Many of the executives<\/strong>\u00a0we speak with in banking, retail, and other sectors are still struggling to devise the perfect cross-channel experiences for their customers\u2014experiences that take advantage of digitization to provide customers with targeted, just-in-time product or service information in an effective and seamless way.<\/p>\n How consumer behavior keeps changing<\/a><\/p>\n<\/div>\n<\/div>\n<\/div>\n McKinsey\u2019s David Edelman explains how purchasing decisions are made in a digital world.<\/span><\/p>\n \n<\/div>\n<\/div>\n This quest for marketing perfection is not in vain\u2014during the next five years or so, we\u2019re likely to see a radical integration of the consumer experience across physical and virtual environments. Already, the consumer decision journey has been altered by the ubiquity of big data, the Internet of Things, and advances in web coding and design.1<\/sup><\/a>\u00a0Customers now have endless online and off-line options for researching and buying new products and services, all at their fingertips 24\/7. Under this scenario, digital channels no longer just represent \u201ca cheaper way\u201d to interact with customers; they are critical for executing promotions, stimulating sales, and increasing market share. By 2016, the web will influence more than half of\u00a0all<\/em>\u00a0retail transactions, representing a potential sales opportunity of almost $2 trillion.2<\/sup><\/a><\/p>\n Companies can be lulled into thinking they\u2019re already doing everything right. Most know how to think through customer search needs or have ramped up their use of social media. Some are even \u201cengineering\u201d advocacy\u2014creating easy, automatic ways for consumers to post reviews or otherwise characterize their engagement with a brand.<\/p>\n Yet tools and standards are changing faster than companies can react. Customers will soon be able to search for products by image, voice, and gesture; automatically participate in others\u2019 transactions; and find new opportunities via devices that augment their reality (think Google Glass). How companies engage customers in these digital channels matters profoundly\u2014not just because of the immediate opportunities to convert interest to sales but because two-thirds of the decisions customers make are informed by the quality of their experiences all along their journey, according to research by our colleagues.3<\/sup><\/a><\/p>\n To keep up with rapid technology cycles and improve their multiplatform marketing efforts, companies need to take a different approach to managing the consumer decision journey\u2014one that embraces the speed that digitization brings and focuses on capabilities in three areas:<\/p>\n Let\u2019s consider what an optimized cross-channel experience could look like when companies target improved capabilities in these three areas.<\/p>\n Imagine that a couple has just bought its first home and is now looking to purchase a washer and a dryer. Mike and Linda start their journey by visiting several big-box retailers\u2019 websites. At one store\u2019s site, they identify three models they are interested in and save them to a \u201cwish list.\u201d Because space in their starter home is limited\u2014and because it is a relatively big purchase in their eyes\u2014they decide they need to see the items in person.<\/p>\n Under an optimized cross-channel experience, the couple could find the nearest physical outlet on the retailer\u2019s website, get directions using Google Maps, and drive over to view the desired products. Even before they walk through the doors, a transmitter mounted at the retailer\u2019s entrance identifies Mike and Linda and sends a push alert to their cell phones welcoming them and providing them with personalized offers and recommendations based on their history with the store. In this case, they receive quick links to the wish list they created, as well as updated specs and prices for the washers and dryers that they had shown interest in (captured in their click trails on the store\u2019s website). Additionally, they receive notification of a sale\u2014\u201c15 percent off selected brand appliances, today only\u201d\u2014that applies to two of the items they had added to their wish list.<\/p>\n When they tap on the wish list, the app provides a store map directing Mike and Linda to the appliances section and a \u201ccall button\u201d to speak with an expert. They meet with the salesperson, ask some questions, take some measurements, and close in on a particular model and brand of washer and dryer. Because the store employs sophisticated tagging technologies, information about the washer and dryer has automatically been synced with other applications on the couple\u2019s mobile phones\u2014they can scan reviews using their\u00a0Consumer Reports<\/em>\u00a0app, text their parents for advice, ask Facebook friends to weigh in on the purchase, and compare the retailer\u2019s prices against others. Mike and Linda can also take advantage of a \u201cvirtual designer\u201d function on the retailer\u2019s mobile app that, with the entry of just a few key pieces of information about room size and decor, allows them to preview how the washer and dryer might look in their home.<\/p>\n All the input is favorable, so the couple decides to take advantage of the 15 percent offer and buy the appliances. They use Mike\u2019s \u201csmartwatch\u201d to authenticate payment. They walk out of the store with a date and time for delivery; a week later, on the designated day, they receive confirmation that a truck is in their area and that they will be texted within a half hour of arrival time\u2014no need to cancel other plans just to wait for the washer and dryer to arrive. Three weeks after that, the couple gets a message from the retailer with offers for other appliances and home-improvement services tailored toward first-year home owners. And the cycle begins again.<\/p>\n As this example makes clear, the forces enabling consumers to expect real-time engagement are unstoppable. Across the entire customer journey, every touchpoint is a brand experience and an opportunity to engage the consumer\u2014and digital touchpoints just keep multiplying. To maximize digital channels, companies need to focus on improving their \u201c3-D\u201d capabilities.<\/p>\n Even in this era of big data and widespread digitization of customer information, some companies still lack a 360-degree view of the people who buy their products and services. They typically measure the performance of direct sales activities such as product pitches and encourage downloads using \u201clast-action attribution\u201d analyses, which assess campaigns in isolation rather than in the context of the entire cross-channel consumer decision journey. Usually these data will have been stored in disparate locations and legacy systems rather than in a central server. Complicating matters further is the range and quantity of unstructured data out there\u2014information about consumers\u2019 behaviors and preferences that is, for instance, captured in online reviews and social-media posts. In our experience, this type of data is usually the least understood and therefore the least utilized by companies.<\/p>\n To get the full customer portrait rather than just a series of snapshots, companies need a central data mart that combines\u00a0all<\/em>\u00a0the contacts a customer has with a brand: basic consumer data plus information about transactions, browsing history, and customer-service interactions (for an illustrative example of how companies can lose potential customers by failing to optimize digital channels, see exhibit). Tools like Clickfox and Teradata can help marketers gather these data and begin to pinpoint opportunities to engage more effectively with consumers across the decision journey. This collection effort requires input from people across multiple functions\u2014a complex undertaking, to be sure, but the payoff can be big. Our work in this area suggests that the growth rate of earnings before interest, tax, depreciation, and amortization of grocers that focus on customer analytics is 11 percent, compared with just 3 percent on average for their main competitors. For big-box retailers, the difference is 10 percent compared with 2 percent.4<\/sup><\/a><\/p>\n Failure to optimize digital channels may result in underperformance.<\/p>\nVideo<\/h4>\n
How consumer behavior keeps changing<\/h3>\n
\n
A new normal \u2026<\/h3>\n
\u2026 requires new capabilities<\/h3>\n
Discover: Build an analytic engine<\/h3>\n
Exhibit<\/h4>\n
<\/h3>\n