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Ernan’s Insights on Marketing Best Practices

Monday, January 8, 2018

'Personalization Is The New Loyalty,' Says Neiman Marcus VP

Article by Ernan Roman
Featured on CMO.com
Jeff Rosenfeld is the vice president of customer insight and analytics for The Neiman Marcus Group, where he is responsible for leveraging analytics to drive revenue. His team focuses on personalization, web analytics, media-mix attribution, product and customer insight, and business intelligence.

While not at work, Rosenfeld serves as a board member for charity and academic institutions, is an instructor for the SMU CAPE Digital Analytics and Insights Certificate Program, and enjoys traveling with his family.

Rosenfeld recently participated in our “4 Questions for Marketing Innovators” series. As you’re about to read, his topic of choice was very timely.

1. What is one marketing topic that is most important to you as an innovator?
Personalization is a hot topic these days, but in a recent RIS News study on who does it best, “no one” was a top-ranking answer. This pains me to see as I know at Neiman Marcus we’ve done a lot of great work in this space and driven substantial incremental revenue as a result. That said, when we put ourselves in the customer’s shoes, most of what the entire industry is doing today doesn’t feel that personalized yet. On the bright side, this means there is substantial opportunity here to improve the customer experience.

2. Why is this so important?
Traditional loyalty programs have gotten a bit stale. Personalization is the new loyalty. Ironically, it was probably also the first form of loyalty between shop owners and their customers even thousands of years ago. As the world has gotten more digital, the personalization from a top sales associate has gotten harder to replicate.

Neiman Marcus is a 110-year-old brand with a legacy of great service and personalization. For most of that time, personalization has been primarily driven by our world-class sales associates. Our best sales associates do three things: They observe what customers say and do, they act on that information, and they remember those observations over time.

In the digital world, observing and remembering is easy. This is data collection. Acting on that data is the hard part. This is where the algorithms come in. The first step in acting on the data is having solid identity information. You can’t personalize if you don’t have a complete picture of how each customer interacts with your brand. Identity information generally comes in two flavors: people we probably know (probabilistic) and people we definitely know (deterministic).

Most of today’s personalization for the entire industry is in the probabilistic bucket. At Neiman Marcus this includes machine-learning-driven actions, like product recommendations, private personalized offers, and working with partners like Coherent Path to help determine which of millions of possible combinations of email content will be most appealing to each customer. While these are critical to improving the customer experience and driving revenue, the average customer doesn’t realize the extensive curation the algorithms do on their behalf. As a result, most people don’t “feel” the degree to which their experience is personalized.

This is where the deterministic bucket comes in. Only when we can confidently link specific behaviors to unique individuals can we execute personalization that customers clearly realize is truly just for them. Beyond the basics, like cart-reminder emails and display remarketing, Neiman Marcus is doing things like remembering customers’ filter preferences across sessions and our “quick links” predictive site navigation from email.

3. How will this improve the customer experience?
Personalization improves the experience by making the entire journey, from initial exploration through post purchase, much easier. We like to call it “friction reduction.”

Quick links is actually a good example of initial progress on this front. It was born from the insight that most customers open email on their phones, which make it difficult to navigate and quickly get deep in the site. My team built a machine-learning algorithm to recommend three unique links for each customer to help them quickly navigate to where they are most likely to visit but also be so clearly personalized that customers would have no doubt it was custom for them. This is only the beginning, and I truly believe that the largest benefits to both us and the customer will come from further expanding this “explicit” personalization track.

4. How will this improve the effectiveness of marketing?
Marketing effectiveness is essentially a ROI calculation. It can be improved by increasing revenue relative to the associated costs. Great personalization helps drives a virtuous cycle of loyalty in which the customer is engaged, provides data that improves the personalization further, which increases customer engagement, and so on. As loyalty improves, revenue goes up. Generally speaking, marketing to loyal customers is more profitable than spending elsewhere.

Bonus: What is your favorite activity outside of work?

