customer focus

As Artificial Intelligence (AI) ushers in the era of Industry 5.0, transforming every industry and every size of business, it’s impact will be most keenly felt in the realm of workflow efficiency as businesses adopt AI for productivity. Repetitive tasks, long the domain of human workers, are now being automated by machine learning driving large language learning models (LLMs) and intelligent machines, leading to significant time-savings and quality improvements. From jump-starting marketing and messaging to streamlining customer service to optimizing production lines, AI is revolutionizing how businesses operate. No matter what size of business you have, you  can do more with less and focus on higher-level work by incorporating AI in your technology stack. The result? Cost reductions, increased productivity, and stronger competitive performance.

AI for Marketing

AI can be a powerful tool in your sales and marketing toolbox. So far, much of the discussion about AI … at least in the small  business sector … focuses on AI as a content generator. Given how much has been written on this aspect already, I’m going to focus on other areas of sales and marketing benefits. (edit 2024/4/8: I recently did a short talk on AI for content generation, which you can watch here). 

Lead Generation and Qualification

AI can also transform your lead generation and qualification efforts by transforming vast amounts of data into insights you sales team can quickly put to use. Tools already exist that can crawl blogs, social media posts, and online forums to identify users interested in specific topics. It can analyze demographics and past behavior to further refine lead pools, and it can produce lead scores based on interactions with your website, email, and social media presence. This type of work would take sales and marketing teams an extraordinary amount of time, but AI tools can achieve similar results in days or even hours.

Predictive Analytics for Campaign Development

AI can also help you target marketing  campaigns by moving beyond simple demographics and past behavior. It can analyze massive customer datasets to identify hidden patterns and correlations … connections that only the most skilled and experienced data analysts would otherwise pick up on. AI tools can predict which customers are most likely to churn, which are prime for upselling, and which customers will respond best to specific types of promotions or messages. 

Wouldn’t you love to know which customers were least likely to repurchase before offering a discount? Would you love to know the best time to send a re-engagement communication to a past purchaser? These are things AI can facilitate for you.

Sales Forecasting

Forecasting is always going to be part art, part science, but AI tools can make the science aspect of forecasting much, much (much) more accurate. This is  because AI tools can factor in far more variables than traditional approaches like spreadsheets with human interpreters or even business intelligence (BI) tools like Power BI or Qlik.

AI algorithms can analyze historical sales data, market trends, customer behavior, seasonality, and even external factors like economic indicators, local weather, and local or regional politics. The tools can pinpoint subtle patterns and correlations that untrained (or even skilled) data analysts might miss. Even better? AI tools can also pull in data regarding competitor product launches, industry adoption rates, and your own lead generation data. All this adds up to better prediction of potential sales activities. 

Why do you need this type of forecasting? Because better visibility to future changes in sales will help you eliminate pipeline bottlenecks, get ahead of production opportunities, and rebalance your offerings and inventory to reflect changes in demand. 

Beyond Marketing

But now let’s look beyond sales and marketing, to topics that are being discussed extensively at the Fortune 500 level, but aren’t being given enough attention for small and medium sized businesses … even though the tools for many of the things I’m about to describe are already available and affordable for smaller businesses.

AI for Productivity in Operations and Logistics

AI tools can help you optimize and streamline your inventory, improve demand forecasting (see Sales Forecasting above), and improve your route planning, again, b y analyzing complex data. AI can take the historical sales pattern data you are probably using right now to plan your inventory, provide a more nuanced view of seasonality, add in lead times and external factors like weather and politics to predict what stock is needed and when. All this leads to better inventory and production decision-making.

For route-planning, AI can integrate with your warehouse management system, add in constantly changing real-time factors such as traffic conditions, weather, construction, and delivery time windows, and update routes automatically. 

This is already useful data for large logistics companies like UPS and FedEx. But imagine what it can do for your local delivery team or regional distribution efforts.

Data Analytics

One of the things most small and medium-sized enterprises (SMEs) struggle with is numeracy (edit 2024/4/8: Check out this snippet from my presentation on numeracy in manufacturing). Even though businesses of every size are swimming in vast quantities of data today, very few companies employ … or truly know how to use … sophisticated data analysts.

Even with excellent BI tools, most companies fail to optimize their data insights for better decision-making, because the typical IT, accounting, or even marketing team member doesn’t really know how to structure the data models that will give them better insights.

