Archive for January, 2021

The million-dollar question

People’s approach to wellbeing has gone through subtle but significant shifts for some time, with the coronavirus pandemic creating a moment of salience that has accelerated much of that change.

Behaviour has adapted as individuals’ attitudes to health have become broader – encompassing physical and mental health. In conjunction with this mindset of complete good health, the increasing sophistication of technology and products makes recording and mapping of personal health data and performance commonplace. From body fat % measurement to watches tracking heart rates, the power of taking care of one’s health now sits comfortably with the individual. It’s not surprising that the global medical wearables market is expected to reach $19.5 billion by 2025 – up from $7.4 billion this year.

And if all this wasn’t enough to spell a shakeup for the traditional pharmaceutical market, personalised DTC (direct to consumer) healthcare brands are also disrupting the sector. Several companies stand out here – for example UK mail order blood test health brand Thriva, supplement business Vitl, at-home test kits EverlyWell and LetsGetChecked, and male focused personal wellness company Hims, just to name a few.

Whilst we can agree that, when it comes to healthcare, both category and consumer behaviours are rapidly changing, the question is now how more traditional pharma establishments can capitalise on this moment of change to generate new business opportunities and positive social impact.

We believe pharma brands can do just that by learning from DTC and mastering four critical dimensions: distinctiveness, substance, intelligence and experience.

Distinctiveness and substance 

What we’re seeing is the healthcare DTC market moving in the same direction as beauty brands, with a sleek and contemporary look and feel. But as the market gets more crowded, differentiation is going to be crucial, meaning brand building will require designing and using distinctive assets. The most successful brands in the category are going to be those that can demonstrate their distinctiveness and ability to satisfy multiple consumers’ needs.

When Bayer acquired DTC vitamin and supplement start-up Care/of, the German pharma giant said: “Together we plan to grow the Care/of business across new channels, categories and markets to deliver even more personalised nutrition.”

Being distinctive means standing for something and giving people a brand and product that they can buy into emotionally. It means ensuring brands have substance. This is a particular challenge for pharma, where the product is so often shrouded in mystery and where trust levels have been historically low compared to other sectors (although it must be noted, the pandemic has improved perceptions, at least in the short term).

This means that, the more effort pharma brands make to reach the public and explain the tangible benefits of the work they do – the more meaningful partnerships can be built with customers and the higher levels of trust can be maintained.

Intelligence and experience

A significant advantage of the DTC healthcare relationship is the proximity and the stronger feeling of connection consumers experience with personalised products. Of course, this does rely on people being willing to share their private and sensitive data. In 2020, Deloitte found that 70% of consumers will share their data with healthcare providers and another GfK research study showed that consumers are comfortable with sharing data especially when they gain benefits or rewards like lower costs or personalised services in return. This means pharma brands need to work even harder to show consumers the tangible value exchange they’ll gain from sharing their personal information.

The new symbiotic relationship enabled by DTC is something pharma brands can take advantage of. By establishing conversations with people, they can rely on a steady stream of consumer data and feedback to feed into product development and shorten lead-times.

We’ve already noted that distinction in the market will gain importance, and as products and user experiences become similar, Brand (with capital B) will provide stand out.

From how the website operates to the unboxing experience as products are delivered, the brand purpose and personality should underpin the entire experience and imbue all stages of design to build stronger bonds and consumers’ loyalty.

The whole is greater than the sum of its parts

According to industry experts, an implementation gap – rather than an information gap – prevents healthcare systems from prioritising preventive care services although they know the impact of prevention in reducing the incidence and burden of chronic diseases.

By empowering people to self-manage routine health checks, maintain their wellbeing through personalised products and services and take prevention in their own hands, the advantage for pharma brands might be two-fold. They will sustain their growth through a renewed connection with consumers  whilst generating a wider, positive impact on the health of entire nations.

The future of retail: Looking back to go forward

Why it matters

Bricks and mortar retail has been devastated and e-commerce brings added competition, but brands employing analog techniques standout with fresh and more personal interactions.

