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Convergence

7 questions and 7 answers

Grenville Main February 2010
open 2 7x2

We asked a diverse bunch of experts and opinion leaders working across a range of sectors to answer the same seven questions – Where are businesses using multi-channels well – and where is convergence or integration really working for both business and customers? What is fundamentally driving the need to be multi channel – self service, personalisation, cost, competition?  What NZ companies have transformed their businesses through work in this space?

The Experts are: Sarah Gibbs – Co-founder, Trilogy Skincare; Kostia Shinderman – Manager Digital Strategy & Operations,  BNZ; John Lee – Editor Theme Magazine, New York; Mark Di Somma – The Audacity Group; Frank van der Velden – Chief Executive Officer, Touchpoint; Charlie Ward – Design Director, DNA; and Simon Coley – Creative Director / Co-Founder of Powershop and AllGood Bananas.

 

1. As a business how and/or are you using multi channels?

 

Sarah

 Yes, at Trilogy we are multi-channel, leading with retail and physical distribution and well as the digital space as well. Although you can buy from our website we use digital as much more of a marketing function rather than a selling function in most of the markets we are in. Physical retailing, in Australasia at least, absolutely dominates our selling function in terms of percentage of sales.

Kostia

As a bank, we need to make it easy for our customers to manage their business, transact and engage with us. We realise that channels, devices and most importantly the understanding and expectations of these channels has matured. The breadth of channels offered by banks is still growing incredibly fast (especially around mobile and integration with third party channels), however, the focus of late is more in the optimisation and actual use of these channels rather than the creation of new ones. The tricky part we are facing is how we combine the experience within these channels based on our knowledge and understanding of the customer and their journey.  We know that a customer may use up to three or four different channels when making a purchasing decision and that there will always be a primary or preferred channel for different events.  To that end, channels BNZ is currently using includes stores, websites, internet banking, ATM's, IVR (telephone banking), digital screens, inbound and outbound contact centre's, mobile, radio(?), twitter and tv.  We continue to increase the effectiveness and opportunities for each of these channels.

John

Yes, but we're finding that not all channels are effective. If you think about a company as a brand and each channel as an extension/face of that brand you run the risk of brand fragmentation if you don't optimize the time you spend on each. I think going forward brands will find that dabbling in certain channels can actually be detrimental to their brands by eroding the effectiveness of their presence in the channels that actually are beneficial to them.

Mark

I’d like to think we’re using the right channels. The temptation is to feel you have to use a whole lot of channels, basically because they’re there. My view is - use as little as you must to get the results you want, but be very clear about what you’re using, why and how you’re measuring success.

Frank

Yes.    

Charlie

Almost all clients I have now require a multi-channel approach to brand development, application and experience. Approximately five to six years ago only clear market leaders considered multi-channel brand application whereas monopolies and catch-up brands considered the online environment as a peripheral concern.  Now almost all competing brands consider multi channel brand execution and application as a mandatory part of the mix. As a practitioner I immediately consider the spectrum of clients’ needs from a holistic and unified perspective – e.g. the needs of their customers. This means multi-channel consideration. This also means fitness for purpose and less needs to be more. With more and more brands now translating into digital media the opportunities for new and fresh forms of engagement and experience are highly liberating and rewarding for creators, clients and their customers.

Simon

We’re an online business. Our primary channel for acquisition and customer service is the internet. Powershop offers greater control of power usage at lower prices. This is entirely dependent on our web enabled application and the transactions it supports. We’re also developing mobile applications as extensions of this service like iPhone apps. Although nothing beats face-to-face engagement, we’re endeavoring to achieve the same sort of relationship over the internet and the phone. In a recent Consumer NZ survey we gained an unprecedented 92% score for customer satisfaction so we’re learning how to deliver great service without a shop you can walk into. We connect with our customers via their web browser, inbox or telephone. We also have over-the-counter payment services, meter reading services and we occasionally communicate by good old fashioned mail – in the post.

2. Where are businesses using multi-channels well – and where is convergence or integration really working for both business and customers?

Sarah

The wine industry and the fragrance industry to name a couple...

Kostia

The difficulty lies in using the channel mix as effectively as you can. The best examples provide consistency across all channels, a focus on customer needs while also making significant operational and process improvements.

