Digitization in practice: Marketing
The digital transformation is transforming the way customers discover, compare, select and evaluate new products and services. In this new reality, marketing structures must also adapt accordingly in order to continue to achieve corresponding sales rates.
Marketing departments therefore find themselves in a difficult – especially central – role within the digitalization of companies. They depend on modern technologies as well as on the understanding of complex socio-cultural innovations in order to meet these challenges.
With the all-encompassing networking, the lightning-fast exchange of information and the high speed of small, flexible competitors, business in almost all industries became much more difficult. Marketing is therefore under particular pressure to survive in this competition and to ensure sales despite more difficult conditions.
The list of innovations that digitalization has made part of all of our lives is infinitely long. One of the most important aspects, however, is how it affects our type of consumption: with the availability of all relevant information on each product around the clock, the entire market situation changed: a supply-centric market became a demand-oriented market.
Where in the past an advertising campaign or a customer representative could easily claim that “this product is the cheapest/best/fastest/…”, the veracity of such a statement today is refuted in seconds via smartphone. Prices in stationary retail are directly matched with the best Amazon offers and, if the price difference is appropriate, left on the shelf.
This put companies in the uncomfortable situation of not being able to polish up products, services or their own image as they used to. Today, an offer that lags behind the competition can hardly be placed profitably through advertising campaigns – the actual quality is decisive today.
As a result, marketing is losing its original “magic” at a frenzied pace: a well-designed glossy campaign can no longer save an inferior product. Instead, today, the only way to present goods and companies in a positive way is to reflect on the real merits and open approach toone’s own weaknesses.
The unconditional focus on the wishes of the customer and the resulting production of the perfect service or the perfect product is crucial for long-term success. Unfortunately, product policy is often not in the power of marketing.
Today, companies no longer decide which products they market or what their business model is. The attempt to do so fails quickly and with disastrous proportions. Instead, it is the customers and their needs who dictate which services find their way into the company’s portfolio. If this demand is not met, there is absolute certainty that another, faster provider will be on hand.
Influence on the marketing funnel
The“marketing funnel” is a rather old concept, but it still has a certain validity. It is also one of the concepts that is significantly influenced by the digital transformation.
The items of this funnel are five different levels that illustrate a typical customer journey – from the first contact to the final deal. The typical funnel shape arises from the unavoidable fact that potential customers jump off at each stage. Not every user who visits a retailer’s website makes a direct purchase.
These are, in classic marketing:
- Attention. This is the first time the customer discovers the product or service.
- Interest. The potential customerchecks here whether the offer meets his needs
- Consideration. A serious interest leads to the consideration of whether a purchase makes sense.
- Intention. The customer develops the intention to purchase the product
- Decision. The transaction is carried out as the decision has been made in favour of the supplier.
In the pre-digital past, companies could only create marketing material and then keep their fingers crossed. Direct influence was only possible if a human seller was present in any way to contact the customer directly.
This changed completely with the digital transformation. Now it is possible to contact the potential buyer directly and in real time at each individual contact point of the funnel. Even non-human management using chatbots and virtual assistants is now possible.
It is not only direct communication via the Messenger service that is a means of direct influence; personalization offers, cleverly placed product recommendations, intelligent pricing software and other technical applications can also be used today. The result is a two-pronged communication, of which many marketing areas are still overwhelmed: it is no longer enough to create high-quality advertising material. The customer must be “hand-picked” throughout the entire process.
Personalization as a game changer
The ability to offer automated and personalized offers to every customer is one of the most important changes in digital transformation. As an option, which is primarily available for online retail, it contributes sustainably to the loss of sales of brick-and-mortar retail.
Companies with physical customer contact are testing beacon systems and similar technologies to also benefit from this effective form of marketing. So far, however, it remains primarily digital providers of apps, services or mail order that benefit from this.
On the basis of the existing data, suitable profiles are created for the respective customer, which are then used in the further contact. Simple information in this context is, for example:
- Which smartphone is used? If it is a luxury mobile phone, the customer’s financial situation is more likely to allow the purchase of more expensive products -> High-priced goods can be recommended/displayed.
- Has the customer been on the road in the terms and pits or product descriptionfora for a long time? Then there is a high probability that he or she might have questions about the product. An offer to chat with an employee could lead to a successful sale.
But even more complex personalizations are possible, if the data situation allows them:
- In the mouse-tracking area, extensive psychological profiles can be created based on the movement behavior of the computer mouse or scrolling from the smartphone screen. While simple variants, such as pop-up messages when the mouse pointer moves towards the “back button”, are already present today, more sophisticated applications are still the exception. For example, the scroll speed can be used to determine the reading speed and thus derive the customer’s reading comprehension. If this is low, the entire Web site can use a simpler language. In this case, the offer to switch to a different language may also be useful in order to support non-native speakers.
