We’re calling it the Serviceplan Group Middle East Diary: Every week, one of our team members will be sharing what’s currently going on in her or his life at Serviceplan Middle East.
The New Year is not giving us any breathers. The New Year’s Eve fireworks have barely died down and we are already invited to enthuse about the long-awaited relaunch of an important tool. How it’s not too long before we’ll be browsing with our reading glasses and why voice assistants are likely to get on our nerves soon – this and more you’ll find out in the SEO News bulletin for February.
1) Hooray, the new Google Search Console is here!
With the start of the New Year, the mailboxes of webmasters, in-house SEOs and agencies far and wide have been overwhelmed with countless emails. What initially looked like spam soon turned out to be a long-awaited message from Mountain View. After a test phase lasting many months, the new Google Search Console is now available to all users. Though officially still in its beta phase, the data portal for monitoring the organic search aspect of website performance formerly known as Webmaster Tools has had its design completely overhauled. Alongside its fresh look, the Search Console also offers real improvements, such as access to historical data from the last 16 months instead of the previous mere 90 days. There are new functions too, like the Index Coverage Report, which enables superior tracing of the search function performance for individual URLs. Although some basic functions are still missing, Google has announced that it will further expand the range of functions for the new Console within the year. At the same time, new functions will also be added to the API. The fact that the highly-anticipated rollout took so long was mainly due to the need to collect and evaluate the beta testers’ feedback, a Google spokesperson said. Google is also still interested in Webmasters’ input. They have been asked to submit ideas to Google for useful reports and functionalities. SEOs and Webmasters should not let this opportunity slip by to further adapt one of the most important tools of the sector to the changing needs of our time.
2) Voice search ranking: new study reveals first figures
The British online performance agency Roast has run a study to investigate the connection between rankings of classic Google search results and responses of the Google Home digital voice assistant. To this end, 616 top search terms from the areas of medicine, retail, travel and finance were entered as queries, and in the UK, an “answer box”, the so-called featured snippet, was shown as the search result. The Google Home voice assistant could answer roughly 75% of the queries through its automated search process; the remaining 25% left Google speechless, although the desktop search showed a corresponding answer box. No statement could be made about the rules governing the answers displayed, as the study shows. What’s more, about 20% of the queries answered by the voice assistant did not tally with the featured snippet on the desktop. For search marketing, these results mean that a successful battle for featured snippet ranking in a desktop search is far off from guaranteeing an equivalent reception on Google Home, and the Google My Business tool is still indispensable for managing information that serves search queries for local services.
3) Visual search on the rise
While we’re still waxing lyrical about the influence of voice search on digital marketing, AI is yet again opening up totally new avenues. With new apps like Google Lens and Pinterest Lens, as well as expanded functions on Microsoft’s search machine Bing, we’re advancing in the visual search era. Since the early days of Google we have been able to look for images using key words; later came reverse search for image files with the aid of structured data. In the next developmental step of visual search, AI will recognize the content of photos or only sections of images, completely without context, and will not only come up with similar images in its results list, but also detailed information on the properties of the depicted object. For the e-commerce sector, this means a new access point on the customer journey. Information searches and purchase decisions can be conducted quickly and intuitively. The need to translate your own search purpose into a written or spoken search phrase becomes obsolete; results are instantly reflected in an augmented image. For search engine optimization, this development means that providing product information via automated data feeds and data banks will become even more important. In this way, suitable information be stored in the search systems and successfully served by this kind of push paradigm. The transferred content – images and text – need to be optimized for quality and relevance and be able to excel as structured data in order to take their place in the competitive data world. The integration of visual search in cameras, browsers and apps will take place very quickly and accelerate the transition from on-page to data optimization even further.
4) Alexa gets her own opinion
In the meantime, we know that digital voice assistants like Alexa and Siri have female voices because studies verify that both men and women find the female voice more trustworthy than its male equivalent.
