Several industries are already embracing the benefits of blockchain. The finance industry uses it to monitor the exchange of stocks and bitcoin. The public sector uses it to eliminate voter fraud and confirm digital identities.
But what is blockchain? And how can supply chain organizations begin using it to their advantage?
Breaking down blockchain
The seeds of blockchain were sown more than 25 years ago – more as a concept than anything else.
Since then, the technology has blossomed and evolved into an actual tool, composed of a chain of data containers used to track and store transactions.
In blockchain, a new transaction creates a new block in a particular chain. Because this information is updated in real time and stored in decentralized databases, participants retain complete access to their transactions on their very own IT premises. Additionally, any changes must be confirmed by all other blockchain members, which makes unauthorized uses practically impossible.
The benefits of this are obvious: Companies and individuals can forge new business relationships without actually knowing one another – as all transactions are clearly visible and easy to monitor.
While many supply chain organizations have remained in the piloting stage of blockchain adoption, the time has come for them to finally begin embracing this transformative technology.
For one, blockchain can help supply chain organizations to improve visibility and traceability. In the event of a recall, for instance, products can easily be identified and pulled from store shelves, helping companies to save costs and avoid future liability issues.
Blockchain can also help to build trust among buyers, generating new business and improving customer satisfaction. One pharmaceutical company is leveraging the technology to assure patients and physicians that certain medications are authentic.
Gain – and share – a picture of your whole supply chain
Moving a product from supplier to customer requires people, resources, knowledge, processes, and financial transactions. It’s complicated to display the full picture of a large supply chain system to everyone involved. Information is distributed to various people at various times, and this data is typically stored in multiple locations. Moreover, participants usually have only partial access to the overall information. Blockchains could resolve these transparency and traceability issues.
By using blockchains, any information relevant to that particular supply chain will be captured along the way, and it will be made accessible to all parties involved:
Pallets, trailers, and containers can be tracked as they move between supply chain nodes using RFID for asset allocation.
Purchase orders, change orders, receipts, shipment notifications, or other trade-related documents can serve as blockchain items to increase fraud protection.
Certifications or certain properties of physical products can be stored as blockchain items to ensure the products comply with quality standards.
Information about manufacturing processes, including assembly, delivery, and maintenance, can be shared with suppliers and vendors.
5 blockchain benefits your supply chain enterprise simply can’t ignore
As I see it, there are five key benefits that blockchain can provide to your supply chain organization:
Transparency: As documents are separated from the physical flow of the product and taken out of the hands of supply chain parties into a “neutral” zone, the supply chain reveals its true origin and touchpoints. This increases trust and helps eliminate the bias found in today’s supply chains. According to a 2014 Deloitte University Press publication, “supply chain transparency is critical for managing rising levels of risk in an environment where corporate supply chain practices are attracting increasing legal, regulatory, and consumer scrutiny.”
Scalability: Normally, a rising number of supply chain participants would increase the complexity of supply chain management. That’s no longer the case. With blockchain technology, you can add any number of participants and touchpoints, and managing the supply chain will be as simple as ever.
Growth: Companies in supply chain that adopt blockchain at an early stage can generate significant competitive advantages over other players. By gaining greater insight and visibility into your operations, your organization will be better prepared to deal with unforeseen challenges and provide superior consumer experiences.
Innovation: Opportunities abound to create new specialized uses for technology as a result of the decentralized architecture of blockchain. There’s no limit to what your organization can enhance, whether it’s your production processes or delivery capabilities.
Don’t delay: Embrace blockchain today
Blockchain is a revolutionary technology that can transform many existing traditional processes into more secure, transparent, and collaborative systems. With the myriad ways it can benefit your enterprise, it’s high time to begin making blockchain a part of your supply chain organization’s future today.
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About Kirsten Lubritz
Kirsten Lubritz is a senior supply chain solution specialist at SAP. She focuses on the project management topic within the field of supply chain, specifically around transportation management, warehouse management, and track and trace. She has a MBA in Economics from Universität des Saarlandes and is based in Walldorf, Germany.
The emergence of blockchain technology couldn’t be more fortuitous for the 130-year old diamond industry, much of which is still powered by scraps of paper, a gentlemen’s handshake, and the promise to pay. But higher-quality synthetic stones are rampant and harder to detect, while hackers have breached certificate repositories, increasing the risk of fraud from fake, stolen or conflict zone diamonds.
This was the backdrop of an announced partnership between SAP Ariba and Everledger to explore blockchain initiatives that will help reduce risk and fraud for banks, insurers and open marketplaces, including the diamond industry. I listened to executives from both companies explain the partnership during an insightful roundtable at the recent SAP Ariba Live 2017 event.
“The ultimate beneficiary of our technology is the consumer,” said Leanne Kemp, CEO at Everledger. “Using the distributed ledger, people will know where their diamonds came from, if they’ve been rightfully traded, and if it’s a true diamond or a synthetic stone.”
