By Alex Stickelberger | VP BORN

We are all familiar with the linear economy: Natural resources are turned into products, which are sold, consumed, and then thrown away without regard to reuse or recycling. However, the linear economy is clearly less and less viable in today’s world when waste and the other byproducts of production and consumption pose an existential threat to our world.

Today’s enterprises focus more on sustainability in the broad sense, and one way to pursue sustainability is by embracing the circular economy. Instead of the take, make, waste dynamic of the linear economy, the circular economy encourages recycling, reuse, and repurposing in an effort to minimize waste through the entire value chain of a product. In a circular economy, all stakeholders benefit: companies and consumers as well as society as a whole through the obvious benefit of greater sustainability.

The term “circular economy” may not yet have the widespread currency of “sustainability,” but examples are all around us. More and more companies support re-commerce, a new-ish term for the age-old practice of buying and selling used products. Online platforms have amplified and magnified this business tremendously for every imaginable good (think Poshmark for clothes and Amazon and eBay for virtually every category).

Another example of the circular economy is the growing trend of “product as a service.” Aircraft engines, to cite just one example, are often sold as a service: Instead of buying a jet engine outright, an airline can essentially rent one on a per-hour basis. With this model, manufacturers take on the responsibility for product maintenance and recycling, and sometimes even outcomes; users of the service save in terms of capital expense and ongoing maintenance. Product as a service is becoming more common with the renewed interest in the circular economy, but it also has old roots. For decades, printers and copiers have been leased and contracted on a usage model instead of being purchased outright.

Contemporary enterprises engaged in the circular economy rely heavily on digital platforms. This is obvious for online marketplaces in which trading and marketplace platforms do the heavy lifting of onboarding, listing, discovery, transactions, and fulfillment logistics. Digital platforms also enable physical stores to manage similar functionalities with more efficiency. And in B2B marketplaces, digital platforms enable companies to trade or sell unused resources, such as raw materials or equipment, fostering greater efficiency in terms of production and distribution.

One of the key benefits of a circular economic approach is efficiency. But trade-in programs, automated and seamless recycling, and an intelligent customer experience can create a more sustainable consumption model and deepen customer engagement.

We believe it’s clear that the transition from a linear economy to a circular economy is accelerating. Here are some opportunities for rethinking business models and finding new opportunities to make your enterprise more sustainable, create new revenue streams, and deliver more value to your customers:

• Offer to lease: Consider building a platform that enables users to rent or lease products instead of selling them outright.
• Embrace re-commerce: Create an aftermarket platform where people can buy, sell, and trade products. This is a powerful way to deliver value to customers and improve sustainability. A good example here is Poshmark for clothes.
• Make recycling a seamless component of the customer experience: Design a value chain that makes recycling of products and components as straightforward as buying or using them. Apple makes this easy to do with any Apple product and will even accept non-Apple products.
• Facilitate efficient returns: Customer returns are inevitable and typically costly, so you can greatly improve sustainability and embrace the circular economy with a platform solution that makes returns as efficient as possible (which may involve working hard to avoid the necessity of returns).  

Broadly speaking, you have two possible routes for platform design and development in pursuing circular economy business models: platform-agnostic or using SAP, which has a pre-built re-commerce solution and includes other functionalities that can improve sustainability. We work with clients to help them take the best route by evaluating their current landscape and technology stacks, by creating customized business cases (including ROI), and designing a proof of concept. Each approach has a different set of pros and cons, of course, but either should help you lean into the circular economy.

Finally, when you do embrace the circular economy with these kinds of initiatives, make sure your customers understand the what and the why of your strategies. Showcase the fact that you’re eco-friendly, committed to sustainability, and willing to try new things or change strategies. Promote your initiatives for reuse, recycling, and upcycling. Encourage your suppliers and competitors to join you on the journey. You could, for example, create your own “Green Report Card” and display it prominently on your digital channels.

Sustainability and the circular economy represent one of the best examples of a “win-win” strategy. Creating or adopting new business models that reflect this evolving approach can reduce your overall environmental impact, improve business performance, and deepen customer engagement and trust.

The global pandemic prompted a huge shift in consumer behavior — including notable breakdowns and disruptions in customer loyalty. 

As supply chains suffered a shock that restricted inventory and forced long-time customers to look elsewhere, another important transformation was taking place. 

Brands and retailers that hadn’t been focused on their eCommerce presence suddenly went “all-in.” And those that already had strong websites and solid operations in place to serve online shoppers took things up a notch. 

The resulting advancement in customer experience created a new breed of consumers. These shoppers have sky-high expectations from brands when it comes to everything from product recommendations to fulfillment to customer service, and more. 

Building Loyalty in the Post-Pandemic Landscape

Now that the initial “shock to loyalty” is leveling out, the onus is on brands and retailers to create customer experiences that are so intuitive, delightful, and memorable that they’ll entice these new, more demanding shoppers to come back time and time again. 

The brands that invest in keeping the new business they’re seeing in the long-term — or those that crack to code on how to increase customer lifetime value (LTV) — are poised to be at a tremendous advantage in the coming months. Today’s blog post with BORN partner Syte helps illustrate that advantage by going into detail on LTV and how visual product discovery helps win over shoppers. 

LTV is so essential because loyal customers don’t just return to your website more often, they are also more eager to spend with your brand. In fact, 39% of loyal customers will spend more on a product, even if there are other, less-expensive options available elsewhere.

Still, when looking to build lasting relationships with customers, brands and retailers often overlook the most critical element of the customer journey: product discovery. 

After all, if shoppers can’t find what they’re looking for in the first place, why would they come back?

Why Visual Discovery Wins Over Shoppers 

Innovative brands and retailers are increasingly using visual AI to take their product discovery experience to the next level. This emerging technology, which includes image recognition capabilities, allows retailers to pinpoint specific details about each product in their inventory and to use that unique visual data to surface the most relevant items for each shopper. 

Visual discovery tools that leverage AI, including camera search and smart recommendation carousels, enable shoppers to easily find products that suit their tastes, even when they don’t have the right search terms or the time to navigate through dozens of product listing pages. 

