E-Commerce

Online Business Growth

Online Business Growth – The Easy or The Right Way?

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Online business growth – the easy way or the right way?

Onine business growth is a topic concerning most retailers. How can retailers grow their business in these times? The key message is at the very end.

Consider this scenario.

You are the owner of a mid-sized retail business. You presently sell your product to your customers in physical stores. A typical sale goes like this: Customers show up at your store. They specify their needs, you give options. You counsel, they choose. You pack, they pay, and you complete the transaction.  

Thus far, you have been successful in your current brick-and-mortar model. Your business has a loyal customer base. The net profit margin is in the range of 15%-20%. And, the cash flow is good too.

So, you decide to take your business to the next level.

How would you do it?

The answer is ‘you go omnichannel’.

The internet penetration of above 90% in most developed countries makes it a no-brainer. Among the developing countries, the internet has grown by over 5000% since year 2000 to around 59%. Moreover, customers now prefer to buy in an omnichannel environment.

In omnichannel retail, the focus is on providing seamless shopping experience to the customer across multiple channels. Omnichannel strategy helps you integrate physical store, online store, mobile app, and social media.

In-short, your business growth strategy now revolves around selling online.

To sell online, there are two main options:

  1. Create your ‘own online channel’
  2. Sell through existing ‘online marketplaces’

This decision determines the future course of your business.

Let us dissect each option.

Option-1: Create your own online channel

Creating your own online channel includes two things: first, setting up an e-store – an e-commerce website – to display products and receive customer orders. Second, you need to have an efficient and trustworthy logistics system to fulfil the customer orders. The entire order-to-fulfilment process must run smoothly to give customers a seamless shopping experience.

Having your own online channel has several benefits.

Top three benefits are:

  • You can create bespoke personalised experience for your customers. It allows you to ensure stronger connection and engagement with them.
  • You have total control over your business throughout the customer buying process. So, you decide how customers interact with your brand while being on your website. Also, you can create relevant content around your offerings to engage with target customers.
  • Most importantly, you gain direct access to your customers and their data. You can leverage advanced analytical techniques to analyse this data. This analysis can give you crucial insights about the type of visitors, their visiting trends, and their buying patterns. These insights help you decode the online customer behaviour. Using that, you can make appropriate changes to the way you sell online. This data-driven online selling strategy promises to help you grow your online sales.

What do top-brands do?

While it is not a surprise that top brands like Apple, Starbucks, Disney, and Under Armour have their own online channels, most mid-size businesses have also launched their own online stores. It helps them create unique customer experience. The successful ones have implemented advanced analytics to reveal insights about their customer buying behaviour.

Online Business Growth
How top brands ensure unique and enjoyable customer experience through their e-stores

However, a common perception among small retailers is that there are a few disadvantages with this option, viz. higher upfront investment, additional analysis and marketing costs, and higher lead-time for online business growth. Perhaps, that is why, almost one-third of small businesses in the US do not have a website of their own.

That brings us to the second option.

Option-2: Sell through existing ‘online marketplaces’

Online marketplaces allow you to sell products without you having to set up your own online store. The marketplaces host many sellers on their website. Marketplaces are popular among buyers because they allow to buy different products across categories without having to leave the site.

The marketplace owns everything on their website. They take care of the marketing too. In return, you pay them product listing fees and a commission on every product sold.

There are many online marketplaces around. A few are global, some are regional, and many of them are national. The popular ones are Amazon, eBay, Flipkart, AliExpress, Rakuten, Etsy, and Target, amongst many others.

Many retailers tend to choose this second option over the first. It seems easier to them. Ostensibly, they see the following ‘advantages’ in this option – no upfront set-up cost, reduced marketing costs, and no waiting for online business growth.

Except, these advantages hide the real disadvantages.

Let us explain by listing out six key disadvantages of ‘selling through marketplaces’ option:

No Upfront cost = Lose control over sales

You don’t incur upfront cost if you don’t invest in your own e-commerce set-up. Instead, you use the marketplace’s infrastructure to sell. You use their e-commerce applications, their algorithms, and their processes. You depend on them for the sales.

Sure, the sales can increase, but you may not know why. [GE executives recall how Mr. Jack Welch would get angry when the sales went high and they couldn’t explain why.]

In a way, you lose control over your sales process and data to the marketplace.

Why is it a big problem?

Because, if the sales go down, you would be clueless about it. And so, would not know how to fix the problem.

Let us see an example of what it means by not having control.

When you are selling on marketplaces, you cannot control what products are being sold beside yours. Worse, what if the other product looks identical to yours but is from your competitor. Worse still, what if the other product being sold has the same brand-name as yours, but in altogether different category.

It DOES happen!

Here is a real example* of a brand selling at one of the top marketplaces:

The organic soft-cotton baby onesie, is selling alongside

woman’s cocktail dress of the ‘same’ brand-name (but from a competitor); selling alongside

motor flush oil of the ‘same brand-name; selling alongside

a music label of the ‘sam-e brand-name

– all of them in the same window.

And you cannot do anything about it.

Reduced analysis and marketing costs = Risking business survival

Generally, marketplaces own the data on your product sales. The minute a retailer signs up to a seller’s account on a marketplace, they give permission to the marketplace to use their sales data however they choose. Most marketplaces don’t share that data back with the sellers.

So, in reality, when you choose to sell through a marketplace, you don’t just pay listing fees and a commission per transaction. You also pay with your sales data, and future sales.

[I would re-read that last sentence to let it sink in.]