Such sophisticated use of personalization methods is widely circulated in the trade press, but in reality it is still difficult to find. Only large corporations such as Google or the Facebook Group currently have the necessary know-how in important disciplines, such as artificial intelligence, to individualize the customer experience at such a level.
Data processing as a basic requirement
The whole concept stands and falls with the availability of data and the ability to process and use it quickly and automatically. Once again, it is the area of big datathat decides on the success of a company in times of digitalization.
Numerous service providers therefore offer corresponding services that enable the use of customer data or support their own data processing. Social media networks also offer advanced tracking capabilities, helping marketing departments learn more about their customers and their interests. Instagram and Co. are thus making a significant contribution to the change to a personalized advertising.
The lack of usable, up-to-date, high-quality data has always been the biggest limitation to marketing effectiveness before the digital transformation begins. Once an advertising campaign was created and published, there were few ways to accurately determine its success. How many people have seen the advertising poster? Who, in response to the television advertisement, has really bought that product?
All this changed with modern data processing and analysis. The commitment and effect of a campaign on today’s relevant channels can be evaluated with just a few mouseclicks. This provides the opportunity to derive appropriate recommendations for action and to better shape future campaigns.
Additional information, such as the location from which a video was retrieved or an ad clicked, is abundant. Time of call, age groups, devices used, etc. can be included in the further planning.
For the first time, marketing experts are in possession of accurate and relevant data that allows them to adapt their planning to real-world conditions. This allows a flexible use of advertising materials and a quick adjustment based on the feedback.
The digital transformation was accompanied by changes in the nature of media entertainment. While film, television, news, music… in the past, a limited offer and a one-sided sender – receiver communication were characterized, this has changed fundamentally with digitalization.
Modern media are interactive and offer a much higher choice. The temporal and local unconnectedness is also a new aspect that has been added to the entertainment world. Where in the past the broadcasters determined the television, radio, newspaper, etc. programme and the recipients had only the choice to take advantage of the offer or not to take advantage of it, today media are consumed on request.
For every interest, subject area, political orientation, language, etc., a separate news page is available today. Dozens of streaming services offer an unmanageable number of movies and series. Music streaming services allow you to play millions of songs at any time. Today, it is consumers who decide when and where they want to access which media.
This also changes marketing, both in a positive and a negative sense. The ability to address customer groups in a highly granular manner is an enrichment. Up to now, expensive advertising campaigns have been used to tape entire cities or to book expensive magazine pages, broadcast slots or radio time – and in the end, they have mostly reached people who did not correspond to the target group. Today, the perfect customer base can instead be determined and contacted with appropriate measures.
This significantly increases the efficiency of marketing. At the same time, however, it also becomes more difficult to reach the selected customers with their own campaigns. People have become extremely picky and always decide for themselves when, how and where they want to consume which media. The same applies to advertising, for which there is generally no longer any tolerance.
Ad blockers and ad-free streaming services have reduced the number of ways a company can successfully place ads in the first place. Overcoming these new barriers has created a variety of new technologies and creative ideas. Freemium offers in which a user can use a service for free if they are willing to endure advertising in return are an example.
Cryptocurrencies that market attention as a tradable commodity are also becoming more widespread. For example, the Basic Attention Token (“BAT”) created such a blockchain-based unit that rewards consumers in monetary rewards if they are willing to allow advertising.
The use of personalities who trust end users is a often successful path, which enjoys correspondingly strong use. The entire influencer subculture, as celebrated on social networks, is an expression of these measures. Various tactics have emerged, such as the use of numerous “small” influencers (“micro influencers”). They provide companies with new marketing tools.
The marketing sector faces seemingly insurmountable barriers due to the empowered customers. It has long been the consumers who determine when, where and if they let companies into their lives. And even if a product or service has managed to gain attention, a deal is no longer guaranteed.
Fast verifiability made it almost impossible to survive on the market without excellent quality. Marketing promises have little meaning – the true value of a good is explored instead via a search engine; the appropriate price on Amazon. Deviations lead to the cancellation of the purchase, because the competition is always numerous and offers the additional service or the better price that is sought.
As a countermeasure, only the unconditional customer centering (and associated with it the ideal product) as well as the extensive use of data remain. Capturing and processing it personalizes quotes and shopping experiences, and can result in the loss of reach of other marketing tools.