Connecting shoppers with their ideal products so seamlessly leads not only to a higher conversion rate but also to a dramatic rise in customer lifetime value. 

In fact, Syte’s data analysis from July-December 2020 found that when shoppers interact with on-site visual product discovery tools — specifically those powered by visual AI — they are more likely to become long-term, high-value customers:

• Compared to high-intent “add to cart” shoppers, those who engaged with on-site product discovery tools had a 12% uplift in retention rate at the end of a 30-day period
• The higher retention rate among users of visual discovery technologies also translated to a 19% uplift in customer LTV within a 30-day period, compared to all customers.

These numbers demonstrate that today’s shoppers deeply value brands that help them find what they want intuitively and quickly — and that they see this process as a core element of an improved customer experience. 

Brands that rise to the challenge of creating an outstanding product discovery experience will become a trusted destination for shoppers and drive long-term value from new customers. To learn more about how these solutions impact customer experience and drive business value, take a look at our partner Syte’s blog.

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Welcome to BORN’s Partner series! Through this program we look to highlight thought leadership from our vast array of technology partners. Follow along using the hashtag #thisisBORN and #BORNpartner!

Today, we’re happy to call attention to our visual search partner, Syte, and talk about how they help transform Customer Lifetime Value with effective visual product discovery.

It will be interesting to see the data around 2020’s eCommerce adoption numbers given how people are panic buying staples such as toilet paper, pasta, yeast, hand sanitizers, vitamins and hair dye, while travel has been curtailed and over 250,000 retail outlets shuttered in the US alone.

If anything, brick and mortar stores have become an even more key part of the fulfillment process during the COVID-19 situation where logistics snarls have made same-day and next-day delivery a complicated proposition. 

For eCommerce businesses, it will be imperative to have a brick and mortar location for the highest conversion rates, given that in the US, online spending represented only 16% of total retail sales for 2019, according to a Digital Commerce 360 analysis of Commerce Department retail data. Amazon’s share is a third of that. 

eCommerce giant Amazon realizes the value of retail stores – it bought grocery chain Whole Foods in 2017 for US$13.4billion. Using insights gained from that purchase, Amazon now operates seven kinds of retail stores – Amazon Go cashierless groceries and convenience stores, Amazon Books bookstores, Amazon Pop Up themed kiosks,  Amazon 4-star general merchandise stores and Amazon Fresh Pickup grocery pickup locations.

While those numbers are on a trend upwards, from a global perspective, pure-play eCommerce is the exception, not the rule.

While Bonobos, which started out in 2007 and is now owned by Walmart, gained some success offering menswear as a purely online business, it took the opening of a trial space for shirts in 2011 in the lobby of its New York headquarters for business to explode.

One of the biggest and most well-known examples of a purely online business that moved into brick and mortar has to be Warby Parker, which upended the business of purchasing eyeglasses online with its direct-to-costumer (D2C) play in 2010. Experimenting first with popups and then stores on wheels – decked-out buses – the company opened its first physical store in 2013, and surprised even themselves with the overwhelming response. The founders have said that the first few shops generated US$3,000 per square foot of sales, a number topped then only by Apple stores, and physical stores have remained the company’s biggest growth drivers. Since then, they have gone on to open a raft of stores in nearly 90 locations across 30 states in the US and Canada, each tailored to the local market with a custom and unified point-of-sale system. As they expand into contact lenses, the Warby Parker cross-channel strategy will employ more doctors and see all their retail stores equipped with eye examination suites.

Inspired by the ‘Warby Parker model’, D2C brands such as Allbirds, Glossier, Everlane, Casper and Away have disrupted the traditional sales channels for products as varied as shoes, makeup, clothes, mattresses and luggage. These DNVB (digital native vertical brands), all of which put their customer’s interests at the forefront, see physical stores as an extension or scaling up of their online presence, a core part of their omnichannel sales strategy to heighten brand awareness and unify the customer experience.

Not only that, bedsheet brand Boll & Branch has said that its “very profitable” physical store gives consumers the chance to touch products, a very important experience when shopping for a tactile product such as bedding. In-store average order value is said to be two to three times higher than that of purchases made online. No wonder pure-play online companies are racing to set up brick and mortar stores, mostly with a smaller footprint than the usual retail store in its class, despite the steep initial set-up investment.

Define the purpose of your stores

Stores are not only for sales. Digital retailers get to know their customers fairly well, with all the data they gather about the customers and their behavior on the site, but a store is a customer touchpoint like no other. DNVBs get to communicate their brand through another channel, while customers go to a nearby store to get a personalized, tailored experience or to trial products. Stores offer more effective pickups and returns. In-store staff become knowledgeable ‘guides’ to help them through the sales process, while receiving feedback, and their interactions provide learning and insights to make better marketing decisions. Bonobos physical stores are actually dubbed Guideshops. Products ordered there are directly shipped from warehouses to the customers’ homes, reducing the need for storage space.

Differentiate between online and off

The assortment of products offered as well as the customer experience could be different on the Internet and in stores. They use social and experiential touches that can scarcely be recreated online. Mattress company Casper opened “The Dreamery”, a so-called ‘nap store’ where customers can take a 45-minute nap for US$25. Furniture retailers Snowe or Burrow House, have a showroom model. Burrow House offers a  newly-opened space where customers can lounge, drink a coffee, watch movies, made videos of themselves and, of course, shop the displays. Beauty brand Glossier’s bubblegum pink stores, said to top Apple stores in revenue, are tailored to its millennial customers with communal tables for testing, a washroom with sinks and cleansers to wash off the makeup, and staff walking around with iPads taking orders for that instant gratification.

If your DNVB is considering adding on a large or small footprint retail location, there are a few things to consider:

Popups to test the waters or expand your reach

Popups are not a recent trend but remain a solid method to experiment and gauge market response especially when done in collaboration with an established retailer. They can be found within a traditional brick-and-mortar stores as a store-within-a-store, as a standalone kiosk or even a motorized vehicle like with Warby Parker. Such popups increase brand recognition or credibility when placed next to established brands inside stores, and gives shoppers a way to visualize them differently. The lower costs and risks of going this route are another factor in its popularity. Even if you have a physical store, you could consider pop ups as an alternative channel to get your products to travel.

