Agenda Overview for Digital Commerce, 2015

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1 G Agenda Overview for Digital Commerce, 2015 Published: 18 December 2014 Analyst(s): Jennifer Polk Marketing is making a greater impact on, and taking more responsibility for, digital commerce. Gartner's 2015 digital commerce research will help marketing leaders develop and implement successful digital commerce marketing strategies and tactics.

2 Analysis Figure 1. Digital Commerce Agenda Overview Source: Gartner (December 2014) Marketing's impact on digital commerce has doubled in the past two years and will keep growing during the next two years. Fifty-four percent of marketing organizations have ultimate responsibility for digital commerce, and 25% of chief marketing officers (CMOs) have total responsibility. As a marketing leader, it's likely that you already play a role digital commerce in your organization, perhaps developing campaigns to attract prospective buyers to the commerce site or store or to promote products and services. Page 2 of 9 Gartner, Inc. G

3 But digital technology disrupts the status quo by giving customers easy access to information and more channel choices, leading to a shift in power from company-led to customer-led commerce. As a result, your company's value propositions must change from selling products and services to delivering exceptional customer experiences. Your focus must shift from designing campaigns and promotions to developing cohesive and compelling digital commerce experiences that optimize the four Ps (product, price, place and promotion), and that leverage data and content to better target, attract, engage, convert and retain customers (see Figure 1). What makes digital commerce marketing different is how you use elements such as data and content to optimize the four Ps and across the nonlinear phases outlined above. There was a time when your company could achieve profitable revenue growth by adding a new location, selling more units or raising prices to boost margins. Today, customers are less interested in how many locations you have and more interested in how quickly you can get them their products. This means developing a digital commerce strategy that leverages physical locations, Web, mobile and social not just erecting another store or distribution center. Simply selling more units or raising prices won't guarantee sustainable, profitable revenue growth because customers are using digital channels competitors' commerce sites and applications, third-party review sites, and social networking sites to check and compare prices and product attributes. Loyalty is fleeting and fragile, and it has to be earned at each transaction not just through low prices and promotions, but by delivering value through exceptional customer experiences. How do you know what's valuable to your customers? Use data to learn about their expectations and content to personalize the commerce experience to their preferences. Digital Commerce Marketing Presents New Challenges for Marketers In addition to attracting customers to the site or store, it's imperative that you take responsibility for what happens when customers get there by setting digital commerce strategy; choosing digital commerce channels; and designing the customer experience for digital commerce. Digital commerce marketing success metrics are tied to business results, such as revenue and profitability, rather than marketing or brand health metrics. Gartner's 2015 research will address key issues to help you fulfill new responsibilities, achieve and measure results. If you are taking on greater responsibility for digital commerce, you face several challenges, starting with expanding your team's efforts beyond promotional activity. Optimize marketing activities to improve digital commerce results, such as targeting potential buyers instead of mass marketing to a broad audience. This may require changes to your organizational structure and strategic new hires, such as a business analyst who can interpret data to personalize marketing content or a digital commerce leader who brings a blend of marketing and technology or e-commerce experience. Increase your business and technology acumen, especially if you have profit and loss (P&L) responsibility. Access and leverage business insights, as well as understand cost and revenue drivers in your organizations. Sixty-six percent of marketing and marketing-led teams are responsible for setting marketing technology strategy to support digital commerce; therefore, you need to know how to evaluate, select, integrate and manage a growing ecosystem of partners, such Gartner, Inc. G Page 3 of 9

4 as agencies and system integrators, digital marketing technology providers, and digital commerce platforms. Blend left- and right-brain functions to combine creativity with a data-driven approach. Digital commerce marketing involves using data to gain insight into your targeted audience, attract and engage buyers, and design, measure and optimize digital marketing and digital commerce experiences across channels to maximize results. It also requires creativity and innovation to develop and deploy content that grabs customer attention and to create compelling digital commerce experiences. Gartner's 2015 digital commerce marketing research will offer best practices to help you address each of these challenges. Key Issues Creating Digital Commerce Experiences How can we develop marketing strategies that support digital commerce to drive profitable revenue growth? How can we design and manage marketing activities to support digital commerce? How do we create and connect customer-led digital commerce experiences across channels (that is, Web, social, mobile and in-store)? Optimizing Digital Commerce Experiences How do we measure the impact of marketing on digital commerce results? How can we use data, content and underlying marketing technologies to improve digital commerce throughout the purchase journey? How can we identify and evaluate commerce marketing technology and service providers? Creating Digital Commerce Experiences How can we develop marketing strategies that support digital commerce to drive profitable revenue growth? How can we design and manage marketing activities to support digital commerce? How do we create and connect customer-led digital commerce experiences across channels (that is, Web, social, mobile and in-store)? Digital customers expect to be able to research and evaluate products and services, engage with companies and brands, and complete their purchase when, where and how they choose. It's not uncommon for a buyer to start their research on a search engine using their tablet, continue evaluating providers and options on Facebook or LinkedIn using their smartphone, browse a commerce site, put items in their cart using a desktop, and finally decide to drive to the nearest Page 4 of 9 Gartner, Inc. G

