By Scantrust Marketing on Jun 20, 2019 5:10:29 AM
“With digital technology, it’s now possible to have a one-on-one relationship with every consumer in the world,” says Robert McDonald, the CEO of Procter & Gamble. One way to build that relationship, he says, is through consumer feedback.
Decades ago, that meant listening to cassette-tape recordings of customers’ comments and reading and responding to letters. Nowadays, one can monitor social media sentiment, study loyalty program engagement via an app, and even conduct surveys on websites launched from digitally connected product packaging.
These digital touchpoints allow marketers to gain deep insights into consumer behavior. Today more than ever, companies have the capability to gather high-quality consumer data. However, many companies have not yet harnessed this data to glean significant customer insights and improve consumers’ experiences with their brand.
In fact, McKinsey & Company notes that one of the most underused assets of consumer-packaged-goods companies is the massive amounts of data they have gathered. Organizations are missing the opportunity to use data to optimize their supply chain, as well as to improve their understanding of their consumers.
Data-driven insights are so important that global companies, including P&G, L’Oreal and Nestle, helped launch a consortium in 2018 to understand shifting consumer sentiment across different industries. The consortium aims to provide researchers and companies with real-time “insights on demand” enabled by technology and automation.
One technological development that could help provide such insights is digitalization.
The Role of Digitalization in Consumer Data Analysis
Digitalization transforms the way companies operate, from creating products to distributing and marketing them, and even monitoring their usage. It is all about “the use of digital technologies to change a business model”, instead of simply switching from analog to digital processes.
To digitize machinery and goods, companies embed a tamper-proof physical unique identifier into a product. This digital ID can, for example, be an Internet of Things (IoT) sensor, RFID tag, or QR code. It is then connected with the appropriate digital asset by entering it in a database or blockchain. (To further understand how this process works, read this article on Five Steps To Digitizing Your Product).
But that’s only one part of the process. The next step—the part that truly brings out the benefits of digitalization—is data analysis. The IoT devices and identifiers that connect physical equipment and products to the digital realm are capable of capturing data, which is then fed to a business intelligence dashboard that different teams within a company can use.
For example, on the production floor, a machine’s sensors would pick up variables like humidity, room temperature, materials being processed, and more. In a grocery store, a shelf with embedded sensors could detect the number of shoppers that pass by, and provide data on which product placement succeeds most in attracting buyers. Digitally enabled tags on product packaging could provide information on when and where the item was bought, how long it stayed on display before being purchased, and when it was opened.
Marketing managers can then use this data to analyze consumer behavior and preferences, and make the necessary changes to increase sales and make their goods more relevant to their target market, at the right time.
Harnessing Digitalization to Improve Consumer Insights
Through digitalization, marketing managers can transform the way they obtain consumer insights by viewing multiple channels and touchpoints as ways to capture data. For example, the product or product packaging itself can capture information that provides insight into consumer behavior.
Take the example of Nike Fit, a digital foot measurement tool Nike announced in May of this year, that uses “computer vision, data science, machine learning, artificial intelligence and recommendation algorithms” to scan and measure the full shape of a person’s feet.
Consumers simply need to use their smartphone’s camera to scan their feet using Nike Fit. The app collects 13 data points for accurate measurement. This data is stored in the person’s NikePlus member profile and used to recommend shoe types and sizes.
As the data is tied to the individual’s NikePlus membership account, Nike knows which program member has downloaded the Nike Fit app. Nike can also see which scans and product recommendations led to a purchase.
Members can even use a ‘guest mode’ to scan other people’s feet if they want to give them shoes as a gift. This helps the company identify which shoe purchase is for the member and which one is bought as a gift, enriching insights on consumer preferences.
At the same time, the NikePlus member enjoys an improved shopping experience due to the assurance of a perfect fit for every shoe purchase or gift. The member will also get personalized recommendations based on their feet shape and size.
Nike adds that “Nike Fit will improve the way Nike designs, manufactures and sells shoes” by making sure that they create shoes with better fit and accurate sizing. It will also reduce the frequency of product returns or exchanges caused by an inaccurate fit.
