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MANAGING DIGITALTRANSFORMATION
Jari Salo,Professor of Marketing, University of Helsinki
Professor of Digital Business and Marketing, Oulu Business School, Uni of OuluAdjunct Professor of Digital Marketing, Aalto School of Business
Associate Editor of Internet Research
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COMPANY REFERENCES
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TRANSFORMATIONTRANSFORMATION
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WHY DIGITAL?
• Create new customerrelationships
• Enhance old relationships• Improve service
”experience” (CEM)(mobile, augmented,social, location)
• Create and extend brandawareness
• Old ways of advertising donot always reachyoungsters (with contentmarketing – native/viralreach is better)
• Simplify the fuzzy front endof innovation (PDM,NPD/NSD/R&D)
• Increase sales, reduceoverall costs and receivingpayments earlier
• Decrease cost of service,operations and channelstructure
• Behavioral change -gamification
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WHAT HAS INFLUENCED INVESTMENTDECISIONS?
Divia (Digital Business Network), Finland 2014
Consumer behavior Cost Immediacy –fast rech
Customer interactionEasy targeting
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GOALS SET FOR DIGITAL
Better serviceIncreasing salesIncreasing customer interactionImproving communicationsImproving advertisingStrengthening the brand
MobileEmail
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HOW TO MANAGETRANSFORMATION?
HOW TO MANAGETRANSFORMATION?
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Online
metrics
SCM
CRM
INNOVATION & NPD
BusinessStrategy
CustomerStrategy
BusinessStrategy
CustomerStrategy
Valuecapture
Valuecreation
Value co-creation
Valuecapture
Valuecreation
Value co-creation
Performanceassesmentprocesses
a) Shareholderresults
b)Performancemeasuring
c) KPI
Performanceassesmentprocesses
a) Shareholderresults
b)Performancemeasuring
c) KPI
Multichannelintegration-FB, Instagram,
Twitter-YouTube
-Email & newsletters-Company websites,extranets, electronic
marketplaces-SEO/SEA, web
advertising-Blogs, pods, -Vpods,
webcasts-Mobile, locationbased services,
augmented/virtualreality
-Data science
Multichannelintegration-FB, Instagram,
Twitter-YouTube
-Email & newsletters-Company websites,extranets, electronic
marketplaces-SEO/SEA, web
advertising-Blogs, pods, -Vpods,
webcasts-Mobile, locationbased services,
augmented/virtualreality
-Data science
Information systems- Data management
- Front & back office applications- Big data and cloud applications
Information systems- Data management
- Front & back office applications- Big data and cloud applications
HOLISTIC VIEW - DIGITAL MANAGEMENTFRAMEWORK
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TASK 1: FROM HOLISTIC TOSPECIFIC VIEW – PAIN POINTANALYSIS• In a group or individually pick a process close to your heart
(CRM, SCM, INNOVATION)
1. What are the inputs to your (sub)-process?
2. What are the activities constituting the (sub)-process?
3. What are the outputs of the selected process?
4. What are the desired outputs of the selected process?
5. What are the identified pain points in the selected process ?
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TASK 2: FROM HOLISTIC TOSPECIFIC VIEW – PAIN POINTANALYSIS1. Were does it hurt the most? Rank order the pain points, is it
campaign level, is it multichannel issue, is it processimprovement etc.
2. Develop an action plan to eliminate pain points one by onee.g. social media X e.g. Facebook advertising doesn’t lead topurchases in your e-commerce site?
