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Four Big Reasons Your Email Campaigns Are Being Ignored

Michael Brenner

If you put email messages, Facebook posts, Tweets, and blog posts in a room and told them to duke it out, last-man-standing style, I guarantee you—email would win. Your email messages are far more powerful than your other digital channels when it comes to making a marketing impact.

Blogs may generate leads like a machine and social media can grow your brand’s reputation like a gardener with two green thumbs, but your email messaging is the glue that keeps the whole content marketing strategy together. This is because email is where you are reaching out to them, a still necessary concept in the era of inbound marketing.

Email drives more conversions than both search and social. Your messages are five times more likely to be viewed than your Facebook posts, 40 times more likely to lead to customer acquisition than your well-planned social media campaign, and (take a deep breath for this one), the potential ROI of email marketing is 3800%.

It is email that keeps your leads interested, makes your existing customers feel involved, and even serves as a jump-off point for your thought-provoking blog posts, can’t-miss videos, and other content that your curated contact list needs to see.

Your email campaigns are what let people know what is going on, from promotional deals to industry news, and maintain your relevance more than anything else. From B2B email newsletters that hook your quality leads to those elegantly formatted transactional and follow-up emails that work your customer retention magic, email marketing is more effective than many businesses are aware of.

Are you getting $38 back for every $1 spent on email? If your emails aren’t getting opened and you aren’t getting the acquisitions, conversions, and returns that this channel is capable of offering, then it’s time to examine your methods to find out why your email campaigns are being ignored.

1. Your headlines aren’t irresistable

Think about it. Most people check their email every day. Especially with mobile email, it is more convenient than ever to sift through our inboxes whenever we feel like it. Lots of email interaction happens at the office – a report by the McKinsey Global Institute found that 28% of the average work week is taken up by email.

But, more relevant for marketers, it’s also happening while at various points throughout the day. It is estimated that half of Americans check their email while sitting in bed. 42% are checking while in the bathroom.

We can conclude that your target market is opening and reading some messages. If people aren’t opening your email, it is because your headlines aren’t enticing enough. We are clearly glued to our digital communications. As long as you have something of value or interest to share, you’re going to get attention.

And that’s the key to creating an irresistible email subject line: hinting at something of value or interest. You want your recipient to think, “I better open that one and see what it says. Don’t want to miss out on what’s inside.”

Here are some examples:

  • Did you know this?
  • Don’t make this mistake! (I did)
  • Save $52 – Today!
  • Question about your career/work/health/specific goal…

All of these subjects evoke a natural response of curiosity. Not every recipient will click on your message, but emphasizing the importance of intrigue in the subject line is going to increase your email open rates.

Make your subject lines promise something more inside, without over-promising, of course. False promises are a great technique for shortening your contact list.

2. Your email isn’t primed for mobile

With so many emails being opened on mobile devices (anywhere from 20 to 75 percent depending on your industry), it’s important to craft email campaigns that are mobile-friendly. What does that mean? Basically, keep things short and concise.

  • Keep your subject lines short. Mobile devices tend to display only between 25 and 30 characters.
  • Screen sizes are small. The smaller your email content, the more likely it is to be read.
  • Leverage your pre-header text. That first line of copy in your email will show up along with the sender’s name and subject line on a mobile device. Use this to your advantage.
  • CTAs should be glaringly obvious–just in case someone is checking their email while doing other important tasks. One, in some cases two, CTA buttons are appropriate. Any more than this will dilute your messaging in the limited space you have to work with.

Here’s a great example Campaign Monitor shared of CTA design in an email for Freshbooks:

It’s easy to recognize and click on, even if you are in the middle of chopping veggies or walking home from work.

3. Your timing is off

This is where marketing automation offers such an immense value. You can time when your emails are sent, creating a seamless experience for your target recipients. What day and at time your emails are sent does matter if you want them to not be overlooked.

From birthday emails offering a special deal to timely reminders about a service about to expire, when you send can make the difference between meaningful and meaningless. Hubspot shared an excellent example of the power of timing: Eater Boston sent out an email at 6:45 pm on a Wednesday night titled, “Where to Drink Beer Right Now.” This type of strategic timing can make your email metrics go through the roof.

4. You are not being personal enough

Personalization is paramount when it comes to email marketing. Simply adding an element of personalization in the subject line and within the content can dramatically increase your open rates and click rates.

Email personalization is a true digital marketing art form in its own right. There are plenty of techniques you can use, and they all revolve around understanding who is reading your email and segmenting. Consider what tone of voice your target recipients will be most interested in relating to–casual, uplifting, professional, sarcastic?

It’s also important to pay attention to content. Depending on the business you are marketing for, it may make sense to segment your contact lists based on what products or services your buyers and leads are interested in. For example, a software company may send out completely different weekly emails for customers who have subscribed to varying tiers of service.

