Deloitte: The New Connected Consumer

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The following is an excerpt from ‘Global Powers of Consumer Products 2015′ by Deloitte.

More than ever, consumer product companies must directly engage with consumers. Consumers are talking – all the time, everywhere – and it is they, not companies, who increasingly own the conversation about products and services. The supply-driven world has become a demand-driven world where the consumer is in charge.

Today’s connected consumers are not only critics and curators, but, increasingly, creators. Yesterday’s consumer purchased from a limited set of offerings, and the communication was one-way, under complete control of marketing and advertising agencies. Today, individual consumers can start with an idea, a need, or an inspiration and browse online to find what they want, and, if they can’t find it, create it themselves by working with companies that provide this capability.

Today, the consumer is in charge.

More than ever, it is important that consumer products companies be an active part of the conversation. Direct conversations with consumers can drive growth and innovation. To seize this sizeable opportunity, the critical challenge for consumer product companies is to create the right experience, the right engagement, for consumers and to do it at scale.

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Consumer engagement – much more than marketing

One function or one department cannot engage consumers, nor can it be viewed as a one-off campaign. Consumer engagement requires long-term commitment and collaboration across the entire company to manage multiple consumer touchpoints and to sustain the relationship as consumer expectations evolve. If not, the business will constantly be playing “catch-up”.

Businesses that commit to making engagement as easy as possible for consumers are positioning themselves in the center of the conversation and are better positioned to succeed. Such positioning will likely involve:

  1. Deciding on the appropriate engagement approach – whether it is being actively engaged in the conversation, monitoring it or simply ignoring it, a well thought out strategy, based on brand positioning, will pay dividends.
  2. Developing content creation and content management capabilities – focus on informing and educating consumers rather than just selling to them. Arming consumers with the right information helps them move independently through the shopping journey, creates trust, and increases their loyalty.
  3. Investing in technology and developing analytics capabilities – integrate and track, across all channels and touchpoints, every individual journey to offer targeted responses in real time.
  4. Ensuring staff at each level of the organization understand the role they play – empower staff to make appropriate decisions, whether this means directing consumers toward alternative products or providing compensation to dissatisfied consumers
  5. Managing the reputational risks associated with social platforms – establish social command centers to listen to conversations, engage with consumers, and proactively share positive stories.

A good example is Shapeways, a 3D printing company where consumers can design the products they seek. Customers upload their designs to the Shapeway website for price quotes based on the materials involved. Users can also refine their designs with help from “experts” on the Shapeway forum or opt for pre-existing designs.

Leveraging the crowd

Empowered consumers are a significant driver of growth, as their behavior intensifies competition and drives innovation. The ability of like-minded people to compare experiences and promote their collective voice has become a force in the consumer market, moving beyond reviews and recommendations into co-creation.

Companies are learning to incorporate the contributions of individual consumers, as well as communities, into their value chain. Many are using sensors, digital data, and smartphone interactions to innovate with their products and services.

Businesses can take specific consumer characteristics and behavior and contextualize them with data on thousands or millions of other individuals. This enables designers to deliver products and services that are unique or closely tailored to consumer needs.

A good example is Lego Cuusoo, a crowdsourcing platform where people post their Lego creations. If the creation gets more than 10,000 supporters, Lego will commercialise it and the creator will receive royalties.

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What will it require?

Harnessing crowd-based insights will require companies to change their approach and processes in a number of ways:

  1. Shifting organizational focus from simply providing products and services to solving a problem and creating an experience for the customer.
  2. Treating consumers as potential designers – use consumer satisfaction data in which consumers critique and assess the goods and services they receive.
  3. Moving away from broad-scale product testing – follow the model of entrepreneurs and small companies that are very close to the ultimate consumer, possibly including marketing teams in the new product development process.
  4. Creating better and faster feedback loops – continuously collect and analyze the steady stream of consumer feedback at a fairly granular level. Apply the resulting insights from this to improve and redesign offerings and to personalize products for different kinds of consumers.

Finally, all of these processes must have a solid foundation of consumer trust, without which none of these conversations and collaborations can occur.

Fostering and sustaining trust

While consumers have unprecedented access to product information and online expertise to guide their purchasing decisions, recent research from Deloitte shows that, surprisingly, consumers are talking far less to product or service experts than they are to families, friends, and other consumers.

Most trusted source of information on products and services

With trust in consumer companies at its lowest level in years, consumers are turning to those they feel they can trust. It is imperative, therefore, that in return for sharing their data, consumers get something valuable in return. As the statistics below indicate, trust is an important driver of consumer purchasing behavior.

So while consumers may appreciate the benefits of personalization and customization, a vast majority continue to have great concerns about sharing their data with consumer product companies. Many are aware of, or have been affected by, data security and privacy breaches and are not likely to be forgiving if this occurs with their own information. As the saying goes, trust is difficult to earn and can be lost in an instant.

Allowing users to opt in to share their data rather than making it the default and providing something valuable in return for their data is certainly an important proposition. However, as shown in the chart below, industry and consumers are far apart in recognizing the importance of this exchange. To consumers, personalized offers or recommendations do not outweigh the perceived risks of sharing their information. This “trust gap” must be addressed if companies are to benefit from collaborative innovation with consumers.

Personalization does not outweigh risks of sharing information

What can businesses do to foster trust? Most immediately, the consumer product companies must build stronger data privacy and security practices based on the consumer’s mindset. This includes:

  1. Developing privacy policies as if they were a marketing tool.
  2. Elevating the seniority of the executive responsible for data privacy and security.
  3. Deploying supporting processes and systems consistently across the entire enterprise.
  4. Expanding risk management to guard against external as well as internal breaches.

Beyond this, companies must regularly reassure consumers that their personal information is being protected:

  1. Provide transparency in policies and actions
  2. Be judicious about collecting and sharing data
  3. Inform and reassure customers about security measures
  4. Be prepared to compensate for security lapses

Being involved in the consumer conversation means, ultimately, establishing engagement and trust. This is not a one-time effort but an ongoing effort involving multiple functions in which collaboration and consistency are critical to meeting consumer expectations and ultimately driving profitable growth for the brand.

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