But apart from fact-based question-and-answer exchanges, so far it has not been possible to carry on a conversation with the voice assistants. This should now change through an Amazon decision. According to Techcrunch, Alexa will be endowed with her own opinion and also express this confidently in conversation with her user. By way of example, the company gives comments on films in its own video product range. As she once did with the funny character at the video shop counter, (the older reader will remember this), in future Alexa is intended to start up conversations with users looking for the right evening entertainment – which will not be based on content curated by humans. Instead the artificial intelligence of the voice assistant will independently generate the necessary portion of attitude and humour that is crucial for lifelike conversation in all its nuances and suitable for the market. With use of this strategy, Amazon expects to win an advantage over its competitor Google, which has recourse to information and facts from a disparately larger data set, a company spokesperson has explained. Thus, Alexa is today already declaring the US beer brand Budweiser to be her favourite drink. Humour aside, a machine’s skill in conducting a natural conversation with a human will shape and change the future of search marketing in a more decisive way than any leap in technology we have experienced so far.
In the last couple of years, entrepreneurs across the Middle East have launched new products, businesses, and have shown the possibility of creating a vibrant startup scene similar to Europe and the United States.
Startups from the region have shown great promise. An example for this is the recent acquisition of Souq, an e-commerce player that got acquired by Amazon for close to $800 million. Another notable exit from this region is Talabat which was acquired by Delivery Hero based out of Germany.
According to a report published by MAGNiTT, a research agency, more than $870 million were invested in Middle Eastern startups last year and each company raised more than $500k individually.
E-commerce, however, is a crucial domain in which startups can do much more to fill the gap in the market, so let’s take a closer look at this vital industry.
Present and future of e-commerce
According to a report published by BMI Research, the Middle East is one of the fastest growing e-commerce markets in the world. The same report also projects that the sales volume of this region will expand to $4.3 billion in 2020 from $22.3bn in 2016.
Out of that sales volume, $19.8 billion will originate from the United Arab Emirates (UAE) as currently close to 88% of UAE’s population are internet users with a smartphone penetration of 78%.
But when looking at the current state of the market, Gartner reported that only 15% of the businesses in the region have an online presence and 90% of online shopping import products from outside the region. These statistics clearly show the tremendous opportunities that lie ahead for the online retailers.
Across the region, men are more likely to shop online than women. For instance, in the UAE 59% of online shoppers are male, while Egypt shows the biggest disparity – with 77% of shoppers being male.
Younger web users are contributing to the drive of the e-commerce market too. In all the markets analysed, 26-35 year olds are more likely to make purchases online than any other age group.
In Egypt, a massive 50% of digital shoppers are 26-35 years old.
As for products bought, air tickets, electronics and fashion items are the most popular goods purchased online by shoppers in the Arab World.
E-commerce is getting social
The leading way for e-commerce brands is to connect with shoppers across the Arab region via search engine optimisation and social media.
Facebook is the leading social channel among Arab online retail brands, with 41% using the service. Instagram is also proving to be popular – with 23% of these companies making use of the photo sharing app.
It’s good to see an increasing in-depth coverage of the digital market(s) in the Middle East. E-commerce growth has certainly seen an impressive growth.
For those looking to connect with online shoppers across the Arab World, brands need to be aware of the comparatively acute demographics currently making purchases online at the moment – i.e. men aged 26-35 – and trying to understand what makes other web users to try online shopping.
Access may be an issue for certain consumers. And we can also see that certain product types may be better offered through online channels than others.
Social and SEO are seemingly proving to be increasingly vital for e-commerce companies to reach more and more customers, so it will be interesting to see how digital shopping continues to evolve in terms of a search tool, and seeing an increasing adoption in social and more mobile technologies over the coming years.
Challenges in e-commerce
Although the prospect for the e-commerce market in the Middle East is huge, there are many obstacles restricting the progress. Here are some of the key issues:
There are high trade barriers in the region which makes it difficult for online retailers to ship products. Moving goods through customs can trap any company in a bureaucratic nightmare — especially when you add high tariffs, changing regulations and volatile currency exchange rates. Amazon’s Souq, which delivers products primarily to the six countries in the GCC customs union, is an exception.
Most startups would probably fail if being faced with the adverse conditions in the Middle East. In Egypt, for example, there are no bankruptcy laws. That means an entrepreneur could end up being jailed if debts are not cleared on time.
Simply closing a company to start a new business can also prove to be extremely problematic. Endless amounts of regulatory paperwork is involved and it can take up to 5-10 years. According to World Bank, the average ranking for starting a business in the Middle East stands at 117, which is far below the rankings of the US and the UK. So it’s safe to say that there are still quite a few hurdles in the way for Middle Eastern startups.
Usually, startups attract new talent by offering employee stock options. This is true for most of the world but it’s an alien concept in the Middle East as businesses are forced to operate with outdated legal and regulatory systems.