Know your asset’s provenance
“We want to bring transparency to a worldwide business network that’s been fairly opaque ─ 81 countries are involved in the international diamond trade,” said Kemp. “The world is at a point where we can apply the worldwide ledger to mother earth’s assets, meaning diamonds. We have the ability to know and track an object through its provenance chain, enabling proof of its associated certification as well as compliance with duties and taxes.”According to Kemp, her fast-growing London-based startup has transacted over one million diamonds in its blockchain, and is expanding to cover other valuable assets such as wine and art.
New level of procurement trust
Blockchain has the potential to improve visibility into contracts between buyers and sellers for faster business with better outcomes for both parties in many industries. “If you can track and trace diamonds, you can track and trace anything,” said Joe Fox, vice president of Business Development and Strategy at SAP Ariba. “It makes sense for us to team up with Everledger, and apply the same chain framework around all goods for our customers.
Fox believes blockchain will transform procurement with a new trust protocol as applications are layered onto a cloud-based, tamper-proof network, driving more innovations. It will also help buyers gain greater trust in suppliers via third party verification across the supply chain.
“Blockchain brings trusted commerce,” said Fox. “We’re adding blockchain to the application layer so that we can build enhancements to existing applications and new chain-based applications using Hyperledger that we hadn’t even considered before like smart purchase orders and smart invoices. Blockchain is a business structure accessible everywhere sitting on the internet, and that’s what companies have been waiting for from a business enterprise software perspective.”
Opportunity in disintermediation
Getting diamonds onto the blockchain with a digital representation is just the beginning of market transformation. While blockchain allows international payments in minutes, potentially disintermediating banks, Fox said those institutions will shift to a more important, long-time role, providing trust between parties exchanging funds. Only now those transactions are based on matching the digital to the physical relative to currency and assets. “The quality of the chain is based on how well it’s designed for inheriting external trust,” he said.
It may be hard for seasoned diamond traders to imagine a world without bits of paper and their word alone, but trust us, it’s coming.
With people now looking beyond the banking industry for promising use cases built on blockchain technology, BlockShow Europe 2017 could not have come at a better time.
Held April 6-7 at the Alte Kongresshalle in Munich, Germany, the event attracted more than 560 people and featured 26 speakers, making it the largest international blockchain event in Europe to date. Organized by Cointelegraph in partnership with Nexussquared and BlockPay, BlockShow Europe provided ample opportunity for networking, knowledge sharing, and education.
The event attracted a mostly young, entrepreneurial crowd, many of whom were already working in established Bitcoin and blockchain startups. Innovation experts from the corporate sector were also on hand, as well as “explorers” who were just getting familiar with the technology. According to Cointelegraph, more than 200 individual networking meetings took place during the event.
Notable and quotable
Moderator Elizabeth Lumely, a leading expert on fintech solutions and managing director of Rainmaking, guided the program in a constructive exchange that offered information useful to both Bitcoin and blockchain people alike. She shared the results of a recent survey by Cointelegraph that asked: What is necessary for blockchain in the enterprise? Fifty-seven percent of respondents answered “security first for Bitcoin,” while 43% answered “smart contract Ethereum.”
Bitcoin entrepreneur Charlie Shrem presented the opening keynote, “The Current State of the Blockchain.” During his address, Shrem, founder of the Bitcoin Foundation and currently responsible for business development for cryptocurrency exchange Changelly, compared blockchain technology with the power of the printing press for its potential to remove corruption, power, and control from the hands of the few and put it back into the hands of the people. Shrem said, “The printing press gave people the ability to publish their own information very cheaply across borders around the world and distribute it in a decentralized way. Bitcoin is the printing press of our time. And blockchain technology is what’s powering that.”
Trust: the decisive factor
Panel discussions took on provocative hot topics like the challenges of blockchain implementation and initial coin offerings (ICOs) of cryptocurrencies. Panel experts agreed that blockchain technology is good for solving issues of trust, which they said seems to be the best measure for evaluating the promise of use cases. The blockchain community, however, is faced with challenges common to new technologies: lack of standardization; fee structure; interoperability between different blockchains; and absence of relevant legislation. One hurdle for new users of the technology may be a willingness to accept full responsibility for their data and use of the technology. As one panelist noted, there is no blockchain help line, for example, in the event that you lose your privacy key.
The banking industry was represented with a keynote from Daniel Drummer, vice president at JP Morgan, describing the blockchain-related projects underway at his company. In another keynote that resonated well with the audience, Milan Sallaba, partner at Deloitte, shared his organization’s insights and advice on how entrepreneurs can move from blockchain use cases to scalable production.
Use cases showcase breadth of new technology
Throughout the day, startups took to the main stage to present their blockchain use cases and business models. Here is a sampling of just a few.