  • The shift to e-commerce makes it harder for brands to connect emotionally with customers – a key driver for success.
  • In a digital world, tactile, physical moments are all the more memorable.
  • Catalogs have been rethought to be more editorial, encouraging dwell time with corresponding increased response rates.
  • Customer service is the ultimate way to gain emotional brand connection and an opportunity to demonstrate customer commitment.

Not a week goes by where there’s not an article touting a new technology that is predicted to disrupt retail – from AR and VR to beacons, AI and more. While some of these technologies have been – or will prove to be – successful, in today’s retail reality brands may need to think beyond the latest bells and whistles and consider taking strategies from the past, to succeed in the future. Shopping has changed drastically over the past year and some of these changes could be permanent. Brick and mortar businesses have suffered a devastating blow since COVID-19. It is expected that over 14,000 stores will close this year alone in the US, while we’ve seen monthly increases of up to 209% for online sales. This has serious implications.

As businesses make e-commerce their pivotal sales channel they will face new competition. Think about it, a retailer that counted on a large portion of its revenue from in-store sales in a Simon or Westfield mall faced competition mostly from stores within the mall. Online, these brands will compete with DTC brands as well as main street retailers, which are now on a more equal playing field. The shift to e-commerce makes it harder for brands to connect emotionally with customers – a key driver for success.

To standout and win during this mass online migration, brands should be considering how analog experiences can help make the digital ones work harder to attract, engage and connect with customers. Unboxing is a good example of this, as discussed in ‘Delight at the Doorstep’. Many of the best unboxing experiences come from digital brands. These brands recognize how important tactile, immersive experiences are, understanding that digital-only brands need to compensate for their lack of physical and in-person touch points.

Extending beyond letterbox packaging and the delivery experience, many of these brands have found other ways to surprise and delight consumers. For example, Tile Bar has beautiful black and white letterbox packaging that stands out on the doorstep but its approach to gifting – a retailer’s version of an amuse bouche – is memorable with gifts including hand sanitizer at the height of the pandemic and an etched shot glass. But unboxing is just one way brands can create more immersive experiences – analogue experiences can support digital ones to access new audiences and deepen the connection with existing ones. Three others that brands might want to consider are:

1. The return of the catalog

With the rise of e-commerce, many brands walked away from, or limited, catalog use and moved to quicker, digital marketing tactics – but given today’s retail dynamics, brands might want to revisit their marketing mix and catalogs. Research has shown that catalogs are again becoming an effective marketing tool, with response rates increasing 170% in recent years. With the amount of competition with digital advertising, it makes sense that we are seeing results like this.

Consumers don’t need to open an email or visit a store, but they do have to interact with the catalog that arrives on their doorstep, even if they were just going to throw it out. And when you receive something like a 700+ page Restoration Hardware catalog, it’s hard to immediately throw it out without first perusing. Younger audiences, like millennials, are now favouring catalogs – they receive less mail and as a result, they are engaging with, and embracing, catalogs rather than writing them off like some older generations. According to a study conducted for the US

Post Office, 64% of millennials would rather scan for useful info in the mail, than in email. The Canada Post had similar findings with millennials in a neuromarketing test. Participants’ recall of a print ad compared with a digital one was 70% higher and the part of the brain that corresponds to motivation was 20% higher. We are now seeing many companies that started as pure online brands embracing catalogs – Bonobos, Wayfair, 1stdibs and Amazon, along with some of the start-up DTC’s like Primary. Catalogs are going through a reinvention. Historically, they were functional, synonymous with the definition of the word, “a complete list of items, typically one in alphabetical or other systematic order”. Today, catalogs are more editorial, like magazines or coffee table books. Catalogs for brands like Serena and Lily and Patagonia include inspiration and storytelling – with consumers keeping them longer and flipping through them multiple times.

