Improving Consumer Insights Through Digitalization
Most companies either underestimate their capability to gather high-quality consumer data or don't do enough. Product digitalization fills the gap and delivers insights on demand.
For decades, peering into consumer insights meant listening to recordings of focus groups or reading through letters written by customers sending complaints by post. Those days have long since been traded in favor of carefully monitoring social media, analyzing visitor interactions with websites and apps, and investing in app-based loyalty program engagement. The latest convenience in keeping tabs on what consumers want is physical products digitalized with QR codes. With consumers incentivized to scan or otherwise interact with products, everything from product origin to product feedback become more likely to be accessed by consumers and in return, more data is generated. Improved deeper consumer insights are the result.
Even for companies that have started to digitalize their products, many have only scratched the surface toward improving their consumer experiences and generating actionable consumer insight data. McKinsey & Company, which unsurprisingly has its own marketing advisory business, often reminds its clients that one of the most underused assets that consumer-packaged goods companies have is the massive amounts of data they have gathered. Organizations are ignoring opportunities to use data that would lead to optimizations in their supply chain and lead to new understandings of their consumers. That new understanding changes quickly, too: because sentiment around a product, topic, or campaign can change quickly, products that gather consumer insight through IoT tags or QR codes are all the more valuable to implement and innovate with.
This approach isn’t a secret either. Digitally-driven insights are paramount for the biggest fast-moving consumer goods players. Procter & Gamble, L’Oreal, and Nestle are among a group that launched a consortium in 2018 to understand shifting consumer sentiment across different industries. The consortium aims to provide researchers and companies with real-time “insights on-demand” enabled by technology and automation.
The Role of Digitalization in Consumer Insights: Data Analysis
It’s very helpful to clear up what digitalization is before considering what it means for consumer insights and data. It’s very easy to end up with a definition of digitalization that is too narrow. Gartner defines it as “the use of digital technologies to change a business model.” Compare that to the concept of switching something from analog to digital, like when DHL started accepting package receipt signatures in a digital device as opposed to requesting a pen-to-paper copy. Digitalization serves us best in a broader way as referring to transforming how a company operates. A company’s digitalization efforts can include everything from creating new products to how those are distributed, marketed, and tracked.
For example, let’s look at how to digitize machinery and goods. To do this, you can embed a physical, unique identifier onto a product: this represents a digital ID. A digital ID can be an Internet of Things (IoT) sensor like an RFID tag or a cost-effective QR code. This is connected with a digital asset by entering a record in a database and mirroring the identifier that organizes any information associated with the physical item.
Once a physical object is bound to a digital record, the benefits of digitalization through data analysis can begin to pay dividends. The IoT devices and identifiers that associate physical equipment and products to records on the internet are what trigger the capture of data. That data then feeds information to a dashboard system that can alert different teams within a company, not just marketing, to provide actionable intelligence. While it may not seem obvious at first glance, this setup is exactly the first step that a company should take toward solving a grey market problem.
How detailed and to what degree the information gathered for each product depends on each unique situation. A production floor environment may require a machine’s sensors to pick up variables like humidity, room temperature, and types of materials being processed. In a grocery store, shelves with embedded sensors can easily detect the anonymous number of shoppers that pass by and provide that data to guide which product placement succeeds most in attracting buyers. Digitally enabled tags can take any of these details and pass them on to consumers so they can interact with the package and see when and where an item was bought for retail, how long it stayed on display before being purchased, and when it was opened. The type of Digital ID pairing that accomplishes these different goals are distinct, but they are all manageable, and there are already plenty of tried and true models for just about any digitalization goal.
Harnessing Digitalization to Improve Consumer Insights
Through digitalization, marketing managers can transform the way they obtain consumer insights by viewing multiple channels and touchpoints as ways to capture data. For example, the product or product packaging itself can capture information that provides insight into consumer behavior.
Take the example of Nike Fit, a digital foot measurement tool introduced by Nike. It uses “computer vision, data science, machine learning, artificial intelligence and recommendation algorithms” to scan and measure the full shape of a person’s feet.
Consumers simply need to use their smartphone’s camera to scan their feet using Nike Fit. The app collects 13 data points for accurate measurement. This data is stored in the person’s NikePlus member profile and used to recommend shoe types and sizes.
As the data is tied to the individual’s NikePlus membership account, Nike knows which program member has downloaded the Nike Fit app. Nike can also see which scans and product recommendations led to a purchase.
Members can use a ‘guest mode’ to scan other people’s feet if they want to give them shoes as a gift. This helps the company identify which shoe purchase is for the member and which one was purchased as a gift, enriching insights on consumer preferences.
