On January 10, 2012, Free Mobile—a digital-only operator—entered the French mobile market. It successfully attracted 700,000 customers in the first week and 4 percent of the country’s mobile market in less than a quarter. It also shook up the market’s competitive dynamics: existing no-frills price points plummeted almost 50 percent.
While aggressive pricing certainly played a role, this is also one of the first cases of a digital model going mainstream. Free Mobile is present in less than five physical stores nationwide and didn’t spend a single euro on traditional advertising prior to launch. This sales burst was managed entirely online.
One lesson seems especially clear—for telecommunications, media, and technology (TMT) players, a reactive digital game is no longer enough. For example, around 50 percent of all telecoms purchases today involve research on digital media. To succeed in sales, companies can up their digital game in three ways:
- Blend an effective approach for each channel into a harmonious whole that accompanies consumers across touch points to maximize cross-channel conversion rates
- Turbocharge digital offerings by turning them from mere online brand storefronts into attractive, conversion-driven channels with tailored offers, communication, and lead management
- Leverage the big data available in the digital world to understand customers like they do themselves—and target them with a whole new level of effectiveness.
Many companies hesitate to dive headlong into the digital world, fearing they could lose some control over their brand. After all, interactive digital channels give anyone the chance to create content. But as Margo Georgiadis, Google’s President for the Americas, notes, “The digital age represents a huge moment of empowerment for companies. Digital creates an opportunity to be relevant to customers on their terms.” As a result, digital enables companies to provide “a magical experience in the moments that matter”—a very powerful ability indeed.
A regular customer turns to a Web portal to quickly place a recurring order, a shopper dissatisfied with a competitor checks a blog to see what people think about your brand, a new customer close to making a purchase visits your store to find out the differences between your two top-selling products. Every touch point has its own tone and rhythm. While it is essential to get each melody right, the most effective companies also blend these individual tunes to make beautiful music.
For most companies, offline channels remain an important part of the mix. Despite all the ink spilled about the digital revolution, most TMT product sales around the world still occur through traditional channels. The difference today is that fewer and fewer consumers use them exclusively, instead following paths to purchase that wind through both the online and offline worlds. In the UK, for instance, customers choose to pick up 25 percent of the Vodafone hardware they buy online at one of the company’s physical stores.
At many companies, however, channel conflict or poor coordination gets in the way of true multichannel harmony. Successful multichannel leaders understand the importance of flexibility—helping consumers shift between channels at the different steps of their decision journey to achieve the experience they want.
When McKinsey analyzed this journey that mobile consumers follow, we found that digital touch points—the corporate Web site, blogs, forums, apps, and social media—are collectively the only ones that matter at every phase, from early consideration straight through to the final purchase decision. Traditional touch points are important at specific points; for example, traditional media continue to greatly influence consumer perception in the consideration stage, but no offline touch points are as relevant throughout the entire decision journey as their digital counterparts. These findings suggest that even operators generating most of their sales offline need to include digital in their touch point mix. In fact, recent McKinsey research shows that retail consumers who shop across a number of channels—physical stores, online, catalogs—spend about four times more annually than those who shop in just one.
Electronics giant Samsung sees orchestrating a range of offline and online channels as critical to the sales mission. “In our business, the entire consumer purchase cycle and experience is intertwined between online and offline worlds,” explains Gregory Lee, Samsung’s president and CEO for Asia. “The vast majority of consumers use digital channels to conduct research prior to their purchase, either by visiting Web sites or relying on digital word of mouth. Hence, digital channels are critical for driving sales but also for connecting our customers with our brand experience through content and services.”
For TMT players, some of the most powerful channels to reach customers may not even be their own. By cultivating the image (whether true or false) of a “Robin Hood” provider for the little guy, Free Mobile has amassed an online community of avid fans, including 670,000 Facebook friends. They play a key role in the company’s marketing efforts. Starting a year before the mobile offer launched, founder Xavier Niel made several provocative announcements to pique interest about the service, then let bloggers and Internet commentators take over. As the launch neared, the company released key bits of information that fueled rumors—and buzz. At its peak, the impending launch generated more online chatter than some of the biggest stories to unfold in France at the time.
Yet creating a smooth transition from online activities to offline sales often remains a challenge. The head of sales at a major consumer electronics company found that the majority of shoppers for large TVs did research on popular e-commerce sites before going to a store to see the products firsthand. He also learned—to his dismay—that more than one-third walked straight out again because what they saw on the shelf didn’t match the product numbers, features, and prices they had seen online. He responded by investing in online content creation capabilities—his company would supply consistent, up-to-date, clear content for resellers across online and offline channels. Big-box retailers were resistant at first, fearing that better content for e-retailers would simply boost sales on those sites. The sales team persevered, convincing retailers to post signs with a number customers could text to receive additional product information on their mobile phones—the same information they would have seen on their favorite e-commerce site. Both online and offline sales climbed rapidly, and the first TV line sold using the new approach became one retailer’s biggest seller, exceeding forecasts fourfold.
Likewise, electronics pioneer Apple is increasingly blurring the boundaries between online and offline channels. With the company’s EasyPay app, iPhone users can order products and arrange a personal pickup at the nearest store or even pay for some store products right on their smartphones, skipping the checkout line altogether.
Two decades after the Internet began revolutionizing how books, music, films, and personal computers are sold, digital sales channels are becoming increasingly critical for selling in almost every industry. Forrester Research reported that while overall retail sales in the US grew at an annual average of just 3 percent between 2006 and 2011, digital sales (via the Web, mobile, or social networks) and digitally influenced sales grew by 15 and 21 percent respectively to represent 46 percent of all US retail sales in 2011.