A/B testing was born to help you create better email campaigns

Email marketing is an effective digital marketing tool that you can’t afford to neglect. If you’re not getting the results you should, as with all facets of modern marketing, then it’s time to refine your strategy. Make adjustments–or start from scratch–in order to motivate your contacts to open your emails, read what you have to say, and click on your CTAs to move further down the sales funnel.

When you’re not sure what will work, A/B testing is a marketer’s best friend. From colors and timing to subject lines and tone of voice, don’t hold back when it comes to good old A/B testing to ensure you are crafting the most impactful email campaigns possible to engage, inspire, and relationship-build with your market.

For more on email marketing strategies that get results, see Why Email Marketing Is Making A Comeback In 2017.

Source links for images: Business InsiderCampaign MonitorInvespcroPixabay 

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About Michael Brenner

Michael Brenner is a globally-recognized keynote speaker, author of  The Content Formula and the CEO of Marketing Insider GroupHe has worked in leadership positions in sales and marketing for global brands like SAP and Nielsen, as well as for thriving startups. Today, Michael shares his passion on leadership and marketing strategies that deliver customer value and business impact. He is recognized by the Huffington Post as a Top Business Keynote Speaker and   a top  CMO influencer by Forbes.

It's A Phygital World

KC Krishnadas

In May 2016, nearly 150 years after Jamsetji Nusserwanji Tata started a private trading firm in 1868 that grew into the giant Tata Group, TataCLiQ was launched. It was the conglomerate’s first venture into pure-play digital. This e-commerce venture, however, is different from the likes of Amazon or Flipkart in that it converges physical with digital retail, delivering India’s first true “omnichannel” customer experience. Its executives call it “phygital,” a platform that allows shoppers to order, collect, return, or exchange products either online or at any of its brand partners’ brick-and-mortar stores.

I have a fairly prosaic definition of digital because it helps me focus on where I think the disruptions can happen. While enterprises have seen the first wave of disruption due to ‘digital-only platforms,’ the second wave of digital will be ‘phygital’—a combination of physical and digital, commonly called ‘omnichannel.’ –KRS Jamwal, executive director, Tata Industries and Digitalist 2017

The ‘Q’ in the TataCLiQ logo is in the form of a magnifying glass—a visual representation of the brand’s focus on only the best, most authentic brands and products. Unlike other Indian e-tailers that have burnt big-time cash in their quest for growth, this one-year-old enterprise is already disrupting the disruptors through tech-enabled innovation.

When Tricia Manning-Smith, senior on-air global correspondent, Customer Storytelling Team, SAP, dropped in to meet senior TataCLiQ executives Ashutosh Pandey, CEO; Vikas Purohit, COO; and Sauvik Banerjjee, CTO—as well as K.R.S. Jamwal, executive director, Tata Industries Ltd.—to find out more about TataCLiQ, Digitalist magazine decided to accompany her. Edited excerpts from the conversation with the Tata executives follow:

Manning-Smith: What makes TataCLiQ unique?

Banerjjee: It has enabled the brick-and-mortar model online. When you place an order, the store fulfilling it will be one close to your address, or to the pin code of the location you reside in. Ours is not a warehouse model, but a store based fulfilment one. If you place an order for a blue shirt of a certain brand, for instance, you are informed of the stores nearest to your home that stock it. You can either collect it from these stores or have it delivered home, whichever you prefer.

TataCLiQ also opens up all luxury brands. Retailers across product categories love that. Who wouldn’t want his inventory problem in the franchise-driven retail world solved? People thought we were entering the game late. What they did not understand is that we have the loyalty of a huge pan-India customer base.

The consumer shops online and picks up selected products from a nearby store or has it delivered home. Every part of India has a pin code, so when an order is placed, the store nearest to your home puts up its hand and competes with other stores nearby to fulfill your order. The seller can continuously see the orders and where they are coming from. It is similar to the lodging or the taxi businesses now around the world that own neither hotels nor taxis.

Can you buy anything on TataCLiQ?

Banerjjee: It now has clothing for men and women, electronics, footwear, watches, and accessories, but more categories will be added. Many international brands are also seeking to enter the Indian market through Tata-CLiQ .

Can you elaborate some more on the ‘phygital’ experience?

Pandey: Retail, enabling customers to pick up products from a store or having it shipped to their homes is uni-dimensional, easy to do. In India, many brands do not reach beyond the top 10-12 cities because of infrastructure issues. What we have done, for the first time in the world, is become an omnichannel provider for many big brands.

We can scale brand by brand. It’s better than putting up the physical infrastructure ourselves, which would be duplication. This model removes the physical-digital divide by giving customers a seamless experience across both worlds. Conventionally, customers have one or the other, not both and not seamlessly. So ‘phygital’ is combining the physical and digital seamlessly. We were not the first to go to market. Competition existed, and so we had to bring in a degree of innovation and value.

