ibm presentation at oracle retail loyalty dinner
DESCRIPTION
IBM presentation on Retail Loyalty study to Oracle audience in Dallas on April 20. 2010TRANSCRIPT
IBM Corporation 2010
1
The New Retail Imperative The New Retail Imperative –– Blinding Self Interest Meets Optimistic AltruismBlinding Self Interest Meets Optimistic Altruism
What a long strange trip its been
The way customers reach us used to simple.
We’d advertise and promote
They’d come
We’d serve them well
They’d leave happy
They’d return
But the current market, the current media and the current customer have left us with lots of potential directions, and a not just a bit of uncertainty
IBM Corporation 2010
2
potential directions, and a not just a bit of uncertainty
So, we’ve done extensive consumer and business research to inform our thinking
IBM Corporation 2010
3
Retail Consumer Perspective
Marketing, Sales and Service Executive Perspectives
Focused on what specifically will drive the business and the consumers
you serve forward now and in the upcoming years
The conversation
The relationship:
It can be exclusive, or inclusive But it must be real, active and personal
The navigation systems:
It’s a store locator,
The current situation can be summed up across three forces
IBM Corporation 2010
4
The moment
The devices It’s a store locator, price arbitrageur, communications device, record keeper, budget tracker and opinion obtainer. In the palm of your hand
The experience:The thrill of perfect fitting pants or a 3/8” wrench that fits just as well. The coupon perfectly timed. The delight of a surprise bonus
Conversion begins in the conversation, that you have, that they have
The conversation
Facebook is fast becoming the medium of choice, followed by twitter
(or whatever will replace it) and a myriad of ways for customers to
communicate with each other and with brands
IBM Corporation 2010
5
Baileys Baileys hopes you had a relaxing festive break! We’d love to hear how you will you be celebrating New Year- are you throwing a party, or snuggling up on the sofa with Baileys Irish Cream? Baileys desea que tengas un relajante descanso durante las fiestas. Nos encantaría saber cómo vas a celebrar el Año Nuevo, ¿tienes ...
However, there is the good, the bad and the ugly out there
The conversation You can’t necessarily control it, but you MUST manage it
My dissatisfaction with Home Depot And finally, fast resolution…
IBM Corporation 2010
6
Consumers expect a value exchange for following a retailer
ReasonRank
Being able to trial new products (free samples)
Receiving preferred consumer status*
1
2
Most important reasons for ‘following’ a retailer
IBM Corporation 2010
7 Source: IBM Institute for Business Value Analysis, Retail 2010, n=32,087
Note: *’preferred status’ referred to things such as access to special promotions or advance sales notices
Influencing product development or changes
Providing feedback to retailer on customer service or store experience
Learning news or industry trends
Interacting with other consumers
Sharing feedback and reviews with people in my social network
3
4
5
6
7
In the current world, marketers must
understand...
You no longer control the media.
You create embassies of digital content,
IBM Corporation 2010
8
distributed by brand ambassadors that you enable.
You no longer simply buy media.
You earn it from your customers.When they participate, they provide and deliver
value to your brand through their interactions.
And everyone is rushing to attach a value to each Facebook Fan
$3.60 -vs- $2,000
IBM Corporation 2010
9
Media value on impressions
Sales value based on e-commerce
http://www.adweek.com/aw/content_display/news/digital/e3iaf69ea67183512325a8feefb9f969530
http://www.risnews.com/ME2/dirmod.asp?sid=&nm=&type=Blog&mod=View+Topic&mid=67D6564029914AD3B204AD35D8F5F780&tier=7&id=8A3FC4F205BE4CD183DDD2C988C8AF01
Don’t overlook the concept of “games” as a means of engagement
The conversationDoes the customer understand what 22.8 cubic feet really is? No.
But she understands how many gallons of milk, heads of lettuce
and pints of ice cream that is…
IBM Corporation 2010
10
Zynga social gaming
Zynga retail model –game cards
Apps and App Stores abound – and it’s not about games
The devices The app is a reality: Loyalty cards that are easy to manage, payments
that you bump phones to deliver, price arbitrage and grocery listings
IBM Corporation 2010
11 http://148apps.biz/app-store-metrics/?mpage
Grocery IQPayPalCardStar
Device enabled shopping is the next big thing, you can start and end there
TV
Computer
TV
Computer
Phone
Phone
Store
Store
“I love Alicia’s suit on The Good
Wife. Wonder where I get that
…and they shorten the skirt?”
“The new bathroom fixtures all
seem to have the same look, I
want to see them in person”
Phone
Phone
IBM Corporation 2010
12
Phone
Store
Computer
Phone
TV
Store
Computer
TV
“Honey, the last storm broke the
outside light. Get a new one, but
make sure it fits.”
“Hey, do you think this dress
makes my thighs look big? I love
the color.”