Team up with tech

A recent study reveals that nearly 66% of shoppers check their smartphones in-store for knowing more about the product. As 5G opens up the way to a faster and richer surfing experience, online shopping via this channel will get even more pervasive and companies need to think about incorporating it into their sales and marketing strategies. Using analytics also helps you locate your stores where your customers are. Bluetooth beacons allow messages to be broadcast to customers’ mobiles within stores to aid conversion. POS systems reduces queuing time, while touchscreens can display offers, and enable customers to check stock availability or ask for help. 

Keep costs down but retail staff are valuable assets

While a low-inventory policy might be able to keep a store’s physical footprint down, many DNVBs realize that their retail staff as offering a unique competitive advantage compared to chatbots and artificial intelligence. Consequently, they are investing in training them specifically for their interactions with customers in their physical stores.

Online customers that don’t buy right away can be given an incentive to visit another channel, whether by way of a follow-up discount, scanning in a barcode for exclusive content, or giving digital customers a redeemable coupon to entice them into your physical store
According to CBInsight, since 2012, retail space occupied by brands that started online has grown by 1,000% in the top 300 malls in America.  A physical store might not result in a sale but it should be an integral part of a DNVB’s sales strategy – to keep abreast of modern customers’ shopping habits and engage them to create a cohesive and memorable customer experience where both online and offline channels work seamlessly together to clinch sales.

Merle Norman is a family owned and operated cosmetic producer founded in 1931 by Merle Nethercutt Norman. Since then, Merle Norman’s vision has expanded to over 1,000 retail locations throughout the US and Canada. Each independently owned location gives their customers a unique and leisurely experience inspiring them to be the best version of themselves, with exceptional products ranging from skincare, to cosmetics along with indulgent Studio offerings. 

As the outbreak of COVID-19 began to sweep the country, Merle Norman and their executive and family member, Travis Richards, were determined to adjust their current eCommerce strategy to fit an imminent need, hand sanitizer. In order to get this solution off the ground, there were a few barriers that needed to be overcome, including; the solution itself, a revised technology landscape to fit their new offering, product packaging, branding and finally FDA approval. In addition, it was critical that Merle Norman consider the well-being of their loyal employees throughout the entirety of this process. This included following CDC guidelines and taking all necessary precautions outlined by the US Government. It’s important to note, this wasn’t Merle Norman’s first time assisting in a national crisis. In WWII, the brand manufactured machine gun oil and camouflage sticks for the US Government – being called to duty and helping is in their heritage.

After careful consideration, Merle Norman’s team of chemists determined an ideal solution to fit the needs and requirements of their clientele. The final product, which is distributed in a sprayable container is a 75% isopropyl alcohol and 80% ethanol alcohol-based fragrance-free lightweight liquid and is approved by the World Health Organization. The product is available in a convenient 6 oz and 3.4 oz size. 

As long-term partners of BORN Group and Salesforce Commerce Cloud (SFCC), the brand worked closely with the agency to revise their digital landscape to meet this new initiative, under a tight timeline. It was critical that their digital solution not only be scalable to accommodate the amount of intended traffic but flexible enough to make minor adjustments to their product inventory and shipping restrictions, all on the fly. ‘[We] were very impressed with BORN’s integration and our ability to work together seamlessly, the results truly speak for themselves,’ adds Jose Escobar, eCommerce Lead at Merle Norman. The teams worked closely and were ultimately able to create a stack that fit their business needs. 

The ‘Helping Hands’ initiative was launched by Merle Norman just 3 weeks after inception. With minimum branding and PR associated with the rollout, Merle Norman hosted a banner across their homepage along with a post to social media. Almost immediately, the brand saw a surge in orders of their new product attracting first-time visitors and loyal fans alike. With this success the brand had to create a limitation of purchases per one single user to prevent hoarding and overselling of the merchandise. All in all, the launch of hand sanitizer for the Merle Norman brand was not only beneficial to their business but to the thousands of franchisees who have been forced to close their doors during this time. With the production and distribution of hand sanitizer, Merle Norman was able to not only share their protective solution with individuals across the country during this high-risk time, but simultaneously protect their family-owned business and the thousands of franchisees and employees who rely on their business. 

Since the launch of Merle Norman’s hand sanitizer, the product has found a new niche in commercial accounts. Merle Norman’s product provides clients with a consistent superior formula in branded packaging all manufactured locally in Merle Normans location in California. Richards adds, ‘These past few weeks have been crazy for us all, the reception of the hand sanitizer, especially in the sprayable format has been epic. Doctors especially are fawning over this product because of its performance and other applications. The spray is more potent than all the others and doesn’t leave snail trails all over everything and it’s used on surfaces where regular mass gels would never be used- it’s exciting, I’ll never go back to a gel personally!’

Following the COVID-19 pandemic, our world has been faced with a revised reality that will affect each of us moving forward. B2C and B2B retailers alike, have seen changes in every aspect of how their businesses operate and in turn, have altered their digital presence to keep up with demand. This time of distress and disruption is not the time to halt your digital presence or growth, but instead, work to ensure that your solution is flexible and robust enough to withstand current circumstances and any future changes. 

How has COVID-19 impacted the way we do business?

‘COVID-19 has become both an agent of change and an accelerator for pre-existing trends,’ says Keith Pires, SVP, Enterprise at BORN. 

• The COVID pandemic has forced the closure of most brick-and-mortar entities disrupting the way traditional retailers conduct business.
• Businesses have to work even harder to stave off competition and fight the ease of buying off Amazon.com, deemed an essential business and growing stronger at this time. 
• Growing consumer demands are coupled with a shortened supply chain. To remain innovative and accessible across multiple touch points, businesses are recreating a seamless digital customer experience. BORN is seeing an increased customer need for quick migrations to an online platform that is more robust.
• The ability to work remotely is an imperative. To lower costs and reduce complexity, many corporations are also now moving from an on-premise data storage to a cloud data storage. 

Is moving to Cloud Storage Necessary?

