The Age of "Now Marketing"

© 2009 IBM Corporation

Reinventing Customer Relationshipin the ‘Age of Now’Suresh Shankar, Global Director, Analytics, IBM Global Process Services

© 2009 IBM Corporation2

The Global CxO Studies are part of our C-suite study series encompassing interviews with over 13,000 C-suite executives

IBM Institute for Business Value

’04-’05 ’08-’09’06-’07 ’10-’11

CSCO

CEO

CFO

CHRO

CMOLate 2011 Release

CIO


Standout CEOs understand the need to capitalize on complexity in 3 ways

Embrace ambiguity

Take risks that disrupt legacy business models

Leapfrog beyond “tried-and-true” management styles

Honor your customers above all else

Use two-way communications to sync with customers

Profit from the information explosion

Simplify whenever possibleManage systemiccomplexity

Promote a mindset of being fast and flexible

Be “glocal”

Source: IBM CEO Study 20103

1,541 CEO interviews


CEO focus over the next 5 years

Source: 2010 CEO Study Q13: “Which of the following dimensions will you focus on more to realize your strategy in the new economic environment over the next 5 years? ” (n=1,523); 2011 CIO Study, Q13: “Where will you focus IT to help your organization’s strategy over the next 3 to 5 years?” (n=3,018)

CIO focus over the next 5 years

IBM Institute for Business Value

CEOs and CIOs are both highly focused on insights, clients and people skills

“Business Intelligence will provide information to the company that no one in the industry has ever seen, and will open up opportunities that were not previously considered.”

Utilities CIO, USA

3000+ CIO interviews


According to the 2010 CFO Study: Capabilities required to be successful while addressing the Broader Enterprise Focused Role of Finance are…

Source: IBM Institute for Business Value, The Global CFO Study 2010

Finance Efficiency

Business Insight

Demands on Finance

Help drive enterprise cost reduction

Support risk management

Partner in strategy and value creation

Improve access to and reduce cost of

capital

Provide performance insight and anticipate

Finance Capabilities Needed

1,917 CFO interviews


What are CMOs saying...

Innovators. This minority of CMOs will be championing a fully integrated approach to marketing that leverages cross-functional relationships and insights to engage customers, create perceived value, and generate a positive response to the brand and its proposition. Recognizing that dynamics such as social media have both a direct and an indirect impact on many of their marketing decisions, these CMOs will aggressively track and evaluate data from digital means to inform their “4P” decisions.

The initial results of the survey suggest CMOs are following two distinct paths:

Source: 2011, Today’s CMO: Innovating or following? IBM Institute for Business Value in cooperation with The Economist Intelligence Unit

AdoptersThese CMOs (a majority) are not yet on the leading edge to leverage new dynamics in marketing strategy. While well aware of new market dynamics in a broad sense, they could struggle with issues of execution. Lacking data, insights or other resources available to Innovators, Adopters may find it more difficult to craft proactively a fully integrated marketing approach. In the process, Adopters could gravitate (or bepushed) toward an increasingly narrow sphere ofinfluence—most likely focusing primarily on only two of the 4Ps: Promotion and Product.


We have heard the voice of the CxO…

…now let’s hear the voice of the customer


The fundamental rules of doing business are changing because of the disruptions

caused by new consumer realities

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The consumer reality has created an EXPECTATION economy characterized by instantaneity, the ‘AGE Of NOW’

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FREE

AlwaysON

Networked

Share of Time

Loyalty is Dead

Transparency Tyranny

Less is More


FREE is the future of businessConsumers increasingly expect and want

complimentary” services for giving business to firms

Firms needs to have clarity on their business model by adopting innovative

cross-subsidized business models

ProFree 100 MB monthly photo

upload limit 2 video uploads each

month Limited to 200 most

recent images Only smaller (resized)

images accessible Post images up to 10

group pools

Unlimited photo uploads Unlimited video uploads HD

Video Unlimited storage Unlimited bandwidth Archiving of high-resolution

original images Ad-free browsing and sharing Post images up to 60 group

pools

$24.95$0.00

Giveaway the razor, sell disposable blades

Give away the printer, charge a premium for the ink

Make the video game console cheap, sell expensive games

Shift in Burden

Shift in Level of Service/Access

Freemium: Freemium: Free Vs ProFree Vs Pro

Shift in Time

Ecosystem Ecosystem of Serviceof Service

Free Now Free Now Pay LaterPay Later

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FREE is the future of businessConsumers increasingly expect and want

complimentary” services for giving business to firms

Banks needs to have clarity on their business model by adopting innovative

cross-subsidized business models

Shift in Burden

Shift in Level of Service/Access

Shift in Time

Advertising, sale of info, eyeballs, fees from new services

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Premium users pay more not less for true transparent differentiationStandard users provide mass base

Beyond just lock-insQuantify continuous value delivered


… will make most of its money from innovative

cross-subsidized pricing models that

deliver key services for free

The Marketeers of the future…


TRANSPARENCY TYRANNYConsumers are more informed than ever before and able to evaluate every aspect of

their purchase decision…

Firms are turning transparency into an advantage – by being transparent about their offers v/s competition, cutting down

evaluation time and saving time.

