Dahlström, P. y Edelman, D. (abril,2013).

The coming era of on demand

marketing : marketing and sales practice . McKinsey Quarterly pp. 1-15.
(AR50053)

A P R I L 2013

m a r k e t i n g a n d s a l e s p r a c t i c e

The coming era of

‘on-demand’ marketing
Peter Dahlström and David Edelman

Emerging technologies are poised to personalize

the consumer experience radically—in real time and
almost everywhere. It’s not too early to prepare.

The problem What to do about it

The accelerating pace of digital Companies must excel on
technologies will force companies three levels:
to meet new and exacting consumer
demands for marketing that’s • engaging customers in manifold
always relevant. Executives must new ways by designing
prepare now. interactions that are grounded
in use cases
Why it matters
In an on-demand world, consumers • assembling data offering new
will judge brands by their ability lenses on the behavior of
to deliver heighted experiences— consumers by pulling together and
interactions, literally anywhere, evaluating all their touch points
that offer high levels of value and with a brand
are radically customized and easy
to access—along the consumer • developing new processes and
decision journey. skills across all functions (not
just marketing) to transform the
delivery of brand experiences
Digital marketing is about to enter more challenging territory.
Building on the vast increase in consumer power brought on
by the digital age, marketing is headed toward being on demand—
not just always “on,” but also always relevant, responsive to the
consumer’s desire for marketing that cuts through the noise with
pinpoint delivery.

What’s fueling on-demand marketing is the continued, symbiotic

evolution of technology and consumer expectations. Already, search
technologies have made product information ubiquitous; social
media encourages consumers to share, compare, and rate experiences;
and mobile devices add a “wherever” dimension to the digital
environment. Executives encounter this empowerment daily when,
for example, cable customers push for video programming on
any device at any time or travelers expect a few taps on a smartphone
app to deliver a full complement of airline services.
3

Remarkably, all this is starting to seem common and routine.

Most leading marketers know how to think through customer-search
needs, and optimizing search positioning has become one of the
biggest media outlays. Companies have ramped up their publishing
and monitoring activities on social channels, hoping to create
positive media experiences customers will share. They are even
“engineering” advocacy by creating easy, automatic ways for
consumers to post favorable reviews or to describe their engagement
with brands.

But we’re just getting started. The developments pushing mar-

keting experiences even further include the growth of mobile connect-
ivity, better-designed online spaces created with the powerful
new HTML5 Web language, the activation of the Internet of Things
in many devices through inexpensive communications tags and
microtransmitters,1 and advances in handling “big data.” Consumers
may soon be able to search by image, voice, and gesture; auto-
matically participate with others by taking pictures or making
transactions; and discover new opportunities with devices
that augment reality in their field of vision (think Google glasses).

As these digital capabilities multiply, consumer demands will rise in

four areas:

1. Now: Consumers will want to interact anywhere at any time.

2. C
 an I: They will want to do truly new things as disparate kinds of
information (from financial accounts to data on physical activity)
are deployed more effectively in ways that create value for them.

3. For me: They will expect all data stored about them to be
targeted precisely to their needs or used to personalize what
they experience.

4. Simply: They will expect all interactions to be easy.

This article seeks to paint a picture of this new world and its
implications for leaders across the enterprise. One thing is clear:
the consumer’s experiences with brands and categories are
set to become even more intense and defining. That matters

1 For
 more, see Michael Chui, Markus Löffler, and Roger Roberts, “The Internet of Things,”
mckinsey.com, March 2010.
 4

profoundly because such experiences drive two-thirds of the

decisions customers make, according to research by our colleagues;
prices often drive the rest.2

It’s also apparent that each company as a whole must mobilize to

deliver high-quality experiences across sales, service, product
use, and marketing. Few companies can execute at this level today.3
As interactions multiply, companies will want to use techniques
such as design thinking to shape consumer experiences. They also
will need to be familiar with emerging tools for gathering the right
data across the consumer decision journey. Finally, the marketing
organization’s structure will need to be rethought as collaboration
across functions and businesses becomes ever more essential.

