BUSINESS WHITE PAPER. Contextual e-commerce: The key to an optimized e-commerce channel.

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1 BUSINESS WHITE PAPER Contextual e-commerce: The key to an optimized e-commerce channel

2 BUSINESS WHITE PAPER THE CONTEXTUAL JOURNEY Today s online customers are empowered like never before, engaging with companies across a range of touchpoints and enjoying the benefits that come from greater price transparency, increased access to information, and personalized content from their social networks and online communities. E-commerce growth shows no signs of slowing despite the recent financial downturn. According to emarketer forecasts, retail e-commerce in the U.S. is set to grow by 43.4 percent by 2015, with three out of every four of those who go online in the U.S. actively making purchases on the Web. 1 It s clearly not just a U.S. phenomenon either, with the Chinese e-commerce market set to be worth $311 billion by However, to be competitive on the Web and to optimize the conversion of online engagements into profitable interactions companies need to integrate contextaware applications into their online engagement strategies. These applications must address factors such as mobility, social networking and location awareness. Adapting the customer experience to the customer s needs and situation the essence of contextualization is proving to be a critical element of any successful customer engagement approach. It s also important that companies move beyond simply engaging with customers on a transaction-by-transaction basis, and start focusing instead on how context can truly enhance and extend the e-commerce experience for both businesses and consumers. In this paper we will show how a consistent, contextual approach to online engagement for both businesses and consumers can positively impact the e-commerce experience at critical points in the buying cycle. We ll also examine how companies can integrate contextual into their broader Customer Experience Management (CXM) approach to effectively create a self-reinforcing feedback loop that delivers support at every stage of what Forrester Research describes as the journey towards user context. 3 2

3 Context redefines consumer expectations With the continued growth of online retail activity, there s a growing recognition that the e-commerce experience has evolved away from the basic transactional interactions that were typically conducted from PCs via Web browsers. Mobile commerce is the most significant factor in this transformation. The Nielsen Company predicts that by 2015 smart phones will be the primary enablers of consumer shopping engagements and that new technology innovation will generate additional opportunities for retailers and manufacturers. 4 A recent report by ABI Research also reported that mobile shopping will reach $163 billion worldwide by 2015, representing 12 percent of all global e-commerce turnover. 5 This is a fundamental shift in consumer behavior that is dramatically changing the way companies need to approach their customer relationships. The increasing connection between mobile phones and social networks also presents challenges for companies. According to a 2011 report from Citi Investment Research, Facebook accounts for 14 percent of time spent online in the U.S. that s up from 8 percent in 2010, and nearly twice as much share as Google, its nearest competitor. 6 And people are increasingly using their smartphones to access their social networks. emarketer estimates that a little less than 82 million consumers in the U.S. (26% of the population) will access social networks from their phones this year, rising to nearly 117 million by In addition to mobile and social growth, we re also seeing a growing interest in locationbased data, which enables companies to respond to consumer requirements based on where a customer actually is, right now. Google s announcement of its contextual discovery strategy shows that they have clearly recognized that the data generated by location-aware mobile devices can help deliver real context in terms of push-enabled Google results. Similarly, services such as Tripit and FourSquare offer whole new levels of contextual data that companies can factor into their customer engagement activities. Forrester Research draws many of these elements together in a 2011 report, where it highlights technology solutions that allow business to manage and optimize the customer experience through content management, customer targeting, analytics, personalization, and optimization across online, mobile and Internet-connected device touchpoints. Forrester goes on to define the latest generation of Customer Experience Management (CXM) activities as an approach that enables the management and delivery of dynamic, targeted, consistent content, offers, products and service interactions across digitally enabled consumer touchpoints. 8 3

