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Personalization Advantage In On-Demand Markets: Direct Sales Or Retail?

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The economy is going on-demand, following consumers’ desire for immediate delivery of whatever they want. The sales landscape is erupting with innovation like Kilauea volcano, wiping out businesses that fail to adapt. The way out of the swath of destruction is personalization based on consistent content marketing and sales messaging. Is your company in the path of creative destruction or leading the way with technology to rapidly personalize messaging, test results, and share best practices across the organization?

Consumers have embraced personalization of sales experience, as well as product and services delivery to the home. They are also seeking more home-based work opportunities. More than 44 percent of Americans are adding side-work, or “gigs,” to enhance their income. More consumers welcome local expertise when considering a purchase and more people will be seeking part-time work. On-demand markets create both growth and distributor-development opportunities for direct selling brands. The flexible and in-home business model is becoming the norm.

Retailers, including Amazon, Facebook, and Walmart, are moving rapidly to bring the customer journey into the home, too. Amazon has begun deploying the Alexa voice infrastructure to facilitate in-home ordering, digital locks to provide secure home delivery, and, even, offer medical services. Facebook partnered last week with on-demand home services companies Porch, HomeAdvisor, and Handy.com to offer in-home services tied to products sold and delivered to the consumer. WalMart this week introduced Jetblack, a text messaging order service that will bring products to the customer’s home in hours in hours.

Direct selling and retail brands both face the onslaught of e-commerce, which is eroding the advantage of physical retail as pre-sales customer interaction shifts to digital devices. Trade and business publications frequently announce the end of retail, a claim that should be seen in context: e-commerce accounts for only 10 percent of U.S. retail revenue in 2018, according to eMarketer.com.

For example, Amazon reportedly “owns” 90 percent or more of online sales in home improvement tools, skin care, batteries, golf, and kitchen and dining accessories as of early 2018. However, as a share of the total market, Amazon converts only 10 percent of sales in these categories.

There is plenty of maneuvering room to counter e-commerce with personalized sales and service in the physical world. Resisting the change, though, will lead many companies into dead-ends. Sales experience is fragmenting due to the rise of technology, particularly mobile phones, and the consumer’s developing sophistication and dependence on social influence when buying.

Direct sellers and retailers alike will eventually follow food delivery, home services, and e-commerce into intimate relationships with the customer that start and end in the home. Direct sales companies cannot allow retail to get ahead in the race for individual customer experience. One-to-one selling remains a necessary part of the sales process.

The face-to-face advantage

Face-to-face selling is still alive and well, but it cannot ignore the digital personalization challenge. No longer will a single sales message work for every customer. Direct sellers, who enjoy the advantage of building on personal relationships, will need to craft their messages to deliver better customer experience than retail. Since retailers must first attract customers to their stories, direct-selling strategies are advantaged in the social marketplace. Distributors can develop friendships online to grow their business and forge strong local communities on Facebook, Pinterest, Instagram, and other social networks with the same level of investment of time as a major brand.

Source: eMaketer.com

The online threat, nevertheless, is existential for consumer products and services companies that fail to recognize change and invest to build personalized and one-to-one customer experience. eCommerce will reach 15.1 percent market share by 2021, claiming an additional $365.68 billion in revenue, mostly from retail stories.

Recognizing that they could be consumed by the digital lava rolling through Main Street in cities and town around the world, retailers are not standing still or playing golf in the volcanic smog. Retailers are leading the charge into artificial intelligence to win a personalization advantage, spending the largest amount of any industry, $3.4 billion in 2018 on cognitive systems to augment their online and in-store marketing, according to market research firm IDC.

The Boston Consulting Group reports that retailer expectations for personalization are very high. In a survey conducted during 2017 by the firm, two-thirds of respondents said they will see a six percent increase in revenue from personalization spending. Half of the respondent retailers with more than 25 employees said they were putting at least $5 million into the machine learning technology last year.

Both direct selling and retail will depend more on personalization to convert sales as mobile-native generations age and become the largest group of workers.

“Over 70 percent of retailers are trying to personalize the store experience. That’s never been higher,” Forrester ebusiness and channel strategy analyst Brendan Witcher told AdWeek. “The reason is because so many customers respond to it. We see nearly three out of four consumers responding to personalized offers, recommendations or experiences.”

Success starts before the sale

Direct sales’ challenge is to stay in front of digital marketing efforts by retailers, which can be accomplished by building best practices within an organization and disseminating them using automation. Pre-sales communication, starting online or in-person, must become a focus of investment to ensure messaging is consistent and relevant. Using machine learning, an enterprise content platform can analyze messages and propagate successful content and sales steps to sales representatives using mobile devices.

Brand discovery also increasingly takes place online. Direct selling marketers must develop campaigns that drive and qualify leads. Content platforms then hand leads off to representatives using automated sales process coaching to deliver all the context to present a personalized experience to the prospect. From the first to the last, every touch must reinforce the brand message to successfully close a sale and establish a long-term customer relationship.

Consumers today do more research, check facts and customer reviews, as well as depend on conversational confirmation of their buying decisions than any previous generation. Often, engaging with a brand, retailer, or distributor is the last step in the process. Marketers can respond with better pre-sales content that develops trust with consistent messaging through the entire customer journey.