What to expect in 2020

Over the next several years, we’re likely to see the consumer experience
radically integrated across the physical and virtual environment.
Most of the technologies needed to make this scenario happen are
available now. One that’s gaining particular traction is near-field
communication (NFC): embedded chips in phones exchange data on
contact with objects that have NFC tags. The price of such tags is
already as low as 15 cents, and new research could make them even
cheaper, so more companies could build them into almost any
device, generating a massive expansion of new interactive experiences.
To understand that near future, please turn the page and follow
a hypothetical, tech-enabled consumer, Diane, who purchases an
audio headset.

Meet tomorrow’s consumer: Diane.

2 See
 David Court, Dave Elzinga, Susan Mulder, and Ole Jørgen Vetvik, “The consumer
decision journey,” mckinsey.com, June 2009. The research identified the ways individuals
interact with a brand as they embark on consumer decision journeys across multiple touch
points: considering, evaluating, purchasing, experiencing, sharing, and, ultimately,
bonding with products after buying them. It also quantified the impact of those touch
points on consumer decisions.
3 See
 Tom French, Laura LaBerge, and Paul Magill, “We’re all marketers now,”
mckinsey.com, July 2011.
 5

Scenes from the future of

on-demand marketing
Diane’s rising expectations will require companies to direct a variety
of “scenes” in which technologies, messages, and choices engage her
with products, services, and trusted communities.

Scene 1

Curious about her friend’s headset, Diane

taps it with her phone. Both have near-
field-communication (NFC) capabilities.

Scene 2

Diane’s phone prompts her to photograph

her face and then displays how the headset
would look on her in various colors.

Scene 3

She’s then invited to send the photo to

Facebook friends, who are asked to vote among
a choice of colors that best suit Diane.

Scene 4

Meanwhile, she receives a text alert from Spotify

offering a free month’s subscription to its premium
music service if she buys the headset (the
manufacturer’s data show she isn’t a subscriber).

Scene 5

Friends like the headset in fuchsia,

and Diane completes the purchase.
 6

Scene 6

When the headset is delivered the next day,

a message asks if she would like to post a
“wow” picture on Facebook of her wearing it,
with a link for others to buy it as well.

Scene 7

When she meets those friends in person, her cell

phone reminds her of the NFC chip in the headset
and offers her an additional free month of Spotify’s
service for each friend who taps and buys a headset.

Scene 8

Every week, she gets a “club gig of the

week” message offering discount access
to a venue if she wears the headset
when she walks in the door. A club video
board welcomes her by name.

Scene 9

While Diane listens to songs, Spotify reminds

her that the headset manufacturer
has brought her this listening experience.

Scene 10

At a gym a few weeks later, Diane gets

an opportunity to buy and download an
exercise program the gym offers. She
can access the program by tapping her
phone on a nearby display.
7

Taken together, the scenes from Diane’s consumer journey illustrate

the four emerging areas of consumer demands we touched on above.

Now
Marketers have gotten a foretaste of the consumer’s desire for more
urgency and ubiquity. Bank balances running low? Send the
consumer an alert on her cell phone. A question about fees shows
up on the bank’s Twitter handle? Post an immediate response.
An executive of one major bank believes that the immediacy of smart-
phone apps has already made brick-and-mortar contact unnec-
essary for many young consumers, who use a range of mobile services
to manage their accounts and rarely interact with the brand
physically. Yet having an entire bank in your phone may be only a
baseline for the experiences on the horizon. Consider one European
beverage company’s beta test of beer coasters embedded with
NFC technology. A club patron contemplating a new brew can tap a
coaster with a cell phone and get a history of the beer, bars where
it is served, upcoming promotions, and a list of friends who have
given it a thumbs-up.

In this environment, a marketer’s “publishing” extends to virtualized

media such as the coaster or Diane’s headphones, which become
touch points for considering and evaluating products and services.
Digital information technologies, operating behind the scenes
to integrate data on all interactions a consumer has across the deci-
sion journey, will provide insights into the best influence path-
ways for companies, while also triggering new personalized expe-
riences for consumers.

Can I
Most first-wave digital capabilities helped people access things they
already did—shopping, banking, finding information. Consumers
must often settle for compromises in their digital experiences. Yet
robust programming, data-access, and interface possibilities
now available could make every digital interaction an opportunity to
deliver something exceptional.