BORN is consistently asked when and how to make the move.  Cloud storage allows corporations to easily connect with customers, clients, and other businesses, all at a reduced cost. There is a reduction in deployment time, which is especially significant given the recent economic circumstances. However, corporations placing a heavy emphasis on security and control would probably find more comfort with on-premise data storages and must factor in that this will still require on-site support.

How do B2C eCommerce solutions help brands adapt to these circumstances?

For a business to remain successful, it must cater to the customer’s unique buying proposition by offering personalization, convenience, and transparency. ‘The paradigm of a unique selling proposition has been overtaken by a unique buying proposition,” stated Keith Pires, SVP, Enterprise at BORN. 

To meet the customer’s unique buying proposition businesses must first gather the necessary information on clients in a different stage of its buying journey.  Following its acquisition of Qualtrics, SAP has seamlessly developed a solution that provides a holistic view of customer experience utilizing both experiential and operational data to deliver solutions following every step of the customer journey. Creating a unified customer experience while technically delivering it successfully oftentimes poses a challenge.

How do you implement an eCommerce solution quickly?

BORN developed an accelerator that allows B2B, B2C, and B2C2B commerce enterprises to reduce implementation costs by up to 40% and time-to-market by up to half, all without sacrificing quality.  ‘Even before the pandemic, customers were asking for the full power of SAP Commerce Cloud but in an accelerator approach,’ said Alex Stickelberger, Principal at BORN. ‘We built BORN EAGLE with a robust set of design, UX & UI features and pre-built integrations we developed. In addition, it is the first-ever certified SAP pre-packaged commerce solution.’

What recent innovations in SAP Commerce Cloud support a quicker implementation?

SAP Commerce Cloud helps create digital transformation for businesses by enabling omni-channels strategies, contextual customer experiences, and unifying customer processes.

With a newly-developed storefront called Spartacus, SAP Commerce Cloud Clients can utilize an angular based framer through JavaScript. This removes the need for complex frameworks and allows customers to deploy with little to no downtime.

What should retailers consider as restrictions ease?

It’s important to plan for the gradual re-opening. ‘One critical factor is logistics,’ says Keith Pires. ‘Is a business providing convenience and visibility to the customer?’

By offering a transformative experience in the digital front, businesses can provide customers with a one-to-one experience which can be developed into brand loyalty and trust. Consumers are forever-changed in how they shop and interact with their favorite brands.  It’s time for businesses to rise to meet their new expectations.  

When juxtaposed with a vicious pandemic and turbulent economy, these recent events may feel exceptionally overwhelming and deeply uncomfortable to confront as a society. However, BORN’s identity rests on being bold and authentic – it is essential for us to stand by our convictions and be resolute in times of adversity and need.

The aftermath of George Floyd’s death has sent shockwaves throughout not just the United States, but the world, calling into question the mandate of law enforcement as well as reopening necessary dialogues on race. When juxtaposed with a vicious pandemic and turbulent economy, these recent events may feel exceptionally overwhelming and deeply uncomfortable to confront as a society. However, BORN’s identity rests on being bold and authentic – it is essential for us to stand by our convictions and be resolute in times of adversity and need. 

As a forward thinking agency that is rooted in helping brands find and strengthen their digital identity, we also want to maintain a commitment to support communities in their struggle to defend their own personal identities. We affirm fully with the fight against systemic racism throughout the world and acknowledge that there must be an active, persistent effort to end the marginalization of Black lives.

We employ a very diverse and global community, many segments of whom are a direct product of the triumphs and victories of past civil rights movements and struggles for social justice. Without the contributions of the Black communities’ fight for equal treatment under the United States law during the 1960s, there would be no Immigration and Nationality Act of 1965 – a hallmark piece of legislation that repealed the harsh anti-Asian and anti-Latino immigration quotas inflicted in the Immigration Act of 1924. As an agency and institution strengthened by those many immigrant diasporas that are the legacy of that legislation, we understand and acknowledge that we would not enjoy the success that we do today without the tireless work of Black activists in the 1960s. It is only right for us to show solidarity and support in turn for the crises that still continue to impact them to this day. 

These movements feel painful as a society to bear and may inspire nostalgia to a time before these grievances were made so publicly known. But to those grieving and many otherwise, these struggles are not a ‘new normal’ but an everyday reality. We take some solace in knowing that the history of the United States is filled with many moments like this – it is a maverick nation rife with protest and civil disobedience that, when at its best, is fearless in challenging a privileged class or institution to better the human condition. We can only look to the national myths around eighteenth century patriots dumping tea into the Boston Harbor, nineteenth century patriots demanding an end to the institution of slavery, or the great marches of twentieth century patriots against segregation and war, to see where this energy for civil disobedience stems from. While we do not condone theft, violence, or the destruction of personal property in protest, we also would be remiss to claim those incidents as isolated only to the struggles of the George Floyd protests, and instead note that they come from an impassioned zeal to end a state-sanctioned brutality that has been unaddressed for decades, if not centuries. 

Yet, one of the great successes in the American experiment rests in the consecrated belief in a right to life, liberty, and the pursuit of happiness – something which racism and prejudice inherently challenges by denying or marginalizing the condition of one’s humanity and place in society. The United States Constitution has seen those sentiments enshrined over time by slowly enfranchising more and more of its peoples to have a chance at the American dream via amendments such as the fifteenth and nineteenth, which saw race, religion, and gender dismantled as qualifiers of civic participation. There is some relief in knowing that change has been historically possible and is part of the American system – but that change never came by keeping idle against racism and prejudice.

Fundamentally, prejudice of all forms is a great dampener in the will of a society and it is why, on a utilitarian level, societies tend to move away from it with time. Reinforcing, defending, or failing to challenge the belief that one race or community is less than another ensures that the spirit of an underprivileged group will inherently be deflated and unmotivated to rise to the challenges that society faces, and enables abuses and injustices against those underprivileged groups to fester unaddressed.

However, few prejudices enable such unaddressed violence and death as often as those against Black lives – and for that reason, BORN is making commitments towards a Equal Rights Fund made up of the Equal Justice Initiative, Black Lives Matter, the NAACP, and the Lower East Side Girls’ Club to contribute financially to the causes against police brutality and systemic racism. We invite our team to reflect today on Juneteenth, which commemorates the full abolition of slavery in the United States, and we commit towards providing new content that sheds further light to our principles in equity and justice. Together, we can bring awareness and make change in the fight against racism and strengthen the equality of all before society and the law.

