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{"id":1170,"date":"2011-02-14T12:50:46","date_gmt":"2011-02-14T17:50:46","guid":{"rendered":"http:\/\/www.nyfrenchgeek.com\/2011\/02\/harvard-business-review-on-social-commerce\/"},"modified":"2011-02-14T12:50:46","modified_gmt":"2011-02-14T17:50:46","slug":"harvard-business-review-on-social-commerce","status":"publish","type":"post","link":"http:\/\/www.nyfrenchgeek.com\/2011\/02\/harvard-business-review-on-social-commerce\/","title":{"rendered":"Harvard Business Review on Social Commerce"},"content":{"rendered":"

Harvard Business Review on Social Commerce<\/a>: <\/p>\n

This month\u2019s Harvard Business Review has a spotlight on social media and branding, with a stand out article by McKinsey<\/a>, based on a global study of 20,000 consumers. \u00a0In a nutshell, the article argues that many brands are spending their marketing budgets in all the wrong places, based on an outmoded \u201cfunnel\u201d marketing model \u2013 and proposes an evidence-based alternative.<\/p>\n

The article by\u00a0David C Edelman \u2013 McKinsey Global Digital Marketing Strategy, and entitled \u201cBranding in the Digital Age: You\u2019re Spending Your Money in All the Wrong Places<\/strong>\u201c\u00a0can be\u00a0accessed here<\/a>\u00a0(pay-wall), but below you\u2019ll find the speed summary, with implications for social commerce \u2013 we think it\u2019s useful. And if you don\u2019t have time for that, here\u2019s the summary of the summary<\/p>\n