Marketplaces can use your sales data to gather your customer intelligence. They can leverage it to offer your customers better deals through their in-house labels.

Sellers have shared stories about how this has impacted their business.

In short, you risk losing your loyal customers to your competitors if you do not leverage your sales data yourself.

No waiting for sales-success = Less opportunity to build your brand

Online marketplaces try to make the seller onboarding process easy to bring more offline sellers on their e-commerce platform. They try to make it smooth and quick. You can start selling in a few days [and you may stop selling in fewer days if you violate their policies].

Not just that, you may also start realising sales quickly on marketplaces. However, the presence of many other products makes it difficult for consumer to register your brand among so many others in their minds.

You are successful quickly = Threat of getting undercut on prices

If you start doing really well, someone will notice and one of the two things may happen – they may offer to buy you out or they may undercut you on price and terms, eventually killing you.

Online Business Growth

Remember Zappos? Zappos was extremely customer-centric, very successful. It was the first company that sold shoes online, at scale. They put a lot of importance on understanding shoes, their culture and customer centricity.

When Amazon wasn’t going anywhere with its own online shoe store, Endless.com, they made their first attempt to acquire Zappos in 2005. Zappos declined. What happened later is not up in public domain. However, Amazon eventually acquired Zappos in July-2009.

Hyper-competitiveness – Forced to sell on price, not differentiation

Conservative estimates put the number of active sellers on Amazon at 2.3 million as of 2019. Chances are, many of them are selling the same products as you do. This makes it difficult for you to compete, if you do not have aggressive [read: less] pricing, that helps the algorithm pick your product ahead of the competitors’.

Diapers.com may be the case in point. They built a $100 million business selling diapers online. They offered free delivery of diapers and other products to parents. But they couldn’t sustain the competitive pressures and ceased to exist in 2017.

Restrictive TnC on how you can communicate with customers = Limits brand building

There may be marketplace limitations on how your business can brand and communicate itself on the marketplace. Moreover, any slightest hint of violating the strict policies will earn you the dreaded ‘seller suspension’ message.

Does that mean marketplaces are bad?

NO! Not at all.

In fact, they have disrupted some aspects of retail for the better.

For example, online shoppers love Amazon. Amazon is allowing them to have wider selection, shop-anytime-anywhere convenience, and enjoyable shopping experience, all at a cheaper price. They have developed a world-class e-commerce platform over the years.

Marketplaces can be good for small retailers, that do not have resources to have their own e-store. Also, marketplaces may be useful for those businesses not aiming to create an enduring brand.

But they may not be for everyone.

You need to figure out whether marketplaces are right for you.

Then, what is the way forward to online business growth?

Companies are waking up to the risk of increasing their dependency on marketplaces. More and more mid- and large-sized companies are embracing “direct-to-consumer” sales model.

Almost all large businesses and brands have their own e-commerce stores. Some of them were tempted initially but then recovered themselves from increasing their dependency on the marketplaces.

Nike – just doing it without a marketplace!

Nike is one such example. Recently, Nike confirmed to CNBC that it will stop selling merchandise directly to Amazon, as part of its push to sell more directly to consumers.

To quote CNBC, “Prior to 2017, Nike had resisted such a deal with Amazon, focusing its attention on its own online marketplace and stores. The fear for many brands has always been that, by partnering with Amazon, a company loses control over how its brand is represented on the site.”

This Veracle makes a point that mid-sized businesses should strive to have their own e-commerce set-up. They should attempt to leverage their sales data using analytics. This could be the right way for their online business growth.

What do you think? Have you seen a mid-sized business struggle with this dilemma?

*name withheld on request.

Cover Photo courtesy: Pradnya Design Consultants

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customer shopping behaviour in e-retail

Know customer shopping behaviour KPIs in e-retail?

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Customer shopping behaviour is an important concept in retail.

This is why.

How do you grow your retail business? You sell what customers want. How do you know what customers want? Well, you observe how they buy.

When customers buy a product or service, they do certain things. First, they search for the product online or in stores. Next, they try to seek more information and compare prices. Then, they check product ratings and seek feedback from friends. Over time, they engage with brands through social media.

All the actions mentioned above describe customer shopping behaviour.

Customer shopping behaviour in e-retail refers to how customers interact with your website. It involves understanding the actions a customer performs between landing on your website and leaving.

So, how exactly do we “observe customers”?

We do this using the various Key Performance Indicators (KPIs). KPIs help us get a sense of real-situation quantitatively.

Previously, we saw that e-retail and physical retail have different KPIs.

Now, we can measure the customer shopping behaviour in e-retail using the following KPIs:

  • Total visits
  • Bounce rate
  • Shopping cart abandonment rate
  • Shopping cart conversion rate
  • Sales conversion rate
  • Average duration on page

The flowchart in the figure below illustrates these actions. The little boxes on the right of each process show the corresponding KPI.

customer shopping behaviour flowchart
Flowchart depicting customer shopping behaviour in e-retail

Customer Shopping Behaviour KPIs in e-retail

Here is a brief explanation of each KPI.

Total Customer Visits

Total visits KPI is the total number of visitor landings on a website.

According to Google, 63% of all shopping begins online. That makes ‘Total Visits’ the vital first KPI for an e-retail sale. E-retailers try to increase this KPI to increase sales.

Bounce Rate

Bounce rate is the proportion of visitors landing on your website and leaving without taking any action.

If the website is engaging for customers, they interact with it. More the interaction, lower is the bounce rate, and better are the prospects of making a sale.

