Negotium valorem implementing strategy that matters - final
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The document discusses how businesses are adapting to changing consumer behaviors and trends driven by the COVID-19 pandemic and increasing digitization. It summarizes key shifts in consumer behavior across areas like shopping, work, learning, entertainment, and health. It also discusses how businesses can leverage new opportunities in areas like online retail, entertainment, nutrition, and gaming. Finally, it emphasizes the importance of a customer-centric approach and focusing on customer experience to attract, engage, and monetize customers in the new digital economy.
![Selling subscriptions at a loss…ornot!
The classical marketing & commercial approach has usually been to minimize
acquisition costs. But with Prime’sgenerous advantages (free and soon 1-day
delivery, streaming, etc.), Amazon is looking to maximize its margins by
investing in a growing base of customers spending more moneymore often, and
spending more time attachedto the brand(rather than optimizing costs).
An investmentthat paysoff:
Amazon Prime
Annual
spend per
member
Retention rate
after 1styear
$1400 vs. $600
non-Prime
93%
+
Prime subscription ($120yearly)
- Prime costs (Video &music content /
delivery cost)
=Greater net short-term costs for
Prime
After 2 years 98%
=Greater long-term profit forPrime
[As of June.2019]
+offer
+service
+business opportunities
+purchases
+customer data
+revenue
+products
+competition (lowerprices)
Prime
Video,Music &
Reading,
Free shipping etc.
Customers
+customers
+purchase
frequency
Sellers
+sellers
AMAZON: INVESTING IN CUSTOMER BASE TO GROW
PROFITS AND IMPROVE PERFORMANCE
Sources: worldwide figures from
Amazon, Fortune, Beamer](https://image.slidesharecdn.com/techbiznegotiumvaloremimplementingstrategythatmatters-final-220102203734/85/Negotium-valorem-implementing-strategy-that-matters-final-33-320.jpg)
Negotium valorem implementing strategy that matters - final
- 3. Hello::
- 4. Trends analyst Head, Strategy & Digital, Insight Publicis Pop culture strategist Student of culture & brands
- 5. INTRO: Playing a purposeful and meaningful role in society
- 6. Humankind is now facing a global crisis. Perhaps the biggest crisis of our generation. The decisions people and governments take in the next few weeks will probably shape the world for years to come. They will shape not just our healthcare systems but also our economy, business, politics and culture. We must act quickly and decisively. - Yuval Noah Harari, Author, 21 Lessons for the 21st Century “ ”
- 7. THE CONDITIONS CHALLENGING BUSINESSES TODAY ● Rapid velocity of change ● Increasing diversity of competition ● Precarious geopolitics ● Systems level economic failings ● Excess of information, and ● Changing definitions of value
- 8. The Low Touch Economy Has Affected Consumer Behavior In Five key Ways, Some of Which Will Have A Lasting Impact. McKinsey , Consumer Pulse Surveys, June 21, 2020
- 9. SHIFTTOVALUEANDESSENTIALS • CONSUMERS AREMINDFULOFTHEIRSPENDINGANDTRADINGDOWN,AND OPTIMISMINTHEECONOMICRECOVERYHASN’TSEENARESURGENCE FLIGHTTODIGITALANDOMNI-CHANNEL •MOSTCATEGORIESHAVESEENMORETHAN10%GROWTHINTHEIRONLINE CUSTOMERBASEDURINGTHEPANDEMIC-ANDMANYCONSUMERSSAYTHEYPLAN TOCONTINUESHOPPINGONLINE SHOCKTOLOYALTY • VALUEWASTHEMAINDRIVERFORCONSUMERSTRYINGANEWBRANDORPLACETO SHOPFOLLOWINGSUPPLY-CHAINDISRUPTIONS HEALTHAND“CARING”ECONOMY •THEACTIONSTHATBUSINESSESTAKE DURINGTHESEPRECARIOUSTIMESARELIKELY TOBEREMEMBEREDFORTHELONG-TERM HOMEBODYECONOMY •MORETHAN70%OFCONSUMERSDON’TYETFEELCOMFORTABLERESUMINGTHEIR “NORMAL”OOHACTIVITIES
- 10. We see new behaviors emerging across 8 areas of life namely: ● Work ● Shopping and Consumption ● Learning ● Life at Home ● Communications and Information ● Play and Entertainment ● Travel and Mobility ● Health and Wellbeing Source: McKinsey: “How Covid-19 is Changing Consumer Behavior” THESE BEHAVIOR SHIFTS CUT ACROSS DIFFERENT INDUSTRIES AND SECTORS
- 11. OUR LIVES WILL FOREVER BE ALTERED BY THE INFLUENCE OF TECHNOLOGY New Forms of Consumerism New Behaviors Different Dynamics