Consider Commonwealth Bank of Australia’s new smartphone app,

which changes the house-hunting experience. A prospective
home buyer begins by taking a picture of a house he or she likes.
 8

Using image-recognition software and location-based technologies,

the app identifies the house and provides the list price, taxes,
and other information. It then connects with the buyer’s personal
financial data and (with further links to lender databases)
determines whether the buyer can be preapproved for a mortgage
(and, if so, in what amount). This nearly instantaneous series
of interactions cuts through the hassle of searching real-estate agents’
sites for houses and then connecting with the agents or with
mortgage brokers for financing, which might take a week.

The mortgage app shows how the digital environment is now

integrating disparate sources of information, at low cost and at scale,
for many new domains. The challenge for companies is to look
beyond today’s interfaces and interactions and to see that moving
past compromises will require a rethinking of aspects of pack-
aging, pricing, delivery, and products.

For me
Some online marketers already use features in devices such as
cameras and touch screens to help consumers see what apparel and
accessories may actually look like when worn. Web retailer
Warby Parker, for example, offers hundreds of customized views of
eyeglasses overlaid on a Webcam picture of the consumer.

In the future, demands for more personalized experiences will

intensify. A phone tap, a click, or a stylus jot will instantly personalize
offers, using information captured on “likes,” recent travel,
income, what friends are doing or like, and much more. With each
interaction, the consumer will be creating new data footprints
and streams that complement existing digital portraits, sharpening
their potential impact. Facebook will eventually be able to mine
the world’s largest database of photographs, linking individual people
to their activities. Smartphones have rich data on every place
where you have traveled with one in your pocket. This is just a start,
and the privacy, security, and general trust implications are
staggering. Yet consumers consistently show a desire to provide more
data when companies use captured information to provide truly
helpful feedback (you’re over budget or you are doing well in your
exercise program) or to offer recommendations, services, and
customization tools rather than just push what might appear to be
intrusive (and creepy) messaging.
9

Simply
The quest for simplicity led Amazon to create a subscriber model
for delivering bulky repeat-buy items (such as diapers) and Starbucks
to adopt a tap-and-go approach to mobile payments. Yet many
interactions remain complex and fragmented: to name just a few,
finding, organizing, and redeeming online coupons; turning
weekly meal plans into online delivery orders; tracking your monthly
cash flow; and staying on top of your health-insurance bills
and reimbursements.

Evolving technologies and consumer behavior should make it easier

to redesign many complex experiences. For example, companies
offering inherently complicated products or services could overlay
a game interface on certain Web pages, to let consumers play
at trading off different options and prices. Visual-recognition tech-
nology could allow you to scan health-care bills, receipts,
statements, and appointments into one integrated calendar and
cash-management system. Already, start-ups in travel, expense,
and sales-force management are experimenting with approaches
that streamline processes and make interactions more inviting—
using touch and swipe to make changes, gestures to activate large
displays, and data in phones to recognize consumers and
automatically customize interfaces.

Setting strategies and building capabilities

Consumers will soon make these demands of every interaction they

have with companies. Although the marketing function may often be
the best conduit to get customer input and to drive decisions about
how to distinguish brands, coordinated efforts across the enterprise
will be needed on three levels.

Designing interactions across the consumer

decision journey
Today, many companies have successfully defined and addressed cus-
tomer interactions across a few channels. What they need to be
designing, however, is the entire story of how individuals encounter
a brand and the steps they take to evaluate, purchase, and relate
to it across the decision journey. Marketing or customer research can’t
do this alone. At one apparel retailer, managers from multiple
 10

functions go together into the field to do deep ethnographic research—

watching how customers shop, going into their homes, and
uncovering the triggers and motivations that drive behavior. These
managers look for the compromises that people face as they
try to get things done, probing for their higher aspirations. And the
managers watch how customers react as they interact with brands.

Among the findings, the managers identified seven key “use cases”—
customer situations that lead to satisfaction along different decision
journeys. They found a wide range of trigger points for choosing an
“outfit solution” for a social occasion, learning that shoppers became
frustrated, especially online, when they couldn’t see how items
would look together. Customers wanted to drag and drop items on
an on-screen model or to see great combinations in advance. But
that required different merchants to work collectively and the stores
to bring items together on sales floors.

Cross-functional teams also came together in workshops. With third

parties such as fashion bloggers and thought leaders from online-
media companies, they mapped out new ways to influence the decision
journeys of customers with different attitudes toward the retailer’s
brand or different kinds of spending behavior. One of the most valuable
outcomes was clarity on how the store’s brand positioning could
guide the design of new experiences. The teams knew that their story
would always be “better value than the shopper expected, delivered
in a friendly way.” That meant warm visuals and messaging on
the company’s Web site and across various media to reinforce the
story of value to the customer. And the teams explored new ways
social media could help customers show off the value they received.