Labor laws also make it difficult to fire employees, especially when it comes to foreigners, while the existing education system in the region fails to provide locals with crucial technical skills, such as coding.
Amazon’s arrival is definitely a dangerous signal for the local e-commerce stores. Amazon is more of a gigantic logistics facility than an e-commerce store and the acquisition of Souq.com will help them to build stronger facilities in the Middle East. Amazon can definitely offer a wide range of products and outpace the local e-commerce stores in terms of delivery time. They will also be driving huge marketing campaigns to get locals in the region onto Prime membership.
Amazon’s customer-centric approach and the mission to provide the widest range of products at the lowest price possible makes it an intimidating competitor of any local player.
Fostering adoption via government’s efforts
If the industry is supposed to succeed, the governments in the region will have to play a crucial role in promoting e-commerce, in addition to the efforts of private companies. One of the major ways to build trust can be enhancing e-governance and digital services.
Most of the countries need to integrate the traditional offline services such as visa programs, transportation services, utility services and more online platforms that can leverage online payment gateways to provide efficient services to the local population. In fact, other countries can get inspired by the UAE which has established the world’s first purpose-built duty free retail hub — ‘Matajircom’. There should be concrete efforts from the government to work in conjunction with the regional and international firms to boost e-commerce in the Middle East, so that they can keep up with the rest of the world.
Notable e-commerce startups
Despite the problems that startups in the region face, many have managed to beat the odds and reach notable success. One of the most prominent startups in the Middle East is Wadi.com, an Amazon-like e-commerce store that raised $67 million in a Series A round with an undisclosed valuation.
Contrary to Amazon, Wadi sources products from a diverse set of retailers and sellers (without maintaining warehouses) and operates online in the UAE and Saudi Arabia. This helps them to deliver products at a much faster speed than Amazon and staying ahead of the international giant.
Mumzworld.com is another notable e-commerce store that’s targeted towards mothers and baby products. The startup secured multi-million dollars in a Series B funding round from Wamda Capital, twofour54, and Endeavor Catalyst.
Souq.com, which was acquired by Amazon, has established its business throughout the GCC and Egypt and currently commands the largest market share with more than 23 million monthly visitors.
Other e-commerce players that have a strong ground in this region are Aido.com, Awok.com, and Zappos clone Namshi.com. Another popular e-commerce store is Cobone.com which is centered around daily deals.
The future holds a lot for the e-commerce players in the Middle East and it’s definitely great to see companies succeed in spite of the intrinsic barriers. Their success is inspiring for other players to build great products and services apart from building trust in the local community.
Economic reforms, diversification and improvement in labor laws coupled with steady growth in internet penetration will propel the e-commerce market to new heights in the next decade. This can also be seen from the chart below.
Imagine if “talking” products existed in the retail trade. Imagine if every retail surface and every product could act as a stage for brand and product presentation. Your favourite celebrity chef could pop up in the supermarket as a hologram and offer you cooking tips for the products on display on the shelf. When looking for the right golf club, a 3D light figure of your favourite sports star could appear in the room and talk you through the best products available in the sales area. Does that sound like something from the future? Well, it actually already exists today: Mixed Reality makes experiences like this possible.
Innovation is the driving force of the economy. Without it, there is a standstill. But innovations only work if they solve people’s problems. Dennis Pfisterer calls for a new approach to innovation.
Innovation is the driving force of civilization. The engine of the economy. Without innovation, there’s nothing but standstill. And standstill is death. Everything old must be disrupted and new technologies help set us free. Digital! Social! Global!
A new year begins and when if not now will it make sense to question how we want to tackle things in the future. Are there any new ideas or insights that will help us in 2018? Ones that will characterize us personally, commercially or even socially in the long term? Innovations promise progress, but is that really the case? Is innovation worth striving for?
INNOVATION. WHAT THE…
By definition, innovation is a deliberate and targeted process of change towards something original and new. The search for new knowledge or solutions therefore puts curiosity, creativity and desire for renewal at the fore. That explains why the term “innovation” is so eagerly and often chosen to sell novelties of any kind. From thought constructs such as communism, which sought to change individuals and society from the ground up, to very tangible products like the iPhone X, which largely claim to do the same.