5 store and pick it up rather than paying for shipping and waiting for delivery. Develop marketing strategies and create digital commerce experiences that enable the customer-led purchase process across channels and devices. Marketers use a mix of tactics content marketing, mobile and social marketing, and search, digital advertising and customer analytics, but spend nearly the same amount of time on all of these activities. Thus, you are involved with complex, multichannel marketing strategies, and that means a struggle to determine how to allocate budget across a combination of tactics and channels that will best support digital commerce growth, based on what is most relevant to your customers. Our research will help you allocate resources; select a mix of marketing tactics; coordinate efforts internally; and leverage a growing ecosystem of external partners, technology platforms and point solution providers. Planned Research Our 2015 research will help you create digital commerce experiences by developing or optimizing marketing strategies to support digital commerce revenue growth and profitability. We'll provide guidance on using data to design digital marketing activities, such as best practices and real-world examples of companies using data and analytics to identify and target potential buyers. We'll take a deep dive into commerce channels, such as social and mobile, to help you understand the role that different channels and tactics can play as you design your digital commerce marketing strategy. We'll cover topics that help you manage digital commerce marketing activities for instance, we'll update "Toolkit: Job Description for a Digital Commerce Leader" and provide resources such as "First 100 Days: Digital Commerce Leader" to help the new digital commerce leader succeed. We will also offer advice on how to create connected, cohesive and customer-led digital commerce experience, such as providing guidance on expanding from Web or e-commerce to a digital commerce strategy that connects customers in the store or physical location, as well as the Web, mobile and social channels. Optimizing Digital Commerce Experiences How do we measure the impact of marketing on digital commerce results? How can we use data, content and underlying marketing technologies to improve digital commerce throughout the purchase journey? How can we identify and evaluate commerce marketing technology and service providers? New marketing tactics are constantly emerging. Digital customers' expectations and preferences for digital commerce continually evolve and change due to mainstream adoption of digital technology, such as mobile wallet, which could lead to a shift in purchase behavior toward mobile commerce. But, you need to understand how each channel and tactic impacts digital commerce results in order to know what's working and what's not working, which activities to pursue and discontinue, and where to invest more or less of your budget moving forward. Use data to measure marketing's impact on digital commerce from establishing key performance indicators (KPIs) that connect digital marketing to digital commerce, to tracking, measuring and analyzing results in order to Gartner, Inc. G Page 5 of 9

6 personalize digital commerce experiences in real time (see "SAP Adds Real-Time Targeting to Digital Commerce With SeeWhy Acquisition"), to using insight to design, manage and continually improve digital commerce experiences (see "Develop a Marketing Analytics Framework for Supporting Digital Commerce"). Your success in digital commerce marketing also depends on content. A well-architected digital commerce experience is meaningless without compelling content. Channel proliferation and customer demand for personalization will only increase the need for rich, relevant content to support digital marketing and digital commerce experiences across channels and devices. Continue to leverage content marketing, and learn how to use data to design and deploy compelling content that is contextually relevant and personalized to prospective buyers. You cannot achieve these outcomes without an ecosystem of partners and providers. Participants range from digital marketing hubs to point solution providers and include digital commerce platforms that support Web, mobile and social commerce, as well as niche technologies that sit on top of these platforms. Learn how to evaluate providers individually and as part of an integrated solution, as well as how to select and manage technology platforms and providers, along with service providers, such as marketing agencies and system integrators. Planned Research Our 2015 research will help you measure the value of digital marketing activities by focusing on multichannel revenue attribution and lifetime customer value. It will also help you create your own frameworks for using these methods to measure the impact of your digital marketing activities on digital commerce results. We'll provide guidance on using digital marketing technology, such as marketing analytics tools, to harness and analyze data for better targeting, improved engagement and personalizing digital commerce experiences for growth. We'll offer research to help you build and manage an ecosystem of partners and providers. This research will include Cool Vendors reports (see "Cool Vendors in Digital Commerce, 2014") and Market Guides (see "Market Guide for Social Commerce") to keep you aware of established providers and niche providers with unique capabilities. We'll also provide guidance on evaluating platforms, providers and system integrators, as well as partnerships between these parties. Related Priorities Key Initiatives address significant business opportunities and threats, and typically have defined objectives, substantial financial implications, and high organizational visibility. They are normally implemented by a designated team with clear roles and responsibilities, as well as defined performance objectives. Page 6 of 9 Gartner, Inc. G

