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Digital innovation in retail, or how retailers can learn to stop worrying and love the disruption


Digital innovation in retail, or how retailers can learn to stop worrying and love the disruption


With ecommerce now a central part of the growth plans for many businesses, Mark Cameron writes that 2014 will be seen as the year that Australian retailers stopped fighting digital disruption and started using technology to make their mark on the world.


The way we shop has changed forever. Ecommerce sales continue to climb. A 2013 Forrester report stated that Australian ecommerce sales in 2010 were worth $27 billion and by the end of 2013 had jumped to more than $37 billion.

Over the past few years, major retailers overseas saw strong currencies and economies as an opportunity to expand into the Australian and New Zealand markets. These changes in consumer behaviour and competitive landscape took many local retailers by surprise. Many have been struggling to combat and capitalise on the shift towards online purchases.

This year that is all changing. Australian retailers, big and small, have stepped up their level of investment in online sales. The beauty and fashion industries, in particular, have come under intense competitive pressure and, as a result, they are leading the charge in maturing the ecommerce landscape in this part of the world.

The digital world can be confusing. There is an endless list of software products to invest in and getting the timing and combination right can have a huge impact on the return on investment. So if your business is one of the many retail organisations that is about to make a significant investment in ecommerce, it is worth identifying the most important elements you need to think about.


Getting your ecommerce strategy right

The digital marketing space is awash with software vendors touting amazing products. Most are effective if used in the right way, but the trick is to know which ones are right for your business and how to prioritise and organise your investment ‘schedule’. And that is all about ensuring your digital strategy is aligned to your business objectives, your customers’ expectations, and where your business sits on the ‘digital maturity curve’.

An article entitled ‘The Four Types of Digital Marketer’ published in Strategy and Business highlighted four types of digital marketing companies and described them in the following way:

Leaders are a small but growing group of companies, including Nike, Burberry, 3M, Apple, LL Bean, and Coca-Cola, that have mastered the two main capabilities involved in maintaining an online presence: insights and analysis on the one hand, and platforms and activation on the other.

Scholars are skilled at consumer insights and analytics; some of them, for example, have developed sophisticated forms of market segmentation based on deep insights about the way people make purchases. But they have not yet converted these insights and analyses into profitable action.

Pioneers have established a robust presence in digital media, with viable forms of electronic commerce, their own media platforms, or other kinds of web, mobile phone, or app-based services. But these activation platforms are not sufficiently customer-centric; they are not grounded in insights about their customer base and therefore they do not engage consumers as well as they might.

Novices are still coming up to speed in the practices of digital marketing, and (in many cases) discovering which facets benefit them and which may not.”


Once you have determined where your business sits on the digital maturity curve, you need to determine where to go from there. A Booz & Company report, entitled ‘How to Choose the Right Digital Marketing Model’ identified three categories of digital strategy:

Digital branders are often consumer products companies, retailers or other marketers that focus on building brand equity and deeper consumer engagement. These companies are moving away from traditional linear advertising and investing in digital experiences that connect with their customers. They are focused on recruiting new consumers to the brand, increasing advocacy and driving loyalty.

Demand generators, such as retailers, play the numbers game. They are focused on driving traffic and converting leads in the fewest steps possible. To quote the report, ‘All elements of the digital marketing strategy – website design, search engine optimisation, mobile connected apps, and engagement in social communities – are tailored to boost sales and increase loyalty.’

Product innovators use digital marketing to help identify, develop, and roll out new digital products and services. Booz explained that ‘. . . these companies employ digital interactions with consumers primarily to rapidly gather insights that can help shape the innovation pipeline’.”


RELATED: Choosing a digital marketing model for 2014 (and why Booz & Co don’t have it quite right) »

Your digital strategy is about understanding and designing the entire digital customer experience journey. So your digital ‘plan’ should be a well-thought-through expression of your customer experience strategy.


Database growth

A database of active, qualified leads and customers is a vital strategic asset for an online retailer. It gives you the options and insights necessary to design effective communications.

The key is to make sure the database entries, or ‘leads’, are qualified. Buying a list won’t work. Make sure you have a separate marketing program designed to grow your database. The amount you invest in this area should be constantly assessed and aligned to the value the database is generating. The more data you have about the contacts, the better qualified they will be and more they will worth to you. Invest wisely and communicate strategically.


Conversion rate optimisation

Conversion rate optimisation is a key component of any digital program. You need to have people on your team who can look at sets of data, assess them against best practice and identify opportunities to do better.

Conversion rate optimisation focuses on the conversion performance of all your digital touch-points with potential consumers including email open rates, content marketing engagement rates, search marketing performance and e-commerce website performance. It then seeks to optimise the path to purchase.

The trick is to test and refine in a scientific and disciplined way – develop a hypothesis, predict the results, test, and report the findings to the entire digital team to ensure insights can be adapted to others areas.


Content marketing

Content marketing is a buzzword, gathering momentum because of the results it is getting. A report published in 2012 by Kapost showed that per dollar spent, content marketing produced three times more leads than paid search. And it cost less than paid search: 31% less for small and mid-sized companies and 41% less for large companies.

The proliferation of social media platforms has both added complexity and changed the focus for marketers. Content marketing is less about campaigns and more about a constant flow of engaging content – although it should always support campaign activity.

Content marketing is about tailoring messages to suit specific segments and designing the content to get as much reach as possible.

The content marketing initiatives within your organisation will most probably become the engine room for all marketing activity. It will be the program that determines focus and directs activity.


Marketing automation

An accurate marketing automation program ensures all of your digital marketing activity operates at maximum efficiency and that all the elements link together coherently.

A report published in July 2012 by Aberdeen Group called ‘Marketing Lead Management Report’ showed that companies using marketing automation see 53% higher conversion rates than non-users, and achieved an annualised revenue growth rate 3.1% higher than non-users.

Marketing automation is more than a sophisticated email delivery platform. It is a combination of the tools, processes and resources needed to ensure that you can capitalise on opportunities wherever they arise.


Ecommerce is quickly moving out of the trial and experiment stages and becoming a central part of the growth plans for many businesses. My prediction is that 2014 will be seen as the year that Australian retailers stopped fighting digital disruption and started using technology to make their mark on the world.


Mark Cameron

Mark Cameron is CEO of customer experience innovation agency Working Three and a world renowned digital strategy commentator with well over 400 published articles. Specialties: Digital innovation, Digital customer experience strategy, Social media strategy, Digital strategy, Online Marketing strategy. He blogs at markrcameron.com and tweets from @MarkRCameron.

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