Does TataCLiQ understand India better than its e-tailing rivals?

Pandey: The Tata group has businesses from salt to fertilizers to automobiles to software, so it understands many aspects of India better. In retail, we have the combined learning from Titan, Westside, and Tanishq, where we touch millions of customers every day. This learning is built over a period of time. While algorithms and data can tell you some things, handling so many customers over the years gives you knowledge and insights like nothing else can.

“Every customer experience is important. The customer is not a statistic. He or she is a living person. The day we have the mastery of trying to make her happy through our offering, through our service, through our end-to-end experience that we provide to her, that’s the time you know multiple things can happen.” –Ashutosh Pandey, Chief Executive Officer, TataCLiQ.com

Banerjjee: We personalize the platform on a daily basis using algorithms. We track web behavior, anonymous user behavior, IP address behavior, where orders are coming from, purchasing history, the demographics of buying for specific products, brands, and the like. Our customer service teams work round the clock, answering queries on orders, product availability, or delivery issues—everything from placing an order to having it delivered. We monitor social media feedback and continuously respond to it, usually within 5-10 minutes. If there is any kind of noise created in social media, we try and ensure that at the end we have a happy customer.

How does the logistics work for a country as big as India?

Banerjjee: What we aim at is a threefold model: traditional, online fulfillment using the large 3PLs, and hyperlocal companies. City-based fulfillment providers do the delivery. They are far more agile than big logistics providers within a city.

How does a live business like TataCLiQ help Indians get what they want, when they want it?

Purohit: Our purpose of existence is to connect buyers from [remote parts of the country] to well-known brands, doing so with the confidence that the product is authentic, delivery is swift, and [the customer has] a great buying experience. What will stand out when doing this is that we take every single customer issue seriously, to the point that we have designed a bespoke metric—a customer obsessiveness index. This index must go up as close to 100 as possible. We are not yet there, but we are on our way.

Jamwal: The Tata founders were visionary when they said that the society is not just another stakeholder but the very reason for our existence. There are few business houses or industrialists who look at society as the reason for existence. The group’s history has been one of organic but structured growth. The plan was not to build a conglomerate but to impact lives, build a nation. This was the ethos of the founded and has been carried on over the decades. That won’t go away.

“India is championing a proper marriage between online and brick and mortar, and that’s where the proposition of TataCLiQ. Its an online store inventory reconciliation with visibility to the consumer from a product attribute, SKU by SKU basis.” –Sauvik Banerjjee, chief technology officer, TataCLiQ .com

Banerjjee: We came here in a Tata vehicle; Jaguar Land Rover is a Tata company. Many trucks on the road we traveled were Tata trucks. Some hoardings on the way were of our consumer-facing brands—Titan, Tanishq, Westside, and Croma. We have Tata Salt, a hugely popular brand of table salt, Tata Beverages with its mineral water and fizzy drinks. It will take all day to list our brands, the businesses we are in.

India is home to 1.4 billion people, and we cannot imagine a single adult in the country who is not consciously or otherwise touching a Tata product every day. We see it as a humongous responsibility, for with great power that comes as $100 billion-dollar business comes great responsibility.

How important is digitalization to the Tata group?

Banerjjee: Let’s put it this way: India is expected to be the third-largest digital economy by 2020, according to data from preeminent research organisations. The digital economy, whether in fintech, IoT, omnichannel, or digital banking, will be massive. With India set to become the third-largest digital economy in the next three years, the Tata group will play a big role in enabling and augmenting it, giving it velocity.

How important is trust in the digital world?

Banerjjee: Digitalization, by its very nature, brings privacy almost to an end. You do not know what the data is being used for. People sometimes may not trust sites that sell all kinds of things. That is why cash on delivery is quite widespread in this country. That is where known brands like the Tata brand, which people trust to do the right things for them as it has done over the decades, count. In our hyper-connected world, people need anchors and trust is one of the biggest anchors. That is the reason for the continued relevance of the Tata group.

“We have realized that most marketplaces have become catalog aggregators vis-a-vis becoming a catalogue authority. That’s the difference in approach that a marketplace can take.” –Vikas Purohit, chief operating officer, TataCLiQ.com

What is TataCLiQ doing to make customers feel special?

Banerjjee: Growth alone is not enough. We are clear that unless the customer experience is at a level where customer falls in love with you, there is no point trying to scale. Every customer experience is important. The customer is not a statistic, but a living person. As broadband percolates across the country, more smartphone users are enabled every passing day and personalization becomes a bigger challenge. That is what we are trying to crack, and it is a great challenge to have.

The day we master the art of making the customer happy through our offerings, our service, our end-to-end experience, multiple things can happen. At the end of the day, we are all customers and we would all like to feel special. The place we are shopping at must understand us as people. That is our goal.

