Nexo spoke with Karen Shevchenko, Business Development Director at Carlsberg Croatia, about his experiences investing in connected coolers.
Please tell us about your role at Carlsberg Croatia, and what you are trying to achieve.
My title is Business Development Director. I have key accounts reporting to me, but I mostly focus on business development- which means that my responsibility is to work on commercial efficiency projects. Anything that has the potential to help us to sell more, to generate more profit, or generate more value.
To name just a few projects: we have, for years, run value management; we looked at execution excellence, how we can improve our operations, and use the time in our sales trips more effectively, all with an aim to generate more value.
What are the challenges you face in achieving your objectives? What part do connected coolers play?
For a country like Croatia, coolers play a very important role, because first and foremost it’s a highly seasonal market. The index of the season versus the off-season can be one to five, or one to ten- meaning that, during the season, you sell ten times more than off-season. Of course, coolers play an important role in this regard because being able to provide a cold product during the hot summers here gives you a competitive edge. That is why all beer and beverage producers in Croatia invest a lot in their coolers.
Also, because Croatia is a highly tourist-driven market, with a population of four million, increased by 16-17 million tourists every year, you can imagine how much that affects the sales of any beverage. Our main objective is to understand how we can get maximum value out of the cooler, so it comes down to which outlets to place it in, and in what location in the outlet.
The biggest challenge we had in the past, working with standard coolers, is that we had very little idea how efficient the coolers actually are. We tried to guesstimate, using some assumptions, some empiric knowledge- but it was never a truly data-driven decision process. And this is where a connected cooler gives us an advantage.
The connected cooler allows us to see how the environment around the cooler changes, depending on where it is placed, and what we do with it. This is recorded using two simple metrics, foot traffic and door openings- which are good proxies to tell you whether the cooler is efficient or not, or whether the efficiency is going up or down depending on what you do with the cooler. This creates a wide field for decision taking, for now you can predict results depending on how you use your equipment.
Which stakeholders are involved in your project, and did you need to put any new capabilities in place?
I don’t think the stakeholders changed, pre- and post-Nexo; all of them are interested in the same point: using data to prove different hypotheses, or concepts, or ideas, circulating within three major functions.
Sales, interested in selling more using the coolers, and want to see the data to be able to manage the customers. Finance, interested in return on investments and want to get our assets working as efficiently as possible.
Marketing are interested the most in which brands or SKUs we put into the coolers. They fight for the planograms, to include certain SKUs; for Marketing, having a broader presence is important, whereas for Sales, a major task is to narrow it down and have fewer SKUs, and through that, increase efficiency.
To maintain a constructive discussion between all three functions, you need to operate credible data, to try to maximize your output on all three dimensions: volume (for Sales), value (for Finance), and assortment (for Marketing). With connected coolers, we receive an opportunity to have better understanding of how to manipulate these three dimensions efficiently. Therefore…
Rather than new capabilities, what changed was access to the credible data. We are still trying to answer the same questions; the only significant change that happens is that, where before you had to speculate – unless you had a specific market study – now you have access to specific data, through which you can take decisions.
A lot of companies ask us where they should integrate the data that comes from connected coolers into their business. What is your advice?
I think that Nexo, or data per se, is not a panacea- having more data is not going to solve your problems. It still comes down to capabilities, and the people that work with this data: develop entrepreneurial culture, train your people and they will take care of data, they will find the best way to use what they have at their hands to improve results. If you only invest into better data, it would be a waste of money to get a very powerful tool that you don’t know how to use.
How will you ultimately measure the success of the connected cooler program?
For us, Nexo data is a means to get to the final destination. Efficiency of the equipment is measured through sales per unit, and we use Nexo and other tools to achieve our sales targets.
The trick is, if you focus purely on Nexo, it becomes very difficult to measure its effect, because there are a lot of other factors in the market, affecting your final efficiency: competitors’ activities, weather, out-of-stocks situations, and others. You consider all of these to understand if you’re able to achieve your final target. Therefore, rather than focusing on small parts, we focus on the holistic view: are we getting there using all the tools we have, Nexo included?