There are various reasons for a high bounce rate. Moreover, a high bounce rate doesn’t tell the entire story. Also, there are ways to improve it.

Shopping cart abandonment rate

This KPI means a customer added products in their e-retail shopping cart but later abandoned the order.

According to Statista, 63% carts were abandoned because shipping cost was too high. While these customers have not yet purchased, they are most easy to convert to a sale.

Shopping cart conversion rate

Similarly, this metric helps e-retailers measure the number of completed orders compared to the total number of shopping carts initiated by potential customers.

It is calculated as a ratio of number of visitors who placed an order, to the total number of visitors who started a shopping cart. It is expressed as a percentage.

Sales conversion rate

Google defines sales conversion rate as the ratio of transactions to sessions, expressed as a percentage.

The recent Adobe Digital Index 2020 report pegs average global conversion rate in retail at 3% of the total visits. The sales conversion rate varies across various retail categories. Conversion of consumer electronics is only half at 1.4%. Gifts, and Health & Pharmacy generate the highest conversion rates at around 4.9%.

Average duration per page

One e-retail KPI to measure is the time spent on each webpage. This is tracked as ‘average duration per page’.

This KPIs is based on similar one in traditional retail. In physical retail store, more the time a customer spends inside a shop, higher are the chances of purchase.

So, what do you think? Do you track these metrics? If yes, which ones do you think are the most important for your business?

Author: Sumit Patil

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E-Retail KPIs

How E-Retail KPIs different from traditional Retail KPIs?

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How are E-Retail KPIs different from traditional Retail KPIs?

E-retail is online website of a retail store. Let’s call their KPIs, e-retail KPIs.

Traditional retail is physical brick-and-mortar retail store. Let’s call their KPIs, traditional retail KPIs.

E-retail and traditional retail by their nature are different. The difference exists from both perspectives: customer perspective and the retailer perspective.

The customer perspective drives their shopping preferences and buying behaviour. Customers who value convenience, price comparison, time-saving, and ability to shop 24×7 prefer to shop online. Whereas, customers who want to touch, feel, and try the product first tend to shop in physical stores. Increasingly, customers are buying in Omnichannel environment. That is, they discover a product in one channel, check it out in another one, and buy through a third (see Figure).

E-Retail KPIs
Omnichannel shopping is becoming the norm

The retailer perspective influences their business operating behaviour. Traditional retailers focus on maximising in-store experience for their customers while optimising store space. While e-retailers focus on online shopping experience and user personalisation.

Therefore, this influences their KPIs, or Key Performance Indicators.

E-Retail KPIs

Many e-retail KPIs are common with traditional KPIs. Some of these are the various financial ratios, customer retention, and conversion rate. However, e-retail KPIs are different from traditional retail KPIs in two major areas:

  1. Customer Acquisition Channels
  2. Customer Shopping Behaviour

Let us see how.

Customer Acquisition Channels

This is the source of customer traffic to your business. Understanding where your customers are coming from is extremely important for business growth.

E-retail channels are primarily organic search, direct search, referral, e-mails, and social media. These channels actually lead customers to e-retail store (i.e. the website). So, e-retailers can easily measure the percent of customers acquired from these different channels. They can then devise their deliberate strategy around these insights.

For example, Facebook generates 13.9% of e-retail website traffic, but actual sale happens in only 4.7% of cases. This is a critical piece of information as it will allow you to allocate resources efficiently and ultimately improve ROI.

Traditional retail channels are mainly word of mouth or advertisements in print, television, radio, and social media. For traditional retailers, it is nearly impossible to accurately calculate the percent of customers acquired from these different channels. This is because, these channels do not ‘redirect’ them to store.

For example, a customer actually visiting a store may have seen an ad or may have been referred by word of mouth. Moreover, they may not even remember this information when they visit the store.

Customer Shopping Behaviour

Customer behaviour varies a lot between in-store purchase and online purchase. Understanding customer behaviour is central to acquiring more customers.

In e-retail, KPIs like Shopping Cart Abandonment (SCA) and Customer Lifetime Value (CLV) are important and helpful. The analysis of shopping cart abandonment rate and the list of discarded items can help improve our understanding of purchase intent of customers. Similarly, understanding a customer’s lifetime value helps in targeting profitable customers more effectively.

Whereas for traditional retail, understanding shopping behaviour for every customer is problematic and costly. We can only perform market basket analysis. This will only analyse the products added together in cart. But there is no definite way to measure discarded items from cart in physical store. Moreover, physical space oriented KPIs like sales per square foot are not relevant to e-retail.  

In a nutshell, it is essential for retailers to rethink the right KPIs while taking the retail business online. More so, considering that omni-channel shopping is becoming the norm.

Author: Sumit Patil

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Cover Photo courtesy: Blue Planet Studio

Growth-oriented

Are you survival-oriented or a growth-oriented executive?

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Are you a survival-oriented or a growth-oriented executive?

Top executives at any organisation are responsible for growth of the business. Their professional careers grow (only) if their business grows.

The responsibility lies squarely on the chief executive officer. They are in charge to set the strategic direction and align everyone to it to achieve their goals.

However, the chief executive officer role is a complex one to shoulder.

Over the years, the top executive failure rate has varied from 30% to as high as 60% leading to CEO turnover. Significant proportion of this attrition is involuntary. According to The Conference Board, a staggering 30.5 percent CEOs were sacked by their boards in 2019. PwC’s Strategy and CEO Success study puts the lost market value due to this forced attrition at an estimated $112 billion annually.

