Product-as-a-Channel
What Is It?
With apologies to Visa, it’s true that today’s successful marketers are “everywhere their customers want to be.” We live in an increasingly omnichannel world. A survey of 46,000 shoppers found that 73% use multiple channels during their shopping journeys.1 However, being “everywhere” and showing up with the right message has never been more challenging. One reason: rapidly maturing technologies are turning everyday products like cars, appliances, and speakers into agents of conversation. With advancing technology comes the need to meet audiences where they are, and to support meaningful conversations in the ways consumers expect.
Product-as-a-channel allows brands to accomplish this by blurring the lines between products and services, rounding out their market positions while growing their customer experience portfolios. With a smartphone or wearable app, services companies can connect with the physical world through cameras, haptic sensing technology, location detection and more. Digital channels allow manufacturers to offer advice and education on the use of products.
As the boundaries separating products and services evaporate and new channels emerge, marketers must be ready with the customer-centric philosophy, operational capabilities and technical system to innovate, test, and roll out new offerings to new audiences quickly and with confidence.
Why Is Product-as-a-Channel so Essential Now?
For most of the last century, the tried-and-true channels of radio, television, and print promised an easy, reliable way to reach the masses. The arrangement was simple: brands spoke and consumers listened. “Conversations” were of the one-way variety. But no more. In the US today, there are about eight networked devices for every person, and this number is expected to climb to almost 14 by 2022.2
This year, there will be a quarter-billion connected vehicles on the road, enabling new in-vehicle services, performance monitoring, and automated driving capabilities, according to Gartner.3 Gartner also predicts the connected kitchen will contribute at least 15% savings for brands in the food and beverage industry, while leveraging big data.
Audiences expect to interact with brands using virtually anything with a screen or speaker. Forrester predicts the installed base of smart home devices (which is just one type of connected product) to grow at a compound annual growth rate (CAGR) of 26.2% between now and 2023.4 This trend has made an omnichannel, or even “channelless” mindset, at once more possible, more necessary, and more challenging than ever. To keep pace, digital strategies must anticipate new product-as-a-channel opportunities as quickly as they appear.
How Does It Work?
Step one is knowing how your customers want to connect. It’s not enough to follow tech trends and follow the category leader. The world is moving too fast for “wait-and-see.” Even though eMarketer expects 31 million people in the US to shop via a smart speaker this year,5 knowing when, why, and how your most important customers might choose to engage in this way will require a good deal more understanding.
Savvy CMOs and their teams work hard to develop their own unique customer empathy resources and then use this insight to their strategic advantage. We recommend adopting a design thinking mindset and using primary research methods to uncover your customers’ unmet needs. You can then apply this knowledge in solving for the moments that matter – regardless of device – by creating prototypes that can be designed, tested with users, and iterated quickly. By doing so, your organization can become part of a small-but-growing tier of customer experience leaders ready to innovate with confidence.
Embracing product-as-a-channel also means letting go of the browser’s point-and-click paradigm and offering meaningful experiences through more natural, intuitive interactions. A Forrester study showed that firms lag in addressing connected consumers in part because they “commit to mass-adoption devices but still don’t focus enough on emerging technologies or devices.”6
Product-as-a-channel solutions require users to interact in a wide variety of scenarios and settings. They demand natural user interfaces (NUI) – an emerging breed of interactions that include touch screens (think iPads and other tablets), touch-free gestures (think Nintendo Wii and Microsoft Kinect), and voice (“Hey Siri”). These capabilities allow for more seamless interactions with products within a user’s environment.
As Bill Gates noted, “Until now, we have always had to adapt to the limits of technology and conform the way we work with computers to a set of arbitrary conventions and procedures. With NUI, computing devices will adapt to our needs and preferences for the first time and humans will begin to use technology in whatever way is most comfortable and natural for us.”7
Who Has Done It Well?
