How to understand trending commercial innovations
Whether it’s the metaverse, shopping-friendly social media, or cryptocurrencies, brands are looking to determine which trend best fits both their technology capabilities and customer value proposition.
During the rush, it’s easy to misjudge how a given trend may or may not relate to your audience. For example, earlier this year Hostess unexpectedly announced the launch of “$TWINKcoin”, a crypto-inspired coin-shaped version of their classic Twinkie snack cake.
Hostess not only received backlash from the LGBTQ+ community for its casual use of an offensive term, but it also greatly embarrassed its customers. The connection between the bakery conglomerate and the world of cryptocurrencies was not made clear in their announcement.
However, Mistress’s desire to be included in the often headline-grabbing conversation about cryptocurrencies was understandable. Several consumer brands such as Nike, Sotheby’s and Coca Cola have made the same leap in 2021 and have been met with success and positive headlines for weeks and months. But months after its launch, no one but Hostess understands the brand’s foray into crypto, but we remember it was a flop.
How to Avoid the Innovation Mistake
Interest in commerce trends like the ones mentioned above is still growing. In fact, metaverse-related companies raised over $10 billion last year, nearly double the amount raised in 2020. And this trend is not slowing down – according to forecasts, the metaverse market size will reach almost $ 700 billion by 2030.
However, experience has shown that these trends fail when there is no clear connection to your brand and business model. In the hostess example, putting aside the aggressiveness of the campaign, the value of the company’s product, the customers and this new incursion were still mismatched.
On the other hand, Sephora has been successful by incorporating state-of-the-art commercial innovations as part of its omnichannel experience. The cosmetics store implemented technology that allowed its customers to shop, communicate with live representatives and access exclusive discounts through a mobile app.
In stores and on the app, Sephora customers can use augmented reality (AR) virtual fitting with Color IQ technology to find the right foundation shade for their skin tone. Sephora uses data from both face-to-face and virtual interactions to provide customers with personalized messages, recommendations and experiences. This is the right implementation of technology trends – Sephora prioritized the behavior of its customers and strived for experiences that complemented its business model.
To achieve similar results, organizations must analyze whether a new innovation is consistent with brand identity and customer behavior. In addition, it is important to create a corporate culture that emphasizes continuous experimentation. For example, Sephora launched an innovation lab in 2015 to test the in-store experience before rolling it out widely, thereby reducing operating costs and getting real feedback.
Prioritize brand authenticity and customer relevance
Trendy innovations in commerce often seem impressive, especially from a distance. But it is very important to establish a clear business case before allocating resources.
Start by identifying how the new innovation will generate revenue and reinforce your brand’s values and image. It is equally important to make sure that your customers are interested – or can be convinced of this – in the experience offered by innovations. Customer surveys, consumer profiles, and other feedback mechanisms can help you gauge audience sentiment and needs.
On their way to becoming the most digital generation by 2024, Gen Z is attracted to compelling, relevant content as they grew up in video-centric social media and in the streaming age where they have a plethora of content options at their fingertips.
A good example of this was the Roblox VR Concert 2020 with rapper Lil Nas X. The platform is built around the principles of community, social commerce and gaming and they have not wisely abandoned those core elements that contribute to its continued success. Roblox stuck to what they do best and delivered an experience that their audience cared about.
Ultimately, integrating modern commercial innovation requires both self-awareness and experimentation. Self-awareness of whether these innovations fit your organization’s brand and values is vital to a successful deployment. The ability to experiment to determine if your customers are interested in these innovations is key.
Create a culture of experimentation and then develop a flexible technology stack to match
A culture of experimentation is fundamental to success in commercial innovation. Let’s say you’re interested in introducing an NFT component to an existing offering. Instead of rushing to include NFT capabilities piecemeal in a proposal, experiment and repeat a few rounds of A/B testing. Over time, this “try and try again” approach fosters an organizational culture of experimentation that increases the likelihood that innovations will resonate with both new and existing customers.
But even with the right culture, a rigid technology stack can quickly stifle any innovation. Conversely, a flexible technology stack allows your employees to prioritize innovation, making it easy to launch, learn, iterate, and possibly abandon commercial innovations with minimal risk or waste. In addition, agile technology stacks typically include applications that do not require significant IT knowledge, allowing non-technical team members to fully participate in an organizational culture based on experimentation.
Despite brands’ heightened interest in commercial innovation, 45% of non-technical executives allocate only a minimal portion of their annual budget to improving or expanding their company’s commercial capabilities. This is especially interesting given that the majority (59%) of decision makers say they are more likely to shop at companies that offer a modern commercial experience.
Bridging this gap starts with evaluating current and planned commercial innovations and how they align with current technology capabilities, brand vision, and changing customer needs. By fostering an agile culture and investing in technologies that enable this agility, an organization can innovate without pause and take advantage of the right commercial trends.
Jen Jones is the director of marketing for commercetools..
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