For more insight on where customer engagement is headed, see Customer Experiences Must Be OmniChannel, OmniNow, And OmniWow.

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About KC Krishnadas

KC Krishnadas is the editor of FactorBranded, a brand solutions media agency. He has 25 years of experience covering technology at The Economic Times and later as the India correspondent for EE Times.

Digitalist Flash Briefing: Using Social Media to Streamline Customer Interactions

Peter Johnson

Today, we’re looking at another company that uses digital tools to meet their audience online.

Tune in Monday through Friday for more Digitalist Flash Briefings on disruptive technologies and trends on your favorite device or app.

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    • Download the Amazon Alexa app: Select Skills, and search “Digitalist”. Then, select Digitalist, and click on the Enable button.
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Find and listen to previous Flash Briefings on Digitalistmag.com.

Read more on today’s topic

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Peter Johnson

About Peter Johnson

Peter Johnson is a Senior Director of Marketing Strategy and Thought Leadership at SAP, responsible for developing easy to understand corporate level and cross solution messaging. Peter has proven experience leading innovative programs to accelerate and scale Go-To-Market activities, and drive operational efficiencies at industry leading solution providers and global manufactures respectively.

Primed: Prompting Customers to Buy

Volker Hildebrand, Sam Yen, and Fawn Fitter

When it comes to buying things—even big-ticket items—the way we make decisions makes no sense. One person makes an impulsive offer on a house because of the way the light comes in through the kitchen windows. Another gleefully drives a high-end sports car off the lot even though it will probably never approach the limits it was designed to push.

We can (and usually do) rationalize these decisions after the fact by talking about needing more closet space or wanting to out-accelerate an 18-wheeler as we merge onto the highway, but years of study have arrived at a clear conclusion:

When it comes to the customer experience, human beings are fundamentally irrational.

In the brick-and-mortar past, companies could leverage that irrationality in time-tested ways. They relied heavily on physical context, such as an inviting retail space, to make products and services as psychologically appealing as possible. They used well-trained salespeople and employees to maximize positive interactions and rescue negative ones. They carefully sequenced customer experiences, such as having a captain’s dinner on the final night of a cruise, to play on our hard-wired craving to end experiences on a high note.

Today, though, customer interactions are increasingly moving online. Fortune reports that on 2016’s Black Friday, the day after Thanksgiving that is so crucial to holiday retail results, 108.5 million Americans shopped online, while only 99.1 million visited brick-and-mortar stores. The 9.4% gap between the two was a dramatic change from just one year prior, when on- and offline Black Friday shopping were more or less equal.

When people browse in a store for a few minutes, an astute salesperson can read the telltale signs that they’re losing interest and heading for the exit. The salesperson can then intervene, answering questions and closing the sale.

Replicating that in a digital environment isn’t as easy, however. Despite all the investments companies have made to counteract e-shopping cart abandonment, they lack the data that would let them anticipate when a shopper is on the verge of opting out of a transaction, and the actions they take to lure someone back afterwards can easily come across as less helpful than intrusive.

In a digital environment, companies need to figure out how to use Big Data analysis and digital design to compensate for the absence of persuasive human communication and physical sights, sounds, and sensations. What’s more, a 2014 Gartner survey found that 89% of marketers expected customer experience to be their primary differentiator by 2016, and we’re already well into 2017.

As transactions continue to shift toward the digital and omnichannel, companies need to figure out new ways to gently push customers along the customer journey—and to do so without frustrating, offending, or otherwise alienating them.

The quest to understand online customers better in order to influence them more effectively is built on a decades-old foundation: behavioral psychology, the study of the connections between what people believe and what they actually do. All of marketing and advertising is based on changing people’s thoughts in order to influence their actions. However, it wasn’t until 2001 that a now-famous article in the Harvard Business Review formally introduced the idea of applying behavioral psychology to customer service in particular.

The article’s authors, Richard B. Chase and Sriram Dasu, respectively a professor and assistant professor at the University of Southern California’s Marshall School of Business, describe how companies could apply fundamental tenets of behavioral psychology research to “optimize those extraordinarily important moments when the company touches its customers—for better and for worse.” Their five main points were simple but have proven effective across multiple industries:

  1. Finish strong. People evaluate experiences after the fact based on their high points and their endings, so the way a transaction ends is more important than how it begins.
  2. Front-load the negatives. To ensure a strong positive finish, get bad experiences out of the way early.
  3. Spread out the positives. Break up the pleasurable experiences into segments so they seem to last longer.
  4. Provide choices. People don’t like to be shoved toward an outcome; they prefer to feel in control. Giving them options within the boundaries of your ability to deliver builds their commitment.
  5. Be consistent. People like routine and predictability.

