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2nd MARKETING TREND: Your Digital Infrastructure Determines Marketing Success

Posted on: April 7, 2015 by: Thomas Rozof

This entry is part 4 of 5 in the series 5 Marketing Trends Competitors Will Use To Crush You
Leader-Controlling-Company-Digital-Infrastructure

The State Of Your Digital Infrastructure Determines Marketing Success

Business has only two functions: marketing and innovation.” Milan Kundera

In case there was any doubt, modern business seems intent on validating what Czech author, Milan Kundera, proclaimed years ago: marketing and innovation are taking center stage within companies at the forefront of modern business success. Each day marketing continues to expand past its old boundaries…making its presence felt in more departments and in more areas of the entire business ecosystem. This penetration of marketing is unprecedented…and is not taking place without a great deal of push back and criticism. All this negativity comes from the old guard that is literally killing any opportunity for a company remaining viable and competitive in a highly aggressive marketplace.

Innovation is producing the same kind of aggravating impact as companies realize they must adjust more quickly to the desires and demands of customers. Smart companies have long ago come to terms with the new reality: Customers now control the innovative pace of change. Those that move with and follow their customer feedback are the perennial winners. Marketing and innovation are acting as the new wall pushers, causing more disruption as they move in lockstep with one another, both proving their worth with each advance. They continue to exert there influence deeper into more facets of a company’s infrastructure, a phenomenon that is accelerating right along with the digitization being applied to more company departments. Depending on your viewpoint, the digital revolution is viewed as either a nasty VIRUS infecting every facet of business…or as the long hoped for CURE that is finally paving the way toward change and the new beginning EVERY company needs.

As these trends have emerged, it has become obvious that marketing and innovation function best when they are supported by a highly optimized digital infrastructure. This truth has led to the formation of a new business AXIOM, one that supports our 2nd marketing trend: Your marketing is only as good as the digital infrastructure you erect to support it. If you do not see this, and are not already investing in the digital optimization of your infrastructure, you’re going to find success much harder to come by in the days ahead…if not impossible. Before we explore why and how this new phenomenon is taking place, let’s first stop and answer one question: What exactly is a business infrastructure? Understanding this is essential before we can fully embrace the logic behind digitally overhauling our entire business ecosystem.

Below I have created an infographic that identifies 21 categories that typically make up the core infrastructure present in most companies. Additionally, please note the colored areas in the inner circle that organize these 21 categories around the following 6 larger divisions:

1. Web Optimization
2. Technology
3. Marketing/Sales/Support
4. Talent Cultivation
5. Expansion/Growth
6. Internal Controls

I acknowledge that this is not a comprehensive list…and I’m sure that some of you seasoned observers could add to and expand it out further. Regardless, I believe it offers a snapshot sufficient enough to help the average reader to understand what is meant by the term: INFRASTRUCTURE.

Infographic of 21 Digital Infrastructure Categories

The State Of Your Digital Infrastructure Will Determine Marketing Success

As you examine the 6 organizational themes that frame the 21 categories, you will note that even though only one category relates directly to marketing (i.e. Marketing/Advertising/Branding), all of the other five have logical points of connection.

For example:

• I think you will readily agree that almost everything under Web Optimization can and should relate in some way to marketing. After all, every business web site is erected as a SALES FUNNEL designed to eventually lead to some form of conversion.

• Although new Technology can be applied to many parts of a company, in my first post in this series I highlighted the fact that there are now close to 2000 marketing automation applications already available, 4 and all of this technology relates directly to marketing. As time goes on you will see that this is just the beginning of an explosive growth in technology that relates either directly or indirectly to the marketing endeavor.

• For Talent Cultivation, now that companies understand that everyone is involved in marketing, it stands to reason that they should select new talent that already possesses marketing rich qualities. Also, today’s customers care more than ever about what employees think of the company they work for, as this is one factor among others that might lead them to make a purchase. Additionally, this category is one where a great deal of new technology is being developed…as companies realize the enormous marketing power that resides within their workforce. Therefore, automating these transactions saves a great deal of both time and money. This is one dimension of a company’s infrastructure that will most certainly grow in influence in the days and months to come.

• When it comes to Expansion & Growth there are many ways to test how existing or potential new customers might respond to new product and growth ideas as these are introduced to them. Having a “modern marketing relationship” with your customer means that including them in on your ideas for growth and expansion (not to mention the pure benefit of asking them for THEIR ideas) is now considered a totally congruent activity. Many of today’s most digitally attuned organizations are tapping into the opinions and ideas of their customers, and I expect to see this type of interaction only increase over time.

• Although some of the categories that fall under Internal Controls might seem at first to have little to do with marketing, after further research you quickly begin to see some legitimate points of connection. For example, having a company’s supply chain digitized could certainly help to keep best-selling products on the shelves for immediate purchase or readily available for online shipping, something that all customers appreciate. Likewise, digitally automating financial transactions helps to keep activities such as refunds quick and seamless, another feature that all customers like…and one that will probably greatly enhance their decision to return again for future business.