4 BUSINESS WHITE PAPER Integrating multiple technologies to create a contextual e-commerce approach Analyst firm Gartner Group predicts that the worldwide net economic effect of contextaware computing will exceed $140 billion per year by 2015, and that context will become as influential to mobile consumer services and relationships as search engines now are to the Web. Gartner goes on to project that over the next five years, context will emerge as a game changer in e-commerce and mobile commerce, with emerging context-enriched services using location, presence and social attributes and search to anticipate end visitors needs. 9 By 2015, a combination of emerging technologies and services including augmented reality browsers, new display technologies, enterprise applications, devices, content management and service providers will lay the groundwork for enterprises to address every stage of the e-commerce lifecycle in light of visitor expectations. In order to manage these evolving expectations and remain competitive, companies must be able to manage and deliver targeted content experiences, including contextual e-commerce content, to any consumer touch point on any network-enabled device. Typical areas of application will include: An integrated approach to contextual e-commerce. J JPutting social commerce functions to work by creating public communities on Facebook and Twitter, building out Facebook stores, delivering content on sites such as YouTube, and integrating social content into the mix J JLeveraging advances in mobile technologies, smartphones and tablets to take advantage of mobile Web applications, including context-enriched and location-specific services, to create more sophisticated, situationaware functions, offers and experiences J JManaging the Customer Interaction Lifecycle across key marketing, sales and service functions to create fully integrated, intuitive online experiences for customers J JDeploying a contextual e-commerce approach to synchronize, update and optimize digital content so that when a customer s needs or context changes, companies can quickly adapt and ensure customer engagement By leveraging these different technology approaches, companies can deliver an enjoyable online experience that goes beyond their consumers initial sales and service expectations. However, given the functional range of today s buying experience, companies will inevitably need access to considerable integration expertise if they are to offer an experience that fully combines key e-commerce, Web, CRM, back-office and fulfillment elements. As online experiences become increasingly driven by business processes and transactions, 10 websites can no longer exist in isolation from the rest of the business. Gartner has already identified over 60 separate e-commerce technologies that can be applied to the contextual e-commerce challenge, which it groups into seven key areas: e-commerce components; the customer Web experience; marketing; sales; service; mobile and social CRM. 11 4

5 Mapping the e-commerce lifecycle In identifying the role of contextualized solutions across the e-commerce lifecycle, it s important not to underestimate the scale of the challenge. Forrester Research has outlined four key phases of the contextual journey for enterprises: the initial Mastering of the Basics, subsequent layering in intelligence, breaking out from traditional PC contexts, and eventually embracing motion as a control mechanism. 12 While contextual e-commerce can clearly be applied to streamline specific stages of the buying cycle, the longer-term winners will be those companies that move more quickly to integrate and apply this technology approach across the entire lifecycle. Contextual e-commerce solutions will be fundamental in delivering relevant editorial content, targeted e-commerce offers and personalized support programs that can be combined to create more lasting and profitable engagements. In doing so, companies will also need to balance the potentially differing goals of e-commerce, marketing and service management. E-commerce, for example, seeks to increase conversion rates to capture maximum revenue and reduce the individual cost of sales, while marketing aims to engage customers with rich, personalized experiences, and also find ways to optimize their marketing spend through deeper customer intimacy. In the service arena, however, the goals reflect both approaches, with the challenge being to retain high value customers while still reducing the cost of service and educating customers to solve their own problems if possible. Clearly, delivering an excellent online customer experience is essential in achieving any of these objectives, but it has to be consistent, repeatable and deliverable across these core e-commerce, e-marketing and e-service disciplines. Whether the customer engages at the point of sale, via their mobile, by contacting a call center, on a Website, by using a kiosk, via or through one of their social networks, the experience has to be seamless across these multiple channels. The reality today is that consumers are increasingly comfortable with multi-channel engagement. They may first become interested in a product or solution after being targeted by an campaign, then check the offer in more detail online, and perhaps go over the specifics with their friends and peers on Facebook. Before making a buying decision they might check online reviews and feedback, actually make the purchase on their mobile device, and then collect their order from a retail outlet. 5

6 BUSINESS WHITE PAPER Contextual e-commerce scenarios With continued growth of online retail spending, the e-commerce experience has quickly evolved beyond simply transacting; consumers are increasingly going online at every stage of the e-commerce lifecycle to discover new products, conduct research and make price comparisons, as well as to exchange feedback with friends and peers. This extended online presence creates an ideal opportunity for retailers to forge deeper, stickier and more profitable relationships with their customers. However this will require a more comprehensive and context-aware e-commerce platform that can support multiple Web channel processes while still dynamically personalizing each customer s online experience. While many of today s Web applications offer e-commerce capabilities that are enriched by some e-marketing functionality, it s rare to see an approach that factors in comprehensive product marketing content, or that extends support along the buying lifecycle to address ongoing service requirements or scheduled upsell activity. Companies that succeed in integrating comprehensive content management into this mix, and support their customers context regardless of their location or channel will enjoy significant competitive advantage. More advanced companies will quickly identify how context can impact the e-commerce experience in a diversity of ways throughout the customer buying/engagement cycle from initial product discovery through to ongoing support and product upsell strategies. Possible contextual e-commerce applications include: JJTargeted e-commerce content based on CRM data, and customer purchasing histories J JConducting research and price comparisons using a combination of retail Websites, social media recommendations and mobile Web apps for remote access J JImprove conversion rates by delivering contextual editorial content based on location, time-of-day, purchasing history, and stated preferences J JDifferentiated special offers depending whether the consumer is in-store, at home, in a competitor s store J JPersonalized recommendations based on Likes/Recommendations of Facebook friends J JImproved support thanks to more context-aware service staff J JExchanging feedback on websites and social networks 6

