Why Every Company Must Embrace Digital

You have said that we aren’t far off from an economic environment where the majority of transactions are digitally-driven.  What are the implications for organizations?
The key implication is that, regardless of industry, there is no such thing as an ‘offline business’ anymore. Every organization must think of itself as a digital business and have an effective digital strategy in place. The days of ignoring the Internet and continuing with the status quo are gone.

Describe the difference between users and customers, and why this distinction is so important.
In our research, my colleagues and I have found that the companies that are most effective in this new digital economy are those who prioritize users -- which is quite a different ballgame from the customer-centric models of the past. For 30 years, all we heard was ‘the customer is king’. Users are customers too, but customers are only one segment of people who will interact with your company through the digital version of your organization. Users are also employees, job candidates, business prospects and partners, brand fans, members of the media and other influencers who interact with you through digital media and technology.  These are people who go to your website, who interact with your company on Facebook or Twitter; they might interact with digital panels or mobile devices in your store, or have a discussion about your products on an online discussion board.  By focusing on meeting the needs of this broader user base, paying customers will naturally follow.

Users have all the same needs as traditional customers, but they’re all digital needs. The way in which you interact with someone is very different when that person is interacting digitally. It requires focused thinking about questions like, ‘What are all the touch points with our users and how can they be most effective?’ It’s a very different way of thinking about customer service than just focusing on people being helpful in the store or when you pick up the phone to answer a question.

What do users want?
Users want one thing: simplicity. That’s it. People use technology to do things, to accomplish tasks – whether it’s looking up sports scores, e-mailing a friend, watching a video or researching which shoes to buy. When users interact with your company, they want it to be simple and effortless, so they can accomplish what they set out to do.  When people find something difficult or confusing, they don’t blame the company, they blame themselves – they get frustrated, and people don’t like feeling stupid, so they often reject the entire experience.  The best user experiences require no directions or learning curve; the technology just works in the way people expect it to.  Usability is a critical driver of success.

What does a ‘user-first company’ look like?
A user-first company actually organizes itself around building user satisfaction. It is effectively running two businesses:  its core business -- which might be manufacturing and selling shoes -- and the ‘software layer’ that exists around the company, which is how users interact with it in the varied ways we have discussed.  

You have said that some of the best companies embrace a ‘concentric’ organizational approach.  Please explain.
That is one of the seven principles we have developed for succeeding in a digital environment. The idea is that there is generally a shortage of digital expertise and talent in organizations, but at the same time, tremendous opportunity exists to scale digital resources effectively. The most effective companies embrace a concentric approach, whereby a small centralized team develops an infrastructure that allows large numbers of non-technical employees to use digital tools to advance their business goals.  Basically, a talented few control a standard experience that is easily used by many other individuals to communicate. The best analogy is Facebook, where you have Facebook the business -- the people who work at Facebook and who create a great product; but then you have all the people who use Facebook’s technologies and tools to communicate and collaborate and share with a broader world. That kind of model is analogous to how companies should structure themselves internally to best leverage digital.

What is ‘utility marketing’, and how does it work?
That’s another key principle we came up with. The idea is that for 50 years -- ever since the advent of television and mass marketing -- marketing was done in a very standard way, by telling a story to a target audience that communicates your brand message and the value of your product. The challenge today is that people use the Internet as a tool and consumers have lots of choice online; so it’s not realistic to assume that you can expose your message to a captive audience.  Instead, what we find to be most effective is an approach called utility marketing which is basically, creating products and services online that help people accomplish tasks; and in the course of accomplishing those tasks, a brand message is communicated. 

A great example is the Pepsi Refresh Project, which we were fortunate to be involved in. Rather than just talk about how Pepsi refreshes the world, they took $20 million and funded good causes that actually refresh the world by through different non-profit charities, and talked about those ‘refreshing’ efforts. By actually helping people and concretely bringing the brand products alive in digital, broader marketing messages can be communicated.

You have noted that for many of today’s users, good customer service=self service.  Will this concept eventually be embraced by the world of bricks and mortar?
Most companies realize that they need an effective online self-service strategy to complement their bricks-and-mortar activity. A great example is Best Buy, which is well known for its blue shirts and its geek squad, and the great customer service provided in its stores. However, if you go online to bestbuy.com or participate through Best Buy’s Twitter feed, there are lots of other areas of support where you can solve problems without ever speaking to a live person. The best type of customer service in today’s environment is what we call bilateral customer service, which means that customer service has to be two things: you have to have great human service, if the customer wants that, but you also need to offer great self service, so that when people want to just do everything themselves quickly, without having to talk to someone, they can do that as well.  Basically, you have to be all things to all people; it’s not enough just to have great service people and it’s not enough to just provide self-service options on your Web site.
Describe how Groupon has embraced all of this to become what Forbes magazine calls “the fastest-growing company EVER’.

By all means, Groupon has its strengths and weaknesses as a business, but it has done an excellent job of encapsulating the concepts we’ve talked about. Everything from its focus on making sure that users have a great experience whenever they interact with Groupon, all the way down to how it handles  customer crises and so forth.  One of the big lessons to learn from them is the idea that you don’t necessarily have to be first to provide a product or service to be the best. Groupon is an idea that was tried many times before, and failed; what they did correctly was get the timing right to launch something when all the stars were aligned. The lesson that all businesses can learn from this is that just because you haven’t become a user-first company yet doesn’t mean you can’t do so in the future.  The Internet is only 20 years old -- a small blip in the history of business. It’s not too late to embrace these concepts and make them work for your organization.

For leaders who want to get started, what is the first step?
The first step is developing an internal appreciation -- within yourself and within everyone in your organization – of the giant seismic shift that is occurring. For naysayers, there is no better proof of this shift than to talk to someone who is 18 or 19 years old. These people don’t even remember a time when digital didn’t exist; they don’t know what it’s like to ‘go online’, because they’re tethered to their mobile phones all the time; and in just in a few years, they will become the backbone of the economy. This is how the entire consumer economy is going to be driven, and as a result, the quality of your digital presence will soon surpass the significance of your physical sales force, presence at university job fairs, human receptionists and traditional marketing and advertising.  The software layer is very quickly becoming the beating heart of the organization.

Aaron Shapiro is CEO of HUGE, a digital marketing and design agency based in Brooklyn, New York.  He is the author of Users, Not Customers: Who Really Determines the Success of Your Business (Portfolio Penguin, 2011).

[This article has been reprinted, with permission, from Rotman Management, the magazine of the University of Toronto's Rotman School of Management]