7 Table 1. Related Priorities for Digital Commerce Key Initiative Customer Experience Multichannel Marketing Marketing Management Data-Driven Marketing Mobile Marketing Social Marketing Emerging Marketing Technology and Trends Focus Customer experience encompasses the sum of all brand interactions across customer-facing touchpoints in sales, marketing and support across a brand's products, processes and even people. Multichannel marketing represents a coordinated program across digital and traditional media to acquire and retain customers, extend the brand, condition the market, and engage communities. CMOs are redesigning the organization, building business advantage through multidisciplinary teams and adopting new capabilities to penetrate customer segments and explore growth opportunities. Data-driven marketing refers to acquiring, analyzing and applying all information about customer and consumer wants, needs and motivations. Mobile marketing involves using information about people's context (location, identity, relationships and intentions) to tailor information and products that will increase customer engagement and sales. Social marketing is a strategy that uses social media to listen to and engage customers, and cultivate brand advocates. It can shorten product development cycles, boost innovation and increase conversion rates. Emerging marketing technology and trends, such as big data, social media, augmented reality and context-aware computing, create new opportunities to acquire and retain customers, fueling growth and taking market share. Source: Gartner (December 2014) Suggested Next Steps Assess your marketing organization's role in digital commerce (see "Maturity Model for Marketing's Role in Digital Commerce"): How does your company define digital commerce? What responsibilities does marketing have in digital commerce? How does marketing create new opportunities to acquire and retain customers, fueling strategy? What responsibilities will marketing likely assume in the next two years, and does your marketing organization have the people, processes and technology to fulfill this role? Determine the skills you need to lead or support digital commerce today and during the next two years, and determine whether you need to develop those skills internally, and when and how to leverage providers: What other functions are key to digital commerce? How do you collaborate with those functions to develop and execute digital commerce strategies? Gartner, Inc. G Page 7 of 9

8 Based on the skills that other functions bring and the remaining gaps in your organization, what are the mission-critical roles that you need to create, update and fill? Consider the data and content needed for digital commerce marketing, including insight needed to choose channels and tactics and target buyers, as well as to engage and convert potential buyers: What do you know about your target customer, and how can you use business intelligence and customer insight to learn more, such as sizing and segmenting the market? How does the target buyer make a purchase decision? How and where do they prefer to buy? What role does each marketing and commerce channel play on the path to purchase? Gartner Recommended Reading Some documents may not be available as part of your current Gartner subscription. "Gartner Survey Shows Marketing Taking the Lead in Digital Commerce" "Maturity Model for Marketing's Role in Digital Commerce" "Power Digital Commerce With Ratings and Reviews" "Prepare Your Digital Commerce Strategy for the Rise of Mobile Commerce" "Market Guide for Social Commerce" Agenda Manager Profile Jennifer Polk specializes in social marketing and social commerce, advising Gartner clients on how to use digital marketing techniques to engage customers, evangelize their brands, grow revenue and transform their business. Before joining Gartner, Ms. Polk worked at a full-service digital agency, where she helped retail, restaurant and consumer packaged goods (CPG) brands develop and implement a variety of digital marketing strategies, techniques and campaigns. She focused on the integration of digital marketing with traditional marketing and business operations for maximum effectiveness. More on This Topic This is part of an in-depth collection of research. See the collection: Agenda Overviews for Gartner for Marketing Leaders, 2015 Page 8 of 9 Gartner, Inc. G

9 GARTNER HEADQUARTERS Corporate Headquarters 56 Top Gallant Road Stamford, CT USA Regional Headquarters AUSTRALIA BRAZIL JAPAN UNITED KINGDOM For a complete list of worldwide locations, visit Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This publication may not be reproduced or distributed in any form without Gartner s prior written permission. If you are authorized to access this publication, your use of it is subject to the Usage Guidelines for Gartner Services posted on gartner.com. The information contained in this publication has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information and shall have no liability for errors, omissions or inadequacies in such information. This publication consists of the opinions of Gartner s research organization and should not be construed as statements of fact. The opinions expressed herein are subject to change without notice. Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner is a public company, and its shareholders may include firms and funds that have financial interests in entities covered in Gartner research. Gartner s Board of Directors may include senior managers of these firms or funds. Gartner research is produced independently by its research organization without input or influence from these firms, funds or their managers. For further information on the independence and integrity of Gartner research, see Guiding Principles on Independence and Objectivity. Gartner, Inc. G Page 9 of 9

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