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Straight From NRF: Want Your Share of $100 Billion? Build Customer Trust

As I’m sure most of you know, Jon Stine presented this morning at NRF on the results of his fourth “Catch ‘Em and Keep ‘Em” survey, which is a highly respected study done each year to identify how shoppers are responding to retail technologies. As a followup to his NRF Big Ideas session, I’d like to reproduce here Jon’s blog on his findings and thoughts. Thank you, Jon!

Want Your Share of $100 Billion? Build Customer Trust
By Jon Stine

jostineTrust. It’s a powerful human emotion that often drives our behavior. The level of trust, or lack thereof, between a retailer and its customers can literally make or break the business. Given the importance of trust, many retailers are asking: How much do customers trust retailers? What are the benefits of increasing trust? How do retailers gather the information needed to provide the  personalized experiences many customers want, while maintaining and even building trusted relationships?

These questions are especially important given the critical juncture at which we find ourselves—the convergence of people, process, data, and things called the Internet of Everything (IoE).

To help retailers build customer trust in an increasingly digitally connected world, Cisco Consulting Services surveyed 1,174 consumers in its fourth annual Digital Shopping Behavior survey.* From a behavior perspective, shoppers are becoming more digital. In fact, eighty percent of respondents are what we call Digital Mass shoppers—people who research, browse, and purchase digitally. Within this group, Über Digitals, who almost always use a smartphone to shop, increased from 11 percent last year to 18 percent this year. Clearly, your customers are digital.

Before we discuss “how,” it is important to understand “why.” Our research showed $100 billion of IoE value was available for retailers in the United States to capture in 2013 by offering more personalized shopping experiences. If you missed your share, don’t worry. This number is expected to increase slightly in 2014. Realizing this value, however, isn’t easy.

When it comes to trust, retailers are starting from a low base. When asked, “How much would you trust these companies/institutions to protect your personal data and use it to provide something you value?” respondents ranked retailers second to last, at 31 percent—behind government agencies (37 percent), and ahead of Internet companies (18 percent).

Even so, shoppers want personalized experiences. When asked, “Which personalized experiences do you prefer?” respondents ranked promotions via touch-screen or smartphone first (Digital Mass: 46 percent; Über Digitals: 53 percent). This was followed by personalized products, personalized shopping lists, and personalized service.

So, how do we solve this dilemma between a lack of trust and the desire for personalized shopping experiences, which require the collection of personal information? For answers, let’s look at a few of the research findings.

  • Shoppers want personalized offers that are easy to use – Most people want to receive personalized offers via email at home. This suggests that shoppers — even Über Digitals — start the shopping process while they are in their home environment. The vision of in-store offers may simply not be in sync with the reality of shopper decision making and in-store behavior.
  • Shoppers are willing to share information – Both Digital Mass and Über Digital shoppers are willing to share past purchase history and basic personal information (name, age, etc.) with retailers to receive a more personalized shopping experience. Topping the list of acceptable information for retailers to use are time spent in the store, location in the store, and products you try but don’t buy.
  • Shoppers want something in return – To give personal information, however, shoppers must get something in return. By far, the top two factors that would lead shoppers to share more personal information are guaranteed percentage savings on their next purchase and specific dollar savings on their next purchase. Interestingly, a world-class privacy policy ranked third, 21 percent below the second choice for the Digital Mass, and 14 percent below the second response for Über Digitals.

Based on our experience working with many of the world’s leading retailers, there are three key takeaways and actions when it comes to building trust:

  1. Shopper trust must be earned. Retailers can do this by delivering a clear data policy and making the benefits of providing personal information transparent and easy to understand.
  2. IoE is already here. To capture your share of the $100 billion value at stake, develop a strategic plan that takes into account the information above.
  3. Über Digitals are too important to ignore. Selling to these shoppers requires an architecture and infrastructure that can support their increasing expectations for connected, digital shopping experiences.

To gain even more insights into developing trust in an IoE world, take a look at:

*  This year’s Cisco Consulting Digital Shopping Behavior survey includes responses from 1,174 consumers who are representative of the United States broadband population by age, income, and region. It is the fourth in a series of popular “Catch ‘Em and Keep ‘Em” studies by Cisco Consulting Services.

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Realizing the Benefits of the Internet of Everything for Customer Experience, Part 2 ‘Design Thinking’ the Customer Experience of the Future

The early days of the Internet were a heady time of reimagining, rethinking, and, in effect, “e-enabling” a staggering range of business processes. Today, we stand on the cusp of an equally momentous paradigm shift driven by an explosion in connectivity—not just among devices, but also encompassing people, Rachael McBrearty Blog 2 Graphic_Finalv3process, data, and “things.” This next-generation digital revolution will upend entrenched mind-sets and disrupt existing business strategies on a nearly unprecedented scale, transforming, yet again, the customer experience.

As I shared in Part 1 of my blog, the Cisco Internet Business Solutions Group projects that the Internet of Everything (IoE) economy will generate $14.4 trillion in Value at Stake for private-sector companies globally over the next decade. Nearly 26 percent of this total — $3.7 trillion — will be tied to IoE-driven customer experience advances.

But how do companies begin to tap the vast potential of the next-wave Internet? Since the Internet of Everything remains a work in progress, its uncharted waters and multidimensional scope will demand wholly new ways of thinking as organizations connect to a larger — much larger — universe. In order to meet IoE’s challenges effectively, your business will need a multidimensional toolkit — one that bridges marketing, design, engineering, economics, finance, or any other discipline required inside or outside your company.