One reason for this high CEO turnover is failure to deliver desired results in line with stated strategic goals.

These CEOs often have best ivy-league-education and rich execution experience. They have consistently delivered high performance in their previous roles. Yet, they fail in meeting the objectives as CEO.

While there are various reasons behind it, there is one that is less obvious.

The reason has come to the fore more prominently in the current China-virus pandemic.

It is CEOs’ inherent attitude to managing business strategy.

CEOs fall in two categories based on their mindset towards business strategy.

  1. Survival-oriented CEOs
  2. Growth-oriented CEOs

Survival-oriented CEOs are cost-focused. They believe in maintaining profitability by driving the expenses down. They do not think of investing in growth stimulating actions.

During times of crisis, survival-oriented CEOs follow survive-today-grow-tomorrow principle. They shift focus to short-term. As part of that, they cut costs and downsize operations. These actions help them show good short-term results. But long-term growth prospects of the organisation fall in jeopardy.

Their focus, tactical rather than strategic, can be hope strategy at best.

Being a survival-oriented CEO is justified in some exceptionally challenging situations. This is especially true if the actions are temporary taken just to tide over the crisis.

But this is where it gets counter-intuitive.

A CEO is successful when they achieve long-term results despite the challenges, whatsoever.

On the contrary, Growth-oriented CEOs are revenue-focused. They stay committed to achieving their long-term goals despite the challenges.

The growth-oriented CEOs usually follow a very deliberate strategy to grow. They employ innovation and data-driven strategy for future growth. Most importantly, they commit resources to achieve the business goals while adapting to any changes the challenges may present.

Even during crisis, the growth-oriented CEOs do not lose sight of the strategic goals. They fervently keep long-term outlook. The short-term results may suffer in their tenure, but they are more likely to show good results in the longer term.

Such CEOs spend their time and efforts towards planning and pursuing a working business strategy.

Mr. Bezos is one such CEO. Data science and innovation are hallmarks of his growth strategy. In his words:

We can’t be in Survival mode. We have to be in Growth mode.

You can find out your attitude as a chief executive. Take the CEO Genome quiz.

So, have you noticed a survival-oriented or a growth-oriented behaviour recently? What actions did they take that made you think so?

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management consultants making decisions

Why do Businesses hire Management Consultants?

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To succeed in business and your professional goals, you need to be able to do two things:

  1. Make the right decisions
  2. To be able to justify the right decisions to stakeholders to take them forward

Making right decisions helps because it saves time, money, and heartburn resulting out of the consequences of making wrong decisions. This is especially true when there is a lot at stake on that decision.

It is equally important to be able to justify the right decisions so that they can be implemented.

A well-thought out decision that cannot be executed because you cannot justify it, is no better than a bad decision itself.

Do all situations require decision-making?

No, not all.

There is no decision to make in a TINA (“There is no alternative”) situation.

However, the decision-making process kicks-in when you have two or more options.

Businesses routinely have to make decisions like Buy-Build, Invest-Hold-Divest, or Strategic Transformation-Operational Excellence.

It becomes hard, complex, and stressful, if the options are similar to one another.

Some examples:

  • Introduce a new product line or stretch the existing product line.
  • Whether your company should invest in improving existing technical capabilities or hiring technical talent from outside.
  • Consulting firms in online retail having to decide whether to advise a client to invest more in technology or in physical stores.

Decision-Making

In essence, decision making process involves the following five aspects – Objectives, Options, Process, Timelines, and Stakeholders:

  • Why do you need to make a decision – the objective(s)?
    • Are your objectives clear? Do your objectives align with those of your colleagues or do they contradict?
  • What different choices do you have – the options?
    • Have you considered all possible available options for evaluation? Are these options very similar to one another?
  • How do you make the decision – the process?
    • Is it opinion-based (aka gut-feel based) or facts-based (aka data-driven)?
  • When do you need to make the decision – the timeline?
    • Is your decision-making quick enough or is it time-consuming?
  • Who do you need to get the buy-in from – the stakeholders?
    • Can you justify your decision to the stakeholders to get their approval for implementation?

Ideally, businesses must make decisions that are organisation-objective-oriented, facts-based, quick and efficient, and unbiased. Such decisions are invariably optimal for the business.

However, in real-life business situations, decision-making can be tricky:

The objectives of people involved in decision-making may not always align. Thus, they may not arrive at a decision at all.

Personal biases may interfere with business objectives, so the end decision may be unfairly influenced.

The time taken to make a decision may be so long that the particular business situation itself might change in the course of taking the decision, rendering the decision irrelevant.

The subjective process – basing decision on people-opinions rather than data – is difficult to justify to get a buy-in.

Thus, in reality, businesses tend to make decisions that are subjective, opinion-based, time-consuming, and biased.

Such decisions tend to be highly sub-optimal. They do not invoke the confidence required to invest time, money, and resources to take them forward for implementation.

A decision made in this manner is full of risk and uncertainty.

Guess what?

Risk and Uncertainty are the two things business executives do not like, and want to minimise.

That is why, businesses and other organisations look to external management consultants for help in making decisions.

It helps them manage the risk and uncertainty involved in the decision-making process and in the aftermath.

How management consultants help in decision-making?

Management consultants are extremely objective-oriented. They are adept at working with specific details keeping the big-picture in mind, and leaving out extraneous details.

They are highly analytical. It is their job to ensure completeness and correctness of analysis. They apply specialised skills, tools, and techniques designed to analyse different options. Moreover, they leverage their cross-domain expertise acquired from executing similar engagements from the past.