- 12. DATA, MOBILITY AND TECHNOLOGY DOMINATING THE CENTRE STAGE Telco Efforts Are Intensifying to Drive Growth in Digital And Triggering A Data Explosion Digital Disruption of the Media And Entertainment Sector IoT Value Moves Up the Stack to Retail and Financial Platforms
- 13. EMERGING SOCIAL TRENDS ARE THE NEW NORMS Redefined Social Engagements Fostering Creativity And Self Actualisation Growth of Music Parody IncreasingSocial Media Adoption And Usage Content Streaming And Downloads Family Bonding Growth of Alternative E- Channels Growth of Online Retail And Ecommerce Stores
- 14. INFLUENCING CONSUMER LIFESTYLES AND PURCHASE PATTERNS Remote Working Now A Reality Growth in Internet Usage And Consumption Content Streaming And Downloads Interest Surge In Ecommerce And Online Payments The opportunity spectrum for businesses straddle these consumer purchase patterns
- 15. IMPACTING BEHAVIOR AND OPENING UP NEW AND EXISTING OPPORTUNITY ZONES Online Entertainment Personalised Nutrition Direct to Consumer (DTC) Retail Virtual Gaming
- 16. WHICH IN TURN IS DRIVING OPTIMISM, HOPE AND ASPIRATIONS OF PEOPLE THAT WE NOW HAVE TO LOOK WITHIN FOR SOLUTIONS Rise Of Afro- Optimism Entrepreneurship And Technology Social Community Cohesion
- 17. AFRO-OPTIMISM IS FLOURISHING AMONG YOUNG AFRICANS WHO VALUE ENTERPRENEURHIP AND INDIVIDUAL RESPONSIBILITY
- 18. WE ARE LIVING IN A COMPLETELY DISRUPTED WORLD WHERE NEWLY DEVELOPED SECTORS ARE DRIVING ECONOMIC GROWTH, OUR GDP, AND COMPETIVENESS AS A NATION Nigeria’s E&M market is dominated by Internet revenue and shows a similar growth path to that metric. Having reached US$4.5 billion in 2018, E&M revenue will rise at a 19.3% CAGR to reach US$10.8 billion in 2023. Source: Entertainment And Media Outlook (2019-2023),PwC Nigeria To Become US$10.8 Billion Market By 2023
- 19. A PERIOD OF RAPID GROWTH SPURRED BY DIGITAL TECHNOLOGY, WHICH SUPPORTS CONTENT CREATION, DISTRIBUTION AND CONSUMPTION
- 20. THESE SECTORS ARE NOW OPENING THE STAKES, CREATING ECONOMIC INCLUSION, AS WELL AS WIDENING THE OPPORTUNITY SPECTRUM FOR OPPORTUNITY FOR FINANCIAL INCLUSION
- 22. INSTABILITY IN THE PRESENT IS OPPORTUNITY FOR THE FUTURE
- 23. START FROM THE FUTURE BACK
- 24. FUTURE DRIVERS
- 25. INNOVATE FROM THE ‘OUTSIDE-IN’
- 26. LESSONS ON RUNNING LEAN
- 27. Tesla’s electric cars require huge packs of EV batteries, made of thousands of lithium-ion cells. Until recently, the lack of demand for electric vehicles meant that companies had not invested in battery technology development, resulting in prices remaining high and making the cost of cars prohibitively more expensive than their gasoline counterparts. Tesla invested in a massive gigafactory to produce the newest battery packs themselves, and the economies of scale, as well as not paying markups to manufacturers, are estimated to save them 30% of the cost of the batteries. TESLA: VERTICALLY INTEGRATED SUPPLY CHAIN
- 28. Investorsincreasinglybasetheir judgementon optionality,which isreflected on valuation multiples.A company’sbiggest challenge then becomes tocrystallize this optionality. Rising share of optionality in valuation The new economy is leading to massive value shifts driven by three simultaneous trends. Theemergenceof new models, changing competitive environments,evolvingsector boundaries. Perspectivesare blurred. Theconcept of “value” needs to be redefined:isitbased on the generation of flowsor on the development of assets, on usage valueoron financial value? Value chain disruption New value definition BRINGING VALUE TO BUSINESS
- 29. Valuation approach in the new economy needs to integrate all drivers for value creation and provide a 360° vision of businesses. Differentpillars of value creationneedto be taken into accountin orderto assess a company’svalue and growthsustainability: Customers Talents Ecosystem Social &environmental impact Software Value Creation pillars Customers Talents Ecosystem Social & environment impact Software PROVIDING A 360°APPROACH TO VALUE CREATION