7 Contextual e-commerce requires an integrated approach With the rapid growth of online retail spending, the e-commerce sector has realized that the traditional online distinctions between B2B and B2C are fading away along with the need for separate Web channels and parallel processes. The requirement now is to build on a single e-commerce, e-marketing and e-service platform that addresses all key target audiences: JConsumers J allowing consumers to enjoy quick, easy and consistent online experiences across multiple touch points JBusinesses J helping companies to leverage powerful and convenient self-service Web solutions and manage all sales and service interactions from a single place J JWeb Channel Managers easily set-up and manage their Web presence with simple, step-by-step website management Analysts such as Gartner project that such context-enriched services will begin with more basic, single scenarios such as location and will then evolve into more complex deployments that integrate multiple context sources such as location, presence and group behavior. They estimate that, longer term, such context-enriched service will be transformational representing the next frontier for business applications, platforms and development tools. 13 As a result, companies will need to offer an experience that fully combines key e-commerce, Web, CRM, back-office and fulfillment elements. This demands an integrated approach that can deliver contextual e-commerce functionality seamlessly, ready-to-run and integrated directly with existing enterprise ecosystem solutions including inventory systems, customer relationship management (CRM) systems, enterprise resource planning (ERP) systems, and more. 14 Gartner estimates that most companies e-commerce initiatives can have as many as 15 to 20 primary or core integration points to complete a business process, 15 so it s increasingly important for businesses to work with e-commerce solution providers that can deliver close integration with core enterprise applications such as CRM and ERP particularly as the potential number of customer touchpoints and hence integration points increases. 7

8 BUSINESS WHITE PAPER CoreMedia and SAP : showcasing contextual e-commerce with CoreMedia LiveContext CoreMedia, with more than 15 years of experience in delivering online platforms for leading enterprise brands, provides precisely the kind of integrated e-commerce solution that businesses need and are demanding in order to address contextual challenges. SAP s next-generation SAP Web Channel Experience Management (WCEM) solution offers a full range of e-marketing, e-commerce, and e-service functions for creating and deploying Web shops as a profitable sales, service, and interaction channel. SAP WCEM enables companies to extend market reach and adapt to business changes with a personalized Web channel that is easy to deploy, configure and extend. To further enhance its capabilities, SAP has partnered with CoreMedia to fuel the delivery of highly relevant, contextual Web information. CoreMedia LiveContext enables companies using SAP WCEM to optimize their online sales and marketing channel performance by infusing every aspect of their customers online experience with rich, contextual marketing information. CoreMedia s unique strengths in contextualization enable contextualized information to be incorporated into the e-commerce dialogue and transform the shopping process into an adaptive shopping experience. Marketing users are empowered to create superior online experiences that increase engagement, accelerate time-to-purchase and improve customer loyalty while leveraging their existing SAP investments. Integrated storefront with contextual content models. The areas highlighted in green represent contextual content. They are shown as an example for the purposes of this document only. Working together SAP and CoreMedia, as a preferred SAP WCEM partner, are able to demonstrate how the right mix of product and contextual marketing information can increase up-sell and cross-sell opportunities, and significantly strengthen customer loyalty. 8

9 Conclusion Thanks to the distinctive ability to orchestrate content, effectively manage context, and optimize the online customer experience, CoreMedia is able to assist companies in realizing the benefits of an integrated, centralized e-commerce approach. For consumers, the emergence of a new generation of context-enriched online services that leverage factors such as the customer s social aspects, search preferences, presence status and location are set to offer a much more enjoyable and relevant online experience. For companies and their service providers, contextual e-commerce opens up the opportunity to secure new levels of customer engagement and loyalty and this is set to prove a key differentiator in today s increasingly competitive marketplace. By incorporating relevant content into product data to create stickier and more informative browsing experiences for current shops and by attracting new visitors searching for more engaging content, online retailers can really start to optimize the performance of their e-commerce channels. 1 emarketer forecast, March Credit Suisse China 2015 report, as reported in Forbes, January 4, CMO: The Future of Mobile is Context, Forrester Research report, July The Nielsen Company, Retail 2015 Forecast, June 24, ABI Research, 6 Citi Investment Research and Analysis quoted on All Things Digital: The Facebook chart that freaks Google out, September 26, The Emergence of Customer Experience Management Solutions, Forrester Research, August The 2011 Gartner Scenario: Current States and Future Directions of the IT Industry, Gartner, January Web Content Management Will Weave Its Way Into More Enterprise Applications, Forrester, March Gartner, Hype Cycle for E-Commerce, 2011, August Forrester, CMO: The Future of Mobile is Context, July Gartner, Hype Cycle for E-Commerce, 2011, August The Online Customer Engagement Software Ecosystem, Forrester, February Gartner, Hype Cycle for e-commerce, August

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