5 Key Trends for 2014 - The Year of "Now"

The pace of change bounds on and 2014 will be no different.  Picking up on key trends that have been maturing during 2013, the following are my thoughts on how some of the trends are all coalescing around a single vision of “now”.

1. Enhanced Experiences
One of the promotional mechanics Coke are using for the launch of their new 250ml can is the product recognition app Blippar that allows consumers to use their smartphone to view the coke product and in response, the consumer sees the product become interactive, allowing access to a number of music tracks.

This recent addition to Coke Zone in the UK is interesting in that it suggests two trends.  Firstly, whilst the solution is not strictly speaking traditional loyalty, it does point to an interesting trend about being able to both recognise and reward the customer not just at the point of purchase, but during the consumption/use of the purchase.  This type of enhanced experience could be utilised at any point in the sales cycle, from pre-purchase through to purchase.

Whats interesting about this is that the consumer doesn’t need to enter product codes, send in coupons or even redeem a download code, they simply point their phone at the product.  It’s something that can done “in the moment” as they are experiencing the drink itself, and allows the everyday experience of drinking coke to be enhanced with an interactive overlay.  Coke aren’t the only ones doing this, Blippar (and apps like it) are enhancing everything from magazines to beer mats to ketchup.

It does however speak to the trend of “now” and how being able to provide recognition and interaction as close to the originating event/action is ever more important.

The other part of the Coke Zone promotion - and the second trend it suggests - is the use of Spotify to stream the music tracks rather than provide downloads, and this ties nicely into the next trend.

2. Access, not ownership
Time magazine had a headline at the start of this year saying “Spotify and YouTube are just killing digital music sales”.  Apparently users are choosing to stream music and video as and when they want it rather than purchasing the item; albeit digitally.  Its interesting because 10 years ago, back in 2004, the BBC News website had a headline entitled “Will Napster kill high street record stores” and in January 1990 the Seattle Times has an article entitled “Vinyls Final Days - CDs are gobbling up the market of that old dinosaur, the album"

Things move on and technology and tastes change.  People still want to listen to music, but they want it on their own terms and they want it now.  Broadcasters and publishers alike are scrabbling to keep up with the change as consumers vote with their (virtual) feet and move on.  NowTV from Sky is a direct response to the success of streaming services like NetFlix and Lovefilm.

Even the darling to tech innovation, Apple, is on the back foot.  Streaming service Spotify is now the second biggest revenue service for music publishers after Apple with rumours that it could overtake Apple iTunes in under 2 years.  Whatever the reality, its clear that consumer tastes are changing again and the advent of 4G that enables streaming on the go is only likely to make this move at an ever quicker pace.

In this environment where the purchase transaction is replaced with an all access subscription to content now, the concept of a customer changes.  As competitors provide access to the same content in a different coloured box and essentially commoditise access, creating wider and deeper relationships that don’t just focus on the next purchase but span the total relationship will become ever more important.

3. Ephemerality
In Mission Impossible, Jim Phelps is given a mission via some device such as a tape machine which always finishes with the line “this tape will self-destruct in 5 seconds”.  The purpose of this is both security - so others can’t intercept the mission - but also relevance - Jim either wants the mission or he doesn’t, the information has no value after it has been communicated.  This “ephemerality” of the message is also becoming more relevant to those of us who aren’t secret agents.

When people first start using twitter they don’t always understand how to use it; the more people you follow the more tweets come pouring through your feed and the more out of control it can feel if you try to consume it like a news feed.  This feed is presented as a constant stream of information and the stream can soon become a torrent if you’re not careful.  Instead, twitter is best used as a means of taking a “pulse” - when you choose to read your feed you see what is there at that point.  You don’t go scrolling through days (or hours) of history, the point is to be in the moment - in the now.