Several years ago, my dad and I took a week-long marble-carving course in the Colorado Mountains. I really loved it and ever since have been taking the occasional weekend to carve marble and alabaster abstract sculptures in my backyard. It’s a bit loud, but fortunately none of the neighbors have complained yet.

Monday, December 11, 2017

'Tech Has To Adapt To People,' Says Lowe's Innovation Labs Leader

Article by Ernan Roman
Featured on CMO.com
Amanda Manna is a true innovation leader. As head of narrative and partnerships of Lowe’s Innovation Labs, she oversees the team responsible for innovation strategy, an extensive applied neuroscience research program, partnerships, and marketing and communications.
In her own words: “I direct the framework we are using to drive disruptive change within Lowe’s.”
The Innovation Lab has established a global reputation for breakthroughs, including the first AR/VR home design tools, in-store autonomous robotics, exoskeletons for store employees, and the first store in space—a 3D printer aboard the International Space Station.
With that as a backdrop, Manna provides an interesting, perhaps even surprising, take on technology in this edition of “4 Questions for Digital Innovators.”
1. What is one marketing topic that is most important to you as an innovator? 
There is a lot of excitement about the potential for new technologies like augmented and virtual reality, robotics, and artificial intelligence to transform customer experiences. Too often, this leads marketers and innovators to throw technology at the wall to see what sticks.
The problem with this approach is that people aren’t changing nearly as fast as technology, so what the world needs is more intuitive tools—made possible by technology—that can change human behavior.
Ask yourself, “What are the ‘common cold’ problems facing your business?” You know, the longstanding, stubborn problems that just continue to persist despite every effort. For Lowe’s, one of those problems is how to visualize the end result of a home improvement project. It’s estimated that $70 billion in projects every year never even get started because of how hard it is to envision the end result or share your vision with someone else.
After you’ve identified the problem, then consider how technology might be applied to help solve it. For my team, we knew we could use visualization technology like augmented and virtual reality to solve this human need and overcome fear and apathy. That insight led us on a journey that has helped Lowe’s lead the adoption of augmented and virtual reality tools for home improvement.
2. Why is this so important?
Technology has to adapt to people, rather than the other way around. It’s important as marketers that we are intentional about being imaginative, to ensure we build solutions that help people solve common problems or take advantage of new opportunities.
Too often, it feels like we throw new technology at problems we failed to solve with the previous generation of technology. And usually, these are marketers’ problems: How do I capture and keep attention, shift perceptions, or drive a purchase behavior? Until we actually solve the human problems that our customers care about, none of this innovation will drive the results marketers need.
At Lowe’s, we view our stores as a competitive advantage because they become living labs that allow us to get feedback from actual customers and employees. This is the best way we know to create not just solutions that work, but solutions that work for our customers.
3. How will this improve the customer experience?
It’s clear that by solving real problems first, marketers will deliver a helpful, supportive, and differentiated customer experience.
For example, we’ve learned that customers are intuitively turning to AR via a smartphone for collaborative design, which enables them to visualize changes within their existing space. As a result, our first global product launch was Lowe’s Vision, an AR design application for Google’s Tango platform.
What you learn along the way will likely surprise you, and if you’re paying attention to the right clues, they can lead to new opportunities. While we started off using VR for design, what we saw was that by putting people in a fully immersive environment, they were engaged, focused, and ready to learn. These insights led us to create Holoroom How To, a virtual DIY skills clinic that customers and employees can use to learn how to tile a shower.
4. How will this improve the effectiveness of marketing?
Today, with the launch of Apple’s ARKit and Google’s ARCore, augmented and virtual reality technology is now in the hands of millions of people around the world. Artificial intelligence is driving the functionality of devices, tools, and experiences that are available today, such as smart home devices, and those that will transform tomorrow, such as self-driving cars. Technologies that may still feel far-future today are actually at our doorstep.
We all have the opportunity to shape the future as a result of the actions we take in the present. Start today by putting new technologies to work in service of old problems, and you can gain a head start on rising customer expectations by building tools that exceed what they need and want today. For Lowe’s, this head start has driven near-term value, in addition to the long-term benefit that comes by boosting our reputation as an innovative retailer.
The point I want to leave you with is that it is important to build solutions that don’t just work, but that work for real people. When you focus on building something that is helpful, useful, and exciting, it will sell itself.
Bonus: What is your favorite activity outside of work?
I love to spend my time outside of work relaxing with my husband and daughter. A perfect weekend will find us enjoying the outdoors and listening to music on our screened porch.