If we start with the relatively new research field of neuroscience and thus the deeper realms of our brain, we realize how deeply that concept is anchored in us. If we consider, for example, the model of the limbic map developed by Dr. Hans-Georg Häusel more closely, innovation is one of the three main forces that significantly influence our thinking and actions: stimulus. In very simple terms, our brain subconsciously (in the limbic system) examines all sensory information, whether it’s a) helping us to maintain our status quo, b) stimulating us in some way, or c) possibly lending us power.
In evolutionary terms, innovation can actually be understood as a primitive human urge to free oneself from the status quo in order to secure our future. Of course, anything that’s new and innovative is always dependent on a specific geographic and social context and as such dependent on the zeitgeist. Logically, innovations are only relevant for a limited period of time. We all know the embarrassing moment when mom excitedly talks about Facebook in hopes of some recognition or the acquaintance from the country who thinks that this look or some other is totally Berlin style. Today hype, tomorrow mainstream, and the day after tomorrow old-school. One innovation overtakes the next. And that’s nothing new. But back to the question. In the future, will we really only be successful if we totally “think different” and beat our new ideas into our heads with full power?
ARE YOU DOWN WITH UBER-INNOVATION?
In any case, a problem arises when we as people can no longer keep up with our own innovations. That’s because the rapid development of technology has recently and yet again received a good kick-starter thanks to digital change. Unfortunately, the same cannot be said of human evolution. On the contrary, humans have unfortunately always been and are naturally more inclined to slow and linear change. Our human processor has received far fewer performance updates over the past 50,000 years than computers over the last 50 years.
If one considers the exponential developmental curve of computing power, which follows what’s known as Moore’s Law, it can be assumed that this will reach a dizzying level in just a few decades. As such, a single supercomputer will likely attain the computing power of all human brains worldwide sometime between 2050 and 2060. The thought of what would be possible – in the technical sense – at that point is truly fantastic. But how will our largely neolithic brain handle the constant confrontation with AI-enhanced superbrain cars and vacuum cleaners in emotional terms?
Even today, more and more people seem to be suffering from the excessive demands of innovation overflow and the associated wealth of information that comes with it. Which is particularly absurd because they usually come with the promise of greater personal freedom, self-determination and happiness. At the same time, an increasing number of studies established a direct correlation between the rise of depression and the increasing use of new technologies, suggesting the so-called ‘digital detox’ as a potential treatment. Even if the architects of the big innovation forges in Silicon Valley were to confess that their technology is destroying the social fabric of the real world, seriously questioning the simple inference that innovation = new technology may be called for.
ARE WE ‘HOOKED ON INNOVATION’?
In addition to the extreme speed with which it progresses, the great danger of digital transformation may lie in the overuse and abuse of the word “innovation” itself. Anything promising global, digital-social disruption is celebrated at tech summits, in start-ups, marketing departments and social networks. This, in turn, only leads to innovative ideas brandishing a sort of ‘wow, how awesome’ technology label. Out of sheer enthusiasm for innovative technology, the truly exciting question of where it should take us is all but lost.
Of course, you could say we live in a free market. As long as it can be used to make money, and the user feels they can get through everyday life more easily or quickly, then all’s well. But on the other hand, who’s convincing whom here? Facebook recently ended its AI program because it invented a more efficient language that its creators no longer understood. How long will the masses pay attention to the flood of innovations is questionable. In addition to any block-chain-based cyber currency, attention is likely to be the true currency of the future.
The mechanics that one uses to gain permanent attention from users is called “computer-aided persuasive technology”. The term comes from the behavioral scientist BJ Fogg, now head of the Stanford Persuasive Tech Lab, where technology theorists learn the latest tricks of manipulation. Nir Eyal describes in detail how to create emotional dependency in his bestselling book “Hooked: How to Build Habit-Forming Products”. The most important part in his model is the trigger that transitions into flesh and blood. A like here, a notification bubble or vibration alert there – all to provoke user reactions. Snapchat’s Streaks, for example, reward the user for activity with small flame icons that go out if no more snaps are sent within 24 hours. And how long will these developments continue to go well? The stock market seems to be asking itself the same question and isn’t betting on rising rates for Snap Inc.
INNOVATION. FOR REAL!
