Forces Of Change That Shape Our World With Gwen Brannon
The world is getting better at an extraordinary rate. Investment in data is skyrocketing, and advertising has mutated. All these are brought about by perseverance for convenience and technology. In this episode, Gwen Brannon, Director at The Coca-Cola Company, shares her take on branding and the power of stories. Of course, with marketing comes advancements, that then welcomes changes that strongly impact consumers. Gwen talks about the predictions of Futurist, Ray Kurzweil, coming true today that influence consumer mindsets. Listening to Gwen, you will learn about the shared economy, hyper-connectivity, and the effects of digital marketing on human connection.
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Forces Of Change That Shape Our World With Gwen Brannon
The Power Of Stories
What I want to do is harness the power of stories. In the first ten years of my career at Coke, I sat in an office and I wrote surveys to try to get inside the minds of the consumer. That was the coolest part of my job. The worst part of my job was birthing that data out into the organization and watching it not get used. We would sit there and think, “How have we missed the boat? Why aren’t people latching on? This is the coolest data.” It was because we had a complete inability to tell a story. We did not understand how to take a proportion, statistical significance and make people excited about it. Kathy was telling her story about 9/11. She told it so brilliantly, you could picture the conference room that you were in.
When I think of stories, one of the first things I think of is 9/11. I was in college when 9/11 happened. I went to Georgia Tech. We are good at math at Georgia Tech. When we were sitting in college, my parents lived closer to the campus than anyone else’s parents in my sorority when this happened. They came up in their Expedition. My dad got a bunch of girls in their car and off we went to their house to stay there until we figured out what was going on with the world. What happened there is the power of the story. I had two friends staying there whose families were in New York and who couldn’t get in touch with them.
We sat there. We bonded. Stories were told and stories were shared. My dad shared the most epic story of all-time. Pat and Miguel can attest to it. It ends the punchline of it with my dad playing doubles tennis with OJ Simpson versus the Menendez brothers. It’s a true story. I have the pictures. For a minute, a story can help you disconnect and what a powerful thing. We have to put ourselves in that situation. Me as an insights manager at Coca-Cola, I’ve got to bring data down to life in a way that allows people to disconnect from what they’re doing and embrace the data to start a new conversation, to stop the way we’ve been talking about things, to pivot and to get back into a new conversation. We as brands have to figure out a way to tell our story in a way that makes people rethink the way that we are coming into their marketplace because it is their marketplace.
Forces Of Change Impacting Consumers
What we’re going to go through are some forces of change that are impacting consumers. Every time you talk about forces of change, you have to talk about the naysayers. A man-made voyage will never occur to the moon. People will start to get tired of staring at a plywood box every night. There’s not a compelling incentive to get mainstream consumers to buy a tablet. Cellphones will never replace local wire systems. Cars will never come into as common use as the bicycle. When Apple came out, there’s no way people would ever want a computer in their home. When we start talking about forces of change, especially in an era of change, as dramatic as what we’re experiencing in our industry, the easiest thing to do would be to be a naysayer.
We know we don’t need to be the first one there because let’s see how this shakes out. What I hope you’ll walk away with is that there is not a time or a place for that attitude anymore when we’re talking about integrating into the lives of our consumers. 2020, don’t think of it as a deadline by which you must achieve full integration. Think of it as you’re dead date if you’re not already there. What that means is you don’t get a lot of shots with consumers. If you’re not part of their ecosystem, if you’re not integrated, they have more choices than they’ve ever had before.
I’ve had the fortune of having a lot of great conversations with marketers in the foodservice space. If I had to break down the challenges that we discussed into four things, it would be making sure that we’re boundaryless, making sure that our tone is consistent, but it’s also authentic to the platform through which we’re communicating, straddling the world’s timeline. As soon as we innovate, the world is still moving and we’re out of date a month later. Being a transformer, being brave enough to buck the system because a lot of what we’re talking about does involve ignoring some of the standards that we have in business and thinking in the mind of the consumer like never before because they have more information about us and about our competitors than they’ve ever had.
Finally, this is probably the most important one we’ll talk about, is translating our data monster into actual heartfelt action. We hear so much about data and people talking about we’ve got to harness the power of the data, but the people who are doing this well are taking that data and taking those insights and turning them into empathetic action. We’re able to infer feeling or enable to infer sentiment and we’re able to communicate it back to the consumer in a way that they feel heard. This is data we’re collecting passively from them, not something they’re directly even telling us. Why do we face all these changes? It’s consumers. It’s our fault. We’re consumers too. We’re not just marketers.
We’re smarter than we were years ago. We’re busier than we were. The world is increasingly more and more complex. Think about 30 years ago, if you wanted to learn about something, you had to go to the library. If you wanted to shop for something, you had to go to a shopping mall. If you wanted to watch a TV show, you better be home when it came on and you better have a pretty high tolerance for commercials. We didn’t have nearly as much connection points to understand something, things like mass shootings and terrorism as commonplace as we do. If you think about our children, coming of age in the here and now. One of my favorite ones is if you wanted somebody’s phone number, you had to look it up in the phone book. Those things are gone.
That’s why you had AA towing and AAA towing because the best way to get noticed is to be first alphabetically. There are no consumer reviews and exchange of ideas. The film was the most common thing for photos. How many of us still use a film camera? I don’t. It’s all iPhone all the time because my kids are moving fast. If I waited to turn on the camera, it would be over. They would be killing each other in those two seconds that I had looked away. This one is interesting to me. I saw this on Facebook, but thinking about how things have changed. This is a son texting his mom. The son is asking his mom, “How did any of the college even work before email? What did you do?”
