MANAGING DIGITAL TRANSFORMATION · MANAGING DIGITAL TRANSFORMATION ... Professor of Digital...

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Maatalous-metsätieteellinen tiedekunta

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


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


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


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




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


Twitter-YouTube






-Data science

Information systems- Data management

- Front & back office applications- Big data and cloud applications



HOLISTIC VIEW - DIGITAL MANAGEMENTFRAMEWORK


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?


CRM-CEMCRM-CEM

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DRIVING TO STORE / ACTION

• Mobile

• Customer letters (email)

• SEM (SEA+SEO)

• Twitter lead cards


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)


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


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


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


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."


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)


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


ONE OF OUR PROJECTS: SHOPPINGCART ABANDONMENT RECOVERYNosto – or similar SW

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PUTTING IT ALL TOGETHER – OMNICHANNEL FUNNEL


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


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


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


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


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$


INNOVATIONINNOVATION

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TYPOLOGY OF CUSTOMER INNOVATION

Piller et al., 2011


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


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


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


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




c) KPI




c) KPI


Twitter-YouTube






-Data science


Twitter-YouTube






-Data science





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?


COMMENTS / QUESTIONS?

[email protected]@[email protected]/jarisa

MANAGING DIGITAL TRANSFORMATION · MANAGING DIGITAL TRANSFORMATION ... Professor of Digital...

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