Speaking about this in The Atlantic in an article entitled “2013: The Year ’the Stream’ Crested”, reporter Alexis Madrigal says:-

The Stream represents the triumph of reverse-chronology, where importance—above-the-foldness—is based exclusively on nowness.  No matter how hard you sprint for the horizon, it keeps receding. There is always something more.  

In response to this, some solutions are taking ephemerality seriously and building it into the heart of the offering. Snapchat is a great example of one way this is working, with people sharing pictures at that moment for consumption at that moment.  There is no preservation or history, no ability or need to roll back and look at something from last week.  The whole point is that it’s relevant now and Snapchat defines it as:-

If we can't disappear completely, let's leave as little of a trace as possible. Let's be water vapor, a passing fog, not the stream.

With consumers drowning under these ever increasing volumes of “now", it raises the question as to how we plan and communicate to consumers.  Madrigal highlights this further in his article saying:-

When the half-life of a post is half a day or less, how much time can media makers put into something? When the time a reader spends on a story is (on the high end) two minutes, how much time should media makers put into something? 

This isn’t suggesting that we don’t communicate, just simply that we think about how this communication will be relevant and it’s longevity.  It also introduces some thoughts about where else it’s possible to build ephemerality into our wider marketing programmes.  Either way, we can expect to see more of these types of applications in the future as consumers increasingly try to both manage their time and their privacy.

This leads into the next trend for 2014, that of communications context.

4. Communications Context
CRM matra talks about the Right Time, Right Place and Right Message when discussing about how to manage targeted and relevant communications.   Increasingly however there will be a new one added to this about Right Context.

If indeed, people are over communicated to and are starting to treat communications as a stream, then getting your message into the right stream at the right time will be critical.

Whether it’s email filtering or mail box redirects, people are just trying to limit what gets through the gate before they even look at it.    However, when the message is more directly related to the context of what they are doing then they are more likely to review it.  Messages sent via social channels like Facebook and LinkedIn tend to be consumed in a different context to general email.  Gmail for example has introduced tabbed email folders that automatically separate emails into difference contexts such as Social or Promotional so you can choose when and if to read them.

Discussing this treatment of email, in recent article on Tech Crunch, Peter Yared, CTO/CIO at CBS Interactive is quoted as saying:-

Mail systems are evolving to match the new volume of email, and users will increasingly see only algorithmically vetted emails. Some other emails may be shown below the vetted email, and the rest will flow away into temporal oblivion, just like uninteresting social posts from a few hours ago

Responding to this will mean being more flexible in where a message is delivered.  A siloed approach to communication with specific campaigns for specific channels will be replaced with cross-channel capability that allows the relevant message to be communicated to the customer at that channel at that time, whether it’s a POS till receipt or a in-app notification.  Just as important, and tying back into the previous trend, the message will also need to disappear as quickly as it appeared if it subsequently becomes irrelvant.  Context is king.

5. Quantified Self
Finally, a trend I’ve written about previously looks to be continuing to gain ground in 2014 and continuing with this overall trend of the “now".

With an increasing use of wearable and connected technologies becoming available, more and more people are starting to monitor more day to day activities.  At CES 2014, amongst the many “quantified self” technology launches, Sony showed off its life logging app and kit called the Sony Lifelog which not only tracks activities like walking or running, but also claims to know how you’re travelling such as by train or cycling and linking this information to your behaviours such as social interactions or photos.  This is a real extension of the basic “fitness” apps current available and is starting to extend into recording more day to day activities.

It’s interesting that the core value of this technology is quickly recognised with Marketing Magazine headlining the article “Sony makes a data grab”.  However Daniel Matte from tech consultancy Canalys goes one step further and indicates that with all this data, the winners will those that both grab user attention and keep it by providing actionable insight saying:-

“The end goal of these companies is to provide actionable advice and not just data logging [..] I don't think the average user frankly cares if, for example, they slept eight or nine hours. What they want to know is whether that was adequate and what they can do to sleep better, eat better etc. [..] Creating change should be the primary goal these technologies are striving for"

With this area continuing to grow and dedicated industry conferences just on the use of Personal Information, the challenge for loyalty programmes - typically the largest uses of consumer data - is not only how to integrate this level of behavioural data, but how to provide members with actionable insight - with utility value.

