For many Latin American countries - mobile and social media have been key to their digital roadmap. In this new market or as part of the “second wave”, many regions and countries are finding that the customer experience is key to the next phase of digital transformation.
Jorge Baron, General Manager, SAP - Customer Experience, LATAM offers insight into how COVID-19 has impacted the region and changed the way they think of the online customer experience. Jorge also offers tips for B2C and B2B brands should adapt
Hello, and welcome to Annex Cloud Market Movers, where we bring in experts and luminaries. Today I'm very, very excited to bring in Jorge Baron. He is the GM of customer experience for Latin America at SAP. Jorge, welcome to the discussion.
Hi, how are you doing all? Thanks for the invitation. It's a pleasure for me to be able to share this space with you and your followers.
Wonderful. Jorge, a lot has happened over the last few months. You are based in Latin America. You are right in the middle of it as we are recording this. From a business standpoint specifically, we've been hit by a massive wave of change, especially in the world that we all live in, especially in the world of customer experience and digital transformation as it pertains to Latin America. The first piece I wanted to just get your viewpoints on is Latin America as compared to some other regions in the world, as it pertains to customer experience and digital transformation has a little bit to catch up on. It's a little bit behind the times. But now with these new challenges that we are all facing, it's being pushed the forefront. What are you seeing Latin America, as you speak today? What are the challenges that people are seeing? Maybe we can start there.
You're absolutely right. We are a little bit delayed in many things regarding the digital transformation and the way companies interact with their consumers, and the way consumers were expecting to interact with companies. But with the corona in place and everything that is happening now, most of the consumers are used to start working in a digital way. Everything is turning more digital. And what you're seeing is that most of the companies that had a digital platform to be able to get in a relationship with customers, consumers, and so on are in a better position to survive during this crisis.
Moving forward to the new normal, that we believe it's going to be here to stay, they're going to be able to participate in a different way. I do believe that it's a time where most of the companies will have to do a quick adjustment, as you were mentioning. Because most of the people get used to stay at home, not to get out, and to find new ways to buy and interact with companies. So definitely we'll have to speed up to get in the timing and the needs most companies and consumers have right now. And I would say many companies are looking at it, as we speak, on how to start working in that process.
Good. So in terms of catching up one of the biggest things that people are thinking about when they think about the roadmap, what do they have to build in catching up? It's not the exact same thing. There is a little bit of a roadmap created by some of the regions that may be able to be followed, but at the same time, the same exact roadmap won't work because the region is a very unique region and it presents its own set of unique opportunities and it presents its own set of unique challenges. So from your perspective, can you tell us a little bit about how differently you may apply the blueprint that may be available from other regions? What can you use? What do you have to think about changing?
Absolutely. I agree with you. Every region and within the region, every country is not the same as the other. And there are specifics for every market within the region. Of course, if we want to do the same things you've got in the US, you've got a Europe or you've got Asia, it's going to be different. One of the key things now is to start identifying customers and consumers and building a relationship from a digital point of view. For example, which things are different? Right now we already have a shopping cart in many places. We're starting to build these relationships. But in Latin America, I don't know if you know, but we're heavy users of WhatsApp. WhatsApp is something we need to have in place.
Other things that you need to be aware of, most of the people access the internet through smartphones, not that much into a computer. So you need to build things that are based on smartphones. The way you start building relationships in loyalty terms is different depending on each country. If you want more based on points and economic retribution or building communities or how you work in those communities.
So I would say the roadmap has to be adaptive or concrete. Most of the countries quite alike, if you compare in general, but they have specifics in each of them. And the other thing we also need to be aware off in this relationship, there is also differences in the way you can deliver products and services because of the post office or the way you can get the logistics to it. So overall, what I would say in his roadmap, you need to understand which are the channels that are more often used in Latin America. I would say Instagram, like rest of the world, is okay. Facebook is a big player still now. WhatsApp is a key digital way to communicate and how you build these loyalty programs is going to be key on the relationship you can build digital platforms moving forward.
Great. You mentioned loyalty programs and loyalty in general. Overall, because of the times in the next few years, retention is going to be very paramount. A lot of these companies have to restart almost, right? They have to rebuild, re-earn the trust of their customer. Re-acquire them as we call it, so to speak. And so loyalty and retention in general terms, not just loyalty programs, but retention as a whole is a big consideration probably for some of these companies. Any thoughts around that, broadly?
