Director, Facebook India and South Asia
Today, consumers demand the utmost convenience while transacting and could abandon their purchase journeys at the slightest discomfort. This consumer drop-off from the purchase journey is referred to as 'Friction'. Facebook announced the release of its 'Zero Friction Future' report, put together by KPMG, which aims to define, understand and solve friction in purchase journeys to unlock new avenues for business growth.
The first report titled 'Eliminating Friction in Smartphone Path to Purchase', was released recently followed by an interactive session that was moderated by Nitin Garg - client partner, Facebook India. The panellists include Sandeep Bhushan - Director, Facebook India and South Asia; Asim Warsi - senior vice president at Samsung India Electronics; Sreedhar Prasad - head consumer verticals and member of the advisory leadership team, KPMG India; and Kedar Ravangave - head of marketing electronics & fashion, Amazon.
According to the report, friction accounts for approximately two-thirds of consumer dropouts while buying smartphones and media friction contributes to approximately one third. Currently, Facebook influences 33 per cent of purchase decisions amounting to $4.8 bn worth of sales; it is expected to reach 44 per cent and influence $9.5 bn worth of sales by 2022.
The study further revealed that women seek more explicit communication, while men demand more relevant information. Storytelling, FAQs and sequential advertisements are the quick solutions brands can take on. People over 35 years of age are more likely to abandon purchases as sensitivity to friction increases with age. Hence, brands should try and build more trust with older age groups and assist the younger population with technical queries through chat services and assisted sales. Also, SEC B faces more friction compared to SEC A and drop out due to the lack of offers and information in their path to purchase. Businesses here can reduce friction by proactively communicating bundled deals, price drops and exchange offers thus motivating consumers to make a purchase.
afaqs! spoke to Sandeep Bhushan - Director, Facebook India and South Asia, to understand the insights of the report.
Why is Facebook focussing on friction/ consumer drop out?
When you are ready to make a 'Purchase Journey', wherein you want to know about the brand names, features of the product, payment options i.e. from the point of thinking of buying the product to actually purchasing, it is called your purchase journey. Anytime you don't get the required feature or communication about the feature, is called 'Friction'. In other words, issues that a consumer faces while purchasing a commodity is called 'friction'. So, friction could come from store location, store opening, service, poor internet connectivity etc.
Along with KPMG, we are going to release friction busting reports throughout 2018. While the first report is on smartphones, the forthcoming reports will be on Fashion, FMCG, Travel etc. which will be given to the marketers to make their advertising, payment and availability strategy better.
The objective of this exercise is to provide solutions - both in terms of ideas as well as products - to aid brands/ companies to help their consumers to purchase. What we (Facebook-KPMG) are trying to do is break the friction down at every stage - Awareness, Consideration, Intent, and Purchase (These factors were considered after taking insights from 3000 people/ consumers).
What are the key actionable insights from the report?
This report is designed to inspire advertisers and marketers to rethink their consumers' journey with the use of technology and mobile.
We have figured out what the problems are at every stage. For example, a person may not even have the information that a certain product is available in the market; this is called awareness friction. Then, when s/he wants to buy it, but is unaware that there is an EMI option available, it is called intent of purchase friction.
This report will talk through those ideas so that I, as a brand manager, can do a better job of reaching my consumers. So, we have mapped out every piece of friction for the smartphone category. The insights can be used to help a consumer to do his job faster while brands can be more efficient on the media spent and make more revenue. As a top-line, we believe very significant revenue can be added. We believe there is a $3.1 billion potential in the smartphone category alone, by the year 2022.
With the ever-growing Indian smartphone industry, how do you think Facebook can help brands attract consumers, drive sales and increase overall revenue?
Currently, 27 crore Indians have Facebook accounts; on a daily basis, more than an hour is spent on a social networking platform such as Facebook. In fact, people are spending more than two hours, almost, on overall internet engagement and whatever purchase activity they are in - whether searching for ads/ products/ comparing prices of the products on their mobiles.