They bring external, objective perspective. They trust data and facts more than people opinions. Relying on data removes any personal (emotional) bias.

They are particularly sensitive to the urgency of making a decision. They acknowledge that a timely decision is more important than a perfect one*.

Very importantly, management consultants arrive at a decision in an analytical and logical manner. Moreover, they help in explaining and justifying the decision to stakeholders with the help of facts and data.

A decision made in this manner raises the confidence level to commit organisational resources towards its implementation.

This is why, businesses and other organisations hire consultants in their decision-making.

How do you make decisions in your business or professional world?

*One important side-note here:

In this aspect, American decision making differs from German decision-making. In the American business context, external forces like customer request or market need often guide decision-making. So, they think that it is better to make a suboptimal decision quickly, rather than make a better or optimal decision too slow or too late.

On the contrary, Germans believe that the time allotted to a decision should be determined by the nature of the decision. They believe that it is not dictated by external pressures such as customer request or market need or competitor actions. [Source: commentator John Otto Magee on differences in American and German decision-making process]

Author: Sumit Patil

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Cover photo credit: Kan Chana

How Deliberate Strategy can be your working strategy

How Deliberate Strategy Can Be the Working Strategy!

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The previous two Veracles argued about the two strategies – Nope and Hope – of the three types mentioned in “Does your business have a working strategy”. In this Veracle, we talk about the third type, that actually focuses on developing a working strategy. Here we discuss “How deliberate strategy can be the working strategy for your business.”

Deliberate Strategy is employed in an organization when business-executives:

  • are growth-oriented and are looking for new areas of growth, and
  • have risk propensity to commit resources to new approach

What is Deliberate Strategy?

In this approach, businesses invest resources to develop a bespoke strategy tailored specifically to their business context.

In other words, businesses take deliberate steps within the context of their business situation to increase the likelihood of achieving long-term goals.

In short, the business outcome is not left to chance. Every aspect of operating and growing the business is deliberately and meticulously planned.

It is like a journey one undertakes to reach a destination.

Now, a journey constitutes a starting point, a destination to reach, the route that takes from the starting point to the destination, and the resources required to undertake and complete the journey under any eventuality.

Likewise, developing deliberate strategy requires the following actions to be taken:

  1. Understand the current business context.
  2. Define business goals to be achieved.
  3. Develop plan to achieve the business goals from the current business situation.
  4. Commit resources to achieve the business goals while adapting to any changes.

Let us look at the four steps in more detail:

1. Understand the current business context.

The business-executives developing a deliberate strategy needs to build a full grasp of the current business context with respect to the business environment.

This involves obtaining customer intelligence, acknowledging operational capabilities, understanding product portfolio, acquiring competitor insights, and baselining financial metrics. This step will help you get a sense of your core ideology, financial and operational resources, organization strengths, weaknesses, and problem areas.

Why is understanding the business context important?

The business context provides a frame of reference to define appropriate business goals. Moreover, the business context serves as the baseline to measure and compare the progress against.

2. Define business goals to be achieved.

Organizational purpose and vision are the guiding-light for business-executives defining business goals. Therefore, it is necessary that business goals are clearly defined so that one can communicate them unambiguously to all layers of the organization.

A well-defined business goal adheres to the QTR [read: Quarter] principle:

  • Quantitative – it is measurable
  • Timebound – it has a definite time frame within which to achieve it
  • Reasonable – it is realistic, even if difficult, to achieve in the given time frame

Here are some examples of some meaningful business goals (set by real-life firms):

  • Grow annual revenues to $865 million at a CAGR of 20% within three years
  • Conquer 5% more market share in our target market by the end of the year
  • Reduce operational costs to realize 15% profitability YoY within two years

A QTR-based business goal establishes the destination for a business to reach within a stipulated time.

3. Identify the route to reach the business objectives.

Once the business goal is defined, the CEO and the top management need to put together a route to that end. A customer-centric plan acts as the route.

This step is crucial to developing a deliberate strategy. In fact, this is where a Deliberate strategy differs from a Hope strategy (or any other best practices strategy).

A Hope strategy is forward-designed and forward-implemented.

Whereas, a Deliberate strategy is backward-designed but forward-implemented.

Let me explain.

A Hope strategy involves employing strategies and best practices that have worked for other businesses. Naturally, these strategies are picked up by an organization, customized for their use, and implemented to reach the business goals. Thus, it follows a forward path.

On the contrary, a Deliberate strategy starts from the end-point, i.e. the business goals. It involves figuring out what is required to reach that state, and then coming backwards by designing a slew of bespoke actions to reach that state. This is how it is backward-designed.

This is the key difference between the two.

4. Commit resources to achieve the business goals while adapting to any changes.

Once the business goal is defined and the business strategy is rolled-out, the organization commits to the implementation journey along the strategic route.

A business strategy for an organization exists within the context of its current business situation. The business situation is part of the larger business environment, which includes the market (which buys) and the industry (which sells) among other stakeholders, like suppliers, regulators, government and technology.

And the business environment is constantly changing.

Buyers (or customers), sellers (or competitors) and suppliers keep entering and leaving the business environment, like new passengers en route your journey.

Like you, your competitors are also persistently working on their own strategies to grow and capture market share.

Governments keep looking for newer ways to tax businesses, and regulators are bringing new regulations to safeguard fair competition.

Among all this, technology disrupts the way of doing business.

To reiterate the point, the business environment is continually changing.