I will give an analogy to demonstrate the concept. Take an artist: he needs to learn to mix pigments, prepare the canvas, to put the layers of paint on the canvas, wash his brushes – this is the learning process, this is how you build your people’s capabilities. You need time and experience. But when it comes to creating the masterpiece, you do not control how well the artist mixed the pigments – you look at the final result. But if you trained him well, he will be able to use his instruments to create the best possible results. The same with managing value – sometimes it is an art to create value using the resources you’ve got. And Nexo in this case, as an additional tool, can give you a bit more to work with.
Are there things you know now about deploying this kind of solution which you didn’t know when you started?
Certainly the things you need to take care of before you launch such solutions include: a) a clear understanding of how you will use the solution – having a pilot is highly recommended; b) a plan with clear roles and responsibilities; and c) strict discipline and training – we lost some time at the beginning to train the sales organization how to work with Nexo coolers, scanning them, processing data, and so on.
What would you say to people who are skeptical about investing in connected coolers? We hear people say that the business case isn’t yet justified, it’s not proven- and they’re absolutely right. What would you say?
I’d advise them to try the same approach as we did. Two years ago, when considering an investment in Nexo, we did a pilot in Zagreb, where Nexo provided twenty units that were retrofitted into existing coolers. We were able to see how the technology works.
It was a very controlled pilot. We looked into the data, and experimented for several months; and found that there was enough proof for us that we could scale it up to the entire cooler fleet that we have. We saw that we are able to take decisions that would allow us to increase our efficiency faster than before, and have more transparency on each individual cooler in the market.
Again I think that we, as producers, shouldn’t focus very much on proving whether Nexo is generating uplift or not, because sometimes that’s very difficult to prove: there are a lot of factors you need to take into consideration. Assess the result in its entirety: did you make your equipment work better, or not? Sometimes you need to take the decision based on intuition. In the case of Nexo, our intuition was pretty strong- and it wasn’t very tough to sell this case to the rest of the management of the organization. Everyone was able to immediately grasp that if we can use the data correctly, then we can generate benefits.
I have a strong belief in Nexo. There are so many opportunities- as soon as we are able to find the way to use it.
What needs to be done to enable consumers to discover new, compelling brand interactions?
IoT is rapidly growing in importance for FMCG brands. The ways in which a connected device deepens the experience for the consumer- from a car that tailors tools to your driving habits, to a home store using a VR experience for tactile online shopping– present limitless capabilities to meet marketers’ objectives, now and in the future.
Marketers know that experiences, not technology itself, drive the adoption of new tools and interactions by consumers. What needs to be done to enable consumers to discover new, compelling brand interactions? There are three key areas that brands must align to take advantage of the opportunities presented by IoT.
Firstly, consumers need to warm to the notion of interacting with physical objects. We have begun to see this in the large scale launches of Amazon’s Alexa, and Google Home, and the future of consumer interaction will be primed by this type of lifestyle tool. The experience for the consumer needs a number of factors: they should not be disrupted by the process; they need to appreciate the value of the interaction, beyond rational acceptance; and they ought to be inspired by the benefits the interaction brings.
Secondly, the progress of mobile platforms (apps, and mobile devices) towards a holistic consumer experience will be critical. We currently know our mobile phones primarily as search devices, portals to our social networks, and media devices, so developing usage as a tool with which to interact with the exterior world is another necessary step. While technological development in this area is inevitable, earning consumer trust will be vital to enable full acceptance.
The third component of a successful IoT consumer experience is to provide an end-to-end experience for all parties involved. There’s little point in providing a coupon to a consumer if it cannot be redeemed there and then, or requires further effort to be validated. Equally, brands and retailers will not invest if a campaign’s return path analytics do not allow them to analyse outcomes and develop actionable theories. In summary, the tools that will enable the best IoT consumer experiences will be developed for the consumer and for the vendors to service specific and meaningful needs.