AI tools can help with this. AI excels at extracting valuable insights from massive datasets. Machine learning algorithms wade through all that data to uncover the patterns, trends, and correlations that help you make better decisions. Even better, AI data tools can convert those insights into effective graphics to help your management team “see” the data similarly and get on the same page.

These tools can also assist with fraud and anomaly detection. By establishing baselines for typical behavior within your data, AI can flag deviations and suspicious activity. 

This same anomaly detection is useful for manufacturers, which can use AI to analyze sensor data from machines, detect subtle anomalies in vibration or temperature patterns, and signal equipment malfunctions before they cause costly breakdowns or isolate quality problems before you throw more labor at them.

Administrative Automation

How much time and money does your company waste in administrative tasks? From duplicative data entry to unnecessary printing to missed opportunities, admin is an area ripe for disruption.

AI accelerates document processing, automates routine tasks, and minimizes the tedium of data entry. Using tools like Optical Character Recognition (OCR), AI-powered tools can extract text from images or PDFs, making them searchable, editable, and indexable. AI can then classify documents based on content, route those documents to the right people or departments, or trigger specific activities.

In email management AI can draft responses to common inquiries and free up time for other, more valuable tasks. It can even interpret the intent of emails to suggest meeting times (and share a meeting link to keep you out of the “what time is good for you” back-and-forth), dropping those meetings right into your calendar for you. 

In data entry you can use AI tools to analyze forms, invoices, or receipts, extract information from them, and directly populate your databases or spreadsheets.

Of course, accessing these AI tools assumes that you have at least begun the work of modernizing your tech stack (need help with that? Book a consult now to find out how StrategyWerx can help). 

Competitiveness in 2024 and beyond will hinge on your ability to automate more of your business processes. We are nowhere near the peak of effectiveness for AI-powered software yet, but the tools you can use to begin this process are already available and affordable. If there’s one thing that SMEs should be thinking about right now, it’s how to automate processes beyond marketing. Implement any one of the ideas in this article, and you’ll increase your competitiveness immediately.

“Being able to do something online that you can’t do in any other way is important . . . That’s because the web is a pain to use today! We’ve all experienced the modem hangups and the browsers crash — there are all sorts of inconveniences: websites are slow, modem speeds are slow. So if you’re going to get people to use a website in today’s environment, you have to offer them overwhelming compensation for this primitive infant technology. And I would claim that that compensation must be so strong that it’s basically the same as saying, you can only do things online today that simply can’t be done any other way.”  Jeff Bezos

Website Innovation Goes Beyond the Technology

This quote is from an interview Jeff Bezos did in 1998. I remember reading it at the time and trying to wrap my mind around how I could take advantage of the internet in the business I was then running. It seemed clear to me in 1998 that even though we could use the internet to take orders and ship goods (the business was a jewelry industry distributor), using the internet as a simple replacement for phone or fax orders was not going to take sufficient advantage of the emerging technology. Back then, we didn’t even have the computer systems necessary to facilitate significant use of the internet. We didn’t have fast bandwidth to the building. We didn’t have employees who could type fast enough (or in some cases spell well enough) to manage online orders in the absolutely superb way they handled phone orders. We needed all the building blocks and had to build them fast.

So much has changed since then. Today, 70% of internet use takes place on a pocket-sized device with 4G or 5G. Still . . . if you take away the modems and terribly slow internet speeds of 1998, what Jeff Bezos said back then is still highly relevant: Every website must present a compelling reason to use it.  And yet, most businesses in 2021 are still not providing a meaningful, differentiated, online experience. That’s what website innovation is all about.

In 1964, communications theorist Marshall McLuhan said, “The medium is the message.” Back then, he was focused on the communication medium of television, and how television was changing not only the way households received information, but the culture itself. But he could have easily been speaking about every communication revolution since then: cable tv, digital distribution of music, video games, then online games, social media, the internet. Each new form of communication brought with it new opportunities for communication, new ways of achieving objectives, and new cultural implications.

Business websites are also a communication medium, capable of changing the way customers interact with, experience, and feel about a business. But instead of using all that potential, most business owners have attended to only the most superficial aspects of offering a website.

• The standard page format of websites has barely changed since 1999: Home, About, Services, Contact, Shop. . . maybe News.
• Many retail websites feature pictures and in-store videos to show the website visitor what it would look like if they paid a physical visit. Some go so far as to spend tens of thousands of dollars producing virtual tours, à la real estate agent home videos.
• Product selection on retail websites is often limited to images and iframes provided by suppliers, or which come as part of an industry platform environment.
• B2B websites are even further behind, failing to put full product offerings online or offer the specific services (and price levels) their customers expect to access when meeting up at a trade show or picking up the phone.