But there is a difference between simply offering products for sale online and selling in the best possible way for the digital arena. Digital sales optimizers focus on three core elements: driving traffic to their sales platforms (attracting more visitors, taking a larger share of wallet), making online transactions easy and convenient (engaging buyers, raising conversion rates, facilitating checkout), and using the online connection with buyers to cross- and up-sell (bringing buyers back, encouraging loyalty, etc.).
Of course, these three elements are critical in offline sales as well. But in the fast-moving online world, sellers need to be relentless about testing alternative configurations to maximize visitor numbers, transactions, and revenue—and do so far more quickly than they ever would offline. Getting prospects to visit your Web site or download your mobile app is just the first step. Top sellers use both online and offline channels to drive traffic to their online stores and run frequent, targeted promotions to keep shoppers coming back.
One area requiring constant scrutiny and optimization is the online content that engages customers during the process from considering a brand to making a purchase. Amazon, for example, employs a team of 25 PhDs who constantly analyze the layout of the Amazon.com site. They simulate up to seven versions on different servers at the same time to test designs in parallel and find which versions generate the most sales. Increasingly, these engaging Web experiences must be delivered on mobile Internet devices. Shoppers are using smartphones and tablets to research and purchase products—sometimes even while standing in a brick-and-mortar store.
The second challenge is to get customers to follow through with their intended purchase. There are three reasons why customers don’t progress from looking to buying or abandon shopping carts before paying: inconvenient virtual store layouts (i.e., not being able to find the right item quickly), a difficult checkout process, and delivery times they consider too long. Leading sales organizations ruthlessly remove anything that stands between the customer and the checkout, while the best e-commerce sites also place special emphasis on improving and facilitating the delivery experience. Of course, all this requires efficient IT and supply chain processes to ensure that products and services are available.
Finally, digital sales champions drive cross- and up-selling by using information about online shoppers’ behavior to point them to other products to buy. Amazon is an example of one of the companies that excel in this area. The company draws on its vast trove of customer data to make targeted suggestions at every stage of the shopping experience, using hooks such as “select accessories for this item,” “customers who bought this item also bought,” or “better together” combo offers. Thanks to Amazon’s effective online sales techniques, its customers buy more—in fact, Internet Retailer estimates that the average order from Amazon is 10 to 30 percent larger than those from other e-commerce sites.
Of course, a customer’s decision making process doesn’t end with the sale—the post-purchase experience often determines what messages customers spread and whether they return. Digital channels, especially social media and blogs, play an outsized role in post-purchase communication, both among consumers and between companies and their customers. For Comcast, a US cable company, the first major foray into social media was anything but positive. When a Comcast technician fell asleep on a subscriber’s couch during a service call, the disgruntled customer made a video of the incident and posted it on YouTube. But the resulting public relations backlash had a silver lining—the company got serious about using a full range of digital channels. Now Comcast has a reputation for being very responsive. The centerpiece of this success is its “ComcastCares” Twitter account, which reaches out to customers who post complaints about Comcast on the popular platform. Comcast-Cares has amassed a network of loyal followers who sometimes even help one another directly.
Social media offer a great way to build a connection with customers, but for data-savvy organizations, they also represent a plethora of customer information. Customers’ likes and dislikes, attitudes about your own and competing brands, and ideas for new products are services that are out there to be harvested. The proliferation of mobile technology even means that much of this information contains location data. And social media is not the only source of such large data sets—or “big data.” Today’s customers leave digital trails everywhere: in store register systems, on e-commerce platforms, and on Internet search engines. But sifting out the right insights takes a whole new set of analytical skills.
According to the McKinsey Global Institute, big data analysis is poised to become a key basis of competition. Of course, companies of all kinds have long used data to segment and better serve customers. But as the amount of data available skyrockets and analytic methods and tools become more sophisticated, opportunities and threats of an entirely new order of magnitude are taking shape.
Shashi Upadhyay is the CEO of Lattice Engines, a company that provides big data solutions to Fortune 500 companies. As he explains, the power of big data lies in taking the guesswork out of sales management. “Even routine activities, such as when a sales rep should call a customer, can be scientifically determined,” he says. “For example, data scientists in a call center track social media activity and use other data, such as location and gender, to figure out the best time for agents to make a sales call.”
Online marketing is one of the most advanced fields today when it comes to big data. Major ad space sellers leverage highly sophisticated algorithms to process customer profiles and identify the most suitable type of banner advertising. In addition, automated ROI data is available for search engine keywords, making it possible to optimize marketing spend in real time.
Most TMT companies, in turn, still use simplistic algorithms to tailor their Web sites or don’t customize them at all. As a minimum, they should differentiate their lead offerings. At a more advanced stage, content highlights and lead links could also vary by visitor. Furthermore, by comprehensively processing their customer data, companies can produce a wealth of leads for both online transactions and touch points in the offline world. One French start-up, for example, has developed a tool that enables its business clients to track customers as they navigate the Web (through tags and cookies) and derive a profile of each Internet user’s interests. Client companies can then identify which profiles have higher-than-average conversion rates and aggressively pursue these groups to maximize the efficiency of their e-advertising spend. When one European telco piloted this approach, it found that conversion rates for specific groups can be as high as 45 percent above the average rate.
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This piece originally appeared on the McKinsey & Company Telecom, Media & High Tech extranet (registration required).