- 30. 200s Performance grading of royal family members (China) 1800s Daily performanceof employees (Scotland manufactures) 1200s First follow-up of margins (Venice merchants) 1930s ROI& apparition of the first dashboards (France) 1990s The BalancedScorecard evaluates financial & non-financial performance(US) 1910s Taylorism introduces the calculation of time per movement (US workers) 2015s Digital revolution brings out new customer-centric players questioning traditional KPIs 2018-2019 Amazon, the “customer company”, is valued $1trn Customer approach expands to take into account allstakeholders 1970s EBITDAis introduced to highlight cash flow capacities (US) 2000s Introduction of ARPU (Telecoms) Productivityera Stakeholder era Finance era Customerera EACH ERA HAS CREATED ITS OWN KPIs
- 31. Traditional Economy Industrial economy, centered on products New Economy Usage economy, centered on customers Vs Frommarkets... Marketing mix (4P) Competition on one offer Market share From achain... Added value Value chain Assets owner Number ofsuppliers From corebusiness... 5-year plan Growth & margin Business portfolio …tocustomers’ needs User experience (4C) Competition on one particular need Usage share / Share of wallet ...to an ecosystem of partners Circular value Closed loop of value Network orchestrator Length of network & diversity of connections ...to mission statement 30-year vision, 6-month action plan Customer Lifetime Value Experience platform NO MORE MARKETS, ONLY CUSTOMERS Looking at the new economy with different “glasses”.
- 32. Revenue= Unit price x number of products Revenue= Revenue per customer x number of customers Total Profit Traditional Management Product A + + Margin A Margin B Margin C = Customer SegmentA Profit Seg.A Profit Seg.B Profit Seg.C + + New ManagementModels = Product B Product C Customer SegmentB Customer SegmentC SHIFTING FROM PRODUCT MGT. TO CUSTOMER EXPERIENCE: Revenue Based on Customer Spendings vs. Products
- 33. Selling subscriptions at a loss…ornot! The classical marketing & commercial approach has usually been to minimize acquisition costs. But with Prime’sgenerous advantages (free and soon 1-day delivery, streaming, etc.), Amazon is looking to maximize its margins by investing in a growing base of customers spending more moneymore often, and spending more time attachedto the brand(rather than optimizing costs). An investmentthat paysoff: Amazon Prime Annual spend per member Retention rate after 1styear $1400 vs. $600 non-Prime 93% + Prime subscription ($120yearly) - Prime costs (Video &music content / delivery cost) =Greater net short-term costs for Prime After 2 years 98% =Greater long-term profit forPrime [As of June.2019] +offer +service +business opportunities +purchases +customer data +revenue +products +competition (lowerprices) Prime Video,Music & Reading, Free shipping etc. Customers +customers +purchase frequency Sellers +sellers AMAZON: INVESTING IN CUSTOMER BASE TO GROW PROFITS AND IMPROVE PERFORMANCE Sources: worldwide figures from Amazon, Fortune, Beamer
- 34. 7 5 % of the content viewed on Netflixis based on personal recommendations. Relying oncustomer centric metrics Netflix captures data corresponding to various problematics W hen is the user watching the program? Where? On which device? W hen does the user pause or switch off programs? W hat do users research? To betterunderstand users by cross-referencing data and identifying habits & preferences And drivestrategic choices regarding content creation and licence buyout to provide better customized content House of Cards, a data-driven production Netflix relied on user data showing their interests & preferences to produce a €100m TV serie and create different trailers, each targeting different customer segments. A long-lasting growing revenue (in$m) Netflix leverages customer data to draw a specific profile for each user and design via complex algorithms a uniquecustomized catalogueof movies for each, which has been the base of the strongcustomerexperience, on which Netflix built its success. In a context of increasing competition among streaming services, and of Netflix subscribers growth slowdown in Q2, customer centricityisall the more key to accentuateuserengagement. NETFLIX: LEVERAGING CUSTOMER KNOWLEDGE TO INCREASE ENGAGEMENT AND GENERATE REVENUE