All 5 of these trends really do coalesce around the concept of “now” - from enhancing the experience the customer is presently having, utilising real-time data about where they are and what they are doing and communicating relevant and timely messages that cut through the stream - 2014 as ever is about grabbing a consumers attention whilst you have it.

Will Shell's re-introduction of service revitalise loyalty

There seems to be a never ending trend to automate and self-serve.

• Retailers are introducing self-scanning solutions.
• Train stations are introducing 24hr ticket machines.
• Health care has introduced self-service diagnosis such as NHS Direct
• Amazon has introduced automated delivery drones (well, not quite yet…)

There is less and less human interaction and an ever increasing expectation of getting what we want, whenever we want it.  From the companies point of view it reduces costs, increases availability, increases capacity - and for the customer, it may reduce prices (or suppress price rises) and increase availability.

So it was very strange to drive up to the petrol forecourt last weekend and be greeted by a smiling employee eager to fill up my car.  

This is something in the UK that died out in the last millennium.  In fact, we haven’t had forecourt attendants since the 1970s.  As small, owner operator forecourts closed and big, national brands dominated, the forecourt attendant was replaced with self-service pumps.

So why now - why has Shell re-introduced the forecourt attendant at a time when fuel prices are at their highest and fuel retailers claim margins are wafer thin?  Surely they’d want to continue cutting costs, automating processes and widening the roll-out of “pay at pump” technologies.

Well I think it’s for 3 main reasons

1. Customer Experience

2. Differentiation

2. Forecourt Margin

The first reason, customer experience, is an interesting one.  

On the one hand, customers want quick service and high availability/capacity at a forecourt - I basically don’t want to queue for my fuel or queue up to pay for it -  so this would seem then an obvious place to invest in automation so as to move customers through quickly.  On the other hand, with all fuels being pretty much the same and all forecourts offering the same services, the customer experience is pretty much the same across all brands - there is really no ability to create a stand-out customer experience.

However, with the new forecourt attendants, Shell would appear to be trying to change this, describing their role as:-

“[..] Designed to help drivers with advice on fuels and fuel efficiency, basic car care and safety tips… including checks on oil levels, screen wash levels, tyre pressure and tread. All Shell Forecourt Attendants have been trained by the Automobile Association (AA) to be able to carry out a range of car care tasks for Shell customers"

So this is moving Shell from simply being a outlet to re-charge the fuel tank into a destination to get re-acquainted with your car.

This ties nicely into the next reason which is differentiation.  

In a crowded market, with increased competition from supermarkets, what can a brand like Shell do to stand-out.  If your product/service is basically homogenised, as is the case with forecourt sales, you need to do something to stand out from the crowd.  Price is not an option as the brand leaders don’t have wider supermarket sales to fall back on.  Sales promotions have worked well, but they are hardly ground breaking or innovative and probably won’t reach the heights of the 1980s when people were encouraged to collect glasses or soup bowls.

Serviced fuel however creates a point of difference - and one which people will be more likely to value, helping to obfuscate other properties such as price or location.  Recognising this point of difference, Melanie Lane, General Manager of Shell UK Retail is quoted as saying:-

Across the industry, UK forecourts are generally not considered the most inviting and customer service-focused environments, and we aim to do something about that. The reintroduction of forecourt attendants will be a welcome addition for many of our busy customers.

I suspect however that there is also a revenue opportunity at the heart of this.  

One interesting aspect of the attended service is that I can’t actually pay for the fuel with the attendant.  Given I can pay for a burger with a virtual currency like BitCoin, it wouldn’t be a stretch to give the forecourt attendants the relevant technology to allow them to take payments.  However, this would remove a golden opportunity for me to wander about in the well stocked forecourt shop whilst waiting for my car to be filled or washer fluid topped up.  