Energy: The aim of SolarChange is to incentivize people and even developing nations to produce solar energy and sell it back into the grid. The blockchain billing mechanism allows people to track how much energy they are feeding into the grid.
Content distribution:DECENT provides a peer-to-peer content distribution network, without the absorbent fees associated with traditional publishing houses. Content on the network includes books, blogs, music, and video provided directly from the artist or author. DECENT’s Caesar testnet launched in March, and it plans to launch its mainnet in June.
Supply chain:Kouvala Innovation Oy, based in Finland, is using blockchain technology to enable an information backbone for the movement of goods Europe-wide – or the “Internet for Logistics” – so that every logistics company on the network can benefit from a new level of transparency into shipping activities. Test results with live data are expected at end of June.
Intellectual property:Bernstein.io is using blockchain-based, secured digital certificates to create a trail of record for inventors’ creations. Digital certificates can also be attached to non-disclosure confidentiality agreements to establish the existence of a creation and record who knew of it. Legal acceptance of blockchain certificates is developing rapidly because they provide reliable documentation for clients.
Fine art:Verisart is a startup that is using blockchain technology to provide verification of authenticity for fine art.
Blockchain Oscars: more use cases!
The event also featured a Blockchain Oscar Competition to select the most promising startups working with blockchain technology. The winner for “Most Innovative Blockchain Startup” was Etherisc, a German startup specializing in providing a blockchain solution for the insurance industry that uses smart contracts. The prize in this category was €5,000 worth of Bitcoins. The winner for “Startup with the Biggest Potential for Betterment of Humanity” was SolarChange. The prize in this category was €5,000 worth of tokens from Humaniq, a next-generation bank offering solutions for the unbanked.
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About Jacqueline Prause
Jacqueline Prause is the Senior Managing Editor of Media Channels at SAP. She writes, edits, and coordinates journalistic content for SAP.info, SAP's global online news magazine for customers, partners, and business influencers .
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:
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.
Front-load the negatives. To ensure a strong positive finish, get bad experiences out of the way early.
Spread out the positives. Break up the pleasurable experiences into segments so they seem to last longer.
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.
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!
Despite the progress made in some countries, I am also aware of others that are still resistant to digitizing their economy and automating operations. What’s the difference between firms that are digital leaders and those that are slow to mature? From my perspective in working with a variety of businesses throughout Europe, it’s a combination of diversity and technology availability.
European companies are hardly homogenous. Comprising 47 countries across the continent, they serve communities that speak any of 225 spoken languages. Each one is experiencing various stages of digital development, economic stability, and workforce needs.
Nevertheless, as a whole, European firms do prioritize customer acquisition as well as improving efficiency and reducing costs. Over one-third of small and midsize companies are investing in collaboration software, customer relationship management solutions, e-commerce platforms, analytics, and talent management applications. Steadily, business leaders are finding better ways to go beyond data collection by applying predictive analytics to gain real-time insight from predictive analytics and machine learning to automate processes where possible.
Small and midsize businesses have a distinct advantage in this area over their larger rivals because they can, by nature, adopt new technology and practices quickly and act on decisions with greater agility. Nearly two-thirds (64%) of European firms are embracing the early stages of digitalization and planning to mature over time. Yet, the level of adoption depends solely on the leadership team’s commitment.
For many small and midsize companies across this region, the path to digital maturity resides in the cloud, more so than on-premise software deployment. For example, the flexibility associated with cloud deployment is viewed as a top attribute, especially among U.K. firms. This brings us back to the diversity of our region. Some countries prioritize personal data security while others may be more concerned with the ability to access the information they need in even the most remote of areas.
Technology alone does not deliver digital transformation
Digital transformation is certainly worth the effort for European firms. Between 60%–90% of small and midsize European businesses say their technology investments have met or exceeded their expectations – indicative of the steady, powerhouse transitions enabled by cloud computing. Companies are now getting the same access to the latest technology, data storage, and IT resources.
However, it is also important to note that a cloud platform is only as effective as the long-term digital strategy that it enables. To invigorate transformative changes, leadership needs to go beyond technology and adopt a mindset that embraces new ideas, tests the fitness of business models and processes continuously, and allows the flexibility to evolve the company as quickly as market dynamics change. By taking a step back and integrating digital objectives throughout the business strategy, leadership can pull together the elements needed to turn technology investments into differentiating, sustainable change. For example, the best talent with the right skills is hired. Plus, partners and suppliers with a complementary or shared digital vision and capability are onboarded.
The IDC Infobrief confirms what I have known all along: Small and midsize businesses are beginning to digitally mature and maintain a strategy that is relevant to their end-to-end processes. And furthering their digital transformation go hand in hand with the firms’ ability to ignite a transformational force that will likely progress Europe’s culture, social structure, and economy.