Out of the work came not only a shared, company-wide sense of the
decision journeys of consumers but also immediate buy-in to a wide
range of initiatives that could boost market share. These initiatives
are on track to provide an 8 percent sales lift above what the existing
plan envisioned and were implemented more quickly because of the
management team’s shared sense of engagement.

Making data and discovery a nonstop cycle

To win over on-demand customers, you must know them, what they
expect, and what works with them, and then have the ability to
reach them with the right kind of interaction. Data lie at the heart of
11

efforts to build that understanding—data to define and contextualize

trends, data to measure the effectiveness of activities and invest-
ments at key points in the consumer decision journey, and data to
understand how and why individuals move along those journeys.
To realize that potential, companies need three distinct data lenses.

Telescope. A clear view of the broad trends in your market, category,

and brand is essential. Digital sources that track what people
are looking for (search), what people are saying (social monitoring),
and what people are doing (tracking online, mobile, and in-store
activities) represent rivers of input providing constant warning signs
of trouble or signals of latent opportunity. Many companies are
drowning in reports from vendors providing these types of infor-
mation tools, yet few have much clarity on which things they
need to look for and who needs to know what.

One packaged-goods company got a jump on competitors when it

saw a spike in online conversations about the lack of natural
ingredients in shampoos and then recognized a corresponding rise
in search inquiries on the subject. A new line of natural hair-
care products, launched at record-breaking speed, has become a suc-
cessful early mover in a growing segment. A telecommunications
company has become similarly plugged in: it now has a war room to
track every online comment anywhere. Besides being better able
to address—in an open, friendly, and fast way—problems that could
escalate, it now has a great frontline source of line-outage signals
that trigger repair crews and increases in call-center capacity.

Binoculars. Against this backdrop of market activity, few com-

panies have a complete, integrated picture of where they spend their
money, which interactions actually happen, and what their out-
comes are. Most direct-sales companies (retailers, banks, travel
services) measure the performance of their spending through
isolated last-attribution analyses that look narrowly at what con-
sumers do after confronting a search link, an e-mail, or an
advertisement. Branded-goods companies try to throw all of their
media spending together into an econometric model assessing
the effects of their media mix. In the world of on-demand marketing,
where multiple interactions take place along multiple journeys,
last-action attribution explains only part of the impact of media
spending, and media-mix models fail to account for touches
 12

and costs outside of paid channels.

What’s next? Deploying tools that rapidly assemble databases of

every customer contact with a brand, companies will need to
push every customer-facing function to work together and form an
integrated view of consumer decision journeys. With longitudinal
pictures of customers’ touches and their outcomes, companies can
model total costs per action, find the most effective decision-
journey patterns, and spot points of leakage. As more contacts become
digitized—and they will—the data will gradually get easier to
create. Getting a head start can help companies build ongoing test
labs where they tune the ability to create and analyze the right
data and immediately learn where to add investments. One bank has
already realized millions of dollars in added value from the knowl-
edge that weak points in the customer on-boarding process were
undermining major marketing programs. Only when branches,
call centers, and marketing worked together could the bank find the
right fixes, improve customer satisfaction, and raise marketing’s
return on investment.

Microscope. Trust is essential, and personalization can show cus-

tomers they matter. They expect a brand to be a good steward
and user of data about them and, increasingly, have high expectations
for what a brand should know. In the example described earlier,
data about Diane powers the brand’s ability to make it easy for her to
share photographs, to buy a headset, to set up and manage
a free Spotify subscription, to receive information about a local
event, to be recognized at it, and to get additional special offers.
Information about Diane is the thread that keeps all of her brand
interactions immediate (now), valuable (can I), relevant ( for me),
and easy (simply).

Yet given the laser focus on getting programs into the market to
improve performance, few marketers (or even line executives) have
stepped back and pulled their teams together to work through
the scenarios and customer-data models they will now need to build.
Even fewer have a strong sense of what the current plans of the
company’s IT department will deliver in which time frame. One com-
pany that addressed these issues has identified over 20 types
of consumer decision journeys as archetypes of experiences it must
support over the next three years. From those decision journeys,
13

it has derived a core set of information capabilities it will need

to build and is well down a tight road map of development that has
already enabled it to launch products in breakthrough ways.