So, before innovation gets completely out of hand, we’ll free it from the bullshit bingo and put some sense back into this vital concept. For example, with two well-known approaches: the honest human-centric approach and its close – very reasonable – customer value. This real-deal team might have the power to really do something revolutionary, instead of reflexively only going in the direction of technology-driven digital social disruptive progress. Because innovation that does not benefit or even harm people simply isn’t innovation at all.
As such, a step to the left, to the right, or even backwards at times, would no longer be a contradiction of innovation, provided it creates added value. A few examples: In a transformed, digital future teeming with digital voice assistants, could a service provider with real people in their support team not be at the forefront? Or could not a slightly less slim mobile phone, which offers the battery charging time of a Nokia 3310, establish itself as the smarter option? Or a car that does not have to be attached to a cable for hours, but rather whose battery can be easily switched by remote control at any gas station, not be the obvious choice for urban explorers?
In principle, those who use technology in the future to produce proximity to reality may count among the winners of digitization. Innovative new brands, such as the English manufacturer of cycling clothing Rapha, use existing social and digital channels to bring people together in the real world and have them truly experience their products in an active way. After the content-is-king-years in which “media” and “the message” were almost indistinguishable from each other, in a post-fake bullshit era, actually experiencing products almost inevitably comes to the fore.
In many areas of life, what’s supposedly old is rediscovered and represented in new innovative packaging. In the future, however, the use of as much new technology as possible, such as the virtual, augmented or mixed reality, will become less and less important. Rather, it will be crucial to use technology innovatively to create a product experience that moves the users emotionally and at the same time answers the question “Why this brand?” Such truly “immersive” experiences take more time and cost more money than purely digital measures, but also provide a demonstrably more sustainable added value for users and also generate unique brand content for all marketing channels.
Wherever this year’s journey takes you and your company, innovation will drive you. But innovation must not become a problem for people, but rather a solution to problems. As such, a key challenge for brand owners will be seeing through innovation and seeing when it’s a dead end for users.
The amount of data from business and research that’s already available allows us quite clearly to sketch a technology-driven image of the near future. The question is to what extent we want to make this reality. This year, let’s allow ourselves to hit the breaks for such In-NO-WAY-tions instead of instinctively hitting the like and follow buttons. Instead of spending a lot of time looking for the right innovation, we can use it to drive real innovation. And sometimes, it only takes a very small step in the right direction to bring the greatest benefit to our customers.
- Beyond bullshit:
Results instead of buzzwords, more substance in campaigns, correct evaluation criteria instead of feelings. Real, clearly trackable progress on the way through the funnel.
- Beyond digital only:
The longing for real feelings, real contact, real scents. Brand experience in the sense of ultimate moments with a brand (see also “The Power of Moments: Why Certain Experiences Have Extraordinary Impact”, book by Chip Heath and Dan Heath)
- Beyond sales only:
Discounts, incentives to buy, Black Fridays and Cyber Mondays have become ubiquitous. Not brand stories you can’t escape any more. It’s about the willingness to pay through emotional attention. Offers can then act as accelerants for this brand fascination. But nothing can be accelerated where nothing burns.
2018 is going to be the year of machine learning, especially in the field of consumer segmentation and improvement of automated message personalization processes. Thanks to marketing leaders from Silicon Valley, learning algorithms are already in widespread use. However, we are entering a new stage in the application of these mechanisms beyond advertising systems like Adwords, Doubleclick and Facebook.
Marketers are getting better at gathering and integrating user information all the time. Their allies include global giants like Google. A good example of this is Google’s partnership with Salesforce, announced in November of this year, which, in addition to its positive impact on the amount of information collected, will also affect its quality.
The challenge for agencies and marketers alike is to put their own analytical capabilities up against those of machines—we are, in the end, susceptible to errors, and with such a large amount of data and variables, as well as the complexity of users’ paths to purchase, the risk of mistakes increases. In order to draw conclusions quickly enough and then apply them in the real optimization of user experience, we need to put more emphasis on technology and especially on the possibilities offered by artificial intelligence.
Marwa Saleh tells us about her exciting job as Senior Audience Broker. Check out part 3 of our series Jobtitles Bingo now!
The internet alone is no longer futureproof. Omni-channel shopping is the way forward – shopping on all virtual and analogue channels. However, only very few retailers have plans for this.
On the one hand: Online shopping is booming like never before. In the last year, turnover in Germany increased by 12.5 percent to almost 54 billion euros. A further increase of 11 percent is expected for this year. On the other hand: The stationary retail business is buzzing. The fashion industry, for example, had its best September in 17 years.