At the same time, the NikePlus member enjoys an improved shopping experience due to the assurance of a better fit for every shoe purchase or gift. The member will also get personalized recommendations based on their feet shape and size.
Nike expects that “Nike Fit will improve the way Nike designs, manufactures and sells shoes” by making sure that they create shoes with better fit and accurate sizing. It will also reduce the frequency of product returns or exchanges caused by an inaccurate fit, which is clearly good for business.
Another innovative digitalization strategy is Domino’s Pizza’s AnyWare, which integrates with AI assistants like Amazon Alexa and Google Home so consumers can order pizza using voice commands. Buyers can also place orders via Facebook Messenger, Slack, SMS, Twitter, or directly on the Domino’s app, which also has a voice command feature. The goal, in fact, is for consumers to be able to order and even customize their pizza using any device.
“Domino’s AnyWare literally translates to data everywhere,” says Dan Djuric, Vice President- Global Infrastructure and Enterprise Information Management at Domino’s, in an interview with Forbes contributor Bernard Marr. “Ultimately we start to build this unified customer view, measuring consistent information across our operational and analytic layers.”
According to Marr, the data captured through these different devices is fed into Domino’s Information Management Framework, where it is then combined with data from other sources for a more in-depth analysis of consumers’ experiences. These data may come from delivery services, point-of-sale systems, and demographic information, among others.
Armed with this information, Domino’s marketing team is able to offer customized coupons and compare their performance in specific markets with that of competitors. This, of course, is just a glimpse of how the company leverages consumer insights. Domino’s stock has improved steadily over the years, even outperforming the likes of Apple and Netflix.
Tesco, a British supermarket chain, shows another way for marketers to leverage digitalization to improve consumer insights. It tags every purchase by loyalty cardholders with a unique customer ID. This generated millions of customer purchasing data points, which the company used to send personalized discounts to each cardholder through their loyalty program member accounts and their mobile phones.
The purchasing data also allowed Tesco to anticipate market demand for specific regions and product categories, as well as adjust their product offering to suit purchasing trends.
These examples illustrate different ways marketing managers can harness product digitization to improve consumer insights. The data gathered from the usage of the app can potentially allow marketing managers to:
– Understand consumer shopping behavior, the changes in their buying habits, their reasons for purchases (such as giving gifts). Keep in mind that consumers today research and compare products between brands much more than they did ten years ago. They also have more sources of inspiration and influence, especially through social media and online reviews, and more purchasing channels.
– Determine individual consumer preferences. Data gathered through digitalization can provide marketing managers with insights into consumers’ lifestyles, needs, and preferences.
– Personalize marketing campaigns. By understanding each consumer’s shopping habits and preferences, marketing managers can deliver personalized product recommendations, promotions, rewards, and content. For example, for shoppers who prefer to buy products in physical stores, marketers can use beacon technology to send ads, reminders, or promo offers to the person’s smartphone when it’s within the store’s vicinity.
– Provide input on product design and development. With knowledge about customers’ needs, marketing managers can work with product managers, engineers, or designers to improve the company’s goods. This can also prompt the development of new products or product features.
– Identify consumer segments and trends. A certain customer profile might exhibit similar shopping behaviors during a given season. Certain buyers with similar characteristics may exhibit the same buying preferences and patterns, enabling marketers to identify a new potential customer segment.
Making the Most Out of Digitalization Data
While it seems intuitive that consumer data can lead to marketing insights, it’s not always easy to extract the most value out of information gathered through digitalization. For instance, when digitizing a product, a company might not take into consideration marketing managers’ data needs and may focus solely on data that helps optimize the production process.
That means marketing managers—as well as other teams and departments—need to provide their input even at the planning stage of the digitalization process. They need to communicate their marketing goals for product digitization and identify the metrics they wish to track.
Some marketing goals for product digitalization include:
3. Delivering personalized ads near the point of sale
4. Reinforce brand values and mission (e.g., embedding a QR code in a product package that leads to a website explaining the company’s ethical sourcing practices)
These goals will influence the company’s overall product digitization strategy, such as determining what kind of physical identifier should be used and where (e.g., an NFC sensor tag printed on a product label) and what will happen after a consumer activates the identifier (like launching a website, a loyalty program app, or an augmented reality game).
Marketing managers should also consider how to protect consumers’ privacy. For example, consumers must be notified of what will happen once they scan a QR code. Of course, an app must abide by legal privacy requirements and provide consumers with a way to opt-out of the gathering of certain data. Companies can anonymize data by using only IP addresses instead of a person’s name.
By determining marketing goals in relation to digitalization, marketing managers can provide input into their company’s digital transformation strategy. They will be able to identify the types of information and metrics they need, and harness the data to reap significant consumer insights.