Yes. When I was speaking about loyalty in general terms. At least from my point of view, it's quite simple in the long run. Before the crisis, there were things you did online and things you did physically. There are not exactly the same things and you don't act the same way in the different channels. That's the common business for everyone everywhere.
We don't act the same way in a store than online. So I could agree with you. You need to rebuild, or more than rebuild, build from scratch these relationships again in new channels. When you're getting a new channel, this omnichannel loyalty view, you need to reveal it from a different point of view because the weight of my new channel is heavier. So the way you build it, around it, is completely different. First thing you want to do in this roadmap try to identify who your customers are in this new paradigm because you are going to be having different kinds of customers coming from different places now than the ones you have from the store. So you need to start identifying.
From then on, you need to start building the relationship and understanding how you build this loyalty process with what they need these new scenarios, which is not the same things you have in the past in the stores and so on. So I could agree with you. It's nearly starting from scratch with new rules of engagement between consumers and companies because the wake in the omnichannel bandwidth is different now.
Great. And then when you go broader to customer experience, as a whole, you mentioned there's a couple of things that apply. Loyalty, obviously. But the identification of that customer is very important. What are the parts of customer experience that you think will be accelerated? And specifically, maybe we can even talk about commerce. B2B versus B2C, two very, very uniquely different things that people have to consider. What aspects of customer experience you think will be accelerated and then how will it apply to B2B versus B2C, according to you?
If you see the numbers on commerce, what you find out is that the amount of transactions are extremely higher in their country, I would say it went like three times what we had. We had a 200% growth in the amount of transactions. But on the other hand, what ended up happening is that the average transaction size grew, but not that much. The volume that is being bought online, it's like 70, 80% bigger. Which, I mean, the amount of transactions grew more than the ticket size. The ticket size is lower. So that's one thing.
What is happening with commerce is there's lots of visiting right now. The investments are getting higher on how you attract people to your sites. It's going to be impacted in B2B and B2C. One of the key topics we're seeing now is how you solve the delivery of it because that's the other part, which is getting complex. I mentioned a couple of minutes ago, one of the key topics is how you get to get together with what you bought. The delivery system. One of the things we're looking for is the pickup at the store, which is getting more traction now. It wasn't that common and we're starting to work on it and it's ramping up really fast. This is quite similar to what happened in the US and Europe during the crisis, but do believe it's going to be something where we're looking at stores being more of a pickup station than a store itself. And we believe that's going to be staying in the long run.
The other thing is most of the companies are finding out that it's not only about having a shopping cart online and that's it. It's getting more complex than that. Because you need to add platforms that really support you and that help you have the dynamics you need to add in these new markets. And I would say, it applies first more to the B2C side, what we're looking at. And I do believe there's going to be a second wave into the B2B.
And this is quite common because usually everything that happens, it starts with B2C, and then it moves into B2B. Right now, in the middle of the crisis, what got accelerated was how to get in contact with my customers and consumers. But the second wave is how we start building the relationships between companies, that it's going to be online too. I would say the impact now of the crisis on the B2B side is more based on how we get together in meetings than the actual order taking and so on. But it's moving forward to that, too. So I would say the B2B impact, we will see it in six months from now. That's my guess. The B2C is right now.
Is happening right now. Absolutely. What is your advice to execs that are at these companies that are thinking about transformation? And you've got one side of companies that are heavily impacted by it. Their employees, their team members, maybe even their families, they're all impacted by the crisis. And on the other side that are companies that are, for example, grocery, where they are getting some volume, maybe more volume than before, they're impacted operationally in a maybe positive way from a business standpoint, but operationally, a lot of things are being ripped apart. What is your advice when they think about a transformation, think about new initiatives, think about growth? How do they balance the challenges operationally with thinking about what they need to plan for the future, whether it's in the short term and the rest of 2020, or 2021 and beyond?
I would say there's a couple of things. The first one I would stand up for is don't try to build what you have exactly the same in a digital way. That's not going to work. There are lots of companies trying to figure out to do exactly the same they were doing six months ago, but now digital. That's not the way to look at it. I mean, digital is digital. We were forced to use digital, but we use digital in a digital way. We don't use it, the physical transformation into digital. That would be the main thing on it. And that's what we ask from consumers, users, or whatever are expecting. So we need to think about the roots in the new setting, not the old setting. Transform into a new place, and that's it. That would be the key thing we need to look at.