Apart from the fact that German citizens are keeping the economy running with a generous desire to buy, above all this means that: All the projections suggesting that we will only order things online within a few years’ time are false. The term omni-channel shopping, shopping via all channels, has long been an integral part of the retailer’s vocabulary – at least since the online giant, Amazon, began to infiltrate the real shopping world. Amazon has taken over the American organic food store chain, Whole Foods, and is opening its own supermarkets and book stores. For most retailers in Germany, it seems that setting-up an online store would be enough to be able to survive despite all the new and powerful competition from the web world. Unfortunately it’s not.
It is only a matter of time before Amazon expands to Germany with its physical shopping world. No company relentlessly infiltrates the lives of customers with its services and devices like this retail giant, with an annual revenue of 136 billion dollars – the trend is on the rise. And it is by no means the only online retailer that wants to settle in the shopping streets. Europe’s biggest online fashion retailer, Zalando, is also considering opening shops and the online furniture stores, Westwing and Home 24, have already done it.
They are no longer two business worlds that run side by side, the virtual and the real. They are now visibly overlapping. Successful e-commerce needs stationary trade – and vice versa. However, only those that manage to combine them in harmony will reap the benefits. “E-commerce is becoming more and more physical, accessible and offers a more intense experience, while physical trade is drawing nearer to the web in many ways: It is becoming more interlinked and data driven,” explained Dough Stevens, founder of the consulting company, Retail Prophet, whose client list includes names such as Coca-Cola, Disney and Google. “New technologies are speeding up the development of both channels. The line is becoming more and more blurry, and at some point, we will not be able to say with certainty whether the buying experience is digital or physical.”
Nowadays, customers are well-informed, demanding, price-conscious, impatient and lazy. They want to shop as they please. For traditional retailers, this means: They have to be involved in all channels that the customers may potentially use – shops as well as the traditional catalogue, plus online, mobile and dialogue all the way through to smart TV. However, not many have managed this so far. 90 percent of German companies do not have an integrally networked digitisation strategy. This could be their downfall when it comes to omni-channel shopping.
For many, it’s all about mobiles. For the largest players in the USA, the revenue share of orders via smartphones or tablets is already between 60 and 70 percent. Mobile phones are by no means just a shop window for retailers. “Speed and convenience are essential to a shopping experience and determine success or failure,” said Gerrit Heinemann, manager of the eWeb Research Center at Niederrhein University of Applied Sciences. For example, for retailers this could be an app that alerts customers when the product arrives and lets them know where there is a parking space available. And in the shop, the customer can pay for their goods via the app without having to go to the checkout.
If possible, they would like to have the goods conveniently delivered to their home in the evening, instead of dragging bags around. In some cities in Germany, Amazon has the Evening Express, Media and Saturn offering delivery within three hours, while Deutsche Post works on a Same-Day-Delivery standard for all others. Such operations also work on a small-scale, as the example of Kiezkaufhaus in Wiesbaden shows: Local retailers present their products on the website. The customer orders online and the product is delivered that evening by bike courier. 80 percent of the orders are food stuffs and there has never been a return.
Of course, the physical shopping experience – with an emphasis on experience – is completely lost. It is high time for an upgrade. Department stores and brand shops may be livening up their shop floors with gastronomy, but this can only represent a stepping stone. Tomorrow’s shop will offer completely new worlds of experience driven by the technological development. For example, a few years ago, Burberry established virtual mirrors in its flagship store in London: If you hold a piece of clothing in front of it, the mirror shows you what it would look like on.
The shop is a showcase for innovations. This will mean that it will be possible to present products in the future that are not yet on the market, but that the customer can alter to their needs by means of configuration. In addition to virtual reality, augmented reality will also be introduced – the new iPhones have this technology. Ikea, for example, is working on an app that transposes furniture into images of real environments on your mobile phone.
A side effect that should not be underestimated related to this type of new shop concept is the required investments, but cost savings in the long run. As, instead of 400 square metres, 100 is enough for the haptic experience, the web takes care of the rest. The products do not have to be stored in an expensive warehouse in the city, but are delivered from the outskirts by courier. This considerably reduces the cost of rent, a big chunk of every retailer’s outgoings. And it draws new players to the inner cities – from the e-commerce giants to car dealerships, that introduce their models virtually, yet life-size and in 3D. Cities are becoming more colourful.