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CRM-CEMCRM-CEM
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DRIVING TO STORE / ACTION
• Mobile
• Customer letters (email)
• SEM (SEA+SEO)
• Twitter lead cards
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Measuring mobile: SKRestaurants
SKDataba
se
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AND OTHERS DRIVING TRAFFIC
• SEA +SEO= SEM
• Newsletters (Email biggest ROI of digital)
• Twitter advertising and lead generation cards (LGC)
• Banner ads
• Content marketing (Video and social)
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CUSTOMER LETTERS - PATH TOPURCHASE (KUMAR & SALO 2016, JMC)
• 11 companies provided access to their live e-newsletters account
• Thousands of e-newsletters send over several years
• 6 months period was selected and the e-newsletters were analyzed
• Four regions are used to depict the visual scene of e-newsletters
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CUSTOMER LETTER - PATH TO PURCHASEEXAMPLE FROM OUR RESEARCH
• The average click-through rate of email is 16% with
an open rate of almost 20%.
• The un-subscription rate is low at 0.22%.
• We analyzed number of links, number of words in subject
line and body, number of pics etc. impact to CTR.
• Reverse U effect – NE receives most of the clicks
U
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INSTORE
• Beacons
• Digital signage - smart displays
• Real-time category management
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CONTEXT / LOCATIONAWERENESS
• Apple's iBeacon technology - in-storeBluetooth location trackers designed tointeract with smartphones - enablesretailers and app publishers to identifypeople individually the moment they entera shop
• iBeacon available with many vendors
• Similar to iJack service which wedeveloped with Teliasonera in early 2000which they abandoned in 2004 Sales/deals
80%Content relevant tointerest/Location 62%
Swirl 2013
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DATA VISUALIZATION - DASHBOARDS
Similar heat maps available for banner ads andother digital marketing tools
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•About a year ago, Urban Research, afast-growing and popular fashion, homeand lifestyle retailer, launched anexperiment in Tokyo’s Parco Ikebukuro.
•Allows customers to stand in front of oneof two 60-inch screens, select clothingitems they want to try on and seethemselves dressed in the products withinseconds.
•Customers’ movements are representedfluidly on the screen in 3D and customerscan use an integrated iPad to takepictures of themselves and share themwith friends on social networks.
VIRTUAL CHANGING BOOTHS
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VIRTUAL CHANGING BOOTHBENEFITS
• No inventory needed
• Scan a QR code to buy
• Easy, especially men seem to like it
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REAL-TIME CATEGORYMANAGEMENT
• Lush sales team can changethe layout of their stores inresponse to real-time salesdata
• If one bath bomb is selling wellwith a certain shampoo, theycan change the store layout sothe items are closer together.(Source BBC)
"Not only has this helped to tap in to the ambitious spiritof staff - competing over which store can do best in termsof sales and performance - but it also gives theminformation to improve the customer experience."
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BEHAVIORAL MARKETING -DIGITAL
• E-sales
• Newsletters
• Social
• Shopping cart abandonment recovery
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E-SALES
E-sales (salesperson while in “physical” store if not busyhandles chat, social media store, online store, virtualworld store at the same time) – selling multiple channels
In the project tested with Konebox(old K-group retailer of consumer electronics)
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SOCIAL RETAIL (AS IF THE RETAIL HASNTALWAYS BEEN SOCIAL...)
•Delta Air Lines has launched The Delta TicketWindow, a Facebook application that letsmembers find, book and share flights via the“Book a Trip” tab on the airline’s FacebookPage.
•The application was first to be built to keepthe user on Delta’s Facebook Page for theduration of the booking process, as well asgive them the opportunity to share theirbooked flight with friends
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SOCIAL RETAIL – SOCIAL LOGIN
• Social login - Facebook or other SNS enabled socialcommerce with given retailer
• Authenticate identities
• Pull customer information from particular SNS
• Tailor / customize/ morph in real-time the retailers website
• Social labs study showed that in 2012 only 6% of top 500online retailers used social login
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ONE OF OUR PROJECTS: SHOPPINGCART ABANDONMENT RECOVERYNosto – or similar SW
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PUTTING IT ALL TOGETHER – OMNICHANNEL FUNNEL
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LEVELS OF ACTION FOR CEM(OR AUTOMATION & DATA SCIENCE)
• Individual level data
• Marketing action level data
• Campaign level data
• Multichannel data
• All above over time (CLV)
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MEASURING LEVELS OF ACTION
• Data first
• Giving scores e.g. 0-100 for actions taken by consumer
• Scoring actions over time (time in program, websiteclicks, email clicks, Twitter, LinkedIn, Instagram,Facebook etc. +/- scores, buying patterns and cyclesetc.)
