Organisations across all industries must leverage technology to transform and be part of the digital economy. This has significantly accelerated in the last couple of months as they are forced to transform to survive in these difficult times. Digital Transformation (DX) is no longer a hype, but organisations will continue to struggle to align their transformation priorities to deliver real business impact. From experience, the needs of the Sales & Marketing teams are often lost in the midst of competing for organisational priorities with process optimisation emerging as the first choice.
Why is it necessary for Sales & Marketing to transform?
Organisations’ Business Priorities
The primary reason is that organisations are responding to market pressure and putting customer experience (CX) ahead of even revenue growth as their key business priority (Figure 1).
It stands to reason that if organisations have the improvement of CX and revenue growth as their top priorities, they should involve functions that have higher customer interactions in their DX initiatives. Unfortunately, this is not often the case, even though organisations are inherently aware that their customer base is evolving. Sales & Marketing is all about meeting customer needs, solving their problems and giving them a great experience. In today’s competitive world, an organisation will fail without a customer focus.
The Evolving Consumer
Customers are challenging organisations to change the way they deliver a great experience. Take the growth of smartphone use as an example. Almost any activity will have some element of the smartphone being involved – researching a product, using an app, looking at information posted on a social media platform, engaging with friends to get opinions. This is driving organisations to respond with a ‘Mobile First’ policy and a digital nimbleness which they must equip their Sales & Marketing teams to handle.
Social and digital platforms are also forcing marketers to evolve the way they grab their customers’ attention. Customer service has tremendously benefited from the drive to go digital. It can impact every Sales & Marketing operation, beginning from first consumer touchpoint, all the way through the customer journey, post-purchase engagement and even in predicting issues to prevent them. This requires a huge degree of automation in the Sales & Marketing processes.
Emerging Ecosystems
As the digital world becomes a reality for consumers, the traditional supplier-vendor-channel model might soon become redundant. This is the age of ‘influencers’ – bloggers, customers, vendors, and paid endorsements – and an ever-evolving ecosystem. Engagement with the digital community can be a game-changer for many organisations. Such strong digital community ecosystems are hard to include in the traditional marketing model.
What should Sales & Marketing do to transform successfully?
Ecosystm Principal Advisor, Niloy Mukherjee, has some real-world advice for organisations that are looking to transform their Sales & Marketing practices.
Align with your Basic Strategy
Evaluate your key business goals and work out the changes that are required to achieve those. These changes might be so small and incremental that it may not even appear to be a ‘transformation’. Keeping an eye on the goals, will ensure that you do not invest in areas that do not necessarily need changing. It will also ensure that you simply do not replace an existing process with a new one, without first working out how that change will impact your organisation.
Think beyond features – to the Benefits
Technology investments often end up being the shiny new toy. Decision-makers in organisations may get attracted to snazzy devices and application features – and lose sight of evaluating the true benefits of the technology. For instance, the sales rep selling in-store would have a very good idea of what sells and how much stock to carry. There may be no incremental benefit in equipping the rep with an app that provides real-time sales analytics and inventory data. So, the app gets relegated to being just a feature with no real benefits. On the other hand, a field sales rep might find it extremely useful, especially in sectors that are prone to unpredictable spikes in demand.
Be ready to Invest in the change
You have evaluated the changes that your organisation needs, you have identified the technologies that can truly benefit your organisation – you must be ready to invest in that change. This is not only about financial investments – you have to invest time and in people. This requires your organisation to think of the RoI, again not only in terms of finances but also in terms of effort. Be aware that your biggest challenge in implementing the required change might be people – so invest in making them less resistant and more welcoming of the change.
There will be distractions galore in your transformation journey – emerging tech areas, solutions that seem to be working for your competitors and so on. Mukherjee proposes a simple thumb rule, “If it fits the strategy and looks feasible go with it; if it is outside the agreed strategy then think long and hard, and then turn it down – or change the strategy!”
Click here to download the full report ?
The FMCG industry has always been competitive given the need to drive high sales volume because of the low profit margins of the products. As the industry faces changes – such as the demographics of the consumer base and the need to introduce newer sales channels – technology is playing an important role in ensuring that the organisations can remain competitive.
eCommerce Disrupting the FMCG Industry
The concept of online retail is said to have originated in some form in the 1960s. But with the growth of the access to the Internet in the 1990s and Amazon’s competitive business model, it has disrupted the retail and FMCG industries. As we see a steady growth in smartphone usage, digital payments, online banking and app-based platforms, online retail is becoming mainstream. While initially thought to be ideal for the purchase of durables and entertainment products and services (where price comparison is key), it has become common for FMCG companies to use eCommerce platforms. Even perishables are being purchased online with the rise in the number of online grocery stores. This is impacting the FMCG industry in a number of ways:
Change in Marketing Strategy
FMCG companies need to continue their traditional marketing strategy for in-store consumers. But at the same time, they need to reach out to a wider base of consumers who shop online. The profile of these consumers is different – younger and technologically savvier. They do not necessarily believe in brand loyalty. While the browse-to-buy ratio for FMCG products is high, they are having to invest in digital marketing strategies including personalised campaigns and presence in social media and online forums. Even packaging for in-store and online products need to be different for some products.