Delivering with new skills and processes

To deliver these new experiences, executive teams must rethink
the role and structure of the marketing organization and how
it engages with other functions. The changes are likely to cut deeply,
transforming the way companies manage campaigns and com-
munities, measure performance, provide customer support, and
interact with outside agencies. It’s still early days, but consider
the breadth of recent efforts.

Raising a consumer-packaged-goods company’s digital game. A

European CPG company started by creating a digital-analytics
group with worldwide operations. Rather than sprinkle digital experts
across the globe, the company developed a unified structure with
common standards for roles, common training, and digital career
tracks to build an arsenal of future talent. The analytics team
is part of a broader digital center of excellence that provides service
support to the business units and drives major upgrades in IT
capabilities. Defined commitments from managers in finance, legal,
and HR help the center deal with challenges that arise as it seeks
to offer customers a richer digital experience.

The company also reviewed all of its e-commerce trade accounts and
decided that it needed a much more granular approach to serving
customers. Says one executive, “It is not just an issue of managing
our relationship with pure-play e-commerce sellers versus our
traditional channels; it also is an issue of managing the online versus
brick-and-mortar sides of the same traditional partner.” A new
e-commerce trade team with added digital-analytic support is helping
both to enhance the online-merchandising mix and to improve
the placement of the company’s products in the search engines of
e-commerce providers.

Finally, marketing leaders established a novel customer-relationship-

management (CRM) team because they realized that the growth
of the company’s mobile services, coupon programs, sampling, and
social communities was finally enabling it to gather huge amounts
of direct data about how people interacted with its brands. (That infor-
 14

mation had previously been available only to retailers.) These

structural and talent changes led the company to realize that it needed
to reshuffle its agency relationships, replacing a single brand-
and-ad agency with two agencies—one for brand programs, the other
for digital and CRM direct marketing. The company also brought
more media and digital analytics in-house.

Reorienting a bank. At one institution, a new understanding

of emerging brand challenges led to a radical change in the status of
the CMO. Marketing had earlier ranked low in this sales-driven
organization, where the function’s leaders focused mostly on corporate
communications and brand campaigns. Now, a new CMO, much
closer to her peers on the executive board, has been charged with
directing the full consumer experience.

Each month, the bank’s business-unit leaders gather to talk about

their progress in improving different consumer decision journeys.
As new products and campaigns are launched, these executives place
a laminated card of such a journey at the center of a conference-
room table. They discuss assumptions across the whole flow of the
journey for different consumer segments and how various groups
across functions should contribute to the campaign. Where should
customer data be captured and reused later? How will the campaign
flow from mass media to social media and to the bank’s Web site?
What is the follow-up experience once a customer sets up an account?

The bank has created a corporate center of excellence for digital mar-
keting to give the strategy a forward tilt and to plan for needed
capabilities. It has also appointed a new team of full-time executives
who focus on mobile and social technologies—executives who
have become evangelists, helping business units to raise their digital
game along a range of consumer interactions. The first wave
of fixes and new programs has already generated tens of millions of
dollars in the first six months, and the bank expects these efforts
to add more than $100 million to its annual margins.

The forces enabling consumers to expect fulfillment on demand are

unstoppable. Across the entire consumer decision journey, every
touch is a brand experience, and those touches just keep multiplying
 15

in number. To mobilize for the on-demand challenges ahead,

companies must:

• bring managers together from across the business to understand

consumers’ decision journeys, to speculate about where they
may lead, and to design experiences that will meet the consumer’s
demands (Now, Can I, For me, and Simply)

• align the executive team around an explicit end-to-end data

strategy across trends, performance, and people

• challenge the delivery processes behind every touch point—are the

processes making the best use of your data and interaction
opportunities and are they appropriately tailored to the speed
required and to expectations about your brand?

Executive recruiters tell us that corporate boards are looking for

more people who can challenge and improve a company’s approach
to social media, big data, and the customer experience. Staying
ahead of the design, data, and delivery requirements of on-demand
customers is much more than a marketing issue—it will be a
crucial basis for future competitive advantage.

Peter Dahlström is a director in McKinsey’s London office, and David Edelman

is a principal in the Boston office.

Copyright © 2013 McKinsey & Company. All rights reserved.

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