• CLV - measuring over time
• Calls for behavioral marketing that individualized butautomated
E.g. hotels with automated pricing algorithms
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MARKETING, SALES & MONEY?
Outside non digital marketing efforts
Outside digital marketing efforts
Store marketing efforts
Or online store marketing efforts
RevenueThe aim of marketing is to know and understand thecustomer so well the product or service fits him and sellsitself. (Peter Drucker)
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SCM – B2BSCM – B2B
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DIGITIZATION OF BUSINESSRELATIONSHIPS AND NETWORKS
• Adoption of IT in BR/Nets
• Usage of IT in BR/Nets
• Virtuous cycle / Vicious Cycle
• BR digitization types and processes
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EVOLUTION OF IT TOOLS (SALO 2009)
1960 1970 2008-
Internalcomputerization
initiatedintensively.
E-mails, EDI/IOSand EFT initiated.
Internet facilitatedcommunication and
commerce. Emergenceof Web shops, auctions,marketplaces, EDI over
Internet, explosion ofE-mailing, spam, and
security risks.
Intranet networks andExtranet sharedconnections.Expanding B2Bintegration solutions:EAI, web services,ERP1/ERP2 andmobile solutions
1980 1990
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ELEMENTS INFLUENCING THE DIGITIZATIONPROCESS OF BUSINESS RELATIONSHIPS
AccelerantsCompany and relationship specific
capabilities and needsSimple adopted technology solution
Fit between existing and adoptedtechnologies as well as corporate
strategy
InhibitorsMissing mutual benefits
Radical organizational andenvironmental changes
Lack of trust and commitment
Change in business relationship+Performance increase
+Behavioral changes; increased trust andcommitment
-Decrease in adopted tools- Dissolution
Adoption of digital tools
AntecedentsClose business relationship
Existing trust and commitmentWillingness to adopt digital tools
Salo, 2005
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DIGITAL BOND CATEGORIZATION
Salo 2010, Salo & Wendelin 2013
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DIGITAL BOND CATEGORIZATION
Salo 2010, Salo & Wendelin 2013
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DATA RICH ENVIRONMENTS:INDUSTRIAL PERSPECTIVE
• Trucks
• Busses
• Dumpers (e.g. used to carry iron ore in mines)
• Autonomous vehicles
• Telematics (outsourced e.g. to Volvo)
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INCREASING SALES – B2B SOCIAL MEDIA USECASE: PONSSE LAUNCH EVENT INVITATION
• Invitation to participate launchevent of new productScorpion
• Target market forestmachinery operators/owners
• YouTube campaign
• Target set 500 participants,over 1000 participated(double than usual)
• Most importantly allScorpions were sold (pricetag 0.5M€ each)
• Price of campaign 1000$
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INNOVATIONINNOVATION
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TYPOLOGY OF CUSTOMER INNOVATION
Piller et al., 2011
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COKE, STEELCASE AND BMW
• Virtual world - Coke: Virtual Thirst ”send ideas for portablevirtual vending machine”
• Virtual world - Steelcase: ”design new innovativeexecutive chair”
• Social media: BMW series 1 Use Facebook applicationgraffiti wall to design new and customize your BMW 1.Over 10.000 participated and 600.000 voted for a bestdesign
Kohler 2008
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CASE STARBUCKS
• 125,000 Suggestions from Starbucks clients
• The top idea received over 95,000 votes and over 1,000 comments
• 200 ideas launched
• Starbuck has over 28 million fans on Facebook
• The Facebook fans mostly engage in applications such as eventcalendars, discussions and notes
http://www.slideshare.net/kholzapfel/social-media-success-stories
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COMMERCIALIZATION OF VIRTUALREALITY DESIGN TOOL: UKIARCHITECTS
Using 3D 1:1 virtual cave environment for hospitaldesign