The methodology that can enable these capabilities is design thinking. Drawing on methods used by design professionals, it combines empathy for the human context of the problem; creativity in the generation of insights and solutions; and rationality and feedback to analyze the solution within the customer context.

Design thinking is ideal for problem solving within highly complex situations. Which brings us to IoE. Its high level of complexity will demand that you rethink what you do for your customers, while redefining how issues can be addressed.

Knowing the customer is an age-old path to success. And at the heart of design thinking is a deeper understanding of the customer, citizen, or patient, pinpointing the human needs that fall between business objectives and the technology solutions. Employing user-centered qualitative research methods of observation, ideation, and prototyping, design thinking cuts to the essence of the human pain point and is centered on understanding the role you play in the lives of those whom you are serving. Defining and shaping the problem — in effect, determining the right question to ask — is key. Problem framing comes before problem solving and will be the foundation the creative insight in IoE innovation.

Unlike analytical thinking, which is based on a breakdown of ideas, design thinking concentrates on building up ideas with a broad focus, especially in the early stages of the problem-solving process. Once those early ideas are encouraged to develop, without judgment, they can spur creative thinking.

Here is an example of design thinking at work:

A retail client asked, “How do we increase sales conversions?” The client had the best merchandise selections, financing options, and competitive prices. Customers sang their praises in focus groups. Yet,  they were converting only about 25 percent of shoppers. With a design-thinking approach, we were able to reframe the problem. Customers were attracted by the assortment, we realized, but they were overwhelmed by the choices. They were looking for guidance on the right solution. By reframing the problem (“How do we help customers make a personalized choice?”), we came up with great ideas that led to new services offerings. In the end, conversion increased significantly.

Design thinking is not a new tool—Procter & Gamble and GE are but two companies employing its concepts, and Stanford and Harvard both teach it. It isn’t a magical cure, either. But it could provide critical solutions within the complex scope of the IoE economy.

As in previous Internet eras, organizations that adapt and redesign the customer experience — essentially by knowing their consumers through empathy and innovative solutions — will thrive. IoE will reach its true potential only if it is seamlessly integrated into customers’ lives. And design thinking — with its emphasis on simplicity and empathy—could cut through the complexity of the coming IoE economy, while driving the creation of products and services that resonate with the way your customers live, work, and play.

After all, isn’t that the reason for creating those products and services in the first place?

 

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Service Providers Are Sitting on a Gold Mine of Data

The so-called “data deluge” shows no signs of abating anytime soon. Facebook, for example, has more than 2.5 billion pieces of content and ingests more than 500 terabytes of new content daily.  Mobile devices are driving this growth of data.  The global proliferation of devices estimated to reach 10 billion by 2017—or 1.4 times the number of people on the planet. As a result mobile-data traffic is exploding. The recently released Cisco Visual Networking Index (VNI) predicts that global mobile-data traffic will increase 13-fold from 2012 to 2017, reaching 11.2 exabytes per month.

But along with the challenges inherent to this tsunami of data, opportunities abound for monetizing and optimizing information. All of those new mobile consumers—in developed and emerging markets alike—will demand enhanced Connected Life experiences that will be newer, better, and more personalized. Data is the “new oil” that will fuel this opportunity. Networks and the Internet have a critical role to play in the future of Big Data. First, they are the collectors and disseminators of data, gathering it from the millions of Internet-enabled devices, applications, and sensors, then storing it in the right place for analysis and further action. Second, they are creators of critical information on location, presence, device type, application, and more. Read More »

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For Mobile Carriers, Five Key Trends Promise Pain and Prospects

Mobile carriers face no shortage of pain points as new data streams create unprecedented and staggering amounts of information. But it is important to remember that pain points often arrive in tandem with new opportunities.

From my perspective, observing the driving forces shaping the mobile industry, five key trends stand out. All are laced with challenges and opportunities. And each represents a core element in an interconnected system that is pushing the entire marketplace forward, while demanding innovative breakthroughs in monetizing and optimizing data.

On February 25-28, I will be attending Mobile World Congress 2013 in Barcelona. This year’s event is expected to be the largest ever, with 1,500 exhibitors. I expect these five trends will be major sources of discussion:

  1. Video. We are already seeing the true inflection point in video where it becomes mainstream on multiple devices. The mobile and nomadic consumption of video—whether served by mobile carriers or localized Wi-Fi—is popular, commonplace, and growing rapidly. But video will completely reshape the demand side of the industry, creating enormous amounts of data. It threatens to load and clog networks, and it will demand new models for monetization.
  2. Accelerating connections. As the Read More »

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Four Ways TV Advertising Will Change During this Decade

lizdebskBy Leszek Izdebski, Cisco Internet Business Solutions Group (IBSG)

The past few years have brought sweeping transformation to television—a trend that will only accelerate in the coming decade. Following up on a 2011 study on the future of television, Cisco’s Internet Business Solutions Group (IBSG) recently examined the ways disruptive technology and user behavior trends are impacting TV advertising. We identified four major trends that will transform advertising and the viewer experience.

1. Channels Will Go Away

While we do not believe that all future distribution will be through on-demand unicast technologies, consumers will not think about “channels” as the means of accessing programming. Adoption of video on demand, Intelligent Programming Guides and personal video recorders (PVRs) is shifting viewing from linear broadcasts on a TV screen to a multiscreen, multi-device, multi-modal, on-my-schedule, user-controlled experience. Brands and networks will no longer be able to ensure that ads placed in specific episodes will have sufficient audience reach. This behavioral shift will force advertisers to focus on new forms of addressable advertising: Read More »

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