The digital age is challenging brands with shifting landscapes and consumer habits that require constant adaptation and reinvention. Not only are customers driving the change, but the Internet allows every business to see what every other business is doing – and this accelerates how industry norms and best practices proliferate. A new idea is not a new idea for long, and 2019 will see a continuation – if not augmentation – of these realities.
Though brands face difficulties, in those difficulties there are also opportunities for the feisty, dedicated, and forward thinkers to capture market share while the mastodons get stuck in the muck. Today they might be lauded for taking risks and overturning their own business models, erring on the side of cannabilization instead of waiting for some upstart to take their lunch. Tomorrow – because they are still around – they will be seen as having taken a conservative approach to preserve themselves. Thus is the nature of hindsight.
That being said, here are the 5 challenges facing brands, and what brands can do about it:
Brand loyalty is dwindling
People see products and experiences first, then default to the brand name.
I’ve written about this before: traditional retail as we know it is diving, and there is no end in site. Giants are falling. Malls are shuttering up shop. As e-commerce and e-retail take bigger slices of the market, shopping has needed to shift towards experiences.
If you know the product that you are going to buy already, there is no need for you to pick it up, touch it, or read the label. If you buy Tide detergent once every three weeks, when that third week comes around, you don’t go “shopping” for Tide. You buy it. This is the difference between buying and shopping. E-commerce and particularly Amazon have filled the need for people to buy products with hardly any effort and delivered directly to their doors in no time at all.
Shopping – as in the act of shopping – is more about discovering new products. Shopping at a supermarket is about finding what you want to eat that week, maybe there is a special on ribs or a new salad bar with a hearty kale offering. You shop around by analyzing your options and selecting what looks good for you.
Take one look at the rise of concept stores and you will see that this idea is catching on. Concept storekeepers curate a selection of interesting products and put them on display for people to discover. As an experience, people are stimulated because it is all new things. Fast fashion brands like H&M refresh their offering on a monthly basis to make each trip into the store a new discovery experience. Beauty outlets like Sephora do the same thing, allocating trade slots to new launches from beauty brands to keep the experience fresh.
The stores that didn’t do this, like your Kmarts and Toys R Us, got gobbled up by the fact that most of the things that people need from those stores are easier bought online, so in effect the stores were just giant warehouses. Toys R Us could have imagined an incredible experience, turning it into a living playground where you could buy all the toys. Instead they took the approach of maximizing products per square inch.
The real problem with this approach is that the product itself is not put into a position of value. We are in an age now with advertising on social platforms that often promotes one product in a lifestyle setting that attracts the attention. Since we are primarily visual creatures, we are caught by the aesthetic before we see the brand name. If the visual is powerful enough, or the product cool enough, we are enticed to discover it regardless of the brand.
This means that brand equity that brands work so hard to build is often not convertible into purchasing capital. Sure, the brand is still important in terms of reputation, and it can be the make or break of a purchase, but when the brand is decorrelated from the experience, like in a concept store or in an online ad, it’s the product itself that stands out first.
Brands can no longer afford to rest on their laurels of past success. A new product will always come along that is better, shinier, more performant and trendier. Brands need to anticipate this by thinking about product and experience first.
E-commerce sites all look the same – and are a pain for first time users
How can your brand offer a differentiated experience when it’s using the same optimized pages as everyone else?
Speaking of experiences, if you’re thinking that’s best to control the experience as much as possible, you would often be right. Cutting out the middle man can help raise profitability and let you capture data into your own owned ecosystem. You can also control the entire digital conversion funnel from start to end and optimize at each step.
Makes sense then that so many brands are launching e-commerce sites or are popping up and being sold exclusively online. There is just one thing you might have asked yoursefl. Do all e-commerce sites look exactly the same?
The answer is yes and for a few reasons.
First, the consolidation of e-commerce giants like DemandWare means that more and more brands rely on the same technology, that standardization is both good and bad. It’s good because DemandWare can study how sites and e-commerce work and create a template of best practices so that brands don’t waste time wondering which layout will work the best. It’s bad though because there are stiff limits to the types of personalization of websites that enables the experiences that I talked about above.
Secondly, people have to understand how to use your site. If a customer can’t find the buy button, well then it’s not much of an e-commerce site unfortunately. For the web designers who dream of creating immersive e-commerce experiences (a la Monument Valley), the realities of purchasing will always get in the way.
Finally, each e-commerce site has a set of basic information that they need to have about you in order to complete the order and deliver a product to you. Believe it or not, it represents a big barrier to having a good experience. When you walk into a store, you pick up a product, say hello and swipe your card. Sure, you have to be in the store, whereas with e-commerce you can be literally anywhere. But there is no equivalent for e-commerce for the first time shopper.
Amazon pioneered “one-click buying” simply because they had a large customer base already with all of the information about their customers. When someone comes to your site for the first time, they have to register, choose a password (always with different requirements), confirm their email address, enter in their details, and order. As a brand, you can choose when this happens, whether it’s a the beginning or the very end of the purchase funnel. Either way you decide to go, it’s still a pain for new customers.
So how can you differentiate your e-commerce site? Especially when your product is sold in other e-retail environments where your customers might already have accounts?
To find differentiation, you need to go back to the basics of sales: exclusivity, services, and urgency.
For exclusivity, it’s a good idea to have some products available on your own e-commerce site that aren’t available elsewhere (according to your distribution contracts). This could be something as simple as a gift that people receive when they order a certain amount of products. It shows people that you value dealing directly with them, and are prepared to reward them for it.