Website visitors do not expect the website to replicate your store, are not motivated by seeing all the same products on your website that they find on every other website, and they certainly do not want to purchase your building. Much of what businesses are doing with their websites is missing the point — and the potential — entirely.

That's because most of the work of creating an effective business website isn’t about building the website at all. Effective websites are borne out of the work that comes before they are built.

The Pandemic Effect

Business as we know it has changed forever. Online shopping and buying trends that were happening prior to the pandemic have been dramatically accelerated – economists and social scientists have estimated that we experienced five years of technological evolution in the eight-month period of March - October of 2020. When physical restrictions are lifted, we will not go back to the old ways of working, shopping, buying, interacting with brands, collaborating with known suppliers, or finding new suppliers.

In many ways, this is excellent news. By 2019, most businesses had become mired in price competition. Too much corporate energy was being focused on driving prices down to satisfy price sensitive B2B and B2C customers. But chasing prices is a zero-sum game, forcing companies to offshore work, lay off employees, pile more work on the employees they have left, and ultimately, reduce quality.

Price sensitivity is not going away, but there is another truth here to which most business owners pay insufficient attention: You don’t need all the customers. You just need the right customers. Your value offering can be . . . must be . . . about more than price. Click to Tweet And your website, which will remain a central part of your communications strategy from this point forward, must communicate your value offering in more than just words. Your website must communicate your value offering through experience and benefits.

The Cost of Pricing

Ah, now you're thinking, "But price does matter! People bring up pricing all the time!" Sure they do. So let's break that down. When does price matter most? Two scenarios come to mind:

• Price matters when selling to highly price-sensitive consumers.
• Price matters when there is no other point of differentiation between products.

If you are a grocer in a food desert, God bless you and this article probably is not for you. For everyone else, if you are feeling the squeeze of price competition, it is probably because you have not done the work to differentiate your business from your competitors. Sure, there will always be customers (or potential customers) who complain your price is too high. But if you peer beneath the surface, you will quickly realize that those customers are not your ideal customers. Unless you are interested in competing solely on the basis of price, and are prepared to do all the operational improvements necessary to still make a profit while selling at the lowest price, you shouldn't be competing on price at all.

Doing the Work of Website Innovation

You can't produce a website that delivers an ideal experience to your target customer if you haven't defined your strategy. You must be able to articulate who you are, what you do that makes you different, and why you matter to your target customer. It is a big topic, but for a quick overview of what’s involved, here is a 17-minute podcast and transcript.

How you apply your business strategy to website innovation should ultimately be as unique as your strategy itself. Let’s look at a few examples to illustrate the potential.

An Online Retailer’s Website Innovation

This example involves a jewelry designer who sells to both boutiques (B2B) and consumers (B2C). Her product is fine jewelry, so it's expensive. She produces two collections for boutique distribution, for which she stocks small inventories and has the capability to produce reorders quickly. For consumer direct sales she only offers one-of-a-kind and custom. A big part of her brand value is her aesthetic – people come to her for her design. But her customers return because of her commitment to developing and nurturing relationships, and because she has an uncanny ability to help her customers articulate their ideas and desires and then realize those ideas in physical jewelry form. Finally, this designer has the exquisite ability to help a customer give herself permission to spend money on herself.

A Shopify style, put-a-product-in-the-cart-and-ship-it website will never be able to deliver on this value proposition.

To start, her website needed both a consumer front end and a gated B2B back end.

One-of-a-kind products that are ready to ship can be ordered as is or can be adjusted according to the client’s wishes. From within those product listings, it is easy to book a quick video chat or send an email or text message.

The collections available only through boutiques are also available for browsing, with easy links and directions to the retailers that carry them. She uses these pages to explain why she makes some products available only through retailers, and why she thinks it is important to protect and buffer her retail partners. This transparency builds trust and respect for her business principles.

All her product pages are peppered with links to articles with images and commentary about what she is creating and why. This invites her website visitors into her design process in a way that is unique to an online experience. When a customer visits the physical shop, she can experience the design process in a way that is intimately about herself. Visitors to the website can experience the design process in a way that is more intimately about the designer. Both are excellent experiences, and each is designed to work most effectively relative to the benefits and drawbacks of its respective channel.