John

I think one of the best examples of multi-channel presence is Lance Armstrong and his LiveStrong project. I personally follow his twitter and I am aware of his projects in the art world as well as what he does in the Tour de France. He is a defining presence for Nike and Trek. The main reason is that the story is so compelling that we tend to try and see the good in everything the brand touches. He is a media tour de force. Smart guy.

Mark

I’m still judging most of what I see against the Obama campaign, which I think took intelligent integration to a whole new level. Layered tactics, layered motivations overlaid by a single mantra that everyone got and which was perfectly timed. Social media and the internet have altered the fundamental conversation that marketers need to be having with consumers - from telling to talking. Participation is the new metric. But it needs to be a disciplined participation run to clear outcomes, not just a volume talk-fest. And that’s where companies like Apple do it so well. They’ve stuck to their proprietary systems and then used a range of channels to invite consumers to come and see. Ironical, really - an open invitation to participate in a (relatively) closed world. In this context, channels aren’t noise, they’re tickets. When you go into one of their stores, for example, you don’t just enter a building, you very much step into the kingdom.

Frank

It works especially well where data is collected and used intelligently.

Charlie

No-one yet does it really well. Some do it okay. In the corporate world “KiwiBank” are notable. As a challenger business startup with a low cost positioning the brand started up in a highly competitive environment and has carved out a differentiated position forcing other banks to reassess their brands and offers. The offline brand is differentiated (and reiterates the low cost model), it’s above the line has unique attitude and online is handled with good execution in terms of its interface design and functionality – its almost easier to do it all online. In New Zealand retail, IceBreaker is highly notable. The IceBreaker brand is governed by aesthetics. Very powerful in the physical environment, but could be more effective in the online environment. I believe they could be more effective in the online or digital environment by placing emphasis on digital media as an ecommerce tool and as a more effective tool to maximise the impact they can have in the global market. Their offline brand is constantly reinventing itself, this also needs to be translated into the online environment. Im sure they are onto it as we speak as they do all with passion, beauty and confidence. I also admire Air New Zealand and Tourism New Zealand as these brands seem to work for both parties.

Simon

There don’t appear to be many companies in our industry – power– or other utilities and commoditised essential services whether they be electricity, water, gas or even telecommunications, that use the immediacy and context of emerging internet and wireless enabled channels to full effect. Especially to understand usage of these commodities in anything close to real time. There’s a great example of a power metering device in Germany that uses Twitter to tweet your meter reading so you know how much power you are consuming at that moment. Google have project called Google Powermeter and IBM labs in the UK have rigged up household appliance consumption data to SMS. These may be a small, geeky developments but they play an important part in helping us – customers – understand our usage of increasingly rare and important resources.

3. How should a business cope with this seeming collision (the digital and the physical) in context of meeting the needs of its customers?

Sarah

For us we take a very market specific approach to addressing this question. For example in the UK we have recognised that on-line purchasing  is a key channel both now and increasingly in the future. The act of going into a physical retailer to buy our products is relatively less convenient (and less enjoyable) when you are faced with a large population and transport limitations.

Kostia

Very carefully. A good start would be identifying who you want as a customer, focus on that customer segment, understand what's most important to them, then invest accordingly across the channel mix to meet the customer’s need and realise new opportunities. It's also important to note that digital channels will not always reduce the need for physical channels, but more importantly compliment and allow a refocus and optimisation of these physical channels to achieve new opportunities which may not have been possible previously. So, it's really an "and" not an "or" strategy. 

John

To be honest most businesses I think should first be aware of their primary reasons for existence. What is it that we make? What service do we provide? If one is honest with that assessment and can define it easily, you'll find that meeting the needs of customers can be mapped out as an organic extension of what you do. Stay focused.

Mark

Apply the same discipline to your channels as you do to your brand. Be very single-minded. Know who you’re looking to reach, why they’d want to hear from you and how they’d like to interact with you. In the words of Landor, make a promise and then deliver an experience and a memory. Everything else is a distraction.

Frank

Experiment, experiment constantly and capture learnings.

Charlie

Arguably, the needs of the customer are no different in the multi-channel world. The task for the designer is no different. However the skills to deliver in both offline and online are quite different, and this is what I find exciting and challenging. I believe business must not lose sight of its’ reason for being and where it wants to be in the future and how it is going to get there. Intelligent multichannel delivery deals with expressing and tangibly demonstrating all of the above.