- 35. THE NOTION OF CUSTOMER GOES BEYOND THE COMMERCIAL TRANSACTION
- 36. New businessmodelshave redefinedthe customerconcept,and make no difference betweenpaying customers& non-paying ones. Indeed, customer-centric companies strive to deliver the best possible experience to everyone to catch their attention and turn it into commitment, and eventually into revenue…whether or not a transaction is made. The scope of the customer notion brings together all steps of the relationship with the company, from being a visitor, to being a non- paying user, and finally a paying one. The customer scope Visitors Anyone who pays special attention to you. Non Paying Users Anyone who uses your product/service but does not complete a purchase. Paying Users Users who complete a purchase. Value Creation IN THE DIGITAL ECONOMY, EVERYONE IS A CUSTOMER
- 37. Attract Engage Leverage Awareness Reach of the company Retention loyal & frequent users Monetization Generating revenue from users (paying ornon-paying) Activation Visitor commitment (giving information…) Acquisition of visitors Attention drawn Conversion Visitors become users (paying or non- paying) Fueled by customer experience THE CUSTOMER LIFECYCLE, FROM ATTENTION TO REVENUE
- 38. Models based on data monetization (advertising,affiliation) can measuretheir non-paying customers (users)and their paying customers (advertisers). B2C freemium models B2B2C models can measuretheir paying customers (companies)and their non-paying customers (final users:employees). Depending on their business model, companies can measure paying users, non-paying ones, or both. can measuretheir non-paying customers (users) and their paying customers (subscribers), analyzing engagement & monetization of each. THE CUSTOMER LIFECYCLE, FROM ATTENTION TO REVENUE
- 39. The customer era Efficiency Gucci partnered with Farfetch to launch F90:a 90mn delivery service of any Gucci article. Personalization Spotify generates a unique track curation for each user, thanks to its AI algorithms. Simplicity Amazon offers additionalservices to provide a seamless experience in fashion: Prime Wardrobe (members try before they buy) and Echo look (clothing style analysis and recommendations). Trust Qwant differentiated from Google by insisting on user protection, with its slogan “The search engine which respects your privatelife”. EXPERIENCE IS AT THE HEART OF THE RELATIONSHIP WITH CUSTOMERS Customer satisfaction must be the ultimate goal of customer experience
- 40. The customer era Delivering wow customer service to achieve a lowchurn. Zappos invests in its ‘Customer Loyalty team’ to deliver a wow service, via an overstaffing that enables “breathing space” for employees, in-depth training and a wide flexibility regarding scripts and calls timing. By focusing on its customer service, Zappos creates a strong emotional connection with customers, which has proven successful in terms of acquisition andretention. Experience lays the foundation to attract customers and engage them, in order to create value Inversely,a better knowledge of each step of the customer path can highlight potential areas of improvement of the customer experience. A better Customer Experience Attractiveness Customer Engagement Monetization Improves Optimizes ZAPPOS (Acquired by Amazon in 2009) EXPERIENCE IS THE BACKBONE OF CUSTOMER VALUE
- 41. The framework to evaluate a company’s customer capital integrates 4 complementary key blocks of KPIs that retrace every aspect of the customer scope: Attract Engage Leverage Customer Experience Capacity to acquire & activatevisitors Capacity to convert them into customers & engage them Capacity to monetizeyour customers Improves results Rely on a seamless and satisfying experience EVALUATING EACH STEP OF THE CUSTOMER LIFECYCLE
- 46. Afrojuju :: Communiverse Thank you ::