She’s saying, “You had to walk over to the room and there would be a note on the door if the class was canceled.” He’s like, “What if it was at 8:00?” That’s right. You’d have to walk all the way over there. She’s like, “How would you find out about anything?” He says, “I have to check my email to figure out what groups I’m in and what jobs I’ll have to do.” She’s like, “You have to write it down. It was posted on bulletin boards.” He says, “I don’t even know what that is.” She’s like, “A corkboard with push pins.” He moves on. He still has no idea what that is. How would you read that without walking all the way to the building? You had to walk to the building.
Futurist Ray Kurzweil
She’s going, “I got my first job on an index card off a bulletin board.” He said, “How would you reply if it was on a bulletin board? What if they wanted to link something for more details? It seems so crazy to me.” She’s like, “You had to call the phone number.” He said, “I got a job after responding to one email and I cannot imagine having to interact with someone for it.” This is the consumer. The mom also is the consumer. We’re living in such a complex environment where we have people who value human connections so deeply that they feel completely slighted if it doesn’t exist. We are also living in the world of the consumer where they don’t think they should have to talk to any of us for us to employ them. Forces of change. Who’s heard of Ray Kurzweil? He’s one of the most quoted futurists in the US. He’s also at the helm of Google’s automated intelligence efforts. He created something called The Law of Accelerating Returns.
I know we got to hear poetry. We got to hear cool marketing campaigns and I’m talking about something as fun as the Law of Accelerating Returns. What it means that every day as we progress, the window of time available to us for relevant innovation gets shorter and shorter. It took over 50 years to move from the light bulb to the motor. It took 34 years to move from the computer to the smartphone. Think about food service, in the next few years, 25% of transactions will take place in the digital environment. It’s projected that will make it bigger than drive-through in one-tenth the time that drive-through has existed. The world is running fast and we’ve got to make sure that it doesn’t run away from us. Should we believe this guy? Yes. This guy made 150 predictions in the ‘80s and ‘90s. Here are a few of the things that he predicted.Brands have to figure out a way to tell their story that makes people rethink the way brands are coming into their marketplace. Click To Tweet
I listened to a lot of futurists in my role. I listen to but do not believe a lot of futurists because a lot of them have a very low success rate. He has an 86% success rate, but even his misses are pretty close. One of his misses was he said by 1999 we would be able to sit down at our computer. It would know our sizes and specs and we will be able to create our own clothing. By 1999, it didn’t happen, but we’re getting close and very much on-trend in terms of the desire of the consumer for personalization. He also said that by the 2000s we would have a universal healthcare record system so that your records with a physician would be physician, hospital and healthcare system agnostic. That would be universally accessed.
It’s a great idea. We’re getting closer and in fact, we’re wearing technology that could send our heart rate, BMI and all of that great stuff off to physicians. It’s getting closer. He also predicted that by 2009, all of our long-distance travel would be via autonomous vehicles. Not there yet, but easy to see that that’s a logical destination as to where we’re headed. It’s a little bit off on the time frame. This guy had some good ideas. What’s underneath all of it is get on board, understand the world around you. Don’t be a naysayer, especially when it comes to technological innovation. We’re going to go into five key forces of change.
Digital Adoption And Shared Economy
The first one is all about digital adoption. It’s the one that is slapping us in the face every single day. We touch our phones two times every minute of every day. That’s 2,617 times per day on average that we touch our phones. That does not include typing. When I first read that stat, I was like, “Surely that includes us typing.” 50% of Americans check their phones in the middle of the night while they’re sleeping. Who’s in that group? Why do you think that is? I don’t have a clock in my room. If you wake up, you check the time. You have a zillion notifications and off you go at 2:00 AM into the Facebook abyss.
People are pervasively attached to these devices. They are fused to us in some cases. Technology has also bred an economy all its own. By 2025, the shared economy is expected to hit $335 billion. I don’t need to talk to you about the core players. We’re not going to talk about third party delivery and Uber eats and all of that stuff. That is happening right here in the shared economy. Some of the biggest businesses that are shaping our industry don’t own any real estate and don’t sell any goods. They’re literally middlemen connecting buyers to sellers. Etsy is another wonderful example here, but one of the interesting ones that I saw in the food and beverage space is called BonAppetour. It’s connecting hungry people, diners with chefs of specialty cuisine. It’s in 100 cities. It has over 1,000 chefs connected to it. It’s the idea that if you want something specific, there’s a chef that specializes in it and they can come to your house and cook for you. Technology is connecting people and they have a food service company that employs no chefs and has no guests at that point.
The shared economy also as it has come to exist doesn’t even have to utilize technology. Technology founded the concept, but think about commercial kitchens shaking up the foodservice industry for sure because of very little capital required to start a new food service concept. This is Prep in Atlanta. This is their day that they allow people to come in and test new items. People join a commercial kitchen and can start, can cook food, can buy a food truck, and off they go and they own a restaurant without having to own their own real estate, without having to invest in the capital of infrastructure for their restaurant and all of the equipment that they would need. The shared economy is certainly coming in, changing the game and changing expectations of what it should take for us to be able to buy and to sell.
We’re seeing our digital and our physical world starting to merge. A lot of this is happening because of brands that were founded online. I’ve talked to a couple of you about Casper, but this is one of the best ones because think about ten years ago. If someone told you that you would buy a mattress online, you’d never touch it. You wouldn’t get to lay on it. You wouldn’t get to see if your husband liked it, but you buy it online, sight unseen. How did they overcome that hurdle to become the number one seller of mattresses? A strong brand promise is how they did it. They said, “We feel so strongly that you’re going to love this mattress, that you can sleep on it for 120 days. If at any point you decided it’s not for you, you will come back and get it and you can have your money back.”