For example, McKinsey cites a major health insurance company that experimented with this framework in 2009 as part of its health management program. A test group of patients received regular coaching phone calls from nurses to help them meet health goals.

The front-loaded negative was inherent: the patients knew they had health problems that needed ongoing intervention, such as weight control or consistent use of medication. Nurses called each patient on a frequent, regular schedule to check their progress (consistency and spread-out positives), suggested next steps to keep them on track (choices), and cheered on their improvements (a strong finish).

McKinsey reports the patients in the test group were more satisfied with the health management program by seven percentage points, more satisfied with the insurance company by eight percentage points, and more likely to say the program motivated them to change their behavior by five percentage points.

The nurses who worked with the test group also reported increased job satisfaction. And these improvements all appeared in the first two weeks of the pilot program, without significantly affecting the company’s costs or tweaking key metrics, like the number and length of the calls.

Indeed, an ongoing body of research shows that positive reinforcements and indirect suggestions influence our decisions better and more subtly than blatant demands. This concept hit popular culture in 2008 with the bestselling book Nudge.

Written by University of Chicago economics professor Richard H. Thaler and Harvard Law School professor Cass R. Sunstein, Nudge first explains this principle, then explores it as a way to help people make decisions in their best interests, such as encouraging people to eat healthier by displaying fruits and vegetables at eye level or combatting credit card debt by placing a prominent notice on every credit card statement informing cardholders how much more they’ll spend over a year if they make only the minimum payment.

Whether they’re altruistic or commercial, nudges work because our decision-making is irrational in a predictable way. The question is how to apply that awareness to the digital economy.

In its early days, digital marketing assumed that online shopping would be purely rational, a tool that customers would use to help them zero in on the best product at the best price. The assumption was logical, but customer behavior remained irrational.

Our society is overloaded with information and short on time, says Brad Berens, Senior Fellow at the Center for the Digital Future at the University of Southern California, Annenberg, so it’s no surprise that the speed of the digital economy exacerbates our desire to make a fast decision rather than a perfect one, as well as increasing our tendency to make choices based on impulse rather than logic.

Buyers want what they want, but they don’t necessarily understand or care why they want it. They just want to get it and move on, with minimal friction, to the next thing. “Most of our decisions aren’t very important, and we only have so much time to interrogate and analyze them,” Berens points out.

But limited time and mental capacity for decision-making is only half the issue. The other half is that while our brains are both logical and emotional, the emotional side—also known as the limbic system or, more casually, the primitive lizard brain—is far older and more developed. It’s strong enough to override logic and drive our decisions, leaving rational thought to, well, rationalize our choices after the fact.

This is as true in the B2B realm as it is for consumers. The business purchasing process, governed as it is by requests for proposals, structured procurement processes, and permission gating, is designed to ensure that the people with spending authority make the most sensible deals possible. However, research shows that even in this supposedly rational process, the relationship with the seller is still more influential than product quality in driving customer commitment and loyalty.

Baba Shiv, a professor of marketing at Stanford University’s Graduate School of Business, studies how the emotional brain shapes decisions and experiences. In a popular TED Talk, he says that people in the process of making decisions fall into one of two mindsets: Type 1, which is stressed and wants to feel comforted and safe, and Type 2, which is bored or eager and wants to explore and take action.

People can move between these two mindsets, he says, but in both cases, the emotional brain is in control. Influencing it means first delivering a message that soothes or motivates, depending on the mindset the person happens to be in at the moment and only then presenting the logical argument to help rationalize the action.

In the digital economy, working with those tendencies means designing digital experiences with the full awareness that people will not evaluate them objectively, says Ravi Dhar, director of the Center for Customer Insights at the Yale School of Management. Since any experience’s greatest subjective impact in retrospect depends on what happens at the beginning, the end, and the peaks in between, companies need to design digital experiences to optimize those moments—to rationally design experiences for limited rationality.

This often involves making multiple small changes in the way options are presented well before the final nudge into making a purchase. A paper that Dhar co-authored for McKinsey offers the example of a media company that puts most of its content behind a paywall but offers free access to a limited number of articles a month as an incentive to drive subscriptions.

Many nonsubscribers reached their limit of free articles in the morning, but they were least likely to respond to a subscription offer generated by the paywall at that hour, because they were reading just before rushing out the door for the day. When the company delayed offers until later in the day, when readers were less distracted, successful subscription conversions increased.

Pre-selecting default options for necessary choices is another way companies can design digital experiences to follow customers’ preference for the path of least resistance. “We know from a decade of research that…defaults are a de facto nudge,” Dhar says.

For example, many online retailers set a default shipping option because customers have to choose a way to receive their packages and are more likely to passively allow the default option than actively choose another one. Similarly, he says, customers are more likely to enroll in a program when the default choice is set to accept it rather than to opt out.

