ask what jazz is, you’ll never know."
HOWARD A. TULLMAN is the CEO of 1871 – Where Digital Startups Get Their Start and the General Managing Partner of G2T3V, LLC and of Chicago High Tech Investment Partners. He is a member of the Chicago NEXT & Cultural Affairs Councils and the Illinois Innovation & Arts Councils; an adjunct professor at Kellogg; and an advisor to many start-ups. He is the former Chairman and CEO of Tribeca Flashpoint Media Arts Academy. Over the last 45 years, he has successfully founded more than a dozen high-tech companies. @tullman