They are saying to consumers, “We believe in this.” Whereas if you went to Mattress Firm, lay down on a mattress, bought it, it’s the end of the transaction. You’re done, good job. You used 45 minutes of your time. You laid on mattresses everyone else has laid on, thought about that decision and you bought it. It’s in your house and it’s yours. You own it. There’s no return policy. Casper over the next three years is anticipating to open 200 brick and mortar stores. Mattress Firm filed for bankruptcy and is closing 700 stores across the US. The cooler part of that where is Casper going? Where are these stores? Malls, everybody thought the shopping mall was dead. It’s not. We’re watching these malls re-emerge not as a traditional shopping mall but as these experience destinations. The places where you can go to touch and feel things that you traditionally have only been able to buy online.
Bonobos is another great example of this. Bonobos started as a retailer that was both catalog and eCommerce-based. They have opened stores as men’s clothing stores. Their stores are called Guideposts. You don’t buy anything from there. You go, they have one of every size and color no other end inventory and you get your measurements taken, you find your perfect fit. You find the styles that you like. You see what their pink looks like, what their blue looks like and what the purple looks like. From then on out, you have a profile built and your eCommerce relationship with them is now easier because you gave them 30 minutes of your time upfront. Looking in the retail space, this is exactly what Alibaba is doing. They have opened a supermarket in China where it is truly based around your first experience has meant for us to build your profile. We will never see you again.
In that supermarket, you have people wandering around making their purchases. Everything about them is logged. You know who they are. You know their household composition because like Amazon, they’ve got you. You’re wandering around the store. They know what you’re looking at. They know what you’re interested in learning more about. They know what purchases you made. They’re going to ask you some questions like, “Is this something you’re going to want to replenish fairly regularly?” On the same floor are going to be employees who are fulfilling the orders of the people who’ve already gone through this process. Their promise to the consumer is every future transaction occurs online we will deliver it to your house in 30 minutes. That’s changing consumer’s expectations of what this should look like, the buying and selling of goods.
It’s crazy to watch these digitally native companies come into brick and mortar and start shaping the ideas of consumers about what we should do as marketers and as businesses who have traditionally been buying and selling in brick and mortar locations. The other thing that we’ve been watching happening is the reemergence of chatbots. Chatbots became a thing a few years ago. You saw them come on the scene and you saw them fade off. They faded off because when they first came up, they were not speaking English. They were speaking English robot. It was not a candid conversation. It felt like you needed to type in representative as you do with the ones that are on the phone.
The Reemergence Of Chatbots And Forgetting Human Experience
With this reemergence of chatbots, artificial intelligence has made them much smarter. It’s made them adaptive to slang. It’s made them be able to respond to different people who are communicating with them in different ways with a different tone. They’re enabled to do a lot more on the back end besides just feed information. They can finish the play on a transaction. One hundred fifty million US consumers are using some type of messaging app every day. Of them, 75% have contacted a business over messaging to make a purchase. It’s a humongous number. This is one to watch in the future. Think about that boy who does not think that he needs to talk to anybody to get a job. He certainly doesn’t think he needs to talk to anybody to order a pizza.
It’s starting to humanize this experience, even though it’s not occurring with a human. In terms of digital adoption, it appears because we’re hooked on our phones. We know about the emergence of this sharing economy. We know digitally native companies have done in this physical space because consumers want access. Consumers want you to be available right there. We’ve said that the arm’s reach of desire for Coke for years and years. Now we’re saying it’s at the click’s reach of desire, but being right there when you want them to be there. What do we do to be successful here? The number one thing people ask me about is what happens to my crew? Are they getting replaced? Not in this day and age, they’re not getting replaced.Make predicting genuine, not nonjudgmental. Click To Tweet
The number one misstep in terms of digital marketing that we’re watching people make or digital commerce is that they’re forgetting about the human experience. Mobile ordering, we’re not going to go into that in-depth, but the number one miss in mobile ordering is saying, “We made an app and you can order online.” You’ve got to remember that is a consumer who is driving to your restaurant and they have placed that order online for a reason. If you’re not seeing this experience end to end, you’re missing the boat. I am a working mom. We did some groups with working moms. It was fun to watch my people on the other side of the mirror.
We were talking to them about what’s going on with mobile ordering. They were livid about it. What they were saying is, “Are you telling me I can place an order and it will be ready when I get there?” I drive a 2015 Honda Odyssey because that is the life stage that I am in. If I have those two kids after tee-ball, dirty in the back of my car, five-point harnesses and I place a mobile order and I drive to your restaurant. The last thing I want to do is unbuckle those two things who I have gotten all strapped down. You cannot leave them in the car. They arrest you for that. You’ve got to get them out. You’ve got to drag them in for someone to hand you a bag and say thanks. You walk right back out.
You’re forgetting the human part of that experience because you’re checking the box on technology. As you merge into this technological space, think about the occasion and its totality, what technology is trying to alleviate. If there’s anything you can do further by etching up the compassion or the role of your crew. Empathy is certainly at the heart of what I said there too. It’s understanding that there’s still a human component. There are still human beings with feelings as all cannot be handled by a robotic exchange. Universal accessibility, it’s that you’re still marketing to Baby Boomers, who are not comfortable with technology and teens. We’re operating in a hybrid universe where we’ve got to have enough touchpoints to make everyone comfortable.