Honestly, if space allowed I could review each of these categories again and identify more points of connection to the marketing task, while also showing how digitally enhancing each of these centers of business activity would go a long way toward providing beneficial optimizations. I hope that what I’ve shared above is enough to demonstrate how a fully optimized digital infrastructure could be of value to any modern company. This is true not just because it helps marketing, but for the many other ways it acts to streamline and modernize the operations within your company. Every company leader should make it a priority to fast track these optimizations, especially if you want to lead your industry.

The Logical Consequences Of A Fully Optimized Digital Infrastructure

Now that we have fully explored its definition, let me next try and identify some of the logical consequences that will result once these infrastructures categories are fully digitized:

1. It should be obvious at this stage that everything that can be digitized within the realm of business soon will be in the days and months to come.  If you have not yet come to accept this truth, and are not already positioning your company to embrace this reality, then each day that you prolong your response puts you further behind your competitors, who are at this moment marching forward into their own new digital destinies. This is not merely my personal opinion…it’s an accepted fact among an increasing number of respected business leaders worldwide. Those who embrace this trend will win and those who do not will eventually be crushed by their digitally optimized competition.

2. There has been a tendency among corporate executives to think of “digital” as mainly impacting the realm of marketing and communications. While this may have been true 10 years ago, it’s no longer the case. In fact, as more areas of business become digitized we are seeing the influence of marketing penetrating deeper into every dimension of a company’s life. Also, whereas marketing was once a very confined and narrow activity, companies today are realizing that in order to experience maximum success, marketing must become the responsibility of EVERYONE. Stop for a moment and consider the radical nature of this change. Marketing is taking center stage and there are now multiple ways for the average worker to contribute to its success. For one, just consider how the ongoing proliferation of social channels offers a platform for everyone to participate in shaping how the world views a company. None of this was possible even a few short years ago.

3. There is another factor at work that reinforces the importance of every company maintaining a fully optimized digital infrastructure. It has to do with what the average consumer now requires of a company before they are willing to establish a commercial relationship…especially one that fosters repeat business. Customers are no longer swayed by PUSH marketing efforts that rely mainly on slick presentations. Instead they care more about the values and character that undergird a company. They want to know the experience of past users. They like to hear directly from employees of the organization, especially its leadership. In light of this, there is one principle that I hope you take from this post, even if nothing else: Today the entire company is the marketing message. If you can manage to understand this truth, then improving a company’s digital infrastructure ought to follow as a logical consequence. However, most companies today have neglected this goal, and for these a mature digital infrastructure is not even on their radar, let alone something they are close to achieving.

I have a saying that I repeat to business leaders often:

“No company ever DRIFTS into success…it’s always the result of an intentional, relentlessly executed vision.”

When a company reaches a certain level of success, especially when they are fortunate enough to enjoy this for any period, they almost always begin to DRIFT. Each blog posts in this series is written with these wayward companies in mind. When a business willingly embraces the digitization of its entire operations this decision immediately enhances, accelerates and multiplies the overall impact of its marketing endeavors, while also making innovation a more likely and repeatable occurrence.

illustration-of-digital-infrastructure

Your Digital Infrastructure Controls Every Facet Of Business

Digitization Is Inevitable

As we saw in the first trend in this series, successful modern companies are becoming digital to the core. The sooner business leaders recognize this fact the sooner they can begin leading their industry with one new innovation after another. Standing still and enjoying yesteryear’s victors is a losing proposition…as it opens the doors for competitors to steal the digital edge and to gobble up market share. I see digitization much like the digital icon at work in the PacMan Game. The ingenious little circle with a mouth chomps away at anything in front of it, one bite at a time. It’s relentless, focused and left unchecked it’s going to devour anything in its path. Resistance to digitization is responsible for the erosion of market share that is already taking place in just about every industry…and it won’t be long before a state of panic becomes the norm for current brand leaders who have ignored the (digital) writing on the wall…writing that, I might add, has been there for some time. What we will find is that each division within an organization must be digitally optimized to better support the company’s controlling vision. So let’s dig deeper so we can better understanding what’s entailed in these newly emerging infrastructures.

When business executives hear the term “digital infrastructure” they immediately think of companies touted as leaders of the digital revolution. Companies like the ones I covered in my first post in this series: Amazon, Netflix, Apple, Google, Pandora, and Facebook. In that post I made reference to the book: Code Halos, where the authors identify the collective total of the above companies as “The First Trillion Dollar Club.” If you want to know how ALL companies can discover and leverage the various digital components that are already present in and around it, especially within a traditional business model, then this book is a great place to start. However, the excellent ideas offered there represent but one strategy…among many. There is, in fact, so much available in the way of literature surrounding this topic that I’m convinced that the knowledge required to optimize a company’s digital infrastructure is readily available to all who are motivated and wise enough to seek it out.