Machine learning-coached sales reps can step into the digital engagement at critical moments to add the human element that establishes trust, something retailers cannot do during their sales process today. Feedback captured by representatives sitting with the customer gives the smart platform hints about how to personalize the experience, refining the suggested content to share and messages the distributor can use to move the sale forward.

“The key to closing deals is presales’ ability to shape conversations with the client to position the company’s solution as the ideal ones,” wrote McKinsey’s Homayou Hatami, Candace Lun Plotkin, and Saurabh Mishra in the Harvard Business Review.  “This approach is not about developing a ‘smoke and mirrors’ pitch, but rather investing the time to have a deep understanding of the client’s needs (met and unmet) and then highlighting those elements of the solution that can address them.”

The foundation for a consistent brand message begins with mapping every touchpoint in the sales journey, from pre-sales and discovery through content marketing and sales process steps. The “attribution modeling” process allows management to identify what it expects will happen at each step and, using a machine learning-content platform, rapidly test and revise messages. Instead of launching content one or twice a year, then waiting to see its impact on sales in quarterly or annual results, it can be adjusted as fast as software updates are today.

The speed of software is the new pace of sales in the era of personalization. Companies are beginning to adjust to this accelerated communications cadence, and the tools for in-home personalization are catching up to web-only interactions. The combination of digital and personal engagement is a breakthrough moment in sales.

Personalization is the path out danger for retailers and direct sellers that don’t want to wait for the lava of change to erupt under them. For now, the one-to-one selling community has a sustained advantage over retailers who must attract the customer to their stores. If retailers’ investment in machine learning and personalization goes unchecked, direct selling could fall behind despite their strong foothold in consumers’ homes.

Can you train contractors without becoming a legal employer?

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The gig economy is a powerful force in commodity service markets, such as driving or “ride sharing.” More sophisticated services that require training, which courts have repeatedly ruled put companies in the legal position of employer, creating liability and increasing costs, especially legal costs, will reshape the development of business tools. The evolution of software – it is “eating the world” – points to the solution.

Federal District Court Judge Michael Baylson ruled in mid-April that UberBLACK drivers are not employees of the company because Uber doesn’t exert enough control over their schedules and they do not have to report to Uber employees. The Uber app controls the entire engagement between UberBLACK drivers, who can work when they want.

The ruling treats the Uber app as a tool used by the driver to fulfill the contracted service rather than a system of control. While the case may go as far as the U.S. Supreme Court and be reinterpreted many times, this distinction is critically important to the future of gig work arrangements.

The Society for Human Resource Management summarizes the scope of control issue: “If the employer will rigidly prescribe the manner in which the work is performed, that weighs toward employee status. Hiring an employee would be the safer course of action. If the organization is concerned only about the final product and does not need to dictate how the worker gets from point A to point Z, an independent contractor may be the preferred approach.”

We need new tools to enable professional-level services, not just simple commodity services, provided by contractors.

Brands have extensively documented, constantly evolving business processes that contractors must be able to follow reliably to deliver a customer experience consistent with their value proposition. With driving from place to place, the problem is simple. Uber and Lyft coordinate three things: Drivers; Cars, and; Passengers. Getting a passenger together with a car and driver to reach a destination is a relatively simple process, though hugely valuable, as evidenced by the companies’ more than $40-billion gross revenues. Likewise, dog-walking, package delivery, and other simple logistical markets.

More complex business processes, such as a sales engagement, retail interactions, professional services such as medical or therapeutic services, however, require a form of knowledge that has not previously been embodied in a simple app, a tool rather than a scope of control. These new software tools require sophisticated inputs, the ability to ask questions or provide information based on the customer’s circumstances and personality, and in many settings, a great deal of unstructured data needed to deliver the experience the way the brand requires.

These interactions cannot demand training before the contractor begins work. Based on repeated rulings, that training imposes a system of control.

Instead, a competent contractor needs to be prepared with general skills that can be applied to using a software tool that guides them through the brand experience in real-time. This demands software developers deeply understand a brand’s business processes to:

  • Guide the contractor through the correct information to share. For instance, if a medical worker on contract talks with a patient, they may need to be able to explain a HIPAA-related document and share it in the form the hospital company requires.
  • Understand feedback from customers inputted by the contractor to suggest media assets, next steps in the brand’s sales process, and other facets of the customer experience to the contractor as they exercise their skilled work.
  • Validate that processes are followed, as well as collect relevant data needed to refine the process in response to customers. The rapid evolution of brand experience demands that this measurement take place, or the company will miss key feedback it needs. The contractor can be coached to capture this data but may not be trained to do so in advance.

This merely summarizes a complex evolutionary challenge for on-demand services. Gig tools will certainly evolve from commodity services to refined high-touch services, such as prepared food delivery or online human services like legal services or therapy, which can be significantly improved by a greater focus on process. The transformation is just starting. I

Scope of control is a changing concept. The more easily a trained human can respond to process-led software, the less likely that person is to be treated by an employee. By moving the process to the edge of the network, into the hands of a skilled human who is able to modulate a branded experience, brands, retailers, and professional services firms can reduce centralized costs and move more compensation to the human provider.

Process-based apps are the path to improved contractor experience and brand experience. It also has the benefit of being less likely to result in labor litigation. We need better tools to complete the foundation of a prosperous gig world where flexibility is the primary driver of when and how people work.