Hyperconnectivity, it sounds a little bit similar to digital adoption. Never have we seen more hyperconnectivity than in the foodservice and retail space. Over 1,000 unmanned outlet stores exist. These are multiplying rapidly. I saw a video of a CVS in Asia that is literally on wheels that they can roll in and they drop the wheels down. You go in and you are locked in that thing while you make your purchases. There are so many sensors and cameras that they can tell if you’re about to steal something, they won’t even let you out. They’re saying that it has reduced shoplifting almost entirely and the consumer experience is incredibly heightened. It’s a very cleanable store.
The other thing that’s happening is that they can have a much smaller footprint. They’re using that data. They’re watching what people buy. They’re only offering things in these specific neighborhoods, in these small footprint stores that are relevant to those people. Kiosks, if you go to any trade show for retail or for food service, you’re drowning in kiosk technology. Kiosks are almost on the way out because people are saying, “Why do I need to order off the kiosk if I can order right off my phone that I’m already comfortable with? I could do that before I get here.” That’s something that was in our trends presentation. There were already like, “What’s happening here?” Let’s keep an eye on this and see if it’s headed away. Retail and restaurant technology is at the forefront of trying to figure out the role of the human being versus the role of the tech.
Futurists in the food and beverage space are saying this is the future. It won’t be that we’re ordering delivery for our restaurant to prepare food and deliver it to our door. It will be that we have something similar to existing 3D printing technology. We will have some type of delivery mechanism to deliver on-demand ingredients to our home to go into the 3D printer. What we will be ordering and paying for will be a proprietary recipe or combination of those ingredients for the 3D printer to print out. This blows my mind. I could be quoted as one of those naysayers that would say we would never land on the moon because A, watching this is gross. B, it’s hard to imagine all the different types of ingredients that you may need to pull off a meal via a 3D printer.
That said this is coming up and it’s coming up a lot in terms of the ability of technology to start creating and replacing the recipe and the chef for food. The proprietary recipe itself will be the purchase. You see a humongous marketplace for it for sure. I couldn’t talk about hyperconnectivity without talking about omnichannel and talking about the rise of the smart speaker. One in five households has Wi-Fi speakers in their home. Two-thirds of people who own them say it’s part of their everyday life. It varies how they’re using them for sure. The level of comfort with this technology is varying.
How Technology Changes Consumer Experience
We gave my mother-in-law one of these for Christmas. It was in her home for the next four or five times we went there. I’ve made quite a few statements that I was never going back there, but I do keep going back. The last time I went back, the smart speaker is missing, like, “Where’s Alexa?” She says, “She’s in the closet wrapped up in foil.” I was like, “What?” She said, “She’s always listening. Jim and I were talking about the fact that you and Harding got a Peloton.” I use my Peloton to dry my bathmats. I’m terrible. I bought a very expensive drier. “Since we talked about it, it was on Facebook. She heard us.” We’ve got to be careful about how we’re using data as we get into omnichannel, as we get into this constant connection with people and make sure they were making the scary, not creepy.
We’re using it in a way that we’re personalizing things but not turning people off. It’s a very delicate balance in this marketplace. We’re watching these smart speakers change the game in terms of what current business models look like and where we’re going. Domino’s has always been at the forefront of this one in terms of saying that we want people to be able to order a pizza and the amount of time that they can sit at a stoplight. The technology they’ve come out with over the last few years has been a fun thing to watch in the insight space specifically. You’re seeing them starting to integrate into cars, lots of car integration happening there. Amazon is doing the same by putting Alexa in the car. They’re also making an Alexa enabled microwave. They could cook your food before you get home and keep it cool all day while you’re gone.
The bottom line is 76% of leaders are saying that the business models will be unrecognizable in five years based on the evolution of this tech. It’s not in the buying and selling of goods. It’s also in terms of experience and we’re watching the consumer experience change and thus their expectations. The Coca-Cola Retailing Research Council did an interesting study to try to figure out what they think the retail landscape is going to look like in the next couple of years. This is about a large store that you’ll see, but we can all think about our environment that we’re operating in, be it a food service chain, a small convenience store and see some application.
What is this going to do to consumer expectations in terms of how they meet us at our restaurant or our store? How we’ve learned about them over the course of our relationship to tailor that experience and make every moment we spend with them utilize the most value of their time that we possibly can. It’s interesting to keep thinking about it. This is not that far off. If you look at Nordstrom, it’s a 117-year-old brand. In 2007, they decided to pivot. Instead of focusing on driving more traffic into their store, they start focusing more on digital commerce. Their revenue has more than doubled since 2011 and we’ve watched them try a lot of stuff. They’ve tried a lot with beacon technology where you can place an order online and arrive at a Nordstrom’s. They’re tracking your car. As soon as you pull up, they’re going to bring it right out to your car.
They’ve made a lot of strides with seamless returns. The men’s specific Nordstrom’s that is in Manhattan is almost a fully digitally enabled experience. In many cases, you do not walk out with a product that’s shipped to your home. If you think about where this is going, it’s that evolution of the shopping experience where there are no shopping bags. You’re making your selections and they very well may beat you home by drone. In some cases, the thought is autonomous cars will be used to chauffeur people from home into the store to make their selections and send them back home. People’s expectations of us in terms of how we interact with them are continuing to evolve.The world is running fast and we've got to make sure that it doesn't run away from us. Click To Tweet
The last thing I wanted to talk about within this space is augmented reality and virtual reality, which is certainly coming into play as we think about off-premise and food service. With off-premise, a lot of people’s early skepticism is, “What if I can’t see the food? If I’m talking about a hamburger, how do I know if it’s a thick patty, a thin patty? Is the special sauce orange or green? Is it a sesame seed bun? Is it greasy or is it a neat burger?” This is going so far as to put it right in front of you in your home where you can spin it around and you can see it on your phone before you place the order, taking a lot of the risk out of it. This is the same technology that makes Snapchat filter work.