Another intriguing possibility lies in the way customers react differently to on-screen information based on how that information is presented. Even minor tweaks can have a disproportionate impact on the choices people make, as explained in depth by University of California, Los Angeles, behavioral economist Shlomo Benartzi in his 2015 book, The Smarter Screen.

A few of the conclusions Benartzi reached: items at the center of a laptop screen draw more attention than those at the edges. Those on the upper left of a screen split into quadrants attract more attention than those on the lower left. And intriguingly, demographics are important variables.

Benartzi cites research showing that people over 40 prefer more visually complicated, text-heavy screens than younger people, who are drawn to saturated colors and large images. Women like screens that use a lot of different colors, including pastels, while men prefer primary colors on a grey or white background. People in Malaysia like lots of color; people in Germany don’t.

This suggests companies need to design their online experiences very differently for middle-aged women than they do for teenage boys. And, as Benartzi writes, “it’s easy to imagine a future in which each Internet user has his or her own ‘aesthetic algorithm,’ customizing the appearance of every site they see.”

Applying behavioral psychology to the digital experience in more sophisticated ways will require additional formal research into recommendation algorithms, predictions, and other applications of customer data science, says Jim Guszcza, PhD, chief U.S. data scientist for Deloitte Consulting.

In fact, given customers’ tendency to make the fastest decisions, Guszcza believes that in some cases, companies may want to consider making choice environments more difficult to navigate— a process he calls “disfluencing”—in high-stakes situations, like making an important medical decision or an irreversible big-ticket purchase. Choosing a harder-to-read font and a layout that requires more time to navigate forces customers to work harder to process the information, sending a subtle signal that it deserves their close attention.

That said, a company can’t apply behavioral psychology to deliver a digital experience if customers don’t engage with its site or mobile app in the first place. Addressing this often means making the process as convenient as possible, itself a behavioral nudge.

A digital solution that’s easy to use and search, offers a variety of choices pre-screened for relevance, and provides a friction-free transaction process is the equivalent of putting a product at eye level—and that applies far beyond retail. Consider the Global Entry program, which streamlines border crossings into the U.S. for pre-approved international travelers. Members can skip long passport control lines in favor of scanning their passports and answering a few questions at a touchscreen kiosk. To date, 1.8 million people have decided this convenience far outweighs the slow pace of approvals.

The basics of influencing irrational customers are essentially the same whether they’re taking place in a store or on a screen. A business still needs to know who its customers are, understand their needs and motivations, and give them a reason to buy.

And despite the accelerating shift to digital commerce, we still live in a physical world. “There’s no divide between old-style analog retail and new-style digital retail,” Berens says. “Increasingly, the two are overlapping. One of the things we’ve seen for years is that people go into a store with their phones, shop for a better price, and buy online. Or vice versa: they shop online and then go to a store to negotiate for a better deal.”

Still, digital increases the number of touchpoints from which the business can gather, cluster, and filter more types of data to make great suggestions that delight and surprise customers. That’s why the hottest word in marketing today is omnichannel. Bringing behavioral psychology to bear on the right person in the right place in the right way at the right time requires companies to design customer experiences that bridge multiple channels, on- and offline.

Amazon, for example, is known for its friction-free online purchasing. The company’s pilot store in Seattle has no lines or checkout counters, extending the brand experience into the physical world in a way that aligns with what customers already expect of it, Dhar says.

Omnichannel helps counter some people’s tendency to believe their purchasing decision isn’t truly well informed unless they can see, touch, hear, and in some cases taste and smell a product. Until we have ubiquitous access to virtual reality systems with full haptic feedback, the best way to address these concerns is by providing personalized, timely, relevant information and feedback in the moment through whatever channel is appropriate. That could be an automated call center that answers frequently asked questions, a video that shows a product from every angle, or a demonstration wizard built into the product. Any of these channels could also suggest the customer visit the nearest store to receive help from a human.

The omnichannel approach gives businesses plenty of opportunities to apply subtle nudges across physical and digital channels. For example, a supermarket chain could use store-club card data to push personalized offers to customers’ smartphones while they shop. “If the data tells them that your goal is to feed a family while balancing nutrition and cost, they could send you an e-coupon offering a discount on a brand of breakfast cereal that tastes like what you usually buy but contains half the sugar,” Guszcza says.

Similarly, a car insurance company could provide periodic feedback to policyholders through an app or even the digital screens in their cars, he suggests. “Getting a warning that you’re more aggressive than 90% of comparable drivers and three tips to avoid risk and lower your rates would not only incentivize the driver to be more careful for financial reasons but reduce claims and make the road safer for everyone.”