Therefore, it is imperative to keep looking for any changes that risk execution of your bespoke strategy. The business needs to keep collecting data points and reviewing its strategy at regular intervals to ensure that the journey is on the right track.

These are the actions that make for a working strategy.

How Veravizion implements Deliberate Strategy?

At Veravizion, we have developed our own framework that we call contextual problem solving with deliberate strategy. This framework facilitates development of deliberate strategy using a Context-Drivers-Solution-Impact cycle. This framework applies to any business across industries.

There are many companies that have employed Deliberate Strategies in the past to grow predictably. Some examples (from across the industries) are 3M, Amazon, Apple, Boeing, Google, Nike, Nordstrom, Procter & Gamble, among many others.

While reading the names of these well-known companies as examples of businesses succeeding with deliberate strategy, it is easy to think that deliberate strategy works only for the big ones.

This is a classic logical fallacy.

In reality, most of these companies were virtually a nobody before they implemented deliberate strategies.

Deliberate Strategy

3M were miners. Their earlier venture, started in 1902, to mine corundum failed. 3M tried their hands at other things like making sandpaper. They failed less, yet did not succeed like success.

Later, they chose to embrace “innovation and collaboration” as their Deliberate strategy.Today, 3M is known as world’s most innovative company.

More Examples…

The following example has been taken from “Built to Last”, the bestselling book by Jim Collin and Jerry Porras.

Boeing, until 1952, had been building aircrafts primarily for the military, and had virtually no presence in the commercial aircraft market. Boeing relied heavily on orders from their only major client – the U.S. Air Force – to survive. Nobody knew Boeing. Back then, their competitors Douglas Aircraft dominated and ruled the commercial market with their propeller-driven planes. Boeing wanted to enter the commercial market with a big, fast, advanced, and better-performing aircraft.

If Boeing had followed Nope strategy, we would never have known of them.

If Boeing had followed Hope strategy, they would have probably leveraged the competitor strategies of the time, and would have built a better propeller plane at best.

Instead, Boeing embraced a Deliberate Strategy.

Taking inspiration from their purpose and vision – to be on the leading edge of aeronautics pioneering aviation – Boeing announced their goal to make a jet plane for the commercial market. No other aircraft company had proved that there was a commercial market for jet aircraft. Moreover, such a project was going to cost them about three times their average annual after-tax profit – roughly a quarter of their entire corporate net worth – to develop a prototype for the jet. But Boeing committed to it. The strategy resulted in such fine planes as 707, 727, 737, 747, and 777. Douglas aircraft could never quite catch-up to Boeing. Douglas struggled to survive by merging with McDonnell aircraft in 1967. Eventually, Boeing acquired McDonnell Douglas in 1997.

Apple is a more recent example of a business that became successful by devising and implementing Deliberate Strategy. Apple believes in “breaking the status-quo”.

The strategy helped them differentiate in the crowded smartphone market and created an enviable position for them. As a result, Apple was the most valuable brands in the world for eight straight years.

To sum it up with key insights…

Deliberate Strategy helps an organization achieve their business objectives in a decisive and predictable manner.

The predictability comes only by acting deliberately.

The whole process is highly intentional, methodical, and purposeful.

And Deliberate Strategy is universal. The above framework would still work if you replace organization by an individual or an institution.

There are many examples of successful implementation of deliberate strategy in all spheres of life.

Deliberate strategy is the difference between many successes and failures.

An organization’s strategy is its source of sustainable competitive advantage. Should one squander it away by following someone else’s strategy? What do you think?

You can also subscribe to our blog – Veracles – to receive interesting articles and insights in email. We would love to read your perspectives and comments on that.

Do follow Veravizion on LinkedInTwitter or Facebook to receive easy updates.

Cover photo credit: Brad Wetzler

Other photos: 3M.com, Boeing.com, Apple.com

Most Popular Perspectives from 2015

Most Popular Perspectives from 2015

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It’s New Year again – Happy New Year 2016!

Thanks for your overwhelming response to our insights shared with you over the last year.  We are excited to announce the most popular perspectives from 2015 published at Veravizion/Perspectives. These are our biggest stories of 2015 in case you missed them.

One of the wonderful aspects about sharing our insights is appreciating the incredible business acumen, diversity, and depth of thinking of our readers. Our articles, which we call our perspectives, are written after carrying out thorough research on every topic. Our belief is that these articles will push you into thinking about how the (business) world is transforming before our eyes, and how some long-standing business principles may not necessarily hold true today.

As the year is over, take a quick glance at how the world is getting used to being data-driven. Enjoy these stories and let us know about your top content in the comments. In the next one, we will see how the analytics world is likely to unfold in 2016.

Most Popular Perspectives from 2015

Story# 13 Lessons Every Executive Must Learn From Wimbledon Centre Court For Business Success

Most Popular perspectives from 2015 - Lessons from Wimbledon

Sports has always had many lessons to share for business success; and everyone and their grandpa knows this. Nevertheless, its relevance has never been as great as it is in today’s analytics age.

This article illustrates this phenomenon by drawing lessons for business success from 2015 Wimbledon final between Djokovich and Federer.

 

 

Story# 2Data Science: The Next Frontier For Business Competitiveness

Most Popular Perspectives from 2015

This article on Data Science by Veravizion was originally published as the cover story in the July-2015 edition of Computer Society of India – Communications magazine. You can also read this article at its source at http://www.csi-india.org (Link path: http://www.csi-india.org->PUBLICATIONS->CSI Communications->CSIC 2015->CSIC 2015(July)).“

 

 

Story# 3The Digital Transformation Imperative: Why Businesses Must Have Online Presence – An INFOGRAPHIC

Most Popular perspectives from 2015

INFOGRAPHIC: click to enlarge

The business world is fast going online, so what’s the big deal? The big deal is in grasping the fact that it may replace your business if you do not become a part of the change, soon.