Mobile phones can play a pivotal role in removing the friction because 30 crore people in India are using mobile phones today. Also, we know that 60-70 per cent of consumers, before buying a product, research it on their mobile phones. However, while a few consumers would make online purchases, most of them opt for Brick-and-Mortar stores. So, friction as a concept is not just about e-commerce. It's about using the mobile phone to help you purchase online as well as offline.
Also, we know who the consumer is - male/ female, young/ old - because of their Facebook profile. We have understood that people who want to buy a smartphone, exhibit different behaviour in the category depending on their gender, age and social status. For example, a youngster would want far more information, as compared to an older person, because s/he is tech savvy. Since we can target specifically, we can give the younger person tech-specific information, while to an older person, a simple communication will be passed. The youngster can also get his/ her queries answered through messenger bots. With the technologies available today, we are able to target correctly, give the right information and then assist the consumer so that s/he is able to make the payment and transact. This results in cutting a consumer's journey time by 15 per cent.
Also, since it's entirely relevant, we don't lose the consumer or his/her interest at any stage. We are, therefore, able to drive an increase in sales. With KPMG, we have worked out the friction points and hence, came up with the solutions.
Facebook plays an interesting role because it has products and solutions for every part of a consumer's journey. Today you can put a 360-degree ad for an automobile or generate leads for mobile phone purchases.
While drafting this report, was it aimed to influence consumers to start online purchases or let them continue to research online but go and buy the product from Brick-and-Mortar shops?
For some consumers, the purchase journey starts in their mind, in any case - so they begin to search, read reviews etc. To them, this journey will finish faster. The starting point, however, for most of the categories, is to provoke the need, which may be latent. Let's say, during the summer, if we show you a cola advertisement, the consumption of the beverage may go up. But it may be the absolute opposite if the ad is not shown.
In case of a smartphone, one may be happy with the phone s/he has. But if there's communication that says that brand XYZ will pay back the entire cost or offers a complete replacement to the consumer if the screen breaks, the consumer will enter the category. Here we can start a journey. So, many a time products come up with features which solve significant problems and thus, create a need.
From the advertising perspective, what are the possibilities that brands can look out for?
Based on this particular report, we are suggesting that advertisers should break down their ads in all possible ways. For a brand new phone, creating awareness is a task, so what should your ad be? We are saying ads should be different for male-female, young-old and rich-poor.
Let's say a lot of people know about a particular brand, but they don't buy. Issues could be payment/ variety/ retail understanding et al. Then the brand needs to make sure their communication covers all of that.
Brands, if they know where their consumers are, can craft the communication accordingly, not just for the stag, but also for the consumer type.
In India, still 60-65 per cent of the consumers have feature phones. Do you expect the number of smartphone users to grow in the same proportion as you are hoping the revenue returns?
Consumers already having smartphones will continue to upgrade because the average age of replacement of a smartphone is 1.7-1.8 years. Also, the price of new smartphones is falling. So, the existing smartphone users will continue to buy a new smartphone with enhanced features. Secondly, today's feature phone users are already using Google and Facebook on their phone and they have 2G connections. Those consumers can be given right communication to use smartphones and they can be brought under the smartphone category. A third aspect is Reliance Jio, which offers a feature phone with full smartphone capabilities and Facebook is also present there. Interestingly, the first smartphone is usually owned by the breadwinner of the family and later on, the rest of the family members get one each.
With the increasing affordability of a smartphone and better networks, is there a contingency plan for poorer situations?
From the advertising perspective, the profile of the consumers stays within the system. We use demographics to target (e.g. you will get advertising for males above a certain age). The same set of security/ privacy protocols are available across the world. We will hold ourselves accountable to the best standards on privacy and date safeguard. So, expansion of the smartphone universe and greater usage of Facebook doesn't come with any change in the privacy logic.