The other thing is, that said, if you need to do the delivery, you need to figure out which is the delivery you need to have in this new setting and you need to build it for it. For example, if you were selling home supplies, I used to have it in the store and that's it. So you pick it down there and it was easy. Well, now you need to figure out that if you said 24 hours, it has to be 24 hours. You need to keep the promise. There are your new rules you need to find and understand and commit to them, on keeping the promise that you need to keep investing in it. That's a key thing you need to start thinking up and investing on.
And we're discussing a couple of days ago with some colleagues, and I do believe it's key in this new arena, is that you need to understand that you don't need to be strong or intelligent or fast. You need to be able to adapt. That's a key topic. It's not about being stronger. It's about how you adapt easier and you understand how you need to move into these new environments. So my key recommendation would be to start by thinking in the new model and adapt. Don't try to get stuck in the past because you were happy in that scenario and you were in a good position because the only thing I can tell you is that's not there any longer. So you need to adapt to the new world and think in the new setting. And that's something that it's been a little bit tough for some organizations, but the ones that move fast, I believe are going to be key on it. Once again, look at the topics you need to take care of in these new environments, not with the old point of view.
Love it. There are two really important points. Take a new lens to the equation, look at it very differently, and adapt. Those are two very, very great messages. Jorge, just last thing, that some people may not fully understand the breadth of Latin America and the differences that apply in the region. You mentioned the very beginning, right? There are several countries. There are different ways of doing business in their own way. Could you give people an idea a little bit about the different countries and how you think differently within the different regions within Latin America?
Okay. Just to make it simple. I would first mention five or six countries which are quite known worldwide, but they're completely different by themselves. That would give you an idea.
We've got Columbia. What do we know about Columbia music? We've got Mexico. We know mariachis, and we've got a different setting on Columbia. Shakira is not the same as the mariachis. Nothing to do with it. And they are both Latin American countries. You've got Brazil. We've got the Carnival. We've got soccer. We've got the Rodizio, or the Brazilian restaurants we all know, which is completely different from Mexican, and completely different from Columbian. We've got Chile, which is more a European country, which is completely different and we've got a different setting.
So to begin with, we've got different languages. We've got different sizes. Latin America is quite big. We've got different cultures, even though we are all matching, but there are different cultures and ways to see things. So basically it's a wide variety of different populations. If you want to see from the historical point of view, you've got the Mayas, you've got the Aztecs, you've got the Incas, and they were completely different. It's not all the same in terms of history.
So from that point of view, it's quite spread. It's quite different. We're quite alike because our roots are all Latin, But, we've adapted in a different way. In terms of population, Latin America right now is around 700 million people throughout the region, which is dominated by Brazil, then Mexico. And then you've got countries which get smaller, but it's quite big. And the other thing is that the culture is quite of getting together and quite sensitive to hanging around together and celebrating and so on. So the impact we're having on these quarantines and those kinds of things is really hard. I don't know if that gives you a picture of where we're standing?
It definitely does. Definitely does. And I think, as you said, it's a culture that just works well together as people. And also shopping, when we talk about it, it's a very personal experience and it's a very personal experience. So some of this will be a personal shift for many people over time, as well as progress.
Jorge, this was a great discussion. I think a great overview. I'm sure we will talk more and dive deeper as the month progress and you see more. But I wish you much health and safety as your region goes through these challenges. Thank you so much for spending some time with us today and imparting some advice on how you are approaching the situation.
It's my pleasure. Thanks for letting me share with you what we're looking at in Latin America. We're passionate about everything down here. We're passionate people. We're going to get through this one and I guess everything is going to be better in a couple of months. So thanks a lot for letting me share and we'll keep in touch.
Sounds good. Perfect. Thank you much. Bye for now.
Co-Founder, Annex Cloud
General Manager, SAP - Customer Experience, LATAM
Since 2010, Annex Cloud has provided industry leading loyalty solutions to more than 250 leading brands and retailers, including Jenni Kayne, Hewlett-Packard, Bed Bath & Beyond, e.l.f. Cosmetics, Olympus, Sugarfina, Mizuno, MacKenzie-Childs, VF Corp., with the ability to engage tens of millions of their customers one-to-one at scale.
The Annex Cloud platform provides fully integrated Customer Loyalty, Referral Marketing, and User Generated Content (UGC) solutions that seamlessly work together to optimize the customer journey and deliver a unified customer experience that is designed to accelerate revenue growth, retain valuable customers, increase average order values (AOV) and drive repeat order frequency.
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