Given that forecourts can be earning around 30% margin within the shop versus around 3-5% margin on fuel, it makes sense that Shell would want to get me spending less time filling the tank and more time filling the shopping bag.  I’d only need to spend £10 in the forecourt shop to double the margins earned on a £60 fill up - so this would seem a no brainer really.

This is not unique to Shell however - ironically, service is also being re-introduced due to automation in other sectors.  

Online supermarket sales for example now account for increasing percentage of all sales, with these set to double in the next few years and brands such as Tesco - the global leader in online sales - seeing around 8% of all sales being done online.  This means an increasing number of customers are very rarely setting foot within a supermarket store - and these are valuable customers, spending almost 3 times as much per shop.  For these customers the brand lives or dies based on the front line delivery drivers.  Like the forecourt attendants, these people are bringing a little last-century magic to the modern shopping experience.

As Which? pointed out in a survey of online shopping, the delivery experience can be key saying:-

"As it’s my first time, he presents me with a free pack of Waitrose and John Lewis magazines and recipe cards — a nice touch. He also offers to unpack.  Items arrive in 11 colour-coded bags — green and white for store cupboard and bright blue for fridge and freezer. It makes unpacking a doddle"

Contrasted with another supermarket where the experience is less than perfect:-

"The driver rings just after 8pm to ask if he can arrive earlier. That’s fine — but when he asks me to come out and wave at him so he gets the right house, I’m a little less chuffed. It’s a cold, wet night.  Nine bags sloppily packed. The vegetables are lumped in with the eggs and dried spaghetti, and the washing-up liquid is in with the crisps"

Whilst there is no doubt that Shell will be looking to maximise margins on every customer visit, it can’t be denied that the nostalgic value alone in these austere times adds significant differentiation and a richer customer experience.  Both of these are critical to increased customer loyalty and provide a warm fuzzy feeling that a plastic card and points alone cannot achieve at POS.  

As retailers look to increase these one-to-one customer experiences - delivered by their front line staff -  it will be key that they are well managed to get the best loyalty value.  Based on my personal experience, I can certainly report that Shell seems to be doing a good job so far judging by their courteous forecourt attendant when I visited.  It will be interesting to see how this new service unfolds.

Remarketing - Loyalty's "Groundhog Day"

On February 2nd 2013, famous groundhog Punxsutawney Phil didn't see his shadow in Pennsylvania.

This apparently meant that spring would come early this year - although i'm not sure anyone actually told spring about that as we had a long, drawn out winter - but then I guess it's asking too much of Phil to predict the weather in the UK as well.

Regardless of how accurate this phenomenon is, it was immortalised in the popular film Groundhog day whereby the main character is forced to relive the same day over and over again until he learns to become a better person.  Recently though, you'd be forgiven for thinking the same phenomenon was happening to you.  

Here's the scenario - you're busy surfing the web looking at different products/brands and then all of a sudden wherever you go you keep seeing the same brand that you visited just a little while ago.  Maybe you'd never noticed them before, but now they seem to be popping up everywhere - and days later you're still seeing them all over the web.

Wow, you think to yourself - these guys are everywhere, they must be _____ (fill in the blank accordingly with... amazing, spending a fortune, just right for me, desperate).

You could be forgiven for confusing this with with another effect you see in real-life called the Observation Selection Bias.  When you buy a new car you suddenly see your car everywhere and assume - wrongly - that the frequency has increased; that everyone is now buying that car.  This is not however the case here.

It's actually no coincidence that you now can't fail to miss the brand - they're using remarketing.