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CEPEA<\/strong> \u2013 Bin the funnel model of marketing, the new\u00a0consumer decision journey<\/strong>\u00a0is CEPEA \u2013 Consider, Evaluate, Purchase, Enjoy, Advocate.<\/li>\n
CEP the CEPEA<\/strong> \u2013 Trash media-centric marketing;\u00a0 marketers should build strategy around customer-centric\u00a0Customer Experience Planning<\/strong>\u00a0(CEP) that delivers the brand promise coherently and consistently along touch-points of the CEPEA decision journey<\/li>\n
Rather than simply add a social layer to e-commerce, or an e-commerce layer to social properties,\u00a0smart social commerce should focus on the consumer decision journey, with the objective of helping people make smarter shopping decisions \u2013 where they most need that help<\/strong>.<\/li>\n
Every social commerce program should begin with understanding the consumer decision journey with a view to identifying touch points that are most influential in facilitating decisions.<\/li>\n<\/ul>\n $\"CDJ\"$ <\/a><\/p>\n
From this\u2026<\/p>\n
$\"R1012C_A\"$ <\/a><\/p>\n
\u2026to this<\/p>\n
$\"R1012C_B\"$ <\/a><\/p>\n
Branding in the Digital Age: You\u2019re Spending Your Money in All the Wrong Places.<\/h3>\n
David C Edelman \u2013 McKinsey Global Digital Marketing Strategy<\/p>\n
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Consumers today connect with brands in a fundamentally new way, often through media channels that are beyond manufacturers\u2019 and retailers\u2019 control.\u00a0 This means traditional marketing strategies must be resigned to accord with how brand relationships have changed\n
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Consumers still want a clear brand proposition, what has changed is when \u2013 at what touch points \u2013 consumers are open to influence<\/li>\n<\/ul>\n<\/li>\n
Once, a shopper would systematically winnow his brand choices to arrive at a final selection and complete his engagement by making a purchase.\u00a0 Now relying heavily on digital interactions, he evaluates a shifting array of options and remains engaged with the brand though social media after a purchase\n
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Marketing mis-spend is often the result of using a bad funnel metaphor, whereby consumers were thought to use a process of elimination to get from a wide consideration set down to a final choice.\u00a0 This bad metaphor leads to bad marketing \u2013 paid media push marketing used to drive consumers along the imaginary funnel, culminating in retail promotions to open wallets at point of purchase.<\/li>\n
However, this two-pronged marketing strategy does not reflect the consumer decision journey (CDJ); there is more to the CDJ than \u201cconsider\u201d and \u201cbuy\u201d phases.<\/li>\n
The new CDJ is\u00a0CEPEA \u2013 CONSIDER-EVALUATE-PURCHASE-ENJOY-ADVOCATE<\/strong>, with a\u00a0LOYALTY LOOP<\/strong>\u00a0shortcut leading to re-purchase (and skipping future consideration and evaluation) if enjoyment experienced meets or beats expectations\n
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Rather than begin with a large consideration set, consumers today manage massive choice with smaller initial consideration sets, but that may grow, based on\u00a0active evaluation<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
From an accompanying McKinsey Quarterly article:\u00a0The Consumer Decision Journey<\/a><\/p>\n
$\"Evaluation\"$ <\/a><\/p>\n
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After consideration phase, consumers will now actively evaluate options, seeking input from peers, reviewers, retailers, brands and competitors.\u00a0 Rather than shrink, the number of options under evaluation may grow during this phase<\/li>\n
Increasingly consumers will continue evaluation right up to the moment of purchase in store \u2013 thus point of purchase (placement, packaging, availability, pricing) is increasingly important<\/li>\n
Post purchase, interaction continues \u2013 60% of facial skin cream consumers do online research on the product after purchase.\u00a0 If they enjoy the product, they\u2019ll advocate it to others, thus becoming a touchpoint themselves \u2013 influencing further purchases, and enter into an ENJOY-ADVOCATE-REPURCHASE loyalty loop that buy passes initial phases of the CDJ<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n
Smart marketers will study the \u201cconsumer decision journey\u201d for their products and use the insights they gain to revise strategy, media spend and organizational roles.\n
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First, marketers should stop media-centric budget allocation, and replace it with customer-centric approach, targeting stages in the CDJ\n
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79-90% of marketing spend goes to advertising and promotions that hit consumers at the consider and buy phases, but consumers are often more open to influence at the evaluate and advocate stages<\/strong><\/li>\n
The bad funnel metaphor leads to an outmoded and outdated marketing strategy that vastly over-weights the significance of paid media.\u00a0 Today\u00a0owned media<\/strong>\u00a0(websites (and customer service, sales, packaging)),\u00a0shared media<\/strong>\u00a0(social sites) and\u00a0earned media<\/strong>(third party site content) are significant touch-points<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
$\"Media\"$ <\/a><\/p>\n
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Second, marketers should begin by running a pilot based on the new rules of branding for a particular product in a particular market to demonstrate the potential of a more sophisticated approach to senior leadership\n
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1) Chart the customer decision journey for your product \u2013 what they do, what they see and what they say, for the five CEPEA stages\n
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This will involve an\u00a0upfront shopper research<\/strong>\u00a0project (protocol analysis) to understand the CDJ, and identify key touch-points of influence\n
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(e.g. when are offline channels such as TV advertising and word of mouth most important (consideration phase), do consumers use the website during the evaluation phase (no \u2013 less than 1 in 10 do), do they use search engines (no, they go directly to Amazon)?<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
From an accompanying McKinsey Quarterly article:\u00a0The Consumer Decision Journey<\/a><\/p>\n
$\"Influence\"$ <\/a><\/p>\n
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2) Develop your marketing strategy around a coherent\u00a0CUSTOMER EXPERIENCE PLAN<\/strong>\u00a0that leverages the key touch points in the CDJ\n
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Match experience to expectations and keep it coherent\n
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e.g. Apple\u2019s CEP involving systematically removing jargon across all touch points, making technology friendly across all touch points through online help videos, ads, and in-store Genius Bars<\/li>\n
e.g. Nike offers a coherent experience, bringing the just do it motto to life with online tools and events that help people to just do it.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n
3) Allocate resources accordingly and embrace three new roles for marketing\n
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\u201cOrchestrator<\/strong>\u201d \u2013 Many touch-points are now owned media \u2013 customer service, packaging, website and sales \u2013 and marketers need to coordinate this media, either through internal collaboration or direction in order to offer a coherent Customer Experience Plan<\/li>\n
\u201cPublisher<\/strong>\u201d [Content Supply Chain Manager] \u2013 The rise of shared and owned media means that marketers now have to produce or commission vast amounts of content \u2013 all of which should work together to deliver a coherent experience (one McKinsey client estimates each product launch requires the production of 160 prices of content, involving 20 parties across 30 touch-points \u2013 this needs management<\/li>\n
\u201cAnalyst<\/strong>\u201d [\u2018Marketplace Intelligence Leader] \u2013 The success of your CEP will depend on acting on insightful customer understanding, itself the result of data collection and analysis.\u00a0 This means bringing research and analytics under the umbrella of marketing, rather than stuck in IT and research silos<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n
Implications for social commerce\n
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Most digital marketing \u2013 including social commerce \u2013 is still based on old and defunct funnel\/AIDA model (leading to a fetishization of traffic, transactions, conversion and paid media), whereas the way consumers navigate the digital media landscape has fundamentally changed. \u00a0Social Commerce managers need to become \u201cOrchestrators\u201d and \u201cContent Supply Chain Managers\u201d at ease with earned, shared, and owned media as well as paid media\u2026 \u00a0We need to rethink social commerce in terms of UX (user experience) and realise that the future of social commerce, and more broadly, digital marketing, is Customer Experience Planning<\/strong>\u2026<\/li>\n
Rather than simply add a social layer to e-commerce, or an e-commerce layer to social properties,\u00a0smart social commerce should focus on the consumer decision journey, with the objective of helping people make smarter shopping decisions \u2013 where they most need that help<\/strong>.<\/li>\n<\/ul>\n
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Insofar that the essence of social commerce is the concept of word of mouth applied in the context of e-commerce, social commerce solutions have a naturally fit with the Advocacy phase of the consumer decision journey \u2013 where consumers themselves become brand influential brand touchpoints<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
From an accompanying\u00a0McKinsey article on advocacy<\/a>\u2026<\/p>\n
$\"Top$ <\/a><\/p>\n
$\"VxI=Equity\"$ <\/a><\/p>\n
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Because the Advocacy phase of the Consumer Decision Journey is part of the \u201cLoyalty Loop\u201d, the implication is that from a consumer decision journey perspective,\u00a0social commerce may be primarily a Loyalty Loop solution<\/strong>\u00a0(suited for stimulating loyalty rather than acquisition)<\/li>\n
Social Commerce should be deployed as part of an integrated Customer Experience Plan, not as a standalone initiative.\u00a0 Critical consideration should be given to Experience (UX) delivered by social commerce.\u00a0 If your social commerce solution doesn\u2019t offer a gold standard experience within the consumer journey, you\u2019re unlikely to reap rewards.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
From an accompanying McKinsey Quarterly article:\u00a0 The Consumer Decision Journey<\/a><\/p>\n
From this\u2026<\/p>\n
$\"Funnel\"$ <\/a><\/p>\n
\u2026To this<\/p>\n
$\"CDJ1\"$ <\/a><\/p>\n
<\/span><\/p>\n
JUICY AGENCY<\/a>