This will give heart to those taking the advice of the recent R3 Worldwide whitepaper, that pointed to a strong consumer dialogue as one of the key tactics in strengthening brands’ market share, in the face of retailers’ growing dominance.
Nexo Discovery is the leading connected cooler solution offering consumer engagement, together with operational management tools, and a sophisticated new approach to commercial analysis. It has been designed specifically for brands and marketing equipment management. Where human behavior is evolving rapidly on its own, and mobile platforms keeping pace, Nexo provides a ready technology solution for brands wishing to expand their relationship with consumers. The only challenge now is a creative one.
Take a look at some of our favorite tech-enabled consumer experiences:
Tesco – virtual shopping screen http://www.bbc.co.uk/news/technology-19148154
Born Free – free an Orca screen https://vimeo.com/228971024
Molson Canadian – beer fridge https://www.youtube.com/watch?v=8gper3YkzMg
Heineken – Departure Roulette departures board https://www.youtube.com/watch?v=cg0oBV32ZDk
Putting data and proximity marketing to use, to increase sales.
Internet of Things technology is making physical objects smart, connected, and more effective. They can collect, measure and action data, sometimes resulting in direct interaction with consumers. Let’s take a look at how such technology can be applied to refrigeration equipment in the cold drinks industry.
By adding sensors to a cooler, you are provided with data to understand how it is performing commercially, and functioning technically. But IoT technology also opens up new marketing opportunities.
Enter the world of proximity marketing – localized, wireless distribution of promotions, marketing campaigns and advertising – allowing companies to connect with customers and deliver a personalized experience of your brand. Your smart coolers can now engage directly with customers passing by the fridge via their smart phones, tablets and smart watches.
This is all made possible by beacons and beacon functionality within controller chipsets, that send signals to attract attention to a specific location, in this case your cooler.
Adding beacon functionality to a cooler allows you to communicate with the consumer at point-of-sale. The cooler can gather data about a person standing in front of it, and deliver personalized messages to that person directly on their own smart device. A smart cooler should also be able to schedule, activate and report on the interaction with consumers. This opens up a whole new dimension of consumer engagement: converting footfall around your cooler into increased branding and sales opportunities.
And what can these marketing messages be about? Anything from special deals to a reference to the weather; “Hey, it’s going to be 30C today – maybe a good idea to grab a cold drink? I’m right behind you!” But the communication is not limited to text and images – looking forward your coolers can also be turned into interactive and personalized augmented reality games, cameras, and video players.
All of a sudden you are getting the same metrics for a physical world campaign as you would from a digital campaign, making them easier to plan and evaluate.
What about the consumer, and their habitual uses of their smart phone- now, and in the future? To be able to have you cooler connect with the people around it, they need to be open to receiving direct communication from you.
A 2016 report from Mindshare shows that 62 percent of consumers today are happy to share their data as long as they receive something of value in return.
Data can be attained if a person is already signed up through a participating app or social network, and the service allows you to send targeted messages and promotions.
Beacons have been named among the most important new mobile technologies in helping real-world companies deliver an interactive digital experience to their customers. Proxbook published a report for Q4 2015, indicating that 5.103.500 proximity sensors were deployed globally at the end of 2015. It is estimated that 400 million beacon sensors will be deployed by 2020.
According to data shared during a Boston Retail Partners’ session, 70 percent of companies plan to add beacons over the next five years.
Beacons are becoming a crucial part of bringing a digital experience to the offline world, to drive customer engagement through multiple channels. Making your cooler smart and taking advantage of the growing field of proximity marketing will help increase your cold drink sales and maximise the investment in the cooler itself.
Nexo’s range of controllers features beacon technology to enable proximity marketing, as well as commercial and operational metrics to ensure each cooler sells its optimal number of drinks, at the right temperature. We can advise on the best type of solution for your cooler fleet, that will help you to meet your business goals. Email email@example.com to find out more.