How do consumers choose in a world of automated ordering?
The term “frictionless commerce” is widely used to describe how digital technologies are blending product purchases seamlessly into consumers’ daily lives. In frictionless commerce, purchases will be automatically initiated on behalf of consumers using real-time, integrated data from known preferences, past behaviours, sensors, and other sources.
Envision, for example, a “smart fridge” automatically ordering food items it senses are running low. That is not common as of yet, but ever since consumers were offered the option to shop online from home, rather than having to go to a store, technology has been rapidly removing the friction from commerce.
As frictionless commerce accelerates, so will a momentous shift in the node of commerce. In the era of department stores and supermarkets, consumers selected brands from store aisles and shelves. Today, the in-store experience has been increasingly displaced by online shopping and the node of commerce will be consumers themselves, rather than any distinguishable “channel.”
(1) Weaning consumers
Frictionless commerce will test the emotional bonds that make consumers loyal to established brands. Already, consumers are being disintermediated from traditional brand choices via search engine and online retailer algorithms, which determine which products are presented to consumers, and in what sequence. That puts all brands in danger. Most consumers are at best passively loyal.
When algorithms replace consumer emotions as the prime force shaping purchasing decisions, consumers could easily fore go their customary brands in exchange for the speed and convenience of whatever is offered by the self-interested, digitally empowered parties now taking control of consumer choice.
To remain successful, established brands must give consumers a reason to interrupt the increasingly automated purchasing process and actively choose a brand, rather than passively accepting substitutes. We call this “building brand friction in a
frictionless world.” (2) Influence Vs. Affluence
We see peer influence as a growing force in determining where consumers spend money and what attracts them to brands. Affluence, the traditional source of consumer power, is being supplanted by consumer communities, shaped by shared interests and self-selected demographics. Persuasive individuals can now change the fate of brands easily, underscoring the need to focus on how consumers think and what they value.
In sum, there is clear imperative to adopt more consumer-centric models and rethink everything you do from the consumer’s perspective. Stop resting on comfortable assumptions about the strength of your brands, your customer loyalty scores, or current success. Right now, complacency is your worst enemy.
Here are a few ways to start adapting to the realities: (a) Use data to understand
customers on their terms: Be prepared to offer consumers meaningful value in exchange for their proprietary data. Demonstrably use their data to enhance their lives. (b) Redefine your target market: Traditional demographics are no longer sufficient. They will be increasingly replaced by “personagraphics” — the use of psychographics, anthropology and sociology to identity individual needs and desires across crisply defined consumer cohorts, around which
future consumer decision models will be built. (c) Listen and translate more
than you broadcast: Challenge the complacency that stems from having an abundance of consumer data. Build more ability to identify and anticipate the new keys to brand loyalty. (d) Shift from channel strategies
to consumer centricity: Digital connectivity will make channels all but indistinguishable. Redirect resources away from understanding channels toward deeper understanding of consumers.
(e) Tap influence: As the mass marketing age fades, create brand friction via increased use of membership models and event-driven marketing. Build a sense of community within target cohorts by facilitating a network effect for influencers.
Formerly, technology greatly empowered brands by connecting them with consumers on a mass scale. Now it threatens to have the opposite effect, as the automation and algorithms of frictionless commerce disintermediate brands from the consumers they seek to serve.
Greg Portell is lead partner, Consumer Industries and Retail Practice – Americas Region at A.T. Kearney, the global management consulting firm. Abby Klanecky is chief marketing officer at A.T. Kearney. © 2018 Harvard Business School Publishing Corp.
Even the most capable and sophisticated marketing organisations will need to fundamentally change their mission and shape.”
In the traditional shopping experience, clients would browse through the well stocked aisles, but more and more, the in-store experience has been increasingly displaced by online shopping. Retailers must restrategise accordingly.