Digital channels can also show shoppers what similar people or organizations are buying, let them solicit feedback from colleagues or friends, and read reviews from other people who have made the same purchases. This leverages one of the most familiar forms of behavioral psychology—reinforcement from peers—and reassures buyers with Shiv’s Type 1 mindset that they’re making a choice that meets their needs or encourages those with the Type 2 mindset to move forward with the purchase. The rational mind only has to ask at the end of the process “Am I getting the best deal?” And as Guszcza points out, “If you can create solutions that use behavioral design and digital technology to turn my personal data into insight to reach my goals, you’ve increased the value of your engagement with me so much that I might even be willing to pay you more.”

Many transactions take place through corporate procurement systems that allow a company to leverage not just its own purchasing patterns but all the data in a marketplace specifically designed to facilitate enterprise purchasing. Machine learning can leverage this vast database of information to provide the necessary nudge to optimize purchasing patterns, when to buy, how best to negotiate, and more. To some extent, this is an attempt to eliminate psychology and make choices more rational.

B2B spending is tied into financial systems and processes, logistics systems, transportation systems, and other operational requirements in a way no consumer spending can be. A B2B decision is less about making a purchase that satisfies a desire than it is about making a purchase that keeps the company functioning.

That said, the decision still isn’t entirely rational, Berens says. When organizations have to choose among vendors offering relatively similar products and services, they generally opt for the vendor whose salespeople they like the best.

This means B2B companies have to make sure they meet or exceed parity with competitors on product quality, pricing, and time to delivery to satisfy all the rational requirements of the decision process. Only then can they bring behavioral psychology to bear by delivering consistently superior customer service, starting as soon as the customer hits their app or website and spreading out positive interactions all the way through post-purchase support. Finishing strong with a satisfied customer reinforces the relationship with a business customer just as much as it does with a consumer.

The best nudges make the customer relationship easy and enjoyable by providing experiences that are effortless and fun to choose, on- or offline, Dhar says. What sets the digital nudge apart in accommodating irrational customers is its ability to turn data about them and their journey into more effective, personalized persuasion even in the absence of the human touch.

Yet the subtle art of influencing customers isn’t just about making a sale, and it certainly shouldn’t be about persuading people to act against their own best interests, as Nudge co-author Thaler reminds audiences by exhorting them to “nudge for good.”

Guszcza, who talks about influencing people to make the choices they would make if only they had unlimited rationality, says companies that leverage behavioral psychology in their digital experiences should do so with an eye to creating positive impact for the customer, the company, and, where appropriate, the society.

In keeping with that ethos, any customer experience designed along behavioral lines has to include the option of letting the customer make a different choice, such as presenting a confirmation screen at the end of the purchase process with the cold, hard numbers and letting them opt out of the transaction altogether.

“A nudge is directing people in a certain direction,” Dhar says. “But for an ethical vendor, the only right direction to nudge is the right direction as judged by the customers themselves.” D!

Read more thought provoking articles in the latest issue of the Digitalist Magazine, Executive Quarterly.


About the Authors:

Volker Hildebrand is Global Vice President for SAP Hybris solutions.

Sam Yen is Chief Design Officer and Managing Director at SAP.

Fawn Fitter is a freelance writer specializing in business and technology.

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Artificial Intelligence: The Future Of Oil And Gas

Anoop Srivastava

Oil prices have fallen dramatically over last few years, forcing some major oil companies to take drastic actions such as layoffs, cutting investments and budgets, and more. Shell, for example, shelved its plan to invest in Qatar, Aramco put on hold its deep-water exploration in the Red Sea, Schlumberger fired a few thousand employees, and the list goes on…

In view of falling oil prices and the resulting squeeze on cash flows, the oil and gas industry has been challenged to adapt and optimize its performance to remain profitable while maintaining a long-term investment and operating outlook. Currently, oil and gas companies find it difficult to maintain the same level of investment in exploration and production as when crude prices were at their peak. Operations in the oil and gas industry today means balancing a dizzying array of trade-offs in the drive for competitive advantage while maximizing return on investment.

The result is a dire need to optimize performance and optimize the cost of production per barrel. Companies have many optimization opportunities once they start using the massive data being generated by oil fields. Oil and gas companies can turn this crisis into an opportunity by leveraging technological innovations like artificial intelligence to build a foundation for long-term success. If volatility in oil prices is the new norm, the push for “value over volume” is the key to success going forward.

Using AI tools, upstream oil and gas companies can shift their approach from production at all costs to producing in context. They will need to do profit and loss management at the well level to optimize the production cost per barrel. To do this, they must integrate all aspects of production management, collect the data for analysis and forecasting, and leverage artificial intelligence to optimize operations.

When remote sensors are connected to wireless networks, data can be collected and centrally analyzed from any location. According to the consulting firm McKinsey, the oil and gas supply chain stands to gain $50 billion in savings and increased profit by adopting AI. As an example, using AI algorithms to more accurately sift through signals and noise in seismic data can decrease dry wellhead development by 10 percent.