Simon

As your title implies ‘openess’ in all forms is essential if your brand promises to empower and engage consumers. As a recovering ‘Creative’ I take an interest in the jargon of our industry. There aren’t many creative briefs or statements of corporate values that don’t employ the ‘empower’ and ‘engage’ words. Ari, our CEO at Powershop, often gets asked to speak to peers about his twittering and blogging. The question most often asked is ‘how do you control this media?’ and the answer is you can’t – you have to be open, say what you mean and deliver it. Another cliché: listen to your customers. Most, if not all, of our product enhancement and development is coming from customer feedback. And more and more our current customers are becoming our unofficial sales force for future customers.

4. What is fundamentally driving the need to be multi channel - self service, personalisation, cost, competition?

Sarah

From both a marketing and selling perspective Digital = Convenience.

Kostia

Customer. .. where they are, and where they want you to be.

John

I'd say there is a collective me-too'ism that drives the majority of marketers. There is a fine line between being tech-savvy usage of all available tools and throwing away good money on the new "it"  unnecessarily. Companies have to be honest with themselves - if you twitter, will people really follow? Pepsi's recent failed attempts at building their own version of Facebook - or dare I say it; Second Life! Dunh Dunh Dunh - are both great examples of efforts that should have been tempered by a little consideration. I guess we should all be asking ourselves - does this REALLY help the world? Do we really, really, really need this?

Mark

Hype, fuelled in large part I think by a false premise. There’s a real belief that you have to be everywhere for everyone all the time. And marketers like the scattergun approach because it makes them feel like they’re doing stuff, like they’re getting the word out. My view is fewer channels, better resourced are much more important than lots of channels, thinly spread. Businesses need to be much more focused on why they’re in each of the channels they’re in, what function it serves for them and the people who buy from them, and what value it adds.

Frank

Consumers wish to be in more control and do stuff themselves increasingly – they only want “relationships” when they’re in strife or really need something.

Charlie

Customers dictate whether a brand should be multi-channel or not. Some brands exist without being multi-channel. I find this to be antiquated and slowly will be rendered obsolete. Arguably, it is all of the above, self service, personalisation, cost and competition. Visionary brands instinctively embrace the multi-channel world and seek ways to deliver enhanced experience using the arsenal of different channels in fresh ways.

Simon

For us it’s a combination of the promise of these ubiquitous technologies finally coming of age – people are becoming more familiar with online transactions across many types of devices and often prefer them. And there’s continuous improvement in the design of user interface driven by the race to pack more functionality into smaller spaces on devices like the iPhone. It’s also fundamental to our business to reduce the cost to serve our customers and provide a better service through scalable technology. Better service comes from personalisation and UI design, scale comes from great code and operational processes. Fortunately we seem to be getting good at delivering both.

5. What NZ companies have transformed their businesses through work in this space?

Kostia

Air New Zealand (as duly recognised by their ATW Airline of the year award) and to be fair, all banks as a whole in NZ are very progressive with their sophistication in multi-channel offering...

John

Weta Digital. It's a compelling story of a company that does great work and is beginning to expand its offering beyond hobbits.

Mark

Air New Zealand’s done a great job of using their channels to basically get fliers to do more and more of the work. If you think about it, we now book our own flights and check ourselves and our baggage in. No doubt this has saved the airline a lot of money and helped see them through some tough times, but they’ve been very smart in positioning those changes as improvements and the right to choose. They’ve also made it part of the ritual of how you fly with them, and as we all know one of the simplest and most effective things you can do is to get customers to adopt a simple, branded habit. 

Frank

Flight Centre - and banks are generally part way through what is a multi-year journey.

Charlie

KiwiBank, IceBreaker, Weta Digital, TVNZ to name a few.

Simon

I’m fascinated by the transformation of media companies – they way news and entertainment is acquired and distributed is being shattered into millions of streams and these developments are beginning to influence other industries. I think these many-to-many channels and ultra-personalisation will begin to change the way more traditional businesses communicate with their public. An example from Dell is the best of mash-ups between the face-to-face world and user driven online experiences. They are successfully supporting their online customer experience with real time contact using video pop-ups where service agents can talk directly to visitors on the Dell website. Another example; we’ve seen our friend-get-friend programme inspire customers to promote Powershop on message boards on TradeMe in order to find new friends and encourage to them join – kind of like setting up their own stalls for us in the market.