If you think about the consumer who’s very familiar with that type of technology. You’re able to deconstruct, build back up, get familiar with the food and eliminate the risk there. We’ll see more and more augmented reality and virtual reality coming into play. If you think about that woman’s counter before she went shopping and how interactive that counter was in and of itself, I can’t imagine a world where I would get the reminders on my counter like that. You guys should have seen the text message that I sent to my husband telling him all the things that I usually remember so that my kids could get to school with karate bags, lunch bags, snack bags and water bottles. One son likes lemonade. The other one likes water.
Imagine if that was seamless for me. It reminded me, it reminded him, we can all have that same type of experience and that is the new norm for consumers. It’s very interesting to think about that. One thing that I want to talk about in terms of hyperconnectivity is considering the world that we’re trying to break into. When the iPhone came out, there was an app for that. It was at the tag of every iPhone commercial you would see when it first came out. Obviously, the sentiment there is like, “There is an app for that.” What’s the sentiment when we say there’s an app for that? I’ve got to download something else. Where’s it going to fit in the folder structure of apps that I already have on my phone? Is it going to do something for me?
Hyper-connectivity Through Value Exchange
Is it going to send me a million notifications? We’ve got to try to figure out a way to interact in the consumer’s world in a way that’s not intrusive. The way to do that is through an exchange of currency. When I say currency, I do not mean money. I mean an exchange of value that we’re doing something for them that is alleviating time, stress, creating a more unique experience and showing them when they’re sharing data with us, showing them that we are doing well with that data. We are taking it in. We’re understanding them and that we’re building a better experience for them each and every time that we interact. Doing that in a way that is not self-serving is what’s so crucial in this world where they’re connected constantly. It’s helping them thrive without boundaries.
The other piece that’s crucial here is tone. One of the hardest parts of interacting in digital marketing is understanding how your tone needs to vary. There’s a different tone to Facebook than there is for Instagram and certainly a different tone as you go into Snapchat and other types of technologies. You want to stay consistent with your brand, but you also want to be sure that you’re moderating your tone based on the different consumers that you’re talking to. The boundary-less piece is probably the most challenging in this realm of hyperconnectivity, but making sure for one that you can educate people without training them. Your app should not need any type of training. It’s also shown that if your app has an extensive tutorial in it, that people are going to have to take as soon as they open it, people abandon that pretty quickly if it doesn’t work.
If their first experience with an app doesn’t work, 60% of people abandoned immediately, 70% of that 60% never ever come back. You don’t get second chances in this world of hyperconnectivity. It’s being sure that you’re educating about training, being purposeful. Making sure that you’re not innovating with technology, with consumers in a way that you’re just serving yourselves or that you’re just trying to check a box, being very purposeful and then next level is easy, making sure it’s as seamless and as easy as possible because they’re very busy. The last one in terms of tech is data and talking about what’s going on in this world of data-driven optimization. We are collecting more data than ever. We are walking around literally creating data on our person in terms of where we are, how many steps we take, how stressed we are, how much we need to breathe.
As companies, you see this investment in data is skyrocketing. We’re seeing mergers and acquisitions happen based on data. It’s a rumor that the Amazon and Whole Foods merger was based on two things. One was data, the other was the acquisition of the private label from Whole Foods. Not at all based on Amazon wanting a brick and mortar presence in Whole Foods. The desire to understand more than they could from credit card data about how the Amazon shopper shops at a high-end grocery store and to continue to build out their grocery offerings. Data is incredibly important in this marketplace. Those of you who’ve known me talk about this, I will never stop talking about this until someone does something better. This is the most brilliant use of data within the food service that I’ve seen.
It’s Dickey’s Barbecue Pit. It’s their smokestack technology. What Dickey’s has done is in their little ecosystem. Within Dickey’s Barbecue Pit, they’ve connected all of their systems. With Dickey’s Barbecue Pit, they bring in the inventory and they cook their ribs. Once those ribs are smoked, they’ve got a day and a half to sell them max. They’re sitting in inventory. There’s an inventory management system that tells you how much food you have that has been cooked, that has not been cooked. You got your POS system telling you how much you’re selling through. If lunch traffic is not selling through enough ribs that there is likely going to be waste, they go hit their CRM database and their loyalty system. Find the consumers for that specific outlet who buy ribs, serve them a surprise and delight offer of free ribs with the purchase of two sides and off they go to a world with a 75% reduction in waste since they connected these systems.
Using data that their consumers are giving them via membership and their loyalty database to give right back to those consumers in a surprise and delight type of environment. The power of data. The thing they’d done, the echo is starting to integrate voice technology. Why? The reason that they did this is they were seeing that individual outlets weren’t using this data as much as they wanted them to. They started asking like, “You could get your KPIs on demand, why are you not?” They were saying, “Because I’m in the kitchen and if I go start messing around with the computer, I’ve got to take my gloves off, touch the computer, wash my hands, re-glove.” They have Amazon Alexa all throughout their kitchen where they could ask, “What are my KPIs? What does my inventory look like for something? How much traffic are we projected to have?”
