02 Apr Don’t Follow the Leader
Our daily life is much more like Malcolm in the Middle than the Brady Bunch but I wouldn’t have it any other way. My wife and I lead busy lives. Some might call it chaotic but we call it fulfilling.
She owns a small business and I beat the pavement as a B2B salesman. This means long days and short nights. Sometimes we have time to make our bed, sometimes we don’t. Did I mention we have 3 kids? One of which is a two-year old who enjoys painting my walls with spaghetti sauce. Like I said… Some might call it chaotic but we call it fulfilling.
This is your customer. This is what their life looks like.
In the era of Digital Transformation, business leaders are drawn to the latest buzzword from the latest conference. It’s a well-known fact, almost to the point of being an inside joke, in our industry that there is a Domino effect or Follow the Leader effect. One presenter shares their groundbreaking results at a conference which is followed by every one of their competitors implementing the exact same toolset.
Funny thing is that there is rarely any data to support the initiative but it is always easier to follow the leader than it is to be truly innovative.
It’s okay to use trends as a guide for what might work for you but only once you have empirically tested whether or not it is a right fit for you and your customer. After working several years as a Statistical Process Improvement Consultant for major companies such as Phillips 66 and Huntsman Chemical, I can assure you that just because something worked for someone else, does not mean it will work for you.
Let’s talk about Digital Maturity and how following the leader doesn’t always work out.
In recent years, within ecommerce, there has been an absolute sprint to master “The Last Mile.” Ecommerce juggernauts and competitors alike are trying to figure out the fulfillment puzzle. Everyone is able to drive traffic and sell products but customers are becoming more and more demanding. They want free shipping and same day delivery. These are all demands that were generated from Amazon’s initial Amazon Prime offerings.
Some of the more tenured retail competitors are attempting to leverage their brick and mortar stores as a decentralized distribution center. Hoping that this will help them to compete with Amazon’s ever rising delivery offerings. Perhaps, it will cut down delivery time and help cut costs. Especially if the physical locations are already established then there should be limited expenses when shifting to this strategy. This new approach moved the needle upward for a few implementers. Next thing you know, the smaller fish in the pond attempt the same thing.
Here’s the problem. Simply put… Every play scores a touchdown on paper. Meaning every idea is a great idea until you implement it and discover the unintended consequences. Several variables come into play once an idea is taken from paper to real world execution. Many companies lose thousands if not millions of dollars during this phase of follow the leader.
For a quick example, let’s revisit my chaotic life which I shared with you at the beginning of this article. Here is how Digital Maturity impacts Customer Experience and how chasing trends is cool but caring for your customer on a human level is what is truly important.
It’s another Wednesday night and we were too busy with taxes, employee handbooks, swimming lessons, Parent Teacher Conferences, and vet appointments that we didn’t have time to grab groceries the night before. My wife remembers that one of the local grocers offers Buy Online/Pick up In-Store (BOPIS). Wonderful! This is a lifesaver.
We order the groceries thinking the day has been saved….
At the store, we wait for the store employee to hand deliver the groceries to our vehicle. Honestly, we are all feeling a bit fancy and relishing in the aura of the high tech society we live in.
The employee approaches the car but he doesn’t seem to be as jovial as expected. Hmmm. Anyways, he proceeds to explain to us that half of the groceries that we ordered were not in stock at this location. You can tell by his thorough and polished delivery of the news that this is not the first time this has happened.
He goes on to explain that this has essentially happened on every order that has come through. You see the data that feeds into the website is not associated or tied to the inventory data of each location. Meaning several people are ordering from a catalog online that has nothing to do with what is available in the store closest to them.
We left with half the ingredients that we needed in a car full of hungry kids. Poor customer experience.
This was caused by Digital Immaturity.
Essentially something flashy happened in the marketplace. The local grocer decided to implement it. They loved the idea but could not execute it effectively.
It made sense on paper. They thought that their customers would love the new service. They just didn’t know how negative the impact would be if they failed to implement the idea correctly.
Here’s the problem. The local grocer did not have the Digital Maturity that is required to roll out such an effort. Plain and simple.
If the local grocer had the guidance of a seasoned digital agency, they would have identified the gaps in their digital system prior to rolling out this large initiative.
What was the cost of poorly implementing BOPIS for the local grocer?
- My family roughly purchases around $200 per week in groceries. I’ve heard that we are on the higher end of the range so let’s say $150 per week.
- If you take $150 multiplied by 52 weeks in a year that equals $7,800 a year. We are settled in to our neighborhood and don’t plan on moving anytime soon.
Let’s look at our lifetime value as the customer. If we stay in our neighborhood for 15 years, our LTV would equal $117,000.
That’s quite a bit of revenue. But as we mentioned before, the employee who explained the issue to us mentioned that this had happened on almost every order that he delivered.
How many orders did he process? How many people left that store with half the ingredients that they needed in a car full of hungry kids? 100? 200? Or more?
If even 100 customers were negatively impacted that could potentially amount to $1.7M in lost revenue but that’s not even the biggest downside.
Here’s where the knockout punch comes in. We live in a hypercompetitive day and age. With globalization and digitization, every single industry is being pushed to the limit with new disruptive technologies and business models. Everyone wants to be the Uber of their industry.
While the local grocer was floundering to implement their Buy Online/Pick up In-Store model, my wife was being blitzed with marketing for Online Food Delivery services. The competitors are using highly refined data collection and internet scraping to target my wife via Social Media; on the social platforms she uses most often, with ads that have been tested to work most effectively on women of her demographic, with offers that appeal to her and her lifestyle. And that’s only the first part of their funnel as they focus on retention through loyalty programs and the power of referral marketing to expand business within those same social networks.
My family ended up signing up for an online food delivery provider. They deliver 4 meals each week on Sunday like clock-work. The meals are chopped, measured, and come with step-by-step instructions on how to prepare the meals. We even have our choice on style and preferences.
This is an example of competitors having a better understanding of customer needs and better execution.
This is also an example of how one provider has taken advantage of the possibilities and technologies that are now available within this Digital Revolution.
All in all, staying relevant and competitive in the Digital Age is challenging for all of us. But the difference between poorly implementing what the Leader is doing versus finding new and exciting ways to disrupt your industry to become the Leader are very different. It takes guidance along the way. Here at Mastek, that is our ultimate goal–to help all our customers effectively and efficiently master their Digital Journey.