Brands have come to the understanding that their success is directly related to consumers. Organisations are increasingly investing in technology and innovations to provide better customer experience. As a customer experience management (CXM) company, Merkle owned by Tokyo headquartered Dentsu Group claims that not only it encourages brands to embrace customer centricity, we help them transform organisations into builders of long-lasting, value-driven customer relationships. In its annual report for FY22, the group stated that Merkle is Dentsu International’s largest brand, and is poised to reach $2 billion in revenue in 2023. The company further stated that Merkle’s equation for success is – data transformation + digital transformation = customer experience transformation.
In an interaction with BrandWagon Online, John Riccio, president, Merkle (APAC) talked about the latest technological developments in customer relationship management, digital transformation,India as a key market for the company and more. (Edited Excerpts)
With reduced ad spends and inflation in the market, how have brands made changes in the digital transformation journey?
Before the pandemic, there was considerable focus on digital transformation, particularly in online commerce besides establishing a digital presence. The pandemic highlighted the importance of adapting quickly to survive, with some organisations struggling due to a lack of preparedness. The adoption of digital engagement, experiences, and online commerce accelerated significantly during the pandemic.
While global markets have slowed down, digital transformation remains ongoing. Some organisations continue to invest in optimising their operating models and extracting value from previous technology, data platform, and cloud investments. Others who were already investing in digital transformation before the pandemic, are continually evolving and adapting, while others who did not do so, have only been forces to do so. Organisations which understand the value of being customer-centric continue investing, while those falling behind often halt their digital transformation efforts due to short-term outlooks. So, digital transformation is still happening, but the approache vary based on organisational priorities.
Where does India stand in Merkle’s global scheme?
Asia Pacific is a significant region, and India is one of the four key clusters within the APAC for us. Among these clusters, India holds the second-largest position, emphasising its importance. This is why I am here, as we see immense growth potential in a market with an estimated addressable market size of around $4.5 billion for our services.
Based on our Q1, announcement, we experienced a 4.5% revenue growth year-on-year. Our objective is for Merkle to contribute 50% of Dentsu’s overall revenue globally.
How does a brand leverage data to provide the best customer experience to its target group?
A recent study we conducted revealed that 80% of companies and their leaders believe they provide exceptional or outstanding customer experiences. However, only eight percentage of customers agreed with this assessment. This is a significant gap of 72% and it is here that much of the investment is currently focused.
The enhancement of customer experience and technologies which support it have a wide scope, encompassing various aspects such as promotions, loyalty programs, customer relationship management (CRM), and different forms of commerce such as social commerce, direct commerce, and market places such as Amazon. This entire commerce experience is the second extensive category of technology, which is all-encompassing and plays a crucial role in facilitating customer engagement with physical brands.
While there are always emerging peripheral technologies and platforms, if I had to choose the top two, they would be the evolution and utilisation of data and the array of platforms that enable seamless customer experiences and interactions.
How recent advances in AI and real-time data is supercharging customer experience (CX)?
Newer technologies are enabling companies to create personalised experiences tailored to each customer’s needs, with a focus on making the process frictionless. Mobile remains the primary channel of engagement, but the sub-channels within mobile are evolving, with a trend towards incorporating “buy buttons” into various platforms. Technology is making this possible and leading to novel experiences.
Generative AI like other emerging technologies, has been around for a while, and people often get excited about new technologies without fully grasping their true value. We are currently on a journey of discovery to understand how governments will regulate generative AI, what safeguards will be in place to protect consumers, and how data accuracy will be ensured. Questions about liability also need to be addressed. Just like the Internet in the ’90s, the use of generative AI will evolve over time, and we need to go through a rigorous process to understand its potential benefits and risks.
While generative AI has the potential to be powerful, it can also be dangerous. Startups are actively entering the market, but like any emerging technology, it requires careful exploration to use it ethically and safely, while driving value for customers and organizations while safeguarding people’s rights.
Overall, technological advancements are leading to more frictionless customer experiences, which is essential for maintaining customer engagement with brands. Customers tend to disengage from a brand if the experience is cumbersome, opting instead for brands that offer a smoother interaction.
What are the opportunities and challenges that you see for India as a market ? How are brands trying to upgrade themselves in terms of providing customers the right experience?
Describing India’s market is complex due to the coexistence of advanced technology and the need for infrastructure development. The country represents both ends of the spectrum, with significant technological knowledge and acceptance, making it a powerhouse in the global tech arena. However, culture and lifestyle do not always align with this technology-driven landscape, and many people lack access to technology.
The Indian government’s efforts to make technology and digital services universally accessible create vast opportunities for various audiences. Companies have recognised this potential and are investing in new ways to engage customers beyond traditional methods.
While desktop-based commerce may not be prevalent in India, there is a significant rise expected in mobile commerce, social commerce, and related applications akin to the Chinese market’s Super apps and mini apps. This expansion is due to the opportunity to reach untapped audiences, combined with India’s technical capabilities and a thriving startup ecosystem. India is poised to leverage these advantages and achieve remarkable progress in its market.
How can one bring brand loyalty in today’s age? How does Merkle help in this regard?
With the growth of technology and the Internet, data collection evolved beyond loyalty programs. However, the purpose of understanding customers seemed to fade, and loyalty programs shifted towards driving purchases rather than deepening customer insights.
Now, loyalty is gaining importance again due to impending challenges such as losing access to cookies and data. Brands need to recapture first-party data to personalise customer experiences and maintain customer understanding, considering data collection regulations.
From a consumer perspective, loyalty is scarce in countries such as India, where customers prioritise the best deal and perceived value over brand loyalty based on price alone. Brands must offer additional value and personalized experiences to retain customers, as habits can change if a better option arises. Ultimately, brands, retailers, and consumer product companies must continually innovate their products, brands, and overall experiences to resonate with customers and ensure loyalty.
What are the company’s plans for the new fiscal that has started?
Our main focus is on achieving growth and expanding our range of skills, ensuring that each cluster in the Asia Pacific region has a complete set of capabilities. We are bringing in new talent and exploring additional services and offerings for Merkle in the APAC market. Currently, there are several services, such as personalised experiences, commerce, loyalty, addressable marketing, and transformation, that we have yet to introduce to the market. Our goal is to provide a full array of services in each cluster within the next three years.
India is particularly important to us and is a priority market. Currently, we concentrate on making advertising more addressable and strengthening our capabilities in commerce and strategy. However, our aim is to offer an end-to-end Merkle solution in all our markets, providing the maximum power and value to our clients.