1: The 4 Horsemen

“The 4 Horsemen’’ coined by Scott Galloway are businesses worth over a trillion dollars. The big four include Facebook, Apple, Amazon, and Google. These companies are involved in almost everyone’s day-to-day lives dominating not only our online experience but also the corporate world. But, what makes these companies so successful is their ability to identify and satisfy human needs. 

2: Appealing to Human Instinct

Google has become the replacement for a higher power. In this modern age Google becomes the first place a person turns to when a question is left unanswered. Apple adds to a person’s sex appeal. When someone has an Apple product they are perceived as wealthier, fashionable, and increasing sex appeal. Amazon has become a ‘temple of consumption’ as it provides us with a seemingly endless assortment of products. With over 1.2 billion daily visits to their site, Facebook has managed to gather nearly one-sixth of the world’s population in their digital space on a daily basis. By appealing to our daily human needs, these four companies have grown to dominate the business world and play an essential role in our daily lives.

3: Benjamin Button Effect

The ‘Benjamin Button Effect’ represents an algorithm or product which appreciates in value with every usage from its customer. The ‘Recommendation’ tab on Netflix systematically changes and improves each time a user watches a new tv show or movie. As the individual increases the number of movies and tv shows watched more data is added to the system creating a more personalized selection for the customer. Providing both an assortment of entertainment and an algorithm catered to every individual user, Netflix has become globally renowned as the preferred hub for movies and tv shows. Amazon utilizes a similar effect with a “Similar Products’ function. Its algorithm recognizes what each user has recently or frequently purchased in the past and offers similar products in hopes of increasing sales. Companies which utilize the ‘Benjamin Button Effect’ gather more insight on the customer and are more aware of sudden changes in consumer behaviour. 

4: T-Algorithm

The T-Algorithm, developed by Scott Galloway’s L2 Market Analysis Company, was used to identify startups which would join an elite group of companies worth more than one trillion dollars. This algorithm was identified by analyzing the characteristics of four companies: Amazon, Google, Facebook, and Apple. These companies are characterized by the same 8 variables: Product Differentiation, Visionary Capital, Global Reach, Likeability, Vertical Integration, Artificial Intelligence, Career Accelerant, and Geography. 

5: How do the ‘Horsemen’ reflect these variables?

Each of the four have the ability to deliver superior products. Apple has their appraised iPhone, Amazon has a myriad of products in their assortment, Facebook brings one-sixth of the world together in their digital space, and Google can answer virtually any question thought of by the human mind. With Visionary Capital, each of the four have a long term goal in mind. Facebook wishes to connect the world in their digital space while Google seeks to organize all data on their platform. The four Horsemen have extended their reach on a global scale as people from all over the world either use or are familiar with these companies. To avoid intervention, a company would need to develop a sense of likeability if it wishes to be accepted in society. Each of the big four hold vertical integration as they control each step of the production and distribution of their products. To create an efficient algorithm to gather and store countless data, powerful artificial intelligence must be used. Strong artificial intelligence and digital presence is a pinpoint for brands wishing to establish their name in the business world. An amazing business requires an amazing team. For a business to join the big four it must be seen as an accelerant for one’s career if it wishes to attract talented individuals on their team. The final variable in geography. Each of the big 4 are established around top tier universities which allows the recruitment of the brightest minds. 

“The Digital Age is Heraclitus on steroids: change is a daily constant,” added by Scott Galloway, NYU Professor of Marketing. By cutting costs, establishing a recurring relationship with customers, and communicating risks and visions, companies can greatly increase their survivability in these disruptive and uncertain times. Businesses seeking to improve in their digital presence should follow the eight variables found in all four trillion dollar companies if they wish to remain agile and develop a long-term, sustainable business strategy.

If you were unable to attend our webinar we invite you to view the full recording here: https://us.vtex.com/scottgalloway

About BORN and VTEX:

Selling through digital channels has been accelerated a decade forward in a short span of three months thanks to COVID-19; and it has happened across every industry. As a global leader in collaborative commerce solutions, VTEX is ready to help you succeed with your commerce strategy, be it B2B, direct-to-consumer or launching your own marketplace. Working together with BORN Group, an award-winning full-service digital commerce agency, we help organizations deliver collaborative commerce experiences to meet today’s “new” buyer demands. 

For more information, please reach out to Mackenzie Johnson, mackenzie.johnson@borngroup.com.

Across the board, agencies are seeing a broad shift toward short-term, project-based engagements in place of the familiar Agency-Of-Record (AOR) relationships that dominated the agency landscape just years ago. In fact, Forbes once described this large-scale change as a result of The Agility Era, a phrase that poignantly captures the industry’s newfound preference for flexibility and streamlined production schedules over relatively unchanging client relationships. The question then becomes: what tools does an agency need to work effectively in such an environment?

In order to remain competitive, every ad agency today needs a robust ERP solution specially tailored to the current needs of the industry. There are myriad benefits of ERP software for all businesses, including the ability to integrate information and communication across business management, customer relationship management (CRM), human resources, distribution, and sales. But due to the ad industry’s global shift toward agility over stability, an even greater emphasis has been placed upon an ability to quickly organize data and integrate that information across key business areas. This is where an effective Agency Management ERP solution can make all the difference in the world for your creative organization. For the remainder of this whitepaper, we’ll take a closer look at just how ERP software is defined, how it can help creative organizations, and how ERP systems can be customized for advertising firms. We’ll end by noting that these benefits and more are included in BORN’s unique Agency Management ERP solution.

What is ERP Software?

Enterprise Resource Planning software refers to a category of business management applications that allow the integration, automation, and synchronization of a host of back-office activities pertaining to business management, customer relationships, sales, production, distribution, and human resources. In short, ERPs provide access to nearly every area of business operations through a single digital point of entry. While each of these areas demands a unique skillset to address ongoing challenges, an effective ERP solution allows unmitigated access to each domain for a real-time organization and business management. Key attributes of an ERP system include means for the top-level organization, bottom-level oversight, and synchronization between key business areas. Importantly, these areas of functionality are brought together into a centralized point of reference found in the ERP dashboard, an administrative panel that provides a “driver’s seat” interface for the entire range of ERP functionality.