6. What sectors are particularly suited to online/retail convergence, and who is not?

Kostia

All sectors can potentially gain significant acquisition or retention benefits by leveraging online and offline channels – as long as it’s done appropriately.  As online take up is only going to grow, and technology is now racing to keep up with customers’ expectations, it’s critical for any business to be where the customer is or wants to be. Some sectors could use Digital/emerging channels as primary channel to increase sales, reduce cost while others may use this as a complimentary channel to provide value add services or help retain their customers.

 John

The New Zealand wine industry could really leverage some sort of collaboration with Fedex for example - if the Japanese can Fedex the freshest fish daily around the globe, perhaps there is an opportunity for a demand-availability structure that could enhance brand value and continues to build upon a compelling brand story. As with television in the 80's the Japanese aren't exporting Fish, they are exporting Quality [ie. The BEST!] and that is something New Zealand has in spades.

Mark

Face to face is still the most powerful way to sell and buy I believe, because it’s still the most personalised and the most tactile. But I’m increasingly drawn to the freemium-premium framework where you use specific channels to encourage buy-in, but then you make a different experience or a premium experience available in another channel, which generates a higher price tag. Too many retailers it seems to me look to make their online presence an extension or another version of their retail experience. My view is that each channel needs to be worth its while, literally, so you need to be very clear about what customers get from one channel that they don’t get, or get less of, than they do in another. If you want me to go in-store, for example, then make it worth it. And make sure that staff in-store are trained to deliver me an experience and a memory that will make me more loyal and more likely to buy more while I’m there. Don’t just make the shop the fulfilment station for the online brochure. Convergence is not just about integrating your channels, it’s actually about integrating your whole business approach.

Frank

Banks, financial services, media, telcos and commodity items.

Charlie

All industry sectors can benefit from online and retail convergence. I believe most organisations should now look at online versus above the line and offline and change their weighting or emphasis. A holistic approach still applies. Emotional connection, enhanced experience and great execution still applies. But more than ever speeding up timeframes, bringing benefits to life, deleting repetition, shortcutting application steps are all valuable to consumers.

Simon

I’ve been busy with another project trying to work out how to use the web to establish a premium, ethical brand selling fresh produce and in some ways the Powershop pricing model is similar to selling perishable goods (some of our products have expiry dates). Although the immediacy of the web as a means of exciting and informing purchase seems an obvious opportunity the solution isn’t quite so obvious. I think we’re beginning to prove that a commodity as unlovely as electricity can be presented in ways that encourage more frequent consideration without this being a burden. And judging by our customer feedback some find this engagement even has an element of fun. So, if people can be excited by the prospect of buying electricity there’s hope for even the least sexy sectors. Back at a consultancy I worked at in the early days of the internet we joked about hooking up toasters to the internet. The joke has backfired. Now something as ridiculous as an internet enabled kitchen appliance is beginning to make sense.

7. What’s the potential/trajectory in this space – what’s your prediction for what’s going to happen next and why?

Kostia

I think we're still a little way away from true multi-channel experiences (bar a few market leaders), namely due to the fact that it's not actually about the capability of the channels which is lagging, but culturally how business leaders appreciate and accept the change in a business which is driven by the customer. Some organisations are getting there and will lead the way. My prediction is that the culture of businesses will slowly change but leaders in the digital area will need to get skilled up in how to communicate effectively and prove that new and emerging channels have just as an important role to play as the traditional channels.  Once the capabilities are in place, let the customers dictate how the business and its channels evolve to suit them.

John

All things being cyclical I'd be surprised if we don't see an improvement in the way we do things for a while and then we'll go back to the same ol' - same ol'. I see Swatch watches and parachute pants making a big comeback.

Mark

Channels are a bit like discounts. If you just make them available because you think you should or because everybody else is, then you’re simply spending money not generating it. Sure, people will use channels if they’re there, but will all those channels generate the return needed to justify them - and are the criteria around what’s working and what’s not absolutely clear. I think many businesses have a lot more work to do in that space. 