The future institute in Frankfurt, a think tank of various scientists, is going even further. The shop is becoming a place for open innovation. This means: Buyers and sellers become equal partners, not only in sales, but also in the manufacturing process, product range selection, product design and marketing. At Community Retail, customers help design the products. It’s worth it: In Japan, the retailer Muji investigated whether there are differences in the sales figures of furniture if they were designed by customers or if they came from their own design centre. Result: In the first year after the product launch, the sales revenue of the user-designed products was three times higher than that of the products from the design house. Over the years, this effect has increased.
This is all based on customer data – the more and the more exclusive, the better. This means that completely new business models can be created. The Otto group has launched a first approach in this direction with the About You portal. Based on all the data collected, a custom-made web shop is created for each individual customer. The vision for the future is to have orders already prepared before they even arrive.
The future of trade is dependent on technological understanding, but in particular on new ideas. Amazon has registered 1662 patents in the last year.
The zest for life of employees is the elixir for corporate success
How many times have we heard this before: “Employees are our most important asset!” Let’s be honest: Though most of the time they were just beautiful words, right? However, they are fully applicable for our future – only then will change really happen. That’s why we have to give employees more central responsibility in company management.
At Serviceplan in Munich, as of late there is an atelier, the “Brienner Above”. Our employees can let off some steam here, with oil and acrylic paints, crayons, canvases or on the sewing machine. Conditions: That they do something completely different here to what they do every day in their job. They should calmly fulfil new ideas, without targets or performance indicators.
What makes it special is not the atelier as such, but rather the fact that it was conceived, founded and accounted for by an employee. Michael “Mais” Sundermann, Head of Design at our Plan.Net Pulse agency. “Now and then, creative people have to escape everyday life and try something new in order to improve” he said.
Small escape from the agency routine
Why have we supported Michael’s idea? Firstly, because we are naturally interested in our employees constantly improving. If small escapes from the agency routine are necessary for this – then we are happy to provide them. Secondly, we want all of our employees at Serviceplan to feel comfortable and to stay with us.
The turnover rate shows that we are on the right path: In the last two years it sank by two and three percent. If the motivation of our employees was not excellent, we certainly wouldn’t have produced an increase in sales of 12 (14/15) and 14 percent (16/17) in the past two financial years. Additionally, customer satisfaction, which we poll annually, constantly remains at an above-average level. If the employees are happy, everyone involved will benefit.
Who likes to take on responsibility
The atelier is an example of our new company philosophy, we’re calling it “Ownership”: We encourage employees to shape our company with new ideas and to prepare for the future together. To do this, we need colleagues who regard themselves as entrepreneurs and who are happy to take on responsibility. This new working style – for which the term New Work has been established – is, in our opinion, pivotal to the success of digital transformation and beyond.
New Work and digitisation – these are two sides of the same coin. A company can only respond quickly and flexibly to the increasingly rapid demand of requests of the market if both concepts work.
Basically, we all want the same
That is why we don’t (just) manage company change from the board room, but also from within the workforce. This makes sense simply due to the fact that there are striking similarities between Serviceplan’s aims and the wishes of many (especially younger) employees. Basically, we all want the same: Flexibility, continuous learning and stimulating communication.
So what reason is there not to join forces? Why shouldn’t we shape our company together, employees and management? HR is ideal for moderating this exchange.
The old enticements don’t work anymore, the old rigid rules are annoying
If we take a closer look at the desires of our employees, they are now well explored. Especially the younger generation (Y, Z, digital natives, millennials or whatever they’re called) do not want to have rigid work rules, e.g. turning up on time in the morning, compulsory attendance while working, forbidden from having a side job, maximum of three weeks of holiday at a time. Classical enticements such as a good salary, company car, career path and canteen are less effective than in the past.
Instead, they want jobs in which they can realise themselves and do not always have to be at the same desk at the same time. They want an equal exchange. They want a boss that is approachable – and are not afraid to have extensive discussions with the aim of putting the world to rights.
Do you think these claims are outrageous? We disagree: We see them as a valuable source of inspiration to successfully master the change.
Good results at kununu and in the cafeteria consultation hours with the personnel manager
There are valid reasons to make sure that your employees are not only satisfied, but are also happy and inspired. That is why, three times a year, we evaluate “Colleague Satisfaction” in 60 companies of our group. This value is currently at 72 percent, which we are proud of.