The site pays extensive attention to the experience of creating custom design, with obvious and easy options to launch or schedule a phone or video call throughout the site. She toyed initially with trying to figure out how to create a ring builder, a website convention showing all the possible components and iterations of a design. But she ultimately decided against it, because dragging a graphic around to make a new graphic could not possibly replicate the rich experience of letting a talented designer guide one through the creative process.

Her B2B clients can log in to a secure back end, where they can see their negotiated prices and order products. They can place a purchase order or credit card order immediately, or schedule or launch a video or phone call to speak with the designer. B2B clients can also see past orders, track order progress, and see shipping details.

This website does not require expensive software or management. The technology is fairly basic. Superficially it may even seem like a lot of other websites. But by approaching her website through the lens of her strategy and value offering, this designer went beyond setting up a website and deep into website innovation.

Website Innovation for B2B

Let’s look at the website of a company that distributes instrument and music supplies to music stores and schools. They manufacture some of their supplies at their northern European production facility and distribute thousands of supplies from other manufacturers. Not only are they faced with a shrinking market, but their suppliers can also take advantage of the same internet technology to cut them out as the middleman.

To shake themselves out of survival mode and actually start growing again, they did a strategic overhaul in the years before Covid-19 came calling. During that process, they recommitted to the idea that their deep knowledge in all things music supplies was just as important as the products they sold. They decided to stop worrying about how much cheaper their clients could find things on Amazon, eBay, CDiscount, and Otto, and instead focus on how much their customers trusted them to not only sell the best products, but to help them select the right products.

They knew all their products had to be available for shopping and comparison, and that their business systems had to be upgraded to support that. Their systems overhaul made it possible to manage all their products in only one system and make those products sellable both through their traditional office support and on the website without any extra administration. The systems update also made it possible to show each customer their negotiated prices automatically and made it easy for customers to check on order history and statuses.

Implementing an Inventory Control System

But the big work of website innovation involved answering these questions:

• What are the things we already do really well – the things that gained us trust and respect from our customers?
• When we update our website, how might a website underperform on those important things due to the insufficiencies of a website compared to a phone call or a meeting?
• What can our website do to mitigate those shortcomings and offer something new and better, ideally in ways that a phone call or meeting could not do?

The answers to these questions clarified that their website needed to provide all the information, training, recommendations, and knowledge that their customer service team had been providing all along. The solution was to create a wiki-like information architecture using tagging and categories to make it easy and intuitive for customers to learn about any product, find other products like it, compare products, and do deep-dives into product features, functions, and benefits.

Because so many of their clients are music teachers, they had always offered proforma quotes and provided an extensive form library to assist teachers with budget requests. They turned these forms into an on-demand, easy-to-use, interactive, system. They are currently in the process of refining that system so they can more closely collaborate with individual schools relative to budgets for music supplies.

The website also makes it easy to jump on a phone or video consult, which blurs the line between online and in-real-life interactions, builds trust, and increases close rates. For this company, website innovation was about making sure the online experience was the best possible experience of their company by mitigating the downsides of the channel and playing up its potential.

What Will Your Website Innovation Involve?

You, too, can use your website as a strategic extension of your brand value. Customers are not looking for thousands of products on one site, without curation or context. Sure, they want to be able to buy things, but it is easier than ever to find things and buy them. In fact, consumers are currently overwhelmed by choice, much of it meaningless. 

No, if you want to stand out online, you must identify your target audience and do the brand-relevant things that matter to them (or that will appeal to the right subset of new visitors). The technology is available, and it is affordable. What is generally missing is thoughtful analysis, planning, and imagination. Once you do that work, new answers will occur to you that simply had not occurred before.

So stop. Before you jump into Wix (or Weebly, or Square, or Shopify) and start dragging and dropping your way to a same-as-everyone-else website, do the work. The thinking work of website innovation.

If you want to stand out online, you must identify your target audience and do the brand-relevant things that matter to them. Anything less is just a waste of website space. Click to Tweet

When Will We Start Treating Lab-Grown Diamonds Like a Product Instead of Like an Intruder?

The jewelry industry continues to take polarized positions on lab-grown. It seems like every time we've grown past this debate, another social media group comes to virtual blows over the topic. I'm not surprised - it was the same conversation when Chatham first started offering lab-grown emeralds and rubies. But it's not useful. Not to us, not to our customers.