How oil and gas can leverage artificial intelligence

1. Planning and forecasting

On a macro scale, deep machine learning can help increase awareness of macroeconomic trends to drive investment decisions in exploration and production. Economic conditions and even weather patterns can be considered to determine where investments should take place as well as intensity of production.

2. Eliminate costly risks in drilling

Drilling is an expensive and risky investment, and applying AI in the operational planning and execution stages can significantly improve well planning, real-time drilling optimization, frictional drag estimation, and well cleaning predictions. Additionally, geoscientists can better assess variables such as the rate of penetration (ROP) improvement, well integrity, operational troubleshooting, drilling equipment condition recognition, real-time drilling risk recognition, and operational decision-making.

When drilling, machine-learning software takes into consideration a plethora of factors, such as seismic vibrations, thermal gradients, and strata permeability, along with more traditional data such as pressure differentials. AI can help optimize drilling operations by driving decisions such as direction and speed in real time, and it can predict failure of equipment such as semi-submersible pumps (ESPs) to reduce unplanned downtime and equipment costs.

3. Well reservoir facility management

Wells, reservoirs, and facility management includes integration of multiple disciplines: reservoir engineering, geology, production technology, petro physics, operations, and seismic interpretation. AI can help to create tools that allow asset teams to build professional understanding and identify opportunities to improve operational performance.

AI techniques can also be applied in other activities such as reservoir characterization, modeling and     field surveillance. Fuzzy logic, artificial neural networks and expert systems are used extensively across the industry to accurately characterize reservoirs in order to attain optimum production level.

Today, AI systems form the backbone of digital oil field (DOF) concepts and implementations. However, there is still great potential for new ways to optimize field development and production costs, prolong field life, and increase the recovery factor.

4. Predictive maintenance

Today, artificial intelligence is taking the industry by storm. AI-powered software and sensor hardware enables us to use very large amounts of data to gain real-time responses on the best future course of action. With predictive analytics and cognitive security, for example, oil and gas companies can operate equipment safely and securely while receiving recommendations on how to avoid future equipment failure or mediate potential security breaches.

5. Oil and gas well surveying and inspections

Drones have been part of the oil and gas industry since 2013, when ConocoPhillips used the Boeing ScanEagle drone in trials in the Chukchi Sea.  In June 2014, the Federal Aviation Administration (FAA) issued the first commercial permit for drone use over United States soil to BP, allowing the company to survey pipelines, roads, and equipment in Prudhoe Bay, Alaska. In January, Sky-Futures completed the first drone inspection in the Gulf of Mexico.

While drones are primarily used in the midstream sector, they can be applied to almost every aspect of the industry, including land surveying and mapping, well and pipeline inspections, and security. Technology is being developed to enable drones to detect early methane leaks. In addition, one day, drones could be used to find oil and gas reservoirs underlying remote uninhabited regions, from the comfort of a warm office.

6. Remote logistics

As logistics to offshore locations is always a challenge, AI-enhanced drones can be used to deliver materials to remote offshore locations.

Current adoption of AI

Chevron is currently using AI to identify new well locations and simulation candidates in California. By using AI software to analyze the company’s large collection of historical well performance data, the company is drilling in better locations and has seen production rise 30% over conventional methods. Chevron is also using predictive models to analyze the performance of thousands of pieces of rotating equipment to detect failures before they occur. By addressing problems before they become critical, Chevron has avoided unplanned shutdowns and lowered repair expenses. Increased production and lower costs have translated to more profit per well.

Future journey

Today’s oil and gas industry has been transformed by two industry downturns in one decade. Although adoption of new hard technology such as directional drilling and hydraulic fracturing (fracking) has helped, the oil and gas industry needs to continue to innovate in today’s low-price market to survive. AI has the potential to differentiate companies that thrive and those that are left behind.

The promise of AI is already being realized in the oil and gas industry. Early adopters are taking advantage of their position  to get a head start on the competition and protect their assets. The industry has always leveraged technology to adapt to change, and early adopters have always benefited the most. As competition in the oil and gas industry continues to heat up, companies cannot afford to be left behind. For those that understand and seize the opportunities inherent in adopting cognitive technologies, the future looks bright.

For more insight on advanced technology in the energy sector, see How Digital Transformation Is Refueling The Energy Industry.

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Anoop Srivastava

About Anoop Srivastava

Anoop Srivastava is Senior Director of the Energy and Natural Resources Industries at SAP Value Engineering in Middle East and North Africa. He advises clients on their digital transformation strategies and helps them align their business strategy with IT strategy leveraging digital technology innovations such as the Internet of Things, Big Data, Advanced Analytics, Cloud etc. He has 21+ years of work experience spanning across Oil& Gas Industry, Business Consulting, Industry Value Advisory and Digital Transformation.