The infographic in this article gives a glimpse of how fast the consumer purchasing trends are changing from physical to digital, and what you can do about it.

 

 

Story# 4How Do You Achieve Strategic Transformation For Enduring Growth Of Your Company? – Part-I

Most Popular perspectives from 2015

Historically, leaders of cities, communities, and organizations have been embracing strategic initiatives to ensure long term sustenance and growth of their respective ecosystems. Many a times, these initiatives were ‘intentionally’ directed at bringing about long term transformation of their systems. But do such initiatives specifically aimed at strategic transformation always result in the lasting growth of the entity? We discuss it in this article.

 

Story# 5What Does Digital Maturity Really Mean?

Most Popular perspectives from 2015

This is the last article in the Digital Business series in which we illustrate how small and medium businesses can transform themselves from mere-physical to also-digital, and be more competitive. We do this by taking a visual example of a fictitious light business of our lovable businessman Bobstick.

 

 

 

We hope you enjoy these stories!

 

 

Strategic transformation photo credit: businessinsider

You can also subscribe to our blog – Our Perspectives – to receive interesting articles and insights in email. We would love to read your perspectives and comments on that.

Do follow Veravizion on LinkedIn, Twitter, Facebook, or Google+ to receive easy updates.

 

What Does Digital Maturity Really Mean

What Does Digital Maturity Really Mean?

Veravizion 3 comments
When I went to medical school, the term 'digital' applied only to rectal exams.” - Dr. Eric Topol

Well, things have certainly changed since! The previous article – an infographic – discussed about the urgent need for businesses to achieve digital maturity in order to survive and thrive. But exactly what does digital maturity really mean for a small and medium business organization that thus far has focused primarily on serving local customers?

You might be thinking whether this question – what does digital maturity really mean – is really relevant in today’s digital age. Our implicit hypothesis is that most businesses, especially those in the developed countries, are already digital by now, and so they must know what digital maturity really means.

Well, evidence shows that the above assumption is far from true.

Consider these stats from the UK Business Digital Index 2015 report which states that almost a quarter of UK businesses still lack basic digital skills:

  • Almost 35% of around 5.2 million organisations in the UK have a very low level of digital understanding and capability – they do not make use of the internet for their business and do not have any web or social media presence
  • Barely 53% of the businesses have their own website
  • Only 46% organizations have a medium level of digital maturity – i.e. they use basic e-commerce tools, perform some banking transactions online, and have basic social media presence.

Therefore our question is extremely relevant even today!

 

So what does digital maturity really mean?

To understand this, let us quickly recapitulate why businesses want (or need) to go online in the first place.

Businesses go online for a variety of reasons (read: benefits) such as expanding markets to grow business, deepening engagement with target customers, broadening product and service offerings, leveraging multi-channel capabilities, and in general staying competitive amidst the changing global business landscape.

All these reasons can be summed-up in one simple line: Business organizations, like yours, are going digital because your customers are increasingly seeing, hearing, feeling, searching, interacting, sharing, and buying stuff online.

The above sentence encapsulates the entire online activity happening today in the business world. [tweet this]

In short, your market has gone online and it would serve you better if you do, too.

So what takes you there?

Here are the 5-stages on your journey to achieving digital maturity for your business:

  1. Digital Apathy
  2. Digital Literacy
  3. Digital Transactions
  4. Digital Engagement
  5. Digital Maturity

 

Let us look at each one a bit more closely with an illustrative pictorial example for each:

 

  1. Digital Apathy:

This is the initial (or default) stage of any organization typically born before internet. This company mostly sells their products mainly to customers in its neighbourhood through its physical stores. There is a passive resistance (or indifference at best) in accepting digital strategy due to inertia mixed with scepticism towards going digital. There is absolutely no online or any beyond-the-shop interaction with the customers. The business owner is unmindful about going out of business in this increasingly digital world, and apparently suffers from ‘it won’t happen to me’ syndrome.

 

What Does Digital Maturity Really Mean?

 

  1. Digital Literacy:

There is (almost) a reluctant acceptance to the changing business scenario. The business has a (mostly passive) website that displays the products and services on offer but hardly anything beyond that. On the positive side, customers now have a gateway to your offerings and can find information about your products and services. There is a new one-way channel to update customers about new product and service offerings – a good beginning to say the least.

What Does Digital Maturity Really Mean?

 

  1. Digital Transactions:

The business finally wakes up to enormous possibilities the e-commerce world offers and introduces online transactions to sell its products online. There is a conscious effort to implement basic customer analytics to understand buying customer profile to grow revenues. The business also tends to apply e-commerce intelligence to provide leads reports to sales teams to grow further. There is an emphasis on generating and distributing user-oriented content in order to draw target customers to purchase online. Businesses may introduce their own inventory management and service fulfilment back offices to excel in their customer service to build customer loyalty. The business starts learning about rule based prioritization as they explore the benefits of implementing analytics for revenue and profitability growth.

What Does Digital Maturity Really Mean?