You don't see grocery stories saying, "we won't carry organic/gluten-free/paleo/pick-a-theme" groceries because they interfere with our other grocery sales. They evaluate consumer interest and potential demand, and offer choices. Fashion has done this with alternative fabrics. Car companies had a harder time doing it with alternative fuels, but that's largely because of the expense of tooling up to produce new equipment coupled with wanting government assistance to do so.

When it comes to lab-grown diamonds, we get all tied up in our shoestrings with our own preferences, fears, and perceptions, and in the process lose sight of the customers.

In the most recent social media post and following thread, I saw all the same black-or-white arguments. Diamond mining concerns are doing great! So much change! Mined diamonds are terrible, so much abuse. Lab-grown diamonds are not ecologically friendly - so much electricity! Lab-grown diamond producers are abusive, they're all in (pick a country). None of these tropes serve the industry, our businesses, or our customers. But if we're going to have honest conversations and learn from each other, we need to get comfortable with shades of gray - because that's all there are right now.

Shades of Gray Shadow Both Mined and Lab-Grown
The social and ecological issues are very challenging to sort. Tens of millions of artisanal miners around the world rely on mining to feed their families. Anything we do in the mining sector must be done not only with regard for their health and safety while mining — but also with regard to their health if they cannot mine. In that regard, the pandemic is causing horrific food insecurity around the world.

Want to help support artisanal miners suffering from food security caused by the pandemic?

On the other hand, diamonds do not "do good" yet. Not by a long shot. They are "doing better," and better is a good direction to go in. So we must keep applying pressure on the mined diamond front.

But let's never demean progress. The natural diamond sector was pretty bad for a long time, they've made progress, and if we treat progress as an all-or-nothing proposition, it tends to stop. We don't want that.

So, are lab-grown diamonds a more or less ethical solution? Like natural diamonds, it all depends. If you're talking about factories abusing their labor, then no. But just because a factory is in China doesn't mean it's abusive. I spend a lot of time in manufacturing facilities around the world, and I've seen rotten treatment of employees everywhere — including in the United States — and excellent treatment of employees everywhere — including in China.

Are lab-grown diamonds more or less ecologically sound? Again, it depends. I know of growers working to use the most responsible power generation possible, and some that don't care about that at all. Until lab-grown producers start disclosing some of those details, it's just impossible to know.

But, if you have a customer who has a really hard time with the concept of digging and blowing holes in the earth, then lab-grown may be the flavor of "responsible" she's looking for. I don't agree with making green statements that can't be validated, but I'm uncomfortable with blanket statements that lab-grown producers are all disruptable too.

Which Holds Its Value Better (Hint: It's a Red Herring)

Do lab-grown diamonds hold their value for the future? That's a laugh — a discussion we shouldn't even be having. Not because lab-grown will or won't hold their value for the future — nobody knows that yet! It's a laugh, because mined diamonds don't hold their value. We should never treat diamonds of any sort as if they are a financial instrument. A very small number of collectors in the ultra-rare mined color diamond sector do use diamonds as a financial investment, but that's it. We should never make any promises or inferences to customers about the future value of a diamond.

Should you Sell Lab-Grown Diamonds?

So - should you or should you not sell lab-grown? Well, you could base that on your own preferences, fears, and biases, but I'll suggest that's a terrible business approach. You should make every business decision based on your businesses core values (which are different than biases), and on the desires and interests of your customers. It won't be the same answer for everyone, nor should it be. If analyze this question with intellectual rigor, self-awareness, and deep interest in your customers, you'll have the right answer - and nobody else can tell you otherwise.

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We like to think of ourselves as rational beings, but when it comes to buying, we're just not (oh - and wait until I address reason versus emotions in business decision-making, though that's another article entirely).

Consumers - female and male - buy based on emotion. No matter how many statistics and facts they line up on the way to making a buying decision, that data collection effort tends to  be done in the service of making the decision they want to make. 

But you already know that trust and connection are essential to closing sales. Now make sure that you are also speaking to emotions from the beginning of the process - including the merchandise you choose to offer and the messages you convey to browsers and shoppers - long before the customer lands in the store or the products land in the cart. Be sure you are selling to feelings.

In this month's article for InStore Magazine, I wrote about how the anxiety and disruption of 2020 will influence the shopping emotions of 2021. Read the article to see how the themes of comfort, tradition, and responsibility are the themes to merchandise and market to in the year to come.