Businesses are transforming. Actually, a more accurate way to put it would be that the world is transforming and business needs to keep up.
“There’s been an organizational shift as digital moves from the oddity that only a few people in the company do to a mainstay of American business,” said Aaron Shapiro, CEO of Huge, speaking at Marketing&Tech Partnership Summit held January 28 in New York City.
Look at Pizza Hut—a company that literally started in a hut in Kansas, hence the name. Today, it’s the biggest seller of pizza in the world, with about $5.5 billion in revenue. But even more noteworthy than the notion that the world’s citizens eat that much pizza every year is the fact that $2.05 billion of that came from online sales.
So, what happens when the vast majority of your revenue is generated via the Web? A website in 1999 was basically a glorified marketing portal designed to drive you to the store. Today, storefronts “are like billboards to drive you to the Web to buy through e-commerce—the business model has flipped,” Shapiro said.
In a way, Pizza Hut is no different than Amazon. In a way, no business today is all that different from Amazon.
“Like it or not, everyone in this room is in the technology business, no matter what business you think you’re in,” Shapiro said. “Whether you sell pizza or footballs or whatever, you’re a technology company just like Amazon or Google—and if you don’t think that way, you’re not set up to be successful in the future.”
But there is a nuance there: Amazon was built from the ground up as an Internet business. A brand like Pizza Hut started out in the retail environment and has had to transition online. That, however, is irrelevant in the face of consumer expectation. Digital is the most viewed form of media—it exceeded TV for the first time in 2013 (5:16 versus 4:31 hours)—and the majority of the global population (52%) is post-digital, meaning they don’t remember a pre-Internet world.
And it’s more than a trend; it’s the lens through which all brands now need to view their marketing and technology processes to have any chance of beating out the competition. When the members of the millennial generation hit their late 20s and early 30s, their buying power will come into its lucrative maturity.
“This is the demographic that every brand that exists will be targeting,” Shapiro said. “This will be very destabilizing for how a lot of us do marketing going forward.”
Millennials are looking for instant gratification (people don’t go to a store, order pizza, and wait for it; they whip out their mobile phones to order and get annoyed when their pizza isn’t delivered close to immediately), which means the technology has to keep up. They also expect all the information they need to be easily accessible online.
So, what can brands do to embrace the new reality and deliver the kind of experience, convenience, and speed that digital-first consumers expect? Shapiro got down to brass tacks:
1. Think about consumers as users. “The old-school business model is that the consumer is king. Consumers are important, of course, but I would argue that this new environment is about a larger audience I would call users, people using your digital footprint.”
2. Have a relentless focus on meeting user need. “Grow your user base and customers will follow. Consumers are real people going to your website to accomplish real things.”
3. Have a ‘software layer.’ “No one wants to talk to you or to get your brochure. To move toward a digital future there should be a layer of software around your business—people are not picking up the phone, they’re engaging with you through your software.”
4. Implement user-centric management. “Manage with the user in mind. The path to profitability is the ability to balance three things: user goals, business goals, and technical feasibility.”
5. Be a concentric organization. “Rather than thinking you need a whole organization of digitally savvy people, realize that you need a digital core in the business to think about the internal process which should be as simple as how Facebook enables a broad swath of people with no Internet expertise to communicate with the world digitally.”
6. Understand the concept of disposable technology. “Technology is not a capital investment, it’s an ongoing operational expense. Companies that embrace the Web ethos quickly iterate, constantly improve, and throw away if necessary. You can’t just build something once and never change it again.”
7. Develop higher-calling products. “Digital commoditizes everything. Blend product and marketing together through the notion of utility marketing. Old-school marketing is about telling you something. Because digital is about infinite choices, the new world is about providing utility so that I proactively engage with the brand. Look at the Nike Fuel Band. Is it a product or is it marketing? It’s a product because we buy it, but it’s also a social object.”
8. Provide bilateral customer service. “Customers have bought your product, now how do you keep them happy? Millennials don’t want to talk to anyone. They want to solve their problems themselves digitally and fast—but when they’re confused, they want to talk to someone right away. A lot of people approach customer service thinking of cost, but building strong digital customer service can keep costs down and provide a better net experience.”