Nike+ represents an early, successful foray into the world of connected products. When Nike launched its Nike+iPod activity tracker in 2006, there was no Fitbit, Jawbone, or Apple Watch. A complete platform had to be developed to support the interplay of runner, device, and data. Working the Apple and other partners, the Nike+ system grew to consist of an iPod, a wireless chip, Nike shoes that accepted the wireless chip, an iTunes membership, and a Nike+ online community.
Over the years, Nike became one of the few major brands to hold a substantial share of the wearable retail market, growing to more than 30 million global users in fewer than 10 years. As new products and integrations were introduced to the Nike+ platform, the channel became a more potent means of reaching customers.
Years later, it’s become essential for brands to think in terms of digital ecosystems and platform business models. Manufacturers today can develop services to complement product lines and create new revenue streams around products. By owning the product channel and imbuing it with connected capabilities, marketers can deliver messages and services directly into the hands (or shoes) of customers.
Mastering product-as-a-channel offers another benefit: the ability to gather data and insight about customers as they interact with the world, a critical factor in driving innovation.
Walgreens is exploring a new program to inform shoppers in stores while gathering data about them. The retailer began testing smart displays to connect with customers in their refrigerated aisles.8 By using cameras, sensors, and digital screens in the cooler doors, marketers like Walgreens can target ads for specific types of shoppers as they search for a beverage. The screens display ads in real time to shoppers as they reach for a cooler door handle based on variables such as their perceived age, gender, and the current weather. Walgreens can also see what products customers consider or leave with, providing intelligence that helps brands and retailers craft a personalized shopping experience.
Perficient Applies AR to the Commuting Experience
Recently, our Experience Design team explored ways to help commuters navigate the urban environment using emerging technologies like augmented reality (AR). The team used new AR features available in iOS 11 and 12 to create a proof of concept for the Chicago Transit Authority (CTA) that identifies Chicago’s bus signs using ARKit’s image recognition. By pointing a smartphone at CTA signs, riders can quickly display bus information based on the signage near them. Using the ARKit image recognition feature in this way demonstrates the power of AR for seamlessly connecting people with data in out-of-home settings.
Where Can You Start?
As consumers continue to adopt connected products, it’s critical to stay on top of channel options, know where your customers spend their time, and understand how to leverage that time in a way that makes sense for your brand. However, overemphasis of channels risks taking focus away from the needs of customers and creating barriers to innovation. Digital pros can benefit from imagining a world without channels. You also need to prepare your organization for the changes required to support the new world of connected devices within this paradigm.
As these channels become ingrained in nearly everything consumers encounter and eventually fade away, having an adoption strategy for both customers and internal employees is critical.
Product-as-a-channel planning must take the following into account:
Customer support
As noted earlier, intuitive technologies that make use of NUI effectively help position brands for strong consumer adoption. Mature design thinking and customer empathy competencies are a must. As innovations are introduced, you should be prepared to use your call centers, branded websites, and social media channels to help customers learn about new capabilities and connect them with members of their own communities for advice and support.
Employee enablement
A responsive, well-planned organizational change management strategy is essential. You must prepare and equip employees for a successful transition to new ways of working, because, ultimately, employees define project success. In fact, up to 75% of a client’s project ROI depends on employees using the system or process they implement as intended.
Data and digital intelligence
Data is the lifeblood of modern brands and the experiences used to deliver them. The right data, in the right places, at the right time is critical to product-as-a-channel success. To achieve this requires the ability to:
- Source and validate datasets optimized to your goals
- Have that data orchestrated across the entire enterprise in a single view of the customer
- Use insights from that data to drive activation for customers, and
- Measure the outcomes that will drive learning and future iteration
Operational excellence
Capitalizing on product-as-a-channel also relies on a business that’s not restricted by silos. Today’s business environment demands the free flow of data and insight to drive innovation.
When considering product-as-a-channel, it’s important to think less about specific channels, device, or platform and focus more on the experiences customers want and need. This way, the channel does not cloud the creation of the customer experience. Learning about customers’ unmet needs, including orientation to devices and channels and their ability to adopt them, is the first step. By leveraging your data and customer insight teams, and user researchers, you can map out a customer journey that shows how customers want to experience your brand – anywhere they happen to be.