How do con­sumers choose in a world of au­to­mated or­der­ing?

The East African - - BUSINESS - COM­MEN­TARY GREG PORTELL AND ABBY KLA­NECKY

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.”

Pic­ture: File

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.

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