 

  1. Digital Engagement:

When a business establishes itself on the various social media platforms, there is a step change in the way it perceives customer interaction, customer engagement, and marketing. Old channels and methods of one-way communication are renounced in favour of digital channels which enable listening to customers’ feedback first-hand and responding in their preferred channel to facilitate effective customer engagement. One important aspect of increasing engagement is to create product touch-points across all channels vis. physical, desktop, mobile, kiosks, catalogue, direct mail, and social media. The order in these cross-channel chaos is set by the use of marketing analytics which helps to mine hidden consumer insights, understand customer purchasing journeys, optimize advertising spend, and engage with prospective customers at early st(age) to nurture them into loyal followers.

 

What Does Digital Maturity Really Mean?

 

 

  1. Digital Maturity

The focus at this stage is on innovating the existing business model and on integrating the overall strategy. Personalization is the key here! Customers have 24x7x365 access to the products and services across different digital channels but still have an Omni-channel experience. For example, a customer becomes aware of your product in one channel, say Pinterest, actively searches for it online on his office desktop, physically touches and considers buying it in-store, ends-up purchasing the stuff on their mobile, and shares his new purchase with Facebook friends. Matured businesses (like P&G and Amazon) have institutionalized integrated use of analytics services to study individual consumer behaviour through comprehensive understanding of customer interests, affinities, and actions. They are drawing intelligence trends to predict customers’ future wants and needs before customers themselves realize it. Considering the enormity of data getting generated every day, matured businesses are implementing advanced algorithms to auto-analyse data at its source for more real-time application.

 

What Does Digital Maturity Really Mean?

 

 

Achieving digital maturity is not the end; rather a beginning of the implementation of a truly personalized digital strategy for each consumer. Businesses embracing digital strategy will eventually lead the way.

We are in the throes of a transition where every publication has to think of their digital strategy” - Bill Gates

 

 

Cover photo credit: yourgenome.org

 

If you liked this article then you may also like to read The Digital Transformation Imperative: Why Businesses Must Have Online Presence – AN INFOGRAPHIC.

You can also subscribe to our blog – Our Perspectives – to receive interesting articles and tips in email. We would love to read your perspectives and comments on that.

Do follow Veravizion on LinkedIn, Twitter, Facebook, or Google+ to receive easy updates.

 

The Digital Transformation Imperative

The Digital Transformation Imperative: Why Businesses Must Have Online Presence – An INFOGRAPHIC

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“81% of US consumers turn to search engines to find information on products, services, and businesses before making a purchase,” according to GE Capital Retail Bank’s second annual Major Purchase Shopper Study. The digital transformation imperative study performed by Veravizion indicates that this observation is not much different in other parts of the world.

Less than 20 years back, Google (or an online search engine in its current form) did not exist. Most commercial transactions took place at a brick-and-mortar store. People booked long distance train tickets standing in a long queue at the ticket counter, bought airline tickets from travel agents, rented DVDs in video stores, read about new fashion in a print magazine, and purchased music CDs in record stores.

Today, 70% of all the travel bookings and hotel reservations take place online.

Music CD shops selling LPs, Vinyl records, and CDs have ceased to exist.

DVD stores have virtually disappeared from the streets.

Paper magazines and print advertisements have given way to their online cousins.

 

‘In the present day, if your customer cannot find your business on Google, you probably don’t exist for them.’ In a relatively short span of time, this has come to be one of glaring truths that business leaders must accept. Today’s consumer seems to have too many things to do, and appears to have become impatient because of limited time at hand. She wants to get everything done at the snap of a finger.

The digital world allows them this convenience of having (almost) everything in just one-click or touch. In fact, customers are adapting to this technology-driven shopping so well that they are touching every screen – even ‘dumb terminals’ – looking for an interactive touch-screen experience. Recent research on e-commerce points to a growing trend of digitalization of businesses and even non-profit social organizations.

Many industries like flowers and footwear, where customers’ need to touch and feel the product was considered important, now have above average online penetration. The grocery and general merchandise retailer Tesco is a case in point. It was one of the chains that saw an increasing role of technology in day-to-day household shopping and launched their online operations; it is now world’s second-largest retailer by revenues. A few industries like online grocery and pet foods (remember Webvan.com and Pets.com?) had a false start because of issues with their online business models, but are now being resurrected by the likes of Amazon and FreshDirect. Slowly but surely, every industry is joining the digital bandwagon.

Consumers on their part are enjoying the omni-channel shopping experience. Omni-channel purchase means a customer buying across multiple channels – online through mobile or desktop, call centre, catalogue, direct mail, kiosks, physical stores, and social media – and having a seamless shopping experience. So a customer may discover a great product offer while browsing Facebook during breakfast, search more information about it online via desktop after reaching office, ring a few call-centres to compare prices during lunch, check the product out at a nearby physical shop on the way back home, and finally purchase it online from their home using a smartphone. Once the product arrives, they may update their friends on social media posting pictures of their new purchase. The entire shopping experience becomes conveniently embedded in their routine and is fun.

Thus, internet is playing a key role in how businesses are run today. Nevertheless, it still has some way to go. An e-commerce foundation report shows that a disproportionately high percentage of businesses, even in developed countries with high internet penetration, are yet to go digital. For example, almost one in four businesses in UK has none to low digital maturity, while the ratio is reversed in some of the developing countries in Asia-Pacific, where the rate of digital transformation is much higher.

The attached infographic presents a quick glimpse of how business landscape is rapidly changing. It implores, with substantial evidence, why business (and social) organizations must have an online presence to survive and thrive in this third millennium.

What has been your experience of going digital? We would love to hear.

The Digital Transformation Imperative

The digital transformation imperative

Click above infographic for enlarged view in new window

 

 

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References:

 

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