CPG companies are developing innovative living services to ensure their brands stand out in a competitive marketplace.
In our previous articles on this topic, we described how industry leaders are creating living services to satisfy consumer needs and build new revenue streams. We explored the role that marketing can play in developing these services. A footwear company might draw on its marketing insight to scope out a digital-enabled service that will create new value for consumers. This service may be a far cry from its business of making and selling shoes, but it will help the company build a stronger relationship with its core customers.
But designing and launching living services is only part of the story. The whole point of living services is that they are “alive.” They must remain agile and adapt themselves to reflect changes to the user’s behaviors. Maintaining this agility presents challenges, but it also creates scope for a wide range of new opportunities to drive value and thus revenue—as we explore in this final article in our series.
Rinse and repeat
Let’s say our footwear brand has done ethnographic research to define a living service that delights a lucrative segment of its running shoe customer base. For example, it may have designed a service that provides these customers with running routes specific to their location. If an executive on a business trip can only find a 30-minute window in their day to go for a run, the service would map out a route near them, which would take about half an hour to complete.
If the service turns out to be an immediate success, the company might be tempted to leave it as it is and watch their brand value grow. But James Dyson went back to the drawing board over 5,000 times to perfect the bag-less vacuum cleaner—and the same rules apply with living services. Once the service is live, it’s time to test and correct—then test and correct again—to explore how it can be enhanced and, as data is being harvested with every interaction, we’ll learn more and more about the intention and desires of the user to better modify and evolve the services that we deliver over time.
This is where smart data comes into the story. If the footwear brand monitors how its customers are using the service, it might find that runners use it frequently at first but then trail off after a couple of months. At what point do they lose interest? Careful analysis of the data could suggest that users are not being “nudged” in a way that makes them want to use the app as much as they could. The company should then rethink the frequency and tone of the updates to improve traction. Alternatively, it may find that its users do not always like the routes they are given. So how could the company ensure they are recommending better options? This could lead them to developing new routes that purposefully avoid tourist areas, where there is likely to be heavy human traffic.
Spotting the outliers
Living services meet users’ most critical needs. By collecting usage data, companies can see how their customers are using the service. At the same time, they will come across outliers in the data that point to whole new opportunities.
These outliers may have nothing to do with the products the company makes today, but they still illustrate a customer need that is going unfulfilled. Let’s go back to users of the running app. When studying usage data, the footwear company will be able to pinpoint which of its users go running in the middle of the day. During the summer months, these runners are likely to need sunblock—and might benefit from reminders about applying sunblock as part of the same living service. Marketing can therefore suggest a new opportunity, based on quantifiable insight into consumer needs, for the company to partner with a skincare company to meet this need.
Ten years ago, the CEO might never have believed that the company could one day drive growth on the back of a product completely removed from its core business, but living services can make things like that happen. As we have explored in these articles, living services are already revolutionizing the traditional model of CPG.