Remarketing is a process by which you see personalised advertisements across almost any website that shows ads based on your previous surfing habits.  Google describe it as:-

Remarketing is a powerful way to stay engaged with your target audience. Presenting them with highly relevant ads and offers across the Web -- and making sure your brand is top of mind when they’re ready to buy

Remarketing (or retargetting as it's also known) helps by:-

• Targetting users who visit but don't purchase (up to 97%)
• Helping with brand recall - especially as they're possibly visiting competitors
• Combining branding and direct response techniques to target users across different stages of the buying funnel

Using remarketing, companies have seen a 600% lift in response rates versus standard banner display campaigns.  This is not really surprising given these ads are now targeted at "soft" targets - customers who have already expressed an interest in the brand by visiting the website initially.  It doesn't do away with the initial acquisition marketing to drive traffic, it simply ensures you make the best use of this by having a second bite of the cherry.

At it's heart though, remarketing relies on the the familiarity principle or mere-exporsure effect.  This is the psychological phenomenon by which people tend to develop a preference for something merely because they are familiar with it - it's what advertising is based on!  By using remarketing you continue to remind people of your brand and provide compelling reasons to come back and consider you.  If you're trying to acquire new customers, this alone becomes very powerful.  Research has shown for example that remarketing using personalised ads is 6x more effective than standard banner ads.

While remarketing is now firmly established in online acquisition marketing, I think there is also huge opportunity here for retention marketing.

At it's heart, remarketing is a one-to-one messaging solution based on customer behaviours and it's this that really makes it powerful for loyalty marketing.  Consumers now actively interact with brands via their online websites, making purchases, researching products, writing reviews.  From a loyalty context, they are also checking points balances, reviewing reward options and making redemptions.

Every one of these activities can provide a trigger point for remarketing.  While the messages (displayed as ads) maybe be relatively fixed, the timing of them is highly personalised.

Recognising when someone has checked their balance, has enough to redeem but has not looked at a reward gives you an opportunity to highlight relevant rewards and pull them back.  Members looking at rewards, but not redeeming provides the opportunity to pull them back in to redeem.  However, the opportunity is wider than this.  

It's not just about the single next best action, it's about the journey.  

Using a well designed remarketing campaign, it's possible to track the behaviours of both prospects and members and to tailor the right messaging based on this to deliver the next best action as part of an overall journey.

It's a misnomer to think that 1-2-1 marketing means a single, personalised message for every customer.  Instead, it's about the right message to the right customer at the right time.  You may only have 7 key steps within the overall customer journey, but knowing which step a customer is at and which is the next right step is the key.  We do need to be careful however when myopically driving customers along a predetermined journey.

Knowing the customers journey, not your journey is more important

In a recent (2013) research study by Lambrecht and Tucker entitled "When Does Retargeting Work? Information Specificity in Online Advertising", it was shown that dynamically remarketing to customers based on their browsing habits only worked well if you understand where the customer is in their own journey.  

Based on an example with a travel provider, the study suggests that making the remarketing message highly personalised  - down to the product or product category level - can be less effective than more generic remarketing.   In the study they found that ads which feature hotels that a customer had previously browsed or were similar only prove more effective when the customer is known to be looking for something specific (narrowly construed preferences) and that this was best demonstrated by understanding their wider browsing behaviour with both review websites and/or competitor sites.

This isn't to say remarketing as a whole wasn't working, but that the message used within the remarketing, whether generic or highly personalised needed to be aligned to where the customer was within the buying process - something which may not be apparent from just the behaviours the customer has shown with that brand/site.

Given the wealth of data contained with a loyalty programme and the increasing requirement for loyalty programmes to bring together wider customer interactions, this provides a real and tangible opportunity to increase programme effectiveness.  Whether this is to directly target brand customers for repeat purchase or to more subtly drive up loyalty programme adoption and engagement, both approaches are like to provide compelling returns.

If Punxsutawney Phil comes out next year and sees your loyalty programme using remarketing as part of it's overall marketing strategy, I think he'll be predicting both a very early spring and a bountiful summer.