Frank

Mobile - once we reach a critical mass of smart phones in consumer’s hands combined with reasonable telco pricing plans – currently expensive.

Charlie

As a designer I see huge opportunity. Organisations like Apple lead the way through a stronger emotional connection, beautiful design and execution, in meeting old needs in new ways and showing the customer respect and loyalty. Print will remain. Moving media/digital media are a ubiquitous force in much of modern life. The most successful of our clients will face the future with open but considered minds. My bet will be greater saturation of video content or digitally enhanced moving media content, more intimate interaction between brands and customers and a higher degree of personalisation and bespoke solutions for customers. Pretty exciting really!

Simon

I think the answer is a question – the same posed earlier. The disintegration of traditional media is changing our habits as consumers of news and current affairs and testing our belief. So called social media is blurring the boundaries between journalism and gossip, paid for and free content and somewhere in between is where people will find information they can believe. There is massive change and massive opportunity in the way we connect and transact with each other and, at the moment, little guys have just as much power in this environment as big ones. In some ways the smaller you appear the more credibility you have. So the big question for me around open-er markets and communications enabled by these new technologies where you can connect with anyone, anywhere, anytime, lies in your own personal editorial policy and judgment – How do you find what you want and who do you trust? And somehow I don’t think the answer is Google.

The Experts:

Sarah Gibbs - Co-founder, Trilogy

Sarah is Managing Director of Trilogy natural Skincare. Sarah and Sister Catherine founded Trilogy in 2002 with a commitment to natural skincare and a passion for the environment. Today Trilogy is an established leader the natural skincare sector in Australasia, and is sold in Europe, UK and the US. Trilogy have built a great brand and a dedicated band of loyal staff and partners. Sarah spends much of her time travelling to develop markets for Trilogy’s ever growing range of products. Trilogy may be young but they are growing fast – they have featured in the Deloitte fast 50 for the majority of the last five years. www.trilogyproducts.com

Kostia Shinderman - Manager Digital Strategy & Operations,  BNZ

Kostia is Manager, Digital Strategy & Operations for BNZ (Bank of New Zealand) and leads the bank’s evolution and customer experience across it's core digital channels.

John Lee - Theme Magazine, New York

John H Lee spent his youth growing up in such diverse locations as Borneo, Seoul, Kuala Lumpur, Melbourne, and Auckland. While attending college he spent two years as a professional BMX rider, developing his own brand of skate/bmx clothing, and organizing events and concerts promoting the culture. From ’91 to ’96 he art-directed advertising and initiated guerilla marketing campaigns throughout Asia for clients like Levi's, BBH, McCann Erickson, and Nike. In 1997 he moved to the U.S. where he has directed and designed volumes of projects for clients including the Gap, Brooklyn Machine Works, (capsule), Tess Giberson, and Diane von Furstenberg. He is also one of the founders/publishers of a quarterly culture magazine called Theme. He lives in Brooklyn, NY with his his partner Jiae and their son Ssinjin.

Mark Di Somma - The Audacity Group

Mark is an internationally respected brand thinker and speaker. Mark has worked as a brand strategist successfully for many years, and his site and blog are a source of constant inspiration to us here at DNA.

Frank van der Velden - Chief Executive Officer, Touchpoint

Frank has over 20 years experience as a chief executive for technology companies including long established companies requiring re-focusing and start-ups. Franks' career was founded in the corporate world of liquor in New Zealand and the oil industry in both the UK and New Zealand. He is a chartered accountant and member of the New Zealand Institute of Chartered Accountants.

Charlie Ward - Senior Designer, DNA

Charlie came to New Zealand from Ireland via London and St Martin’s college of Art and Design. He has been winning awards internationally and inspiring businesses and consumers in New Zealand ever since with work for the likes of the All Blacks, Icebreaker and Telecom. Charlie has been a DNA team member for 10 + years.

Simon Coley - Creative Director; Co-Founder of Powershop and All Good Bananas

Simon has been a well recognised Creative Director internationally, and on returning to New Zealand he has been sought by many New Zealand companies for brand, design thinking and product development leadership. Simon has been integral in the success of B_E_E and 42 below in NZ, and was heavily involved in establishing NZTE’s Better by Design programme. He is currently one of the brains behind Powershop and the wave of organic fair-trade bananas hitting New Zealand stores for all good. 

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