Monday, November 27, 2017

How Innovators are Breaking Silos and Creating Cross-Functional Alignment

Article by Ernan Roman
Featured on CustomerThink.com
Summary: When silos rule, internal communications break down and it’s difficult to present a united vision, brand and compelling message to consumers. However, some innovators are redefining cross-functional integration and alignment. 

How GE is Redefining “Communications”

GE Vice President and Chief Communications Officer Deirdre Latour, noted in regards to the company’s restructuring, that there is “no longer a divide between internal and external communications.

Latour commented how the company has fused its total communications, “We view communications as completely boundary less. There are no internal communications and external communications.” The company uses a system they call “go direct” to, as Latour notes, “build a direct communications program using data, that allows us to speak directly to [all] people and …communicate with those who care most about GE.”

How Cross-Functional Alignment Is Growing Tumi 

Luggage company, Tumi, has learned that “Cross-functional alignment to help the brand grow “beyond incrementality” helped boost effective customer engagement and drive growth. Following are cross-functional insights from Charlie Cole, Chief Digital Officer at Tumi,

  • “…it’s imperative that we put all our own needs aside and focus on working together to deliver on that expectation.”
  • “All four of us [digital, creative, merchandising and brand] work together against the same goals, and we have a mutual respect for each other’s expertise, making us effective and efficient.”
  • “It’s marketing/brand’s job to best understand and engage the customer from an emotional perspective. It’s digital’s job to continuously test and measure the impact of our engagement efforts…. I focus on how to provide the most immediate feedback on what’s working and what’s not so we can maximize our tactics.”
  • “We are also able to achieve new heights due to our strong collaboration…”
Research Shows Cross Functionality Fuels Superior CX

McKinsey & Co. noted that in order to build better consumer communication brands need to fix their internal communication.

Their insights indicate that brands need to “better organize and mobilize employees around consumer needs.” Additionally, they note that “designing the customer experience entails…reorienting company cultures.”

And that, “rewiring a company to provide leading customer experience is a journey in itself…. requiring high engagement from company leaders and frontline workers alike…it takes patience and guts to train an organization to see the world through the customer’s eyes and to redesign functions to create value in a customer-centric way.” But here is their caution, “too many companies focus on individual interaction touchpoints…”

The company noted that there is a distinct difference between a single touchpoint and a total journey, noting that “…customer satisfaction … is 73 percent more likely when journeys work well than when only touchpoints do.” And that building this journey “ “…must be made clear to every employee through a simple, crisp statement of intent: a shared vision and aspiration that’s authentic and consistent…” And, that journeys should be, “the framework that allows a company to organize itself and mobilize employees to deliver value…”

Takeaways
  • Communication with consumers begins with communication across departments at all levels. If there is no clear vision shared across all functional areas, then brand messaging, goals, and strategies become jumbled with no clear objectives.
  • When companies unite teams to work together for common goals, the collaborative results produce far stronger marketing that drives growth.
  • Companies need to put ego aside to continually re-evaluate and fix what is not working and adopt new interdisciplinary actions.
Pontish Yeramyan, founder and CEO of performance consulting firm Gap International, noted on the breakdown of interdepartmental communication,” When.. department or function becomes the most important thing, they lose perspective of the bigger outcome.” Brands need to break the cycle of tunnel vision to embrace wide-scoping, all-encompassing thinking in order to provide the type of consistent, well-rounded consumer experiences that builds relationships and thereby sales and loyalty.