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PROJECT PARTIES
• UKI architects (architect company) www.ukiark.fi
• Ludocraft (technology partner, 3D and virtual world expert,builds realxtend virtual world technolgy- platform)www.ludocraft.com/
• Intercircum – business partner (our company)
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HOSPITAL CONSTRUCTION BUSINESS
• Customers, cities, municipalities, and users have differentexpectations
• Multiple technological and architectural options
• Varying business models and government involvement (laws &rules)
• Case: Seinäjoki Central hospital extension
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VIRTUAL 3D 1:1 DESIGN ANDPRESENTATION TOOL FORARCHITECTS – VALO™
•Customers, users, others and architects as well as the construction team
experience the space in virtual environment
•Helps customers and users alike to experience the building before it is even
built with 3D 1:1 design. Idea: User involvement, user centered co-design -
functional design
•Changing style & solutions in the design are cost effective as the design is
virtual and house is not actually build yet
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VIRTUAL 3D 1:1 DESIGN ANDPRESENTATION TOOL FORARCHITECTS – VALO™
•Spaces are user designed for and with
users
•In future if needed all parties involved
can be in different places assuming they
have connection via relevant
technologies to the virtual design
environment
•Illustrative video clip:
http://www.youtube.com/watch?v=smC-
rvzSph4
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OUTCOME OF THECOMMERCIALIZATION
• 3D virtual 1:1 design tool Valo™ is also used internally andalso in different types of customer projects
• New hospital project in Tampere
• Valo™ is now commercially available to construction business
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Online
metrics
SCM
CRM
INNOVATION & NPD
BusinessStrategy
CustomerStrategy
BusinessStrategy
CustomerStrategy
Valuecapture
Valuecreation
Value co-creation
Valuecapture
Valuecreation
Value co-creation
Performanceassesmentprocesses
a) Shareholderresults
b)Performancemeasuring
c) KPI
Performanceassesmentprocesses
a) Shareholderresults
b)Performancemeasuring
c) KPI
Multichannelintegration-FB, Instagram,
Twitter-YouTube
-Email & newsletters-Company websites,extranets, electronic
marketplaces-SEO/SEA, web
advertising-Blogs, pods, -Vpods,
webcasts-Mobile, locationbased services,
augmented/virtualreality
-Data science
Multichannelintegration-FB, Instagram,
Twitter-YouTube
-Email & newsletters-Company websites,extranets, electronic
marketplaces-SEO/SEA, web
advertising-Blogs, pods, -Vpods,
webcasts-Mobile, locationbased services,
augmented/virtualreality
-Data science
Information systems- Data management
- Front & back office applications- Big data and cloud applications
Information systems- Data management
- Front & back office applications- Big data and cloud applications
HOLISTIC VIEW - DIGITAL MANAGEMENTFRAMEWORK
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CHANGE IN ”DIGITAL”EVERYDAY OF PEOPLE?
• Search online recipes - by theingredients / goods online(Foodie.fm) delivered to yourhome/office
• Music (Spotify)• Phone - video (Skype)• Movies & TV-series (Netflix)• Health and wellbeing – quantified
self (Polar activity bracelets)• Online learning (younger
generation)
• Young people share sports /events of everyday to Instagramand FB
• Sharing baby pictures?• Smart houses (Bluetooth,
infrared enabled devices, digitallocks, fire alarms e.g. Nest Labsbought by Google)
• Smart cars (telematics run by e.g.Volvo)
• Routine work done by computers/ robots while idea generation/creativity left to humans(Designer Eero Aarnio saidwithout ideas and designsindustrial machines wouldn'tproduce anything)
Key question to ask - What kind of experiences are sought after ingeneral and specifically by customers, employees, managers?
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COMMENTS / QUESTIONS?
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