Phone
Phone
But device enabled shopping still needs to protect the online mission
Content Differentiation, Functional
Standardization
Content Differentiation,Functional
Differentiation
2 4Exclusive content
in a simplified
application with
basic functionality.
Content drives
Exclusive content
delivered with
robust functions and
multiple
opportunities for
Differentiation relies on having both robust content supported
with relevant functionality that is easy-to use and engaging.
“Interesting finds” “Fun and Cool”
The devices
IBM Corporation 2010
13
Content Syndication, Functional Syndication
Content Syndication, Functional
Differentiation
Standardization Differentiation
Generally available
content in a simple
application with
basic functionality
to maintain a
revenue stream at
lowest total cost
Generally available
content delivered
with robust
functions and
multiple
opportunities for
engagement
1 3
Content drives
revenue model
opportunities for
engagement
“The basics” “Great shopping”
The customer experience is now experienced in a series of moments
The MomentWhether shopping through a device, or asking a friend’s opinion
on a item through Facebook, or tweeting about a great find, each
moment is a little customer victory
IBM Corporation 2010
14
And time sensitivity is commanding new influence in purchases
IBM Corporation 2010
15
Products
• Offers a variety of products
• Consistently has products available
• Offers better quality products
• Provides product information such as where a product originates or product make up (caloric, allergens, materials used [organic])
Convenience
• Makes shopping easier by having tools you can use to check prices, locate products and self-checkout
• Has convenient hours, parking, location
• Allows me to shop in multiple ways (e.g. in store, online, via mobile phone)
• Provides services that make my life easier
We analyzed the relationship between what consumers believe to be most
important and what areas retailers need to make the most improvement
The Moment
IBM Corporation 2010
16
Store Experience
• Provides a consistent experience in store, online or through a mobile phone
• Provides a pleasant and enjoyable atmosphere in which to shop
• Provides a store/ website layout that makes it easy to find things
Price/ Promotion
• Has everyday low prices
• Has great sales
• Offers me discounts specifically for the things that I buy
• Has a frequent shopper program with easily obtained rewards
• Offers me various options to provide me with greater value
Social Responsibility
• Contributes a percentage of what I spend to local causes (e.g. local schools, local charities)
• Works to minimally impact the environment
• Values its employees
Customer Service
• Has knowledgeable store employees
• Has store employees willing to help me in my shopping process
• Makes it easy for me to find help
• Has store employees that understand my preferences
Source: IBM Institute for Business Value Analysis,
Retail 2010
Consumers’ priorities point to Price/Promotion and Product
improvements as the areas that require the greatest focus
125
Improvement
Intelligent Consumers’ Priorities are highly focused at the intersection
of product and price.
Products
Convenience
Low Importance/
High Improvement
High Importance/High Improvement
Both importance and
improvement scores
are ≥ 100
The Moment
IBM Corporation 2010
17
75
100
75 100 125
Impact Score - Importance
Impact score -
Improvement
Source: IBM Institute for Business Value Analysis, Retail 2010, n=32085
Convenience
Store Experience
Price/ Promotion
Social Responsibility
Customer ServiceHigh Importance/
Low Improvement
Low Importance/
Low Improvement
** **Category Area
Importance Score
Improvement Score
Gap
Price / Promotion Offers me discounts specifically for the things that I buy 112.43 123.10 -10.67
Products Consistently has products available 113.53 111.76 1.77
Price / Promotion Offers me various options to provide me with greater value 111.54 108.95 2.59
Products Offers better quality products 114.88 111.92 2.96
Offering personalized discounts and ensuring product availability are
the top areas where retailers need to focus
IBM Corporation 2010
18
Source: IBM Institute for Business Value Analysis, Retail 2010, n=32085
Products Offers better quality products 114.88 111.92 2.96
Price / Promotion Has everyday low prices 115.22 111.85 3.37
Price / Promotion Has great sales 108.73 104.93 3.80
Products Offers a variety of products 113.38 100.63 12.75
Areas in which the Improvement score and Importance score are both over
100 are the areas that retailers need to focus on first… consumers are saying
that these areas are important AND need the most improvement
Anchor Hot House Visualize
Customer
Experience
Customer Experience
Blueprint, Customer
Experience Prototype
“Big Ideas”
Workshops
1 Test big Ideas
“Durability”
Workshops
2 Test Cust Scenarios & Journeys
Customer
Testing
The conversation
• Media
• Engagement
• Measurement
IBM’s Approach addresses the three areas of effort across three
key dimensions
IBM Corporation 2010
19
Business
Innovation
Technology
Leadership
High Level Business
Design Value Case
and Roadmap
Component
Architecture
Prototype Evaluation 3 4
Impact on Operating Model
Legacy Dependencies
Gather and Prioritize Requirements
Stake-
holder
feedback
The moment
The devices
• Channel connected
• Channel independent
• Just in time engagement