For services, you can offer things like personalization (engraving, printing, giftwrapping) that aren’t available in other places. This presents logistical challenges that you can handle yourself much easier than asking a partner to take care of it. That’s assuming, of course, that you can deliver it.
For urgency, you can try the age old sales periods (built in around minor holidays like Art Van) or dedicated sales periods that will give people an extra motivation to buy now instead of waiting until later or a different POS. This is not always easy – or advised – however. Discounting your products on your D2C channels can complicate relationships with distributors and degrade the image that customers have of your brand.
The obstacles do not negate the value of creating a D2C sales channel if one doesn’t exist. Owning the entire path to purchase allows you to optimize each step so that you can maximize conversion. Data collecting during the (painful) sign up and account creation process can represent a solid ROI with a clever CRM program.
Your competitors are always a click away
Go to a YouTube channel, the first thing you see is a list of competitors
Digital platforms are tight spaces. Before, brands might be side to side on a high street or in a mall, but in search result pages they are literally millimeters away from each other. Your competitors have never been closer.
Add in the suggested search results that appear even before a search is made there is less and less room for error. On YouTube pages your competitors are listed right next to your content. E-retail and e-commerce pages are the same.
At any point during the time that people spend with your brand online, if there is a part that is not consumer-centric, be it consuming content or buying your products, people will bounce away – probably into the arms of your competitors.
The tighter spaces often mean a smaller territory of expression, meaning that a message has to be honed to a razor-thin character limit and thereby sacrificing part of your messaging. The Internet favors simple ideas not by choice but by a constraint of design. It’s a truly unique problematic for today’s generation of marketers.
The major platforms have also moved to a self-service auction model, meaning that you are constantly competing with all of your competitors for visibility in real time. The value of certain media buys is constantly in flux depending on the price that the market sets. It becomes even more difficult to estimate target KPIs for performance when the conditions make prediction irrelevant.
Amazon is always a click away
Showrooming and price comparisons are destroying value
A personal story. Our son Marlow became obsessed with a giant toy crane that he saw in the toy section of BHV in Paris. My wife and I decided that we would get it for his Christmas present. We went to BHV a couple of weeks later on a busy Saturday afternoon, found the toy, and went to the cash register.
The cashier scanned the big box and announced the price: 119 euro.
I looked at my wife, that was an expensive toy crane.
She said she thought it was 79 euro. She pulled out her phone. A line formed behind us. She didn’t go to the BHV website, she went straight to Amazon.
The cashier asked if I had a loyalty card.
“It’s 56 euro on Amazon.” My wife discovered.
“The same one?” I asked.
I looked at the photos and looked at the big box on the table in front of me with the impatient cashier.
“Yeah, same one.”
My wife tapped her phone a few times.
“I bought it.”
“OK!” I turned around and looked at the cashier, who looked at me with a mixture of indignation and “I would’ve done exactly the same thing if I was you.”
“Merci.” I left the big box on his small stand and we took the escalator down and out, arms free to enjoy a stroll through the Marais.
This is the danger of Amazon.
Everything is there. The choice of price is unbeatable every time. You know that you’ll get it in a day or two. You could be at any physical store on the planet, test out something that you’re interested in, and buy it cheaper on Amazon. You could be at any e-store, see something you like, then open a new tab, copy and paste the name of the product, and get it cheaper and faster from Amazon.
What used to be the premium of a shopping experience — where products are curated and tastes inspired — is now only being used for the inspiration part. If the crane for my son had been 79 euros at BHV but 56 euros on Amazon, we still wouldn’t have bought it at BHV. I think it’s safe to say I would’ve bought it then and there for a maximum of 65 euros, just to have it and not deal with the delivery or picking it up from the post office. But Amazon sealed the deal.
Amazon’s share of product searches is up to 54%, strongly beating out Google and asserting its dominance over the way people buy. But working with Amazon can prove to be just as dangerous. Giants like Toys R Us went under thanks to getting the short end of the stick from the Amazon business wizards. Can’t live with them, can’t live without them, and definitely can’t ignore them.
Earned media cannot be controlled
Influencers are both a boon and a scourge for brands
There were always celebrity endorsements. But once social networks broke out there came along a new breed of the “popular,” the “important,” the “influential.” Measured by audience, influencers command premiums on the space on their profiles.
At the beginning there were the big influencers. The Chiaras and the Marianos. Then, once those accounts were saturated, the focus shifted to middle-tier influencers. With between 100K and 1M followers, brands have to work with more of them to attain the same impact. In 2018 we saw the rise of micro-influencers, with 20K to 100K followers, who were deemed more authentic and who you could pay much less. So while influencer budgets remained steady (or rose or fell depending on the brand) you got the same reach from an increasing number of smaller and smaller influencers.
Now we are on the cusp of nano-influencers, which means that brands are working with hundreds of people to create content. With my experience I can tell you that it’s difficult enough to create quality content with one or two agencies. Spread out the efforts of a project manager or influencer manager over a huge swath of amateur talent who don’t even understand Photoshop and you can say good bye to quality. It’s just not physically possible to maintain an elevated brand image by spreading out the responsibilities of content production over that many people.
This is why I think that influencers are just a fad that is not the basis of a sound long-term digital marketing strategy. Sure, influencers can make an impact on popular culture and help to determine what’s hot, but for brands they don’t represent the sort of longterm opportunity for building brand equity.
Stick with what you can control.
What are the biggest problems your brand faces in 2019?