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The Next Big Trend: Know Your Adoption Curve

Whenever marketers get together, there will always be conversation about The Next Big Trend – it’s right up there with, “Where’s the open bar?” It’s in the job title – Marketers need to anticipate where the market is going and lead their companies to innovate.

It’s even more important right now because of new technologies becoming available at the same time as the Boomer generation becomes a smaller percentage of the population with purchasing power. It feels like we are at a major inflection point for how customers research and buy products. As marketers, we tend to anticipate and run to keep up with the early adopters. The risk lies in not recognizing when we may have passed the pack where our customers still are, and gotten out ahead of them.

The most important big trend? Recognizing that you have customers at multiple places on the adoption curve… at the same time.

Perhaps you were expecting The Next Big Trend to be artificial intelligence (AI), machine learning, blockchain technology, contactless stores, or digital assistants? Those are all vitally important right now, but how you adopt them and bring your customers along will be what differentiates you in the marketplace.

Let’s go back to that feeling of being at an inflection point. Will the change be like when cars replaced horses in under 25 years? Or, will it be more like the advent of TV where consumers continued to listen to radio as well as watch TV— an additional way to connect rather than a replacement? That’s where the insight and skill of the marketer matters.

Let’s start with some key examples that demonstrate what’s going on.

  • The penetration of online purchasing: Ask any marketer you meet for the percentage of retail purchases made online and most will tell you a number between 40 and 75 percent, which is the percentage of retail growth represented by e-commerce and not the actual percentage of retail sales from e-commerce – the real number is still hovering around 10 percent if you follow the official numbers from the US Department of Commerce1 which includes fuel and autos. Other sources calculate that without auto- related purchases, e-commerce is more in the 13-14 percent range of all sales.2

Our own research3 conducted in 2018 indicates that over 86 percent of Millennials and even 76 percent of Gen Z still regularly shop in stores, even though they are buying a greater percentage of their total purchases online or via mobile.

  • Mobile phone use for research and purchase: Most marketers assume that all Boomers are techno-phobic. That is a dangerous assumption because what is really going on is that there is wide variation in tech adoption.The same Kobie research found that about half of Boomers don’t use a smartphone for researching or making a purchase. However, for the remaining half, 89 percent actively use their phone to research retail purchases, which is an even higher percentage than for younger generations.

Why these facts matter: Many retailers have been assuming that the brick and mortar experience is dead and that the digital experience, especially mobile apps, are the only wave of the future.

In many cases, the in-store experience reflects that lack of love. With over eight out of 10 purchases still made in store, failure to focus on the in-store experience damages the brand overall. Sears is the poster child for this mistake – their digital experience had actually been among the most innovative for the past 10 years, but their stores have languished, as have their total sales. Why explore a brand online if the visible manifestation of that brand in your home town looks more shabby than chic?

What has become apparent in the past year is that the fastest growing big retailers are pushing for innovation at the point of sale in the physical as well as the digital sphere – phygital. That is why you see Amazon announcing the launch of 3,000 automated stores by 2020, Walmart testing convenience store-sized “Fuel Stations,” and other retailers as varied as Target, Ikea and Nordstrom piloting small-format stores.4 This is just one of several important trends in leveraging technology and data within physical stores.

From the perspective of loyalty programs in particular, the retailers and restaurants that implement their programs solely through a mobile app see their programs peak at well under 50 percent in revenue penetration according to earnings reports. The numbers are even lower for brands who have high-value customers within the Boomer generation where phone use is a 50/50 proposition of using it not at all or using it all the time. Programs that enable members to interact in store and online, as well as in app, routinely achieve program penetrations in the 75 – 85 percent range.

More examples of the gap between hype and the real world for major trends:

  • Mobile payment: Banks are rushing to update their apps to add mobile payment capabilities or integrate with Apple Pay, Google Pay and Samsung Pay, who actively market their payment capabilities. But it is worth noting that 40 percent of all mobile payments in the U.S. are made using the Starbucks mobile app – which makes Starbucks the leader in mobile payment over both Apple and Google.5 One of the implications from the success of Starbucks is that integrating a new technology with a loyalty program that recognizes use of that new technology can drive penetration for that technology. The airlines used their programs to similar effect to drive adoption of online booking in a previous generation.
  • Laptops: Similar to in-store shopping, Kobie’s research indicates that 75 percent of consumers across generations are still using laptops to research purchases and 68 percent use their laptops for purchases – this is even true for Gen Z where only 13 percent are NOT using a laptop at least some of the time. This means that it remains important to keep an interface for online purchase and loyalty account access that will display well on a laptop, as well as on a phone.
  • Digital assistants: A year ago, there were a lot of articles about how digital assistants would become the new retail marketplace and drive even more purchases online.6 This year the research is more cautious – among active loyalty program members, our research found that 68 percent have still never used one. That percentage varies by generation but even for Millennials, almost 50 percent claim they’ve never used Alexa, Echo, Siri, or Google Home for researching or making a purchase.7 Playing music, setting reminders and reading the news are far more popular uses. For the moment – it may have changed by the time you read this but for the moment, it pays to know what your customer has and has not adopted.

Let’s get down to the practical tactical level for how to leverage emerging trends without jumping on a trend that doesn’t catch on.

  1. Know what’s out there – Yes, you need to be learning everything you can about
    AI, machine learning, blockchain technology, contactless stores, and digital assistants. They, and others, are among the important trends in the loyalty space today. They will remake the marketplace over time.
  2. Fully imagine what each technology could do for your customers – Some of the greatest innovations are reimaginings of what existing technology can do when paired with newer technology. Hilton was able to increase enrollment, redemption, and member purchases with “Money + Points” rewards – the solution effectively consists of adding new web design to existing booking technology.
  3. Know exactly where your customers are on each adoption curve – Never mistake trial for on-going adoption. Be sure to be clear on what each generation within your customer base is doing for each of the following:
  • What are they engaging with for fun or to stay current?
  • What are they using for research in their daily lives?
  • How are they really closing a purchase and paying for it?

As for that question about whether the coming change in consumer purchasing behavior will be more like cars replacing horses or TV and radio continuing in parallel for a generation – our fearless forecast is that this world of parallel purchasing behaviors in store, online, in app, and via digital assistant will be a continuing reality for the next few years. The winners will make the experience easy and engaging no matter where the consumer walks into their physical or virtual marketplace.

1 “Quarterly Retail e-Commerce Sales 2nd Quarter 2018,” US Department of Commerce, (August 17, 2018) https://www.census.gov/retail/mrts/www/ data/pdf/ec_current.pdf

2 “US e-commerce sales grow 16% in 2017”, Stephany Zaroban, Digital Commerce 360, (February 16, 2018) https://www.digitalcommerce360. com/article/us-ecommerce-sales/ & (November 19, 2018) https://www. digitalcommerce360.com/article/quarterly-online-sales/

3 “Loyalty in the Age of the Connected Consumer,” Kobie Marketing, (June 2018), http://www.kobie.com/wp-content/uploads/KobieMarketing_Loyal- tyintheAgeoftheConnectedConsumer.pdf

4 “Are big box retailers going too small with new store concepts?,” Chris Petersen, PhD., Retail Wire, (September 24, 2018), https://www.retailwire. com/discussion/are-big-box-retailers-going-too-small-with-new-store-con- cepts/

5 “Walmart and Dunkin’ Donuts Gaining on Apple Pay and Samsung Pay, But Starbucks Is Tops”, Aaron Pressman, Fortune, (May 22, 2018), http:// fortune.com/2018/05/22/walmart-starbucks-mobile-pay-apple/

6 “Digital Assistant Users Say Their Shopping Habits Are Changing”, Rim- ma Kats, Retail e-Marketer, (May 11, 2017), https://retail.emarketer.com/ar- ticle/digital-assistant-users-say-their-shopping-habits-changing/5915ff35eb- d400097ccd5fb2?ecid=NL1014

7 “Most consumers prefer to research, rather than purchase, via voice as- sistants,” April Berthune, Digital Commerce 360, (April 20, 2081), https:// www.digitalcommerce360.com/2018/04/20/voice-assistants-are-more-pop- ular-for-product-research-than-buying/

“79 percent of Americans now shop online, but it’s cost more than conve- nience that sways them,” Sarah Perez, TechCrunch (December 19, 2016), https://techcrunch.com/2016/12/19/79-percent-of-americans-now-shop-on- line-but-its-cost-more-than-convenience-that-sways-them/

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Kate Hogenson