On the kununu rating portal we have a good rating, with over 3.5 out of 5 stars, the apprentices praise us with a 4.15. In order to keep the channels of communication open with the employees, twice or three times a week our personnel manager, Winfried Bergmann, sits in the Serviceplan cafeteria in Munich from 7:30 in the morning; anyone who has any questions or wants to share problems or suggestions can come and join him. Anyone who would prefer to remain anonymous can, for example, use the complaints office on the internet. These letters are answered immediately and discretely by Winfried Bergmann.
In the meantime, we have come a long way in the transformation. This is what working at Serviceplan currently looks like:
Flexible working hours instead of a 40-hour dogma: Employees can choose their workload quite flexibly. Although they have to review this with the management team in advance, for example, if they want to change from full-time to three-day work. However, in principle, we offer you the option to flexibly adapt your working hours to phases of life.
Mobility instead of an attendance recorder: Whether a mobile office, brainstorming in the park or a workshop in a mountain lodge for several days – we encourage everything. When working for us, no one has to endure 40 hours at their desk.
Side job instead of recreational obligation: Many of our employees pursue a second or third job in addition to their work for us. This is not a problem as long as it is approved by the respective manager and contractually fixed. We see additional jobs as an indication of above-average commitment, strong will and as a sense of responsibility – character traits that we need.
Sabbatical instead of dismissal: If someone needs more than a three week holiday, we can find a solution. A somewhat longer break is always better than losing a valuable employee.
Training instead of sacking: At times of an acute lack of employees, it makes sense to not sack the professionally weaker employees, but instead to support and train them more intensively.
Learning instead of routine: Our employees are constantly put into new teams, they are constantly learning and continuing to develop. They also benefit from a large educational and training program: Every year, we hold around 65 seminars and impulse speeches on topics such as management, presentations, creative techniques, digital tools, customer loyalty, time management or resource planning. We also support 15 employees through their studies at the Steinbeis University each year (we pay for at least 50 percent of the costs).
Events instead of newsletters: Working together requires personal and intense forms of communication. What use is a newsletter full of new directives that no one understands? Workshops, meetings and discussions are always favoured. Our office doors are always open if you’re passing by.
We also offer all sorts of flexibility and freedom. However, this does not mean that there are no obligations. In return, we demand performance, willingness to learn and critical faculties. And we expect everyone to see him- or herself as a brand ambassador for Serviceplan and to give everything to the role, online and offline.
To make Serviceplan’s character clear to all, our personnel department is developing an employer brand. Every new employees learns the employer brand on their first day, the onboarding day teaches about the interesting facts of the history of Serviceplan and which brand values shape our work. The brand is the frame, within which the employees can act. To an extent, it replaces the hierarchical structures, which we are using less and less because the responsibility for the future success of the company sits on several shoulders.
Do you love responsibility?
One of the most important Serviceplan brand values is therefore called “Ownership”. We support employees that want to establish something of their own with good ideas, talent and a sense for responsibility. Such as Michael and his atelier. Or the personnel manager, Julia Vogginger, who taught yoga classes to her colleagues for free during their break at work. We support projects that optimise our working processes and quality, that improve people’s health or that harness market developments.
Lesson learned: Do not constantly look over your employee’s shoulder
Of course, this new style of work has consequences for management, for example for middle-level management: In training, colleagues learn that they should not constantly look over their co-workers. They have to learn to trust everyone and to support their development. They learn how to communicate “top down” and “bottom up”. Thus, middle-level management acts as a catalyst for good ideas and innovations – in both directions.
And the top management? Their job is to always keep track of corporate goals. In addition, they have to make sure that the source of power for success does not run out: the employees’ zest for life, excellent communication, top quality through the constant development of knowledge. They have to solve interfering factors, such as silo thinking, superior knowledge and conflicts between departments – all remains of the hierarchical past.
The zest for life of employees is one of the most important values of the economy
What have we learned so far on our journey through transformation? That employees’ zest for life is one of the most important and relevant values of the economy. It is the source of power for greater performances and innovations. If employees are happy, they repay it many times over in loyalty, ingenuity and commitment. In particular, there is one thing to do: We finally need to give life to the phrase “employees are our most important asset”, which has been overused for years.