Examples Of Traditional Companies Benefiting From Their Enhanced Digital Infrastructure

Whenever I share these facts I’m met with the argument that the companies listed above BEGAN their life as digital organizations and that because of this they had an advantage. Therefore, in this section I want to show how TRADITIONAL BUSINESS ENTITIES, those not typically associated with digital technology, can enjoy the benefits of having their infrastructures digitally enhanced. If your company falls into this camp then there is one immediate benefit worth noting. Because traditional organizations are not expected to become digital leaders, when they do innovate in this way they enjoy an almost immediate competitive advantage, and many are already realizing exceptional growth by embracing the digital imperative. In their recent book, LEADING DIGITAL: Turning Technology Into Business Transformation, the authors (Westerman, Bonnet and McAfee) decided to intentionally focus on larger companies within industries that power much of the economy, like manufacturing, finance and pharmaceuticals. What they found should cause every CEO to stop in their tracks and take notice. Although the authors admitted that it was not easy to find outstanding digital leadership in these sectors, when they did, in almost every case, the results were extremely advantageous. Their findings were so consistent regarding the positive impact derived from the application of digital technology that the authors began calling these unique companies “Digital Masters.” Listen to how they describe them:

“…the companies that are succeeding…and they range across industries and sectors, we are calling Digital Masters. And these Digital Masters outperformed their peers. Our work indicates that the digital masters are 26 percent more profitable than their average industry competitors. They generate 9 percent more revenue with their existing physical capacity and drive more efficiency in their existing products and processes.” (Emphasis mine)

Keep in mind that the digital implementations exemplified by the majority of these companies were not that extensive. They were given the title of Digital Masters not because they had already created a fully optimized digital infrastructure, but because they exemplified a total commitment to embrace new digital paradigms as these presented themselves to be logical and viable options. Having already experienced the advantages of digitization these companies are now actively looking to leverage more digital innovations. In this respect, being a Digital Master involves the embodiment of a mindset more than does the reaching of a specific goal. Yet I have to believe that once a company fully embraces this value the implementation of a fully optimized digital infrastructure is probably not far behind.

For example, B to C companies have recently found that developing their own COUPON APP can increase both sales and customer loyalty, much more than the traditional newspaper version. B to B companies on the other hand would not normally benefit from this type of app. Another example is the Ford Fiesta. It consistently outsells its competitors and over half of those who purchase it point to the Ford SYNC MUSIC technology as the main reason for their decision. Stop and consider that for a moment. The investment in SYNC is miniscule compared to the overall cost of the vehicle…yet this digital innovation has become the DOMINATE CONVERSION FACTOR for increased sales. It’s a great example of the potential that digital has to transform just about ANYTHING.

Promising Research Findings

Here’s what’s encouraging: Our research has shown that just about ANY company can find unique ways to implement a digital advantage as long as they look for it in the right way and have company leaders who are willing to take risks. Once in place, these exclusive, custom digital elements can often produce an exceptional competitive advantage, especially when they are incorporated into the company’s larger optimized digital infrastructure. We are just at the beginning of a movement that will soon see scores of new digital innovations. For example, did you know that just in the field of marketing alone there are currently over 1000 digital marketing applications? I fully expect this number to double, reaching 2000 within the next 18 months.
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Important Clarification

Many traditional offline companies, especially Fortune 1000 brands have wrongly understood what it means to embrace digitization. Many still see it MAINLY as the process of migrating their sales from offline brick and mortar venues over to online digital eCommerce processes. They intuitively see this as a losing proposition. I agree (as any sane consultant would) since in most cases they are absolutely correct. What they fail to understand is that eCommerce is but one small example of digitization at work…and it’s actually not that significant…since most customers use a credit card in a store just as they would in an online transaction. However, as the examples above illustrates, optimizing a company’s digital infrastructure involves many other factors that are far more critical to a company’s success. Here’s the truth: Companies who have successfully built their business through conventional offline channels SHOULD NEVER abandon this strategy and replace it with digital ONLY, unless they see a clear, science-based reason to do so. They should also know that creating a fully optimized digital infrastructure in no way requires this kind of lopsided radical decision. Instead, these traditional companies should proceed forward by digitizing everything that is ADVANTAGEOUS to their existing business model while keeping a watchful eye on major shifts taking place in their industry.

Writer Darrell Rigby calls this fusion of Digital and Physical “Digical.” While I’m not a great fan of this term, I do understand and agree with his advice, that traditional companies must MASH these two elements together in a balanced response to the digital challenge. Certainly, most companies should provide their customers with a digital eCommerce, online purchase OPTION, since more and more people are engaging in online buying…but it should never be turned into an either/or decision. Customers should also have a MOBILE option, since most studies have verified the dramatic increase in mobile based sales.

Series Navigation<< 1st Marketing Trend: Innovative Digital Research-Part B3rd Marketing Trend-Taylor Swift Like Support Equals Superior Marketing >>
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