A few years back, Nike’s Digital Sport division’s first release was Nike+, a running customer experience app co-developed with Apple.
The app works with sensors in Nike’s running shoes and a Nike running watch. The app has been downloaded over five million times, and has been attributed to an increase in sales for the running division. Analysts credit a 30% uptick in sales between 2010 and 2011, representing about $2.8 billon, to growth of the Nike+ community.
The same sort of shift is occurring at Fortune 100 companies in numerous verticals where marketing VPs are realizing that advertising just isn’t delivering the value it once did, because customers have fundamentally changed the way they make purchasing decisions.
Over the past 10 years consumers have moved away from “push” marketing techniques—placing information in front of consumers in order to influence purchasing decisions—opting to “pull” in their own information instead. Today’s consumers turn more often to friends and family for advice on what to buy rather than a company’s website or ad campaign.
Why Is the Shift Happening?
Customers “pull” more information these days because there’s plenty of it available. There is no end to sources of relatively unbiased information, from the running commentaries of friends on social media sites, to crowd-sourced product reviews, to word-of-mouth suggestions. More than half of all Americans are now smartphone users, according to a recent Pew study, and of those 85.9 million users, four out of five use their smartphones to research and make retail purchases, according to comScore.
As mobile ads increasingly geo-target consumers and serve more relevant content, they are proving more effective than standard web ads. However, consumers remain more influenced by their peers than any campaign.
Both digital and physical social networks are influencing consumers all the time. Unlike the traditional advertising paradigm, wherein the natural campaign “end” is a purchase, in today’s digital world companies also need to make sure their customers continue to be pleased with their purchase. Otherwise face the dip in sales that may occur if multiple people complain about their product or service on Twitter and Facebook.
Opportunities of Digital Products
Fortunately this transformation is not all doom and gloom for marketers, nor is it just about learning how to develop and execute digital products simply because everyone else is.
Customer experience apps like Nike+ are a useful tool for marketers as well. They tend to deliver far more information about a company’s customers than a one-off campaign, they’re ongoing and can thus constantly be improved, and, when done right, they deliver meaningful long-term benefits
Well-executed digital products help brands build meaningful, lasting relationships with consumers and provide unprecedented access to consumers’ thoughts, opinions, and behaviors. Not only are people more willing than ever to share all sorts of information about themselves online, but also any app or microsite includes a database that brands can leverage. Marketers can splice that data in multiple ways to understand exactly how to deliver what their customers want.
That data helps companies better market their products and develop better digital products in the future. After all, a branded app is only valuable to a company if it’s truly valuable to consumers. Consumers download an average of 65 apps on their smartphones, but only use a handful on a daily basis.
Linking digital products to social media wherever it makes sense helps extend the reach of consumer experience apps. The “where it makes sense” bit is really key with social and is another area where many marketers have failed to smoothly make the transition to digital. Consumers have already lost patience with unnecessary social media tie-ins. Companies that don’t understand the subtleties of social risk alienating more consumers than they attract.
In some cases, companies have hit upon consumer experience gaps that are so perfectly filled by a digital solution that consumers are even willing to pay for what is essentially marketing. Nike+ is, again, a good example of this. While the app is free, the gear required to make it work is not, and in many cases consumers are buying the gear because they like the app.
Obviously this isn’t going to happen for every company, but there’s reason to believe that marketers should think in terms of an app people would be willing to pay for when they get into the digital products game.