Outsource digital functions?
Acme Consumer Products announced its decision to outsource all of its finance- and accounts-related activities to an external agency. From this point forward, the company declared, it will no longer be engaged directly in any activities related to finance and accounts. This not only includes the management of its cash balances, invoicing, receivables or payables, but also price negotiations with vendors and compensation levels of employees. "We are not finance people," explained the CEO. "We don't understand it, nor do we have prior experience in it. So why not hand it to the experts, who know better."
Sounds absurd? Well, similar logic is often used today, when it comes to the application of digital technologies to businesses. Now, I wouldn't argue that digital is as fundamental to business as money (leaving aside for the moment that digital crypto-currencies are threatening to alter the nature of money itself). But just as digital is embedded in every aspect of consumers' lives, forward-thinking companies are embedding digital technologies into any activity where it helps achieve business objectives. Digital technologies can be applied to multiple functions in a business. In reality, however, when most people think of "digital", they think "digital marketing", and really, they mean "digital promotion".
But marketing goes a lot deeper than promotion, as it includes customer understanding, brand strategy, product definition, distribution channels, pricing and customer advocacy. "Digital" is applicable beyond marketing, including supplier and partner management, HR, finance and operations.
Venture capitalist Mahesh Murthy tells a story about Carwale, the car shopping website, in its early days. Its founders would ask for approval at every board meeting for a large promotional budget, and he would turn them away each time, exhorting them to improve their product instead.
Pushed to think rather than spend, they built a tool to answer a simple and ubiquitous question"what is my used car worth?"-that drove website traffic far exceeding any estimates from their proposed promotional campaign.
This was a case of taking ownership of your digital strategy, rather than outsourcing it. A marketing agency would have happily taken charge of Carwale's promotional budget, perhaps effectively enough for the campaign to be deemed a success.
But only Carwale understood its customers well enough to think holistically about their car buying and selling journey, and create a solution without regard for the traditional boundaries between product and promotion.
Even if this customer insight had occurred to a marketing agency, it would have been loath to sacrifice its revenue stream, which is dependent on a client's marketing spend, in favour of this product change. But beyond saving money, this product feature gave Carwale ongoing leverage, as unlike promotional campaigns that grind to a halt when the spending tap is turned off, product improvements endure, much like a gift that keeps on giving.
Lest you think lessons from Carwale only apply to online businesses, consider the example of UK-based Innocent Drinks, producer of natural bottled juices and smoothies.
Since 2003, Innocent has organized "The Big Knit", annually. Its customers knit small, wooly bottle caps and send them in to the company. The visible, colourful caps are sold atop bottles in stores, and the extra 25p charged for the caps is donated to Age UK, a charity for the elderly.
The campaign has raised nearly £2 million for charity, and is an important reason that Innocent is now the largest chilled juice brand in Europe, ahead of Tropicana, and growing faster than Red Bull.
The internet is central to the campaign. The Big Knit website serves as virtual campaign headquarters. Besides driving awareness, the website also features knitting designs, with detailed instructions, to inspire and guide would-be knitters.
The finished products-tasteful, witty, cute or outlandish-are posted proudly on Instagram and Pinterest, driving further exposure, brand appeal, conversation and customer identification with the brand.
Could an agency have captured and communicated the essence of Innocent's brand values-its harkening back to an earlier, simpler, more innocent time-with, of all things, an online knitting campaign? Would an agency have the courage and insight to suggest that consumers in the digital age are not just recipients of promotional messages, but can also co-create your in-store product? Would an external agency have executed the programme with the same passion and ownership as Innocent's own employees?
One suspects most agency proposals would have been considerably more banal-along the lines of a laundry list of online banners, social media posts, and search engine marketing. Whether it's reading, courses, or conversations with knowledgeable colleagues and friends, keeping on learning about digital is a must. My earlier column provides guidance on how.