Today’s consumers have

more infoat their fingertip

Data is available on anything & everything

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Progressive, a key player in the insurance industry, openly compares its rates against

other insurers

mySupermarket, a neutral service provider, provides price comparisons across major

supermarkets


TRANSPARENCY TYRANNYWhen data is available on anything & everything,

it is futile to keep info hidden

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Transparency will become

the competitive differentiator

that drives trust

…consumers will perceive such businesses to be transparent in other areas as well

SingTel, has become the first Telco in Asia to unveil the average access speeds of its mobile broadband services vs its own claims

CSL Telecom, engages its customers effectively online with the One2free

Facebook page


… will try to build an emotional quotient

with the customer for being transparent

with the customer on the competitive value delivered



Loyalty is DeadIncreased choice & abundance of loyalty

programs have made it a discount mechanism; delayed gratification is no longer

valued

Firms need to deliver instant gratification & a series of supreme

customer experiences at every point of customer contact

lives for now, desire variety and are quick to shift loyalties.

However, even the benefits of coalition loyalty has its limits…

Organizations have to devise innovative ways to deliver a supreme customer

experience at EVERY moment of touch

Customer experience @

While coalition loyalty simplifies rewards

• Wider choice

• Holistic view of the customer

• Cheaper

• Easier

Random acts of kindness work even better

1

2

Spreading HappinessFoursquare-based campaign employs a ‘Surprise Team’ to give passengers tailored, unexpected gifts at the airport

Redefining Customer experience @

Customer service @ Zappos has always been a

critical part of the brand


… will define loyalty as something they create

– by delivering a series of supremely

differentiated customer

experiences at every moment of truth



NETWORKEDConsumers are embracing social networks

as part of their digital lifestyle, and increasingly, trust networks and not

brands

While firms are starting to use ‘social media’ tactically as yet another vehicle to

reach customers...

…which make a big difference. 70%

That trust extends to product preferences… 92%

They trust other consumers like

themselves.90%

People don’t trust advertising. 86%

Source: GFK,/Roper, 2006

Source: The Nielson Company, 2009



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…there are those who are building businesses around social networks, in the

way they want to be engaged…

770K + Gap Facebook fans

100K tweets make Gap revert the logo

back

Collaborative ConsumptionA web-based swap meet for books, CDs, DVDs and video games

Yet larger % of marketing dollars are still spent on advertising

Social Insurance company leverages on communities to reduce premiums by up to 70% less than competitors


NETWORKED

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Each day, offers for sale a deep-discount coupon from a business in your town.

The coupons aren’t actually distributed until a critical mass of people (say 50) have clicked “Buy.”

Each day, offers for sale a deep-discount coupon from a business in your town.

The coupons aren’t actually distributed until a critical mass of people (say 50) have clicked “Buy.”

The Gripe app lets consumers post complaints about a business and warns businesses of each complainer's social media influence.

The Gripe app lets consumers post complaints about a business and warns businesses of each complainer's social media influence.

Collaborative consumption…Collaborative

consumption…

Reactive community engagement….

Reactive community engagement….

… proactive models… proactive models

New business models are emerging, focusing on…


… will have a marketing strategy

driven almost entirely around a true

community based engagement model

focused on collaborative consumption



ALWAYS ON

I am always ‘ON’

Technology has transformed consumers’ digital lifestyle...they are plugged in 24/7!

Firms need to find a way to become more instant than their customers are, by offering

real-time products, services and experiences.

• 60% of BB owners check email in bed• Spending Time Online: +56%• Using My Mobile: +49%• Sending E-Mails: +41%• Social Networks: +37%• Most people keep their friends informed

of their travels via ‘status’on Facebook

Source: MTV Asia Research on Digital Trends, Neilsen Reports, Newsweek Article**

--- I want it ‘HERE & NOW’ ---INSTANT is the name of the game

Real-time publishing

Real-time search

Real-time reviews

Real-time news

Real-time price

comparisons

Real-time conversations

Allows you to compare prices and make purchase decisions instantly

• SnapTell allows users to take photos of an item or scan a barcode on their phone

• Amazon searches for the product online and enables instant price comparisons and an option to purchase the item securely from their mobile device

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Allows you to make person-to-person transfers instantaneously by simply bumping mobile phones


ALWAYS ON

Technology has transformed consumers’ digital lifestyle...they are plugged in 24/7!