One of the most important features of effective ERP systems is the ability to function as a kind of command and control center, a central point of reference for the top-level executives of the different branches of an organization. With this bird’s eye view, a manager or executive can, with minimal effort, glide between different areas of business operation and, when necessary, swoop down to sort out the details of a particularly problematic area. 

A case in point: a particular client appears to be slow to move forward on a new campaign. All of the elements appear to be in place, including a formal estimate, contract, and work order. Upon inspecting the progress log on this client, though, it becomes clear that they are currently still waiting on the client welcome package, a document that collects the timeline, milestones, project team, and deliverables in one convenient location for the client. Because this client was promised such a document upon agreeing to the contract terms, they continue to wait for it before moving forward. Such bottlenecks, while they may seem trivial, can pose significant detriments to the success of a creative organization.

This client management anecdote brings us to another important function of ERP software: the ability to provide detailed bottom-level oversight for specific business activities. ERP systems excel at allowing a broad-level view into business operations. Another area of strength is the kind of transparency into individual business domains required to quickly diagnose problems before they affect other areas of operation. Here’s an example: it becomes apparent that one of your agency’s top client projects is significantly behind schedule for delivery on an upcoming milestone. Upon looking into the project management dashboard, you notice that only one assigned designer belongs to the project, whereas such a workload clearly requires two or more on the job. So, after checking with human resources, you locate two internal designers currently without major commitments. With a quick email, you invite them to work on the high priority project. Problem solved.

The last important general feature of ERP software concerns the ability to synchronize across disparate areas of business operations. Many imagine synchronization as the heart of any business. Indeed, the image of a creative organization as a “well-oiled machine” is perhaps as old as the world of commerce itself. Successful synchronization of activities across different domains can transform a business from an inefficient operation with many loose ends to an optimized “machine” that regularly nails ambitious and high-visibility projects for high-profile clients. Practically, synchronization means that the aims of sales and business development match up with the numbers from finance and accounting, which feed flawlessly into human resources and resource allocation. Once the silos between these domains have been removed, the components can march in lockstep. When used correctly, an ERP can turn a business into a smoothly functioning creative machine.

ERP Benefits to Ad Agency Project Management

Many of the principal challenges for advertising agencies lie in the area of project management. How can a team remain on top of timelines, meet important milestones, and deliver a product that meets and exceeds the client’s expectations? How can teams avoid some of the pitfalls of communication missteps, scheduling conflicts, interpersonal issues, and exceeding project budgets? Each of these challenges can be conceived through the lens of project management, an area that, as noted above, has become increasingly important as creative agencies turn more and more toward working on a per-project basis. Indeed, without the security of AOR relationships, agencies must work harder than ever to maintain a consistent pipeline of projects. Thankfully, the effective use of ERP software can facilitate such a steady stream of client successes, which then translate into a consistent source of agency revenue. Let’s dive specifically into ERP’s four major benefits to project management: communication, scheduling, organizing time entries and invoices, and collaboration.

One of the most frequent and important problem areas for every creative organization is communication. So much rests upon the ability to obtain accurate information and convey it to the appropriate internal departments and, when necessary, to clients. An ERP can help facilitate clear and effective communication by providing up-to-date information in a given area and allowing one to cross-reference that data with the operations of another domain. Through direct database integration, managers can quickly match resource allocation to project needs and communicate these needs to executives or account managers. Similarly, a chief executive officer can ascertain which clients are optimal for the company to devote more resources to and which to scale back. Armed with such unambiguous data, communication between specific business channels becomes just as lucid.

Related to communication is the issue of scheduling, a task that becomes more complex as an agency scales in number and grows in geography. How can a creative organization, regardless of its size, coordinate between employees of varying status to ensure they are able to have effective meetings, on the one hand, while enjoying concentrated “heads down” time, on the other. Although seemingly straightforward, achieving such a state can pose quite a challenge—especially for agencies who work with talent (and clients) in multiple time zones. This is an area that the project management tools included in an effective ERP system handle with ease. With the ERP interface, a project manager can schedule meetings that bring together internal creative talent with the appropriate personnel in management to spearhead a project. An ERP can also help facilitate client meetings and keep track of both internal and external preferences for scheduling and time management.

Related to the issue of scheduling is the need for every creative agency to keep track of work hours as they pertain to specific projects, along with the ability to generate corresponding client invoices. In most agencies, designers and other creative talent work on multiple projects simultaneously. Using an external bookkeeping application can work in such a situation, although options for seamless horizontal integration remain limited. Want to correlate projected profitability with the current number of logged hours for a project? If you’re willing to toggle between at least three or four applications such a task is possible. But another, more streamlined, way to approach such a task would be to use the time to track features of an effective ERP solution. This data can be correlated directly to additional metrics such as profitability and specific financial goals.

There is perhaps no better-defining the feature of a successful ad agency than its ability to collaborate. From building internal teams of talent to working with external contractors to striking the right creative chord with each client, collaboration—the task of providing the conditions for people to work together—is a critical aspect of every creative organization. Project managers are often put in charge of making sure these important relationships continue to flourish in ways that are beneficial for all parties involved. Here, as with other areas, ERP software can be one’s best partner in the facilitation of the kinds of collaborative relationships that help drive a successful creative team. Specifically, by tracking information related to the personalities and preferences of each team member, an ERP can help project managers match talent to project in efficient and productive ways. To this end, project managers and executives combine high-level project data with low-level HR information to build composite images of how teams collaborate.

The above-mentioned benefits to ERP users focus on activities that typically relate to project management tasks. It is important to note, though, that the perks of ERP software extend far beyond those of a project management tool. Indeed, benefits to agencies using ERP software also include customer loyalty, increased revenues, reduced overall costs, and even data security. Customers receive consistent treatment across multiple projects, each of which is executed with efficient communication, time management, and collaboration. Satisfied customers come back for more work. And such results are even further enhanced through built-in ERP CRM tools. As a direct result of this increased activity, overall revenues increase and costs fall due to an increase in efficiency. Finally, because documentation, process flow, and project management are kept in a protected business area, as a result, the agency’s security is improved.