It’s interesting to watch. There are also companies on the rise that are using things like Google Places, social media data and weather to start predicting traffic in future day parts and thus helping to predict the needs for staffing and for supply. Data is coming together in food and beverage as we’ve never seen it before. Netflix is another phenomenal example of this one. When Netflix moved from being a company that you run a DVD from and they ship DVDs to your house to being a streaming company. For six years, they streamed other people’s content.
When you log into Netflix, what’s the first thing you do? Tell them who you are. There’s a little square. In my family, my husband has a square. I have a square. My oldest son has a square. My youngest son has a square. If you go into my husband’s profile, he watches the weirdest stuff. He watches stuff about the drug culture in Mexico, Vietnam war and stuff that I have absolutely no interest in. If you go into mine, I watch Gilmore Girls, Parenthood and all of that good stuff. What they’re doing is they’re taking in that information from us and they’re curating offerings right back to us. When the politician came out, that was made by the guy who created Glee, that was served to me with flying colors and fanfare. My husband has never heard of it. Not in his weird dark hole of Netflix.
My sons watch PAW Patrol, Top Wing and all of that stuff and that never makes its way into mine. I as the consumer, not as the insight’s nerd is sitting there thinking, “That is great. I don’t have all that noise.” Netflix is thinking, “We know everything about what you want to watch.” They’re collecting that data over a six-year span and they figure out for a 36-year-old mom with two kids, a husband, and weird documentaries. If we want her to watch new content, this is the genre it needs to be. This is the length of the series arc. This is how many seasons we need to plan for. When the climax needs to happen of the plot, this is the type of cast that is needed. This is the tone. These are the colors. They’re capturing so much data.There are no second chances in this world of hyper-connectivity. Click To Tweet
Netflix has an 80% success rate for content creation versus 30% or 40% for cable shows because of the utilization of data. They figured it out. Think about all the data that you’re capturing from your consumers every day and the data that you could capture. People are willing to give you their data. The big brother fear is not nearly there like it was even a few years ago, “Take my address, save my credit card, scan my retina, that’s fine. As long as the next time when I come back, you use that information to make our relationship more seamless.” That’s exactly what’s happening here. Both in my experience with them and in the new content they’re creating to be able to target me, shoot an arrow right through me and say, “Watch this.” I’m like, “I am here for this. That’s great. Thanks for showing it to me.”
Drive To Personalization
It’s interesting to watch this come together. What’s next? One of the big data-driven things we see innovation happen in food and beverage is the drive towards personalization. This is Thriva. They are a company that sends kit and you send back a couple of drops of blood. You spit in a cup and send it back off to them. It’s like DNA tests. It’s a similar concept. They analyze a lot. There’s also a company called Habit that is doing the same. Habit does this with a shake. You fast, they send you a shake, you prick your finger, give a drop of blood, you drink the shake then you do that again in four hours and then again in ten hours and they’re going to watch how you metabolize that shake.
They’re going to combine your DNA with what they’re learning from your metabolism and from your blood to create a personalized nutrition profile for you. Thriva has partnered with a company called Vita Mojo. That is a very personalized nutrition company that delivers food to your home. They will create a custom menu for you with these ingredients to make you your best you essentially. With Habit, you’re more on your own, but you know exactly what you need to intake in what quantities to power your body specifically the best way that you can. It is very tailored to you. Imagine what that means for us in food and beverage, the transparency that’s going to be required in terms of our ingredient list overall.
If we have people adopting this and this is growing like crazy. People are very into knowing as much as they can about themselves and watching them start to take action on this and business models emerge based on that action, it’s been very interesting. What do we do? First, make creepy, not scary. Make sure that we’re utilizing the data that people are giving us in a way that is not creepy and we’re taking the fear factor out of it, but we’re using it to make a very personalized experience. Choices are crucial here. Not everybody has time to explore every offer that you have, but some people like to. Having a choice of either a curated experience or the ability to explore as you get into people like interacting with how you use their data. Make predicting genuine, not nonjudgmental. Making sure that this is not a place where people feel judged at all. They feel seen in terms of data.
That’s one of the bigger things that we saw people getting upset about being served weight loss ads at the same time they were trying to buy a donut. In terms of how we’re using that data, making sure that it’s a very genuine thing. What do we take away from this? The world is getting better at an extraordinary rate. Imagine a world where HIV is cured as easily as the common cold. Where our entire city is covered in drones, but they don’t seem intrusive because they’re part of our ecosystem. Where the number one protein is insects. It’s crazy thinking about the things that are possible driven by technology and driven by people being more open because they’re more connected.
Changing Consumers And Their Mindsets
The last two forces we’re going to talk about are the changing consumer and their changing mindset. Everything we’ve talked about is caused by what we’re about to talk about. It’s that the changing face of the US consumer is astounding. Usually, these presentations are led by us talking about diversity. We’re going to get there, but as marketers, this is one of the main reasons we see all of this technological innovation. Nearly half of the marriages in the US are composed of dual career couples, 75% of Millennial families have both parents working in some capacity.
Why is this happening? It’s because the women in these age cohorts are more educated than any females of previous generations, so they’re staying in the workforce. What’s happening, as a result, people don’t have any time. All the innovation that we’ve talked, the consumer-facing impact of that is creating a more curated experience. Thus, it’s quicker for you to interact with me and I’ve saved you time, creating a way for you to order from me so that you don’t spend your time waiting in a queue and I can go ahead and hand your food or beverage from my chain. Think about click and collect at retail and our ability to place an order, drive up. They put it in the back.