Firms need to find a way to become more instant than their customers are, by offering

real-time products, services and experiences.

--- I want it ‘HERE & NOW’ ---INSTANT is the name of the game

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Hindsight …. so yesterday!

Insight …. need of the hour!

Foresight …. leads to impacting results!

Perpetual beta…. Being 80% right and

getting it done!


… will shift its customer emphasis from

understanding the past to predicting the future

and reacting in the present to deliver real-time products,

services and experiences



SHARE OF TIME

19981998 20052005 TODAYTODAY

Window to the world…

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What is the most valuable piece of real estate in the world?


Facebook ad Revenue jumps by 1000% and is estimated to be $1.8 Bn, targeted to touch $2 Bn in 2011 and is fast poised to catch up with

SHARE OF TIME

The marketer who owns the customer’s time, owns the

customer and hence his wallet!

Marketers need to shift their focus from share of wallet to share of time

Today consumers have more money but less time; Today’s currency is time

Apple uses the APP Store to get share of time of

customers, and then share of wallet

The 3rd largest populated ‘territory’

Mastered the art of creating an emotional asset through friends,

their photos, status messages, emotional wall posts and

relationship status. 25

Research findings predict that Apple's app-related

revenue in 2011 will be $2.9 billion vs. $1.8 billion last

year.


SHARE OF TIME

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Shopping begins at home with an online shopping list

In the store, the customer can wirelessly access her list, and each item appears at the exact location within the store

Items are scanned as they are gathered Customers can look up recipes and the

shopping list is updated The assistant highlights promotions based

on the customer’s preferences or location in the store

The Personal Shopping Assistant dramatically increases speed, efficiency and personalization


… will value share of time more than share

of wallet… and use every opportunity to

translate share of time to monetized

opportunities and happily engaged

customers



LESS IS MOREConsumers seek simplicity and want firms to remove barriers between them and what

they want

Choice is exploding for all consumers; Paradox of Choice : consumers are moving

from ‘not enough’ to ‘too many’

More choices More is actually less…

… and less is MORE.

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? Postponement of decision

making

escalation of expectations for the perfect products

more dissatisfaction from making the wrong choice


LESS IS MOREConsumers seek simplicity and want firms to remove barriers between them and what

they want

Choice is exploding for all consumers; Paradox of Choice : consumers are moving

from ‘not enough’ to ‘too many’

More choices

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Postponement of decision making

escalation of expectations for the perfect products

more dissatisfaction from making the wrong choice

From more choices to…less choices that each

make more sense


… will spend inordinate amount of

time on making things simple for their

customers and removing the barriers

between them and what they want



As Consumers, it is easy to relate to these trends and react positively…

As Business Managers, how can we stop going back to our old ways of doing things?

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… will need to leverage the

data it already has in each of these areas!



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Volume Every day, 15 petabytes of new information are being generated. Data volume are expected to double every 2 years.

VelocityCEOs are emphasizing the need to make faster and smarter decisions to reducing risk and enhance competitive advantages

Variety 80% of new data growth is from non-relational and non traditional data types like emails, documents, RFID feeds, multimedia etc

In fact, there’s been an explosion of data!


…. will have learnt to profit

from the explosion in data



New technologies are emerging...

…changing the way we handle the explosion of data

…changing the way we handle the dynamic consumer landscape


Extreme Innovations in Technology

Stream Computing / Data in Motion

Massively Parallel Processing driven by appliances

Unstructured Data


Managing this explosion in data requires a change in not just technology but also mind-sets

Real time analysis of data-in-motionHistorical fact finding with data-at-rest

Traditional ComputingTraditional Computing Stream ComputingStream Computing

Batch paradigm, pull model

Query-driven: submits queries to static data

Relies on Databases, Data Warehouses

Streaming data

A stream of structured or unstructured data-in-motion

Stream Computing

Analytic operations on streaming data in real-time


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Continuous Ingestion Continuous Queries /Analytics on data in motion

Stream Computing: A new paradigm for ultra low latency and high throughput in-motion analytics


Appliances make it simple, completely transforming the user experience, providing ability to handle massive amounts of data easily

Dedicated device

Optimized for purpose

Complete solution

Fast installation

Very easy operation

Standard interfaces

Low cost


New tools help make sense of unstructured internal/ external data by mining multiple dimensions across key business drivers