Increased Competition
An online presence means that your brand can reach a wider audience – this also means that the competition becomes tougher. Now global brands compete with brands from other countries as well as local brands on the same online platform. This raises the bar, with companies competing not only on price and product but also on delivery services and better customer feedback.
Increased Complexity of the Supply Chain
No longer can an FMCG company depend solely on trucks delivering their products to stores at a fixed time of day. As they play increasingly in the B2C space, they have to constantly be aware of seasonality and spikes. This means that their supply chain operations become that much more complicated, and they are having to spend more on logistics and transportation. There is also the need to handle a larger volume of data.
Changing Consumer Profile
As mentioned earlier, the consumer profile of the FMCG industry has changed to include younger consumers who want to shop online. It also includes consumers in newer markets made possible by eCommerce platforms. FMCG companies also have to cater to consumers who are conscious about product quality, the environment and ethics. This means they want to know where the products were grown or manufactured, their carbon footprints and generally want more traceability of the products they are purchasing. This has led governments to come up with guidelines to protect consumer rights. Recently, the UK government issued guidelines on the quality, labelling, standards and food safety including the right logos, health and identification marks.
The global Ecosystm AI study reveals the top priorities for FMCG companies, focused on adopting emerging technologies (Figure 1). It is clear that their key priority is to handle the competitive market by focusing both on the consumer and the supply chain. Supply chain optimisation through demand forecasting ensures that they are not managing extra stock, and simultaneously not losing out on customers because of lack of stock. This just-in-time inventory management includes initiatives such as pricing optimisation in response to market demand, competition and – especially in the case of perishables – ensuring that stock closer to the use by date is cleared.
Technology as an Enabler of FMCG Transformation
The one advantage that FMCG companies have today is they have access to enormous customer and inventory data. As a result, they are able to leverage several emerging technologies to transform.
Digital Marketing
One area that is transforming the industry is digital marketing which includes multiple aspects such as search engine marketing, video marketing, social media activity and email marketing. While several technologies come together for a digital marketing solution and AI is a key component of the solutions, there are platforms that provide an end-to-end solution.
Digital marketing is most effective with a targeted group of customers and when organisations can identify digital or social champions. Johnson & Johnson’s Babycenter.com is a good example of how creating a digital community can help market products. The core idea behind the website is to give expecting and new mothers advice on early childhood. While on the surface it appears disassociated from Johnson & Johnson, the site almost exclusively carries their advertisements. This gives them a targeted base to push their products to. Dollar Shave Club is another example of how brands can leverage digital marketing. Their social media engagement has been so successful that they got bought over by Unilever. The digital campaign includes incentivising members with their products for posting about them on Instagram or Facebook.
Blockchain
FMCG companies are investing in Blockchain and digital ledger technologies for track and trace functionalities and operational efficiency. The technology not only helps manage the supply chain better by effective shipping timelines maintenance, delivery management and inventory management; it also helps build trust in a brand. It helps in compliance management, reduces the number or need for middlemen, easier handling of cross-border transactions and brings about an end-to-end accountability.
Danone initiated a Track & Connect service for their baby formula using Blockchain for transparency and traceability to show the authenticity of their products to parents and for a better customer experience. FMCG companies will benefit immensely from the farm-to-fork accountability concept initiated by Agriculture.
AI
From predictive analysis to machine learning to deep learning, AI is bringing a lot of benefits to FMCG companies. AI is enabling companies to discover gaps (both in their consumer interactions and in the supply chain) and make their processes intelligent – including demand forecasting, supply chain optimisation, personalised product offerings, social media analytics, consumer sentiment analytics and recommendation engines.
FMCG organisations are analysing internal and external data sources for both sales and improved customer experience. As FMCGs are forced to sell online to remain competitive, they have access to a high volume of the consumer as well as supply chain and inventory management data. Coca-Cola remains one of the leaders in the FMCG market by leveraging this data, including product research and social data mining. Even their vending machines are looking to leverage AI for personalised offerings and for loyalty programs.
The need to enhance the customer experience has also seen innovations like the Maggi Chatbot – “Kim”- that helps customers learn about Maggi recipes, ingredients, and dietary requirements, through Facebook Messenger.
FMCG companies that cannot afford to invest in technologies such as AI also have the option of leveraging the technology offerings of their online retail platform. eBay offers analytics as a service to the sellers – offering them data, metrics, and analytics to help them succeed. They also introduced computer vision technology to help sellers create clearer and more attractive images for the platform.
In this competitive market, we will see FMCG companies – and not just the big global brands but also the local producers – embrace more technology.