This is happening because we’ve never seen a more time-starved generation than the workers in the US workforce. It’s only projected to get worse. If you walk away with one demographic fact from me, walk away with this one, watch these dual-income working families. They have money. It’s the most wealthy consumer economy that exists. They also have high expectations. 80% of these people are Amazon Prime members. It’s pretty crazy watching it, how they’re willing to adopt, they’re willing to spend for more convenient experiences.
Other things with these people, childcare and you’re watching this start to take place within the crew or within the employees. Looking at Starbucks, they’ve had to add to their benefits package childcare. For when a crew member calls out or a child is sick or daycare is closed, they provide childcare to back up that working parent because they know they don’t have their own backup at home. If you think about distresser on people and the presence of their children and the fact that they don’t have much time with them, a super important consideration for us to make as marketers. Diversity and aging, two very interesting things.
The US population eighteen and under no longer has a majority ethnic population. Minority-majority is already happening within the younger consumers. If you look at how we’re doing as marketers there, as you leave and travel out, if you’re not from Chicago and you’re at the airport, a great way to see this is to pick up magazines at a newsstand. We don’t do that very much anymore. Look at the print advertising. We’re doing a much better job depicting a diverse and multicultural US than we were even a few years ago. The aging population is another interesting one. If you look at Baby Boomers, they are experiencing an extended middle age.
A lot of this is driven by the fact that their kids are those dual-income working parents. For one, you’re watching them start taking on a role with their grandkids that you have not seen from generations before them. All of that’s looking very different. One in five US residents lives in a multigenerational family household. It’s very interesting watching that come into play. The other thing is technology has allowed people to live a more active lifestyle because of medical advancements over a longer period of time. At Coke, we used to do all of our research stopping at the age of 69 and then we’re like, “We’ll see what happens after that.” No, we’ve absolutely got to watch this Baby Boomer generation as they age. They’re very active in the marketplace still and very involved. If you think about promotions, it’s certainly an interesting crew to promote and have a very active crew as well.
The other thing, de-stigmatizing mental health. This was a campaign that Burger King did in partnership with a Mental Health Alliance and saying, “It’s fine. You can feel however you want.” There is a mood that you can be in at any given point and we’re going to celebrate it. The idea that this is not stigmatized anymore and it is very much a part of people is something that we would not have talked about a few years ago. If you think about urbanization, you think about Millennials and working, Millennials are thriving in urban areas more than any generation before them. You used to see people have families and move out. Also, the 9:00 to 5:00 is not happening anymore. It’s a much more flexible environment.Being brave is better in the minds of consumers right now than being perfect. Click To Tweet
If you think about the urban environment, this is extreme, but it’s a flexible environment that’s catering to people moving into and out of their workplace. The rise of co-working facilities speaks to this as well. People are not arriving at the workplace at 9:00 and leaving at 5:00. That is the end of their workday. For one, they’re hooked on these phones all day. A lot of the younger generations feel, “If you’re going to email me at 9:00 at night and expect me to respond, you better give me the flexibility to go hit the tee-ball game at 4:00.” It’s becoming this continuous work cycle and you’re seeing urban areas starting to flex and adapt to that. 60% of the global population lives in an urban area, which is the highest it’s ever been.
The Rise Of Smaller Footprint Stores
The other thing we’re starting to see is a lot of smaller footprint stores. This is an extreme example. Starbucks is making test stores out of shipping containers and placing them. This is a good way for them to get a gauge on-demand before they place a permanent location. Circle K is doing this as well. We’ve seen Circle K create shipping containers, driven stores and place them at festivals, place them in neighborhoods. The other thing that they do in these smaller footprint stores is get very personalized so that we understand this community and the offerings within this smaller footprint store are tailored just for you. We see a lot of this happen in urban areas.
I could talk about demographics in the US without talking about income bifurcation. Certainly, the most polarizing thing literally and figuratively that’s happening in the US. In terms of foodservice and retail, we see a lot more tiered pricing. Wendy’s Biggie Bag came out trying to get as much food as possible to people at as affordable a price point. We also see a trend of neighborhood-based pricing where there’s a company called Everytable. A restaurant that is varying their pricing based on the income of the neighborhood that they’re serving. They’re not changing the menu. They’re changing the price point but trying to be sensitive to this. This is what’s polarizing politics in the US and what’s polarizing people in the US is haves and have nots and what have should do for the have nots. The pervasiveness of this discussion in the media is extremely polarizing.
The unique thing, especially with food service, is that we can be a solace for this. We can serve everyone, but the tiered pricing piece is what’s absolutely crucial. Making sure you have a premium offering available for people who can afford it and making sure that you have an affordable offering for those who cannot. Everyone is welcome around the table but certainly a pervasive need here. In terms of shifting demographics, these were the four that I wanted you to walk away with and making sure that you understand what’s going on with people demographically so that you can fit in. For one, be fearless through the chaos. Make sure you stand for something and make sure that consumers feel like you stand behind them. Making sure you’re shape shifting into the areas that matter most. Find areas that are organic for you to be a part of and be a part of them and be brave, not perfect.
One of the biggest successes that we’ve seen or many of the successes that we’ve seen in terms of marketing has been companies admitting when they goofed. Consumers love that in this day and age and that transparency of, “We made a mistake.” Being brave is certainly better in the minds of consumers than being perfect. The last one we’ll talk about is the result of all this is that changing mindset of the consumer. One that we’re looking at a lot is the new definition of value. Why are people willing to pay more for something somewhere than they are in another place? It’s because value used to be the exchange of money for goods and services, but there’s so much more to it than that. There’s service. There’s atmosphere. There’s cleanliness. There’s convenience. There’s so much coming into play. Simplicity is at the heart of all of it though.
