Retail: Flywheel & Technology Stack
And the associated job to be done.
Before we begin, some definitions.
A flywheel is a recursive (repeatable) process. For our purposes, we will define it as a process whereby one attracts, retains and engages customers so as to (1) encourage return purchases and, (2) help attract new customers.
Here's a quick overview.
The Traditional Org
Even though the flywheel concept seems simple enough to understand, most organizations aren't set-up that way.
We tend to demarcate job roles and assigned responsibilities based on what is easy for us to manage instead of around the customer and how their experience would be like.
In most traditional organization structures, it looks like this:
I'm exaggerating the silos in this example but you get my point.
Why it worked in the past
The reason why such a management structure thrived in the past and why it still exists today is because it makes command and control EASY.
When everything gets set-up and when you need to start thinking about growing your business, you probably didn't spend too much time thinking organization structure.
You were drowning in work and you just needed a warm body to fill that role.
Two years later, that one hire has now hired a bunch of people around them to help them with that original job but no one has any idea whether that job itself has any strategic significance to the company in the future.
Example of Where it Fails...
This "just-in-time" hiring method tends to hurt the entire organization but one department is often the most disadvantaged. The marketing team.
Without a clear "job" scoped out, they can be doing a number of things that seems like progress but might not really matter to management at this point in time. Should they be...
- Working on traffic? Crafting more digital campaigns and/or more promotions
- Building collaterals? Video assets, images, stock photos
- Brand building? Crafting brand stories and featuring them on TV ads?
- Researching on new audiences? Conducting customer interviews...
- Establishing influencer relationships/ channel partnerships?
If not properly assigned, ALL of these tend to fall under the marketing team's purview.
The New Org
When you breakdown the roles and responsibilities for each individual component of the flywheel you start seeing something quite different.
You realize how one department might be responsibly for different aspects of the customers' journey or how interlinked their responsibilities are.
So this begs the question, what does any of this have to do with technology?
Technology = Job Enablement
For our non-technical audience, we won't be running through deeply technical terms (that will be reserved for another post). This section is simply to help you understand the business case for your technology stack.
PS: Technology stack is a slang used to describe the bits and pieces "glued" together for the everything application to work
So, how does technology = job enablement?
1. Productivity through automation
As you might have already guessed, we are going to start with automating away everyday manual tasks. Some examples include:
- Scheduling invoices to suppliers
- Report preparation
- Scheduling daily social media post
- Email sequences to engage cart abandonments
Instead of spending 20mins at work every day, spend 4 hours on the first day of every month to get everything prepared. We take this for granted but imagine if you had to bother your entire workforce every time a new order came in. You would have to manually...
- Check your inventory for item
- Check payment (test for fraud if credit card)
- Manual remove purchased items from inventory stock count
- Attribute this purchase on an excel sheet to a particular marketing campaign
It sounds so ridiculous when you lay out every manual task that can be automated away but organizations still have individuals spending hours every week manually typing in receipt or invoice data.
This is the first layer of the technology stack that is usually adopted before anything else in order to drive up workforce productively. The unfortunate consequence is that if you've made a bad initial vendor choice, you risk the adoption of the second layer...
2. Interoperability through data
Have you every sat in a meeting where another department was presenting and they were showing stats and numbers that you never knew existed?
You might have this problem.
How do you expect teams to work together on different initiatives when they don't have the same access to the data? Here are some examples-
- If all the sales data is with the merchandising team, how is the marketing team going to know which are their best sellers?
- If all the inventory data is held up at the warehouse level, how is a salesperson going to answer to customers asking for items that are out of stock?
- If all marketing metrics are kept secret from the finance team, how are they going to evaluate the health of the business? They could be spending 99 cents to acquire every $1 in sales.
We can all think of at least 5 situations that our organization can improve through the interoperability of data. So why don't we do it?
If you were in a rush and made a bad vendor choice, you could be stuck with one system that is siloed from the rest of your data.
In the old days, the solution to this was to purchase ANOTHER monolithic solution called the ERP to solve data reconciliation but every time you added a new system or removed a old one, you had to bother developers to reconfigure everything.
Today, we have companies like Zapier, Tray and Segment that can help funnel data to where it needs to be (without having to bother anyone). An individual can immediately start contributing after 20min of clicking around and setting up various workflows.
So why doesn't everyone work this way? Financial Justification.
Unlike automation that can be clearly justified through hours saved, data sharing is a bit harder to quantify. Here are some suggestions
- Quantify number of hours spent emailing each other excel files
- Figure out how many initiatives currently remain impossible to do because data is store in that way. (E.g. if all your marketing plans are written in a word document)
- Start quantifying velocity of work
Quantifying velocity of work may seem quite foreign to retailers at first but the manufacturing and technology industry has used it for quite some time.
Simply put, given that it took X hours to achieve Y output last year, can we do 50% better the next quarter? (Leading to the final point...)
3. Performance through measurements
How can you improve something if you've never tried measuring it?
It's quite funny when you hear a CEO say that they are going to improve marketing ROI and research and development impact in the next few quarters when they have little to no knowledge about how the company is doing right now.
Here are some things that you can start measuring...
- Salespeople Efficiency (Average revenue per order ): Are they recommending the right products?
- Content Marketing Team (Daily Traffic): Have they done their keyword research? Do they need to release more content? Is it the quality of the content?
- Customer Success (Net Promoter Score): Are customers happy with their purchase? How do they feel about your brand? How often are you mentioned in complains v complements?
All of these can be measured and technology should help you monitor each and every one of these metrics. (Assuming you have fulfilled the first two criteria.)
Thanks for reading
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We will be releasing one more post detailing the specific roles that technology can play in each team in the coming weeks (e.g. social media monitoring -> trend analysis for merchandising department)