Another innovative digitalization strategy is Domino’s Pizza’s AnyWare, which integrates with AI assistants like Amazon Alexa and Google Home so consumers can order pizza using voice commands. Buyers can also place orders via Facebook Messenger, Slack, and SMS, Twitter, or directly on the Domino’s app, which also has a voice command feature. The goal, in fact, is for consumers to be able to order and even customize their pizza using any device.
“Domino's AnyWare literally translates to data everywhere,” says Dan Djuric, Vice President- Global Infrastructure and Enterprise Information Management at Domino's, in an interview with Forbes contributor Bernard Marr. “Ultimately we start to build this unified customer view, measuring consistent information across our operational and analytic layers.”
According to Marr, the data captured through these different devices is fed into Domino’s Information Management Framework, where it is then combined with data from other sources for more in-depth analysis of consumers’ experiences. These data may come from delivery services, point-of-sale systems, and demographic information, among others.
Armed with this information, Domino’s marketing team is able to offer customized coupons and compare their performance in specific markets with that of competitors. This, of course, is just a glimpse of how the company leverages consumer insights. Domino’s stock has improved steadily over the years, even outperforming the likes of Apple and Netflix.
Tesco, a British supermarket chain, shows another way for marketers to leverage digitalization to improve consumer insights. It tags every purchase by loyalty cardholders with a unique customer ID. This generated millions of customer purchasing data points, which the company used to send personalized discounts to each cardholder through their loyalty program member accounts and their mobile phones.
The purchasing data also allowed Tesco to anticipate market demand for specific regions and product categories, as well as adjust their product offering to suit purchasing trends.
These examples illustrate different ways marketing managers can harness product digitization to improve consumer insights. The data gathered from the usage of the app can potentially allow marketing managers to:
- Understand consumer shopping behavior, the changes in their buying habits, their reasons for purchases (such as giving gifts). Keep in mind that consumers today research and compare products between brands much more than they did ten years ago. They also have more sources of inspiration and influence, especially through social media and online reviews, and more purchasing channels.
- Determine individual consumer preferences. Data gathered through digitalization can provide marketing managers with insights into consumers’ lifestyles, needs, and preferences.
- Personalize marketing campaigns. By understanding each consumer’s shopping habits and preferences, marketing managers can deliver personalized product recommendations, promotions, rewards, and content. For example, for shoppers who prefer to buy products in physical stores, marketers can use beacon technology to send ads, reminders, or promo offers to the person’s smartphone when it’s within the store’s vicinity.
- Provide input on product design and development. With knowledge about customers’ needs, marketing managers can work with product managers, engineers, or designers to improve the company’s goods. This can also prompt the development of new products or product features.
- Identify consumer segments and trends. A certain customer profile might exhibit similar shopping behaviors during a given season. Certain buyers with similar characteristics may exhibit the same buying preferences and patterns, enabling marketers to identify a new potential customer segment.
Making the Most Out of Digitalization Data
While it seems intuitive that consumer data can lead to marketing insights, it’s not always easy to extract the most value out of information gathered through digitalization. For instance, when digitizing a product, a company might not take into consideration marketing managers’ data needs, and may focus solely on data that helps optimize the production process.
That means marketing managers—as well as other teams and departments—need to provide their input even at the planning stage of the digitalization process. They need to communicate their marketing goals for product digitization, and identify the metrics they wish to track.
Some marketing goals for product digitalization include:
- Driving engagement in a customer loyalty program
- Understanding in-store buying habits
- Delivering personalized ads near the point of sale
- Reinforce brand values and mission (e.g., embedding a QR code in a product package that leads to a website explaining the company’s ethical sourcing practices)
These goals will influence the company’s overall product digitization strategy, such as determining what kind of physical identifier should be used and where (e.g., an NFC sensor tag printed on a product label) and what will happen after a consumer activates the identifier (like launching a website, a loyalty program app, or an augmented reality game).
Marketing managers should also consider how to protect consumers’ privacy. For example, consumers must be notified of what will happen once they scan a QR code. Of course, an app must abide by legal privacy requirements and provide consumers with a way to opt out of the gathering of certain data. Companies can anonymize data by using only IP addresses instead of a person’s name.
By determining marketing goals in relation to digitalization, marketing managers can provide input into their company’s digital transformation strategy. They will be able to identify the types of information and metrics they need, and harness the data to reap significant consumer insights.