Customizing ERP Systems for Ad Agencies

The onset of The Agility Era has meant an increase in demands and expectations for ad agencies across the board. With a highnumber of projects and increased demands from clients and internal stakeholders, creative agencies need to be on the top of their game now more than ever. Out with the slow-moving and reliable AOR paradigm, in with the fast-paced per-project working model that dominates today’s ad industry. Along similar lines, while the emergence of digital media has opened up various online avenues for advertising, it has also sped up turnaround times. Jobs that would have been formerly delivered in five months are now expected in less than five weeks. Quicker turnaround times mean that jobs must be even more tightly organized with clearer communication between each part. 

Today, only with an effective Agency Management ERP solution can such demands for efficiency and productivity be met. Importantly, these ERP solutions work the way an agency works, providing simplicity for creatives, flexibility for client-facing teams, and control for finance. These customized ERPs help to manage the entire creative process, from engaging with clients to planning a job, scheduling resources, and project delivery through to billing and reporting on profits and utilization. Agencies ultimately deliver better client results, achieve higher margins, and make work more enjoyable for everyone with ERP software—whether an independent platform or as an integrated solution.

Why use BORN?

BORN Group’s Management ERP solution is unique in that it brings together the basic components of an effective ERP software tool (top-level organization, bottom-level oversight, and synchronization between key business areas) with ad agency project management features (communication and scheduling tools, time entry and invoices, and collaboration tools). By combining these key areas of business, project, and resource management, BORN’s Agency Management ERP remains the top choice for ad agencies worldwide. From a high-level view, BORN’s competitive Agency Management ERP solution brings you:

1. Project and Resource Management – flexible and easy to use, this component accounts for the day-to-day management of jobs, people, and the creative process.
2. Financial Management – this component provides complete visibility and control over budgets, finances, and compliance.
3. Social Collaboration – streamlines communication for jobs across key departments and business areas and in order to drive delivery and meet client expectations.
4. CRM Scalability – monitor the needs of each client more accurately by tracking resources, costs, and customer satisfaction.
5. Manage Leads – keep track of lead generation through built-in CRM integration and lead management tools.

As noted above, these enhancements also lead directly to customer loyalty, increased revenues, reduced overall costs, and data security. Additionally, BORN’s solution has been shown to lead to increases in customer loyalty, which can be invaluable for ad agencies working in The Agility Era. Overall, BORN’s Agency Management ERP is a highly effective solution for creative organizations working in today’s fast-paced advertising industry.

Evolution of loyal marketing

Early loyalty marketing started out with premiums offered to customers that encouraged them to return. In the 18th and 19th centuries, brands offered tokens, certificates or tickets that customers could exchange for other items in-store, effectively offering them a discount. By the end of the 19th and well into the 20th century, stamps – the most famous among them S&H Green Stamps, followed by Green Shield in the UK – replaced tokens. Green Stamps could be collected from for purchases at select retailers and redeemed for products from a catalog.

Individual brands and retailers wanting to engage with their customers led to the creation coupons printed on top of packaging that could be redeemed. Betty Crocker started with these so-called box tops in 1929 but it was Kellogg’s offers and tie-in with their cereal boxes since 1909 that inspired so many brands to follow suit.  

The modern loyalty program can be traced back to American Airlines’ frequent flyer program that was set up in 1981 and sparked off an entire industry. Since then, frequent-usage points or miles for airlines, hotel, car rentals have become so ubiquitous that the phrase ‘card-carrying member’ has entered the lexicon. In the UK, one of the first in-store rewards cards backed by a chain was Sainsbury’s Homebase Spend & Save card in 1982.

Credit cards have also allowed customers to accumulate points, and it seems like every major retailer has set up a loyalty card (or rewards or advantage or points or club card) that imitates a credit card – with a magnetic stripe – that either offers a better price or points for a purchase made in-store. This ubiquity has led to customers not being very ‘loyal’ at all.

Frequent flyer programs, which involve the management of tiers, rewards and redemption, in essence, moving millions along on their customer journeys to become top-tier members, are a complex and expensive exercise. In the US alone, companies spend a staggering US$2 billion on loyalty programs every year. Still, engagement is not high. The average US household has accumulated over 20 loyalty memberships and only uses a fraction of them. In the words of Hal Brierly, the man who designed loyalty programs such as American’s AAdvantage, United Mileage Plus, Hilton HHonors and Hertz #1 Gold, “Programs need to evolve toward a sustainable, profitable structure that’s still desirable for the customer.”

Membership programs

The cons of traditional loyalty programs led to the growth of a disruptive variant: membership programs. Unlike loyalty card programs, which are free to enter, customers pay for inclusion in a membership program. Book and music retailers usually go this route. Amazon Prime is one of the largest membership programs with more than 150 million members worldwide. One of the most successful examples is wholesale club Costco, which only allows members to shop, receive discounts and access special merchandise. The Dollar Shave Club, which allowed members to receive shipments of blades on a regular basis, captured a significant 15% market share in the short period of five years before it was sold to Unilever, and forced competitor Gillette to revamp its membership program. Membership fees increase commitment from customers. The predictability of repeat business and cash flow results in significant cost-savings to the business too, not the least from reduced marketing costs. Retailers can also target customers through better product selection and design.

Paid membership programs are particularly valuable as many of today’s consumers expect immediate gratification, even if they’re making their first purchase with a brand. In fact, two-thirds of consumers report that they’d join a paid membership program offered by their favorite retailer if the rewards were relevant, with that number increasing to 75% for younger consumers between the ages of 18-34.

Nikhil Naidu, Product Marketing Manager – Loyalty & Referrals, Yotpo

Mobile adoption

Cards themselves are being increasingly replaced with apps as eCommerce and digital payment infrastructure take off. Nowadays, mobile-optimized apps that use near-field communications are gaining ground. Even Cracker Jack, which included a novelty prize in its boxes of caramel popcorn starting 1912, announced in 2016 that the prizes would be replaced by nostalgic games that could be downloaded onto its app via QR code. 