Dimensional Analysis

Filtering Voice

Keyword Search Dimensional

Navigation Drill Through to

Content

Relevant Topics Associated Themes Ranking and Volume

Relationship Tables Relationship Matrix Relationship Graph

I. COMPREHENSIVE ANALYSIS

II. SENTIMENT

IV. EVOLVING TOPICSIII. AFFINITY ANALYTICS

Business Drivers

Customer CareCustomer CareCorporate ReputationCorporate Reputation

Campaign EffectivenessCampaign Effectiveness

Competitive Analysis

Product Insight

* Supports 35 languages including English, German, Spanish, French, Greek, Japanese, Chinese (except Sentiment) and others

Dimensions Displays them in an efficient and simple dashboard*

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Enter

WATSON

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WATSON is IBM’s next generation computing system designed to rival a human’s ability to answer questions posed in natural language with speed, accuracy and confidence

DeepQA is the technology behind Watson:Massively Parallel Probabilistic Evidence-Based Architecture

DeepQA generates and scores many hypotheses using an extensible collection of Natural Language Processing, Machine Learning and Reasoning Algorithms. These gather and weigh evidence over

both unstructured and structured content to determine the answer with the best confidence.


WATSON is more than a search engine – it provides high confidence expert answers to natural queries

Decision Maker

Search Engine

Finds Documents containing Keywords

Finds Documents containing Keywords

Delivers Documents based on Popularity

Delivers Documents based on Popularity

Has QuestionHas Question

Distills to 2-3 KeywordsDistills to 2-3 Keywords

Reads Documents, Finds Answers

Reads Documents, Finds Answers

Finds & Analyzes Evidence

Finds & Analyzes Evidence

In using a search engine, the decision maker is still required

to parse through the search results to find his answers

On the other hand, WATSON operates like an expert: it works to understand the question, and provides an exact answer with

some level of confidence attached

Expert

Understands QuestionUnderstands Question

Produces Possible Answers & Evidence

Produces Possible Answers & Evidence

Delivers Response, Evidence & Confidence

Delivers Response, Evidence & Confidence

Analyzes Evidence, Computes Confidence

Analyzes Evidence, Computes Confidence

Asks NL QuestionAsks NL Question

Considers Answer & Evidence

Considers Answer & Evidence

Decision Maker

Using a Search Engine

Talking to an ‘Expert’


WATSON is able to deliver these answers in natural language with Precision, Confidence and Speed

Precision Confidence Speed

• Watson combines many analytics in a novel architecture to achieve very high levels of Precision over a huge variety of as-is content

• Watson’s analytics understand the structure and wording of the question asked and finds a specific answer

• Watson answers ‘natural language’ questions: puns, slang, jargon and acronyms that must all be evaluated

• Watson-like analytics provide answers with a confidence ranking that can be gleaned from both structured and unstructured data by running hundreds of different kinds of analytical queries across different kinds of information

• Confidence levels can be used to make betting decisions and manage risks associated with possibly getting wrong answers

• Watson’s computation for Jeopardy! was optimized over 2,800 POWER7 processing cores

• Watson went from 2 hours per question on a single CPU to an average of just 3 seconds over the course of its development


From battling humans at Jeopardy! to transforming business

Tap into a broad, open domain of Tap into a broad, open domain of cluesclues

Do all of that in under three Do all of that in under three secondsseconds

Be highly precise at finding the Be highly precise at finding the answer and put a confidence answer and put a confidence

behind that answerbehind that answer

Parse complex human languageParse complex human language

To compete at Jeopardy!, humans and computers

need to:

Watson-like capabilities can now be applied to your

business:

Manage massive amounts of Manage massive amounts of data from business operations data from business operations

and an instrumented worldand an instrumented world

Do it at the speed of business, in Do it at the speed of business, in real timereal time

Have a high level of confidence Have a high level of confidence in analytics to make key in analytics to make key

business decisionsbusiness decisions

Deal with structured and Deal with structured and unstructured data to gain unstructured data to gain

meaningful insight into your meaningful insight into your businessbusiness

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The core technologies behind WATSON are already available and can help enterprises in many different ways

Natural language recognition to understand the original customer questions and answers

Voice Recognition to allow a non text interface

Ability to provide “reasoning” when feeding back recommendations

Optimized workload to allow massively parallel searches to be handled quickly & efficiently

Free text Analysis of structured and unstructured data to aggregate the available social media and review sites

Location services to narrow down customer feedback to like customer segments

Machine learning to continuously improve the accuracy and relevance of recommendations from customer to customer

Social Media Analytics and semantic frameworks to extract the meaningful reviews and feedback from the vast arrays of available information


Pushing the Frontiers of IT

WATSON, the Internet of Things, Stream Computing, Workload Optimised systems…

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To find out more on how we can help you in ‘Age of Now’, contact:

Suresh Shankar Director, GPS [email protected]+65 9663 9144