If you think about these busy people and how you’re integrating into their lives, as simple as you can make things the better. Amazon is trying to do this very much so with their returns. They partnered with Kohl’s where you can go into Kohl’s and drop it off. It’s great for Kohl’s. They were not in a great spot in terms of their traffic. They’ve had a 50% increase in traffic, which is small base because their traffic was bleeding, but having people be able to bring in their Amazon returns with no bag or anything, bring in your returns, scan a barcode, they’ll pack it up and ship it back off for you for free. Driving traffic into the store, they’re doing the same thing with the UPS store Amazon. Show up with your barcode, your item, no box needed and off it goes. Simplicity, trying to figure out what those barriers are, what’s making people’s lives more difficult.
Overcoming Brand Distress
Distressed, not a fun one. If you think about distress, we look at this a lot as an indicator of are we headed to a recession? The number one question asked of insights people, “Do you think there’s a recession coming?” If you look at the Duke Economic Forum, it happens every November. It’s about to happen again. November of 2018, 40 and 50 economists said yes by the end of 2020. Not a recession as great in magnitude as the one that we saw in 2007, 2008. Nonetheless, one of the biggest indicators we see from consumers is a drop in trust. We have seen that. It’s starting to happen in starting a backslide. There are things that we can do. People are willing to spend with companies they feel are a net positive.
There are so many great examples of this that it would be hard to pick one or two. We’ve seen McDonald’s do a great job with us, with their archways program showing very consumer-facing and crew facing that they’re taking your money and using it to help their crew get a better education with the hope that they go off and do great things in the world. We’ve seen it with Firehouse Subs. They’re doing a lot of work that’s very on-brand with them of giving back to the firefighting community. Showing people and being very vocal about the good that you’re doing with the money that they’re spending with you is absolutely crucial in an era of distrust. I came to Coke in 2004 as a senior in college and at that point, our policy on doing good charitable work is to do it anonymously.
We would do a lot of good for the communities. We would never say anything about it because if we didn’t, we wouldn’t be humble. We’ve had to pivot through my career at Coke and say, “People absolutely want to know that we are taking their money and we’re being responsible. A lot of our consumer-facing messaging is devoted to making consumers aware that we are using their money to create a world without waste, to create jobs for women to return all the water that we use making our products.” The other thing, hyper-localism is a trend within the dynamic mindset of consumers and wanting to be sure that you’re supporting their local community. This is Farm & Table. This is in Albuquerque, New Mexico, but this is sitting on the farm that supports all of the food that they served there.
It’s certainly a freshness message, but also an idea that you’ve employed the farmers there, the farmhands. Hyper-localism is crucial. You see this happen on larger scales enabled by blockchain technology. Being able to show people that we’ve been able to track this individual piece of produce from the farm all the way into this establishment. Take a look at who this was, who the farmer was and how you’ve supported them. It’s something that people are watching. Finally, the last thing we’ll talk about is health and wellness. We already talked about how personal health and wellness is getting and when we talked about Habit and Thriva. The biggest health and wellness turn that is in the US is balance. If you think about the fad diet, it’s Keto. You can have all the fat in the world if you take it easy on a few other things.
Put the butter on it, put the cheese on it, have the steak, don’t need a roll. It used to be counting calories to be careful. It’s certainly not the case in terms of health and wellness. It’s all about there’s a time and a place for indulgence if you have balance most of the time. In terms of looking at consumer’s dynamic mindset, a new definition of value, watch out on brand distress and look at this evolving health and wellness in terms of watching how people want to balance in their lives and their lifestyle. Don’t expect to pass. You cannot be quiet anymore. You cannot get by in terms of your social messaging by not taking a stance on things. Understand what you stand for, speak out about it, take action and be vulnerable.
That’s what’s required as we try to overcome the brand distress and relate to humans and get inside of their dynamic mindset is being very vulnerable. Everything I’ve told you so far, forget it because that’s the past. That is the type of environment that we’re in. Let’s look at the future. The speed of change will make it look like we’re crawling. What does that mean? We’re headed to the upside-down, the opposite of our current truth. Does that mean we’re going to be overtaken by monsters? No. It means that we’re talking about this world of abundance and infinite touchpoints. We’re going to watch this converge over the next few years into a single touchpoint with consumers where they’re living life before they even know it. Keep an eye out for what’s going on.
Ray Kurzweil is coming back to him for the very end here, but what he expects to happen by 2099 is bananas. By 2029, $1,000 computer is going to be more powerful than the human mind overall. Human-driven cars will be illegal because they’re so unsafe relative to the autonomous vehicle. Uploading consciousness becomes possible. People are more involved in virtual worlds than real ones. In 2045 is his big moment, the singularity, and this is where computers are not only more powerful but capable of more complex thinking than a human mind.
Moving into machines being given legal status. Organic humans, a small minority, are humans who have opted out of being transformed a bit of having some type of technology implanted or embedded in them to make them perform better. Some type of AI, human merge, that’s going to be the majority. Whereas organic humans, that’s a small minority. This is an evolving world. We need to buckle up. The important thing is to listen to consumers. We used to be able to do consumer research and get them to tell us things. We’d come to tell you, we can’t even do that anymore. Before we can talk to them and get them to tell us, the world changed again. Our world is listening. Our world is watching around us and responding to the context in which our consumers are interacting every single day.