After outlining the key capabilities for achieving success in a digital economy in his most recent post, SAP's Mark Osborn now begins showcasing different ways in which consumer goods companies are transforming their businesses.
As companies become more consumer-centric, they are investing in new and creative consumer engagement methods. In this article, I'll explore how consumer goods companies are redefining business models based on direct consumer interaction in favor of holistic engagement that will foster ongoing, meaningful relationships.
The advent of digital is helping CG companies transform business processes across the enterprise, allowing them the opportunity to engage consumers directly in product development, delivery and promotion.
With what were previously impossible options for personalization, optimization and agility, companies are now empowering consumers to design the look and feel of “their” products, choose options that define personalized pricing, and have transparency and control over purchasing, production and delivery. Further, they're empowering individuals to become ambassadors based on what ultimately is an entirely personalized outcome.
Personalizing the process
Athletic footwear and apparel companies offer leading-edge examples of how CG companies are leveraging transformative processes to engage with consumers directly to deliver personalized experiences and outcomes.
Take Nike, which has launched a “By You” collection that lets consumers customize shoes, beginning with the type of base they want to work with. Once the shoe type is selected, customers move through a number of steps selecting materials, colors, and any added “innovations” to enhance product performance. Once the shopper is satisfied with the "design," Nike gets to work developing the shoes, sharing development updates along the way.
By allowing consumers to design and develop their own shoes, Nike is effectively transforming portions of its innovation process from company-led to consumer-led. Previously, it would have commissioned expensive qualitative consumer research studies in an effort to predict shifting needs and preferences, and then interpret the findings to make big bets on product innovations and extensions.
Now, Nike delivers an entirely personalized experience for the consumer while gaining real-time insights at a macro-level into broader shifts in preferences relating to critical design factors such as color, style, price, usage occasions, expected durability and configuration options — and all at no incremental R&D cost.
And the benefits do not end there. Because Nike has orchestrated and delivered a personalized experience, it has also created an opportunity to continue engaging with that consumer throughout the product’s lifecycle, not only to predict wear and tear and suggest replacement options, but also to encourage and enable her to become brand ambassadors through social engagement with the company and other like-minded consumers.
Unlike traditional retail, this extra hand in the process means consumers are able to enjoy every specification and desire possible and have the end result delivered to their doorsteps with a satisfaction guarantee.
In addition, the consumer’s experience extends beyond design and promotion to production and delivery. Nike, for one, has further transformed fulfillment by automating and accelerating order processing, manufacturing and direct-to-consumer delivery. It understands material requirements and lead times based on the configuration options it has made available and, instead of trying to predict future demand for finished products, can now activate capacity in real time based on direct consumer engagement.
Agility to Execute at Speed
Capabilities like these can be extended and accelerated further by incorporating emerging technologies such as artificial intelligence and machine learning. These can be used to monitor and learn consumer behavior and preferences in real time, and to begin predicting consumer choice and optimize corresponding capacity, fulfilment, promotion and social engagement based on those predictions. These capabilities improve a company's capacity to shape demand, react to timely events and ensure that the product and engagement lifecycle is considered with respect to each individual consumer.
Nike is just one example of a company that’s leveraging consumer interaction to transform business processes from innovation and R&D to production and fulfilment to marketing and promotion. Another trend in CG is products that are developed specifically for a consumer's profile.
For example, Function of Beauty is creating shampoo and conditioner tailored to the individual's own hair profile. Each consumer fills out a quiz explaining what she wants the products to do, and the company then creates a unique formula to meet those specific hair goals. Similarly, Care/Of is a vitamin company that creates a personalized mix of daily vitamins attuned to individual needs as requested by the consumer.
Both these companies create unique products that feel inherently personalized for each consumer. These consumers are then compelled to continue purchasing from the company to continue receiving that same level of ongoing personalization.
These examples showcase how CG companies are orchestrating and delivering highly personalized consumer outcomes. Nike is helping consumers express their personality and individuality by designing and configuring personalized shoes. This is both a highly differentiated process and a highly differentiating outcome for the company.
This kind of differentiation is at the root of the new competitive challenges facing CG companies. Companies that seize the opportunity to reimagine consumer engagement to deliver holistic, personalized experiences and outcomes will have the best chance to succeed in the new digital economy.