Many of us grew up with the ritual of pouring over a catalogue, circling our favorites ahead of a store visit. The digital equivalent can be found with brands like Boden providing a sample of products within different format catalogs, then directing you online to learn and see more. Amazon’s latest holiday catalog gives a curatorial experience, sans prices, driving consumers online to engage further and purchase.

2. Rethinking service

Customer service is no longer a hygiene factor – it’s pivotal to the experience a brand delivers and even more important in the current retail landscape. Studies show how important service can be for customer acquisition, retention and for commanding premium pricing – according to American Expresses’ Service Barometer, millennials are willing to pay 21% more for great customer service.

Technology has played a role in improving customer service, including bots and using social media to provide a timely service. Brands such as Nike have a separate Twitter handle for support and it has been applauded for solving customers’ problems. But there are aspects of service that cannot rely on technology alone and that is where brands need to spend more time and resources. Retail customer service cannot be discussed without mentioning Nordstrom – it set the bar on service with its tire story.

In 1975, a customer went into a Nordstrom store in Alaska to return tires he purchased from the store that had previously occupied the Nordstrom space. The store manager decided to refund the man the $145, even though the tires were not a Nordstrom purchase – a true example of giving the customer what they want. I’m not advocating that brands should make a practice of taking returns from other businesses, but it is a great example of a customer service-first mentality. At Zappos, everyone, no matter what their job or hierarchy, gains experience working on the customer service phones.

This manifests a core part of the brand’s strategy, as it helps employees understand their customers’ needs. Employees are encouraged to have long interactions with customers – a few years ago a Zappos employee had the longest customer service call in history, almost 11 hours long. Both companies have made delivering great service a critical part of their brand and have empowered their sales and customer service people to use their judgement to deliver excellent customer service, as opposed to relying on a script and a strict set of rules. But moving forward, the customer service role will include connecting emotionally with customers.

Most brands have not done this well. Few train their employees thoroughly to be on-brand or consultative in their sales approach. Really good branding is when you can look at communications, cover up the logo and the product, and still identify the brand. It is similar for service, remove product conversation or written communications and could you tell what brand you are interacting with? Brands such as Starbucks have successfully developed and adopted their Green Apron book but more brands need to make defining their service experience a priority and foundational brand asset.

Owning retail stores for over a decade, I learned that most people want to hear the stories behind the products they buy and they are most effective when told by a person. Employees can become the living embodiment of the brand.

3. Personalization – low-fi and hi-fi

The increase in data and technology has meant large brands can offer personalized experiences – according to Shopify, 75% of online shoppers like brands to personalize their offerings and messages. In a study by Salesforce, 51% of consumers expect brands to anticipate their needs and make relevant suggestions.

Natural food and e-grocer, Thrive Market, developed a new member quiz that helps it deliver hyper-personal recommendations leading to increased sales conversions, and increased repeat custom. Chairish, the online marketplace for furniture and home décor, uses customer browsing behavior to send personalised emails with recommendations. But where brands can really win, is by using technology to personalize in a more intimate way.

Receiving digital content by an algorithm will only go so far and there is a risk that the plethora of emails received on a daily basis become white noise. One example, is the comeback of the hand-written note. While heritage brands such as Chanel, Liberty of London and Tiffany & Co. have long sent hand written notes to customers, new DTC brands are realizing the power of this analog experience. Chewy sends hand-written notes to customers and has even sent flowers to bereaved customers. When Laurie Samuel’s Westie died, she received a hand-written note from the brand sending its condolences and refunded her previous month’s cost of pet food.

Agents at Capital One are encouraged to offer personalized interactions – a Capital One customer having trouble accessing his account online due to a malfunctioning keyboard was sent a hand-written note and a new keyboard. The increase in e-commerce and new technologies has changed how brands interact with customers but as more brands double down on delivering mostly digital content, it will become harder to stand out. The win will be combining technology with analog; brands need to look to the past, to win in the future.

This article was first published in WARC December 2020.