Things to consider for a loyalty program

Once the domain of majors, now even a smaller player can run a sophisticated loyalty program. Here are a few takeaways gleaned from the successes of the best loyalty and membership programs out there.

Simplicity is key

Keeping the adoption process easy and simple is the key to getting customers on board. Pop-ups, freebies, discounts and reminders on your website can remind them to join. Ask only for information that is really needed. Once aboard, they should easily understand what their status is, what their points are and what their potential rewards are. The Starbucks Stars app, one of the best apps optimized for mobile and through which purchases can be made, goes one further and acts as both a rewards program and payment method. The points system is simple too – US$1 gets 1 star. According to Bond Loyalty Report, 57% of consumers want to engage with their loyalty programs via mobile devices, but 49% don’t know if their programs have an app. Make the redemption process easy to navigate. And of course, make sure you don’t upset older consumers when you restructure programs either.

Reward engagement

Loyalty programs need to reward devoted customers beyond just purchase. Don’t just reward new members, keep in mind existing members too. A tiered solution such as Sephora tri-tiered Beauty Insider program is ideal. Reward them for a variety of actions from sharing on social media to customer referrals. Customer engagement can support a retailer’s marketing, bring in new customers and grow revenue. Track loyalty metrics like churn, response and retention rates. The idea is to move them along on their customer journey as they interact with your brand and finally become advocates, and the rewards and incentives for them to do so should be commensurate, relevant and tailored. 

Personalization

The creation of an account for a customer to track lifetime sales also results in a rich vein of data that can be mined to understand shopping patterns and target them better. eCommerce-led businesses can take advantage of the data to come up with targeted sales and marketing for an audience of one. Furthermore, only 11% of loyalty programs offer personalized rewards based on a customer’s purchase history or location data, so there is scope for much more customization of incentives.

Repeat business from loyal customers might be key for businesses to persevere through and bounce back after the COVID crisis, and well-designed loyalty programs that go beyond points and are sensitive to their users’ needs during this difficult time as well as after are going to make it infinitely easier for them to support their favorite brands.

About BORN partner Yotpo: Yotpo, the leading eCommerce marketing platform, helps thousands of forward-thinking brands like Rebecca Minkoff, MVMT, Bob’s Discount Furniture, and Steve Madden accelerate direct-to-consumer growth. Yotpo’s single-platform approach integrates data-driven solutions for reviews, loyalty, SMS marketing, and more, empowering brands to create smarter, higher-converting experiences that spark and sustain customer relationships.

Riding that Wayfair wave

The number of states requiring remote sellers to collect and remit sales tax more than doubled in 2019. By the end of 2018, six months after the Supreme Court of the United States overruled the physical presence rule in South Dakota v. Wayfair, Inc. (June 21, 2018), 19 states were enforcing economic nexus. As of December 2019, 43 states and the District of Columbia have economic nexus laws or rules requiring out-of-state sellers with a certain amount of sales in the state to collect and remit sales tax.

The last two holdouts will likely cave in 2020. Only two states with a statewide sales tax haven’t adopted economic nexus: Florida and Missouri. Both have economic nexus legislation drafted and ready for discussion during their 2020 legislative sessions, which start in January.

A state with no general sales tax may beat them to the punch. Close to 20 local jurisdictions in Alaska have signed the Alaska Intergovernmental Remote Seller Sales Tax Agreement, which was created by members of the Alaska Municipal League and will be managed by the Alaska Remote Seller Sales Tax Commission. The agreement allows local jurisdictions to “implement a single-level, statewide administration of remote sales tax collection and remittance.” Remote vendors could be required to collect and remit sales tax in some parts of Alaska by early 2020.

The rise of the marketplace

If the Alaska Municipal League, Florida, and Missouri all succeed in their efforts, marketplace facilitators will be required to act as the tax collector for third-party sellers in those locations. And Florida, Missouri, and municipalities in Alaska aren’t the only ones looking to implement marketplace facilitator laws in 2020.

Like economic nexus, marketplace facilitator laws exploded in 2019. Only seven states required marketplace facilitators to collect and remit tax on behalf of their third-party sellers as of December 2018, and most allowed marketplaces to opt out of collection by complying with use tax reporting requirements. By contrast, 37 states and D.C. have marketplace facilitator laws now. And counting.

One benefit of marketplace facilitator laws is that they reduce or remove the burden of compliance for the smallest sellers. Another is that state tax authorities don’t have to deal with auditing individual marketplace sellers — they can focus on the larger marketplace facilitators instead.

There are similar benefits when businesses outsource sales tax collection and remittance to a certified service provider. 

Simplifying compliance with certified service providers

Before states won the right to tax remote sales, the Streamlined Sales and Use Tax Governing Board came up with a way to encourage voluntary compliance.

Streamlined Sales Tax (SST) member states simplified sales tax compliance for remote sellers by establishing a central, electronic registration system; uniform definitions, rules, and tax bases; and more. They also compensate certified service providers (CSPs), like Avalara, for providing sales tax software and services for businesses that qualify as a volunteer seller.

The CSP program has been such a success that other states are emulating it. Pennsylvania already has a CSP program up and running. Connecticut, Illinois, New Mexico, and the Alaska Municipal League are developing similar CSP programs of their own. Expect more states to follow suit in 2020.

Other sales tax changes

Though they grab headlines, taxes on remote sales aren’t the only news in the sales tax world. As did 2019, 2020 will see changes in exemptions, product taxability rules, sourcing rules, and more. Expect to see sales tax developments in:

• Bitcoin: How states treat it and whether tax departments accept it
• Digital products: If they’re not already taxed, ebooks and streaming services likely soon will be
• Food: Marketplaces that deliver food may be required to collect sales tax
• Tampons: More states are likely to exempt feminine hygiene products in 2020
• Transportation: More states will look to tax personal transportation services (e.g., Lyft and Uber)

And, of course, there’ll be sales tax rate changes. There are always sales tax rate changes.

Want to know more about 2020 sales tax changes? Get the report.