At a recent Comotion breakfast briefing in the Shard, Carol Savage looked at various aspects of how technology was changing brand/customer interactions. Carol has over two decades of experience as a Managing Director, CMO and latterly Chief Customer Officer, and was keen to create a discussion about three key questions:
- How does technology change how customers behave?
- How does technology change customer expectations?
- How should companies react?
The audience, consisting of senior marketing and customer leaders from organisations like Lloyds Bank, UBM and Western Union, was asked to consider how things were changing and how they were managing their company’s response to those changes.
There is no doubt that technology has had a huge impact on how brands interact with their customers. There are several factors that suggest that this is becoming more important than ever. Many commentators have remarked on the fact that the explosion of technology driven communications (and particularly the arrival of the internet) in the 90’s has heralded the end of the age of broadcast communications. Consumers no longer rely on a few centrally controlled sources of information, choosing instead to select (or create) their own messaging from a multiplicity of sources. This has inevitably led to a reduction in the effectiveness of mass advertising and other centrally controlled brand messaging.
In addition to this macro-scale change, technology has also changed customer behaviours in detail.
How does technology change how customers behave?
Carol took the audience through several specific technologies to look at how each has changed behaviours and created changing demands upon a brand’s thinking about how it communicates, operates and creates products.
- The Internet – After more than 20 years of the Internet being with us, it seems trivial to talk about the Internet as something that is still having a profound effect. But it is. The major supermarkets have all been caught out in the last few years owing to a swing away from ‘1 big shop per week,’ to a more ‘just in time’ approach, supported by online shopping. This has invalidated the core strategy of all the four leading supermarket brands and damaged their approach to planning and developing their property bank. The other major change has seen consumers and customers becoming ever better informed. It has created far greater price transparency and we are still seeing the impact of new customer journeys in product research and decision making.
- Smart Phones – The ubiquity of smart phones and customers use of them has profoundly changed how customers interact with brands. Smart phones drive high-frequency short interactions (although there is growing evidence that consumers are becoming more prepared to engage with longer form content, particularly video, on their phones). Brands do not have the luxury of extended conversations with phone-using customers.The ‘always-on’ aspect of phones has led to consumers being more prepared to manage significant elements of their lives via those devices. Banking, holidays and dating are all sectors where consumers in their droves have transferred online, and from there to phone apps.
- Electronic wallets – the emergence of electronic wallets and payment systems looks likely to follow the surge of card use after the introduction of contactless payments. 2016 was the year of contactless and Barclaycard saw 173% rise in usage in the year to June 2016 – with the biggest rise coming from the over-60s. This behaviour is one aspect of a growing demand by consumers for faster, more convenient interaction with brands, and a growing judgement about those brands that do not provide this ease.
- Fulfilment tools – technology is driving the ability to reduce gratification or fulfilment times. Whether it’s one-click payment processes, decreasing wait times, or a growing emphasis on customer chosen delivery times, technology is putting more emphasis on customer needs. These abilities are creating new models of consumer differentiation and new demands on businesses.
How does technology change customer expectations?
Another theme that emerged in Carol’s talk was the impact on customer expectations as well as behaviours. It may be a subtle difference, but technology is not just changing behaviours – it is also shaping customer expectations. This particularly affects what they expect from a brand in terms of information, recognition and relationships. This change is just as significant for brands as the change in behaviour.
- Speed of response – it’s not just fulfilment where customers are expecting faster and more immediate gratification, the thinking extends into broader aspects of brand/customer conversations. Technology is driving a level of expectation about how and when brands respond to their customers. In customer service, complaint handling and product development, customers are demanding faster, more personal responses.
- Parity of response – as was discussed at the beginning of this article, technology has broadly killed-off mass communication. It is forcing a more democratic balance between brand and consumer. Increasing customer expectations are that brands treat them as equals and recognise their rights to be treated in a personalised and needs driven way.
- Experience led thinking – technology is showing customers what good, personalised and relevant transactions look like and those customers are increasingly demanding this from a wider set of providers. They are also demanding that services or products feel appropriate to their needs. Brands are starting to understand that they need to acknowledge emotional context and take on a holistic approach to their customers.
- Transparency in transactions – technology facilitates comparison and lateral conversations amongst customers. This, in turn, means that companies are very much more likely to be caught out if they are not consistent, honest and transparent in their dealings with their customers. There is a growing expectation that companies are publicly held to account for their communications, actions and policies.
How should companies react?
There are two areas where companies should react to the challenges posed by technology. There is a need to challenge legacy thinking about ‘today’s operations’ and an imperative to learn how to spot the opportunities for growth in ‘tomorrow’s operations’.
Challenging the legacy
One of the consistent themes of the breakfast conversation was that of changing how organisations think about themselves, and how the acceptance of a need for change can be created. There are many barriers to this:
- Recognising that customers and markets are changing before it’s too late. There are several high-profile companies that have failed to recognise and react to existential challenges. What many have in common is a failure to recognise the scale of the change facing their industry. The CEO of Blackberry refused to accept that his customers were increasingly preferring to use smart phones than Blackberry products, despite the evidence of his own staff. The board of Game rejected consultants’ advice that online and download games were going to overtake off-the-shelf package buying. In both these cases the evidence of the scale of change was available, but not heeded.
- Organisational decision making processes and budget control. Too many businesses are geared to make decisions in the wrong way – whether that’s a limitation of decision cycle (not being fast enough to react) or not involving those with genuine insight into what’s happening right now. In order to challenge legacy thinking, customer-insight driven thinking is essential and KPIs need to be reworked to align with customers’ needs.
- Proving the ROI of change. Transformation projects are often seen as high cost and high commitment activities, with the consequential reluctance to commit the needed resources. It was clear from the conversation that, in fact, many of the best programmes had their foundation in small-scale projects that, taken together, helped prove concepts and needs.
Preparing for the future
The conversation threw up a number of tactics that companies can use to prepare for the future.
- Customer focused strategies – Carol drew out two case studies where large organisations had undertaken significant technology projects that failed. In both instances the driver for the project, or how it was structured, came from inside the business and either did not help the customer, or actively hindered them in achieving their goals.
- Creating and using customer insights – it was clear in the conversations that the attendees who felt most confident in their ability to deal with a customer-led future were those that had the greatest confidence in the insights their organisation was developing. It’s not only about asking the customer, it’s about effective listening too.
- Manage scale – a frequent theme in the conversation was that of scale. In simple terms, organisations that started small and could manage both process and expectations were far more likely to have good outcomes.
- Have the right people making decisions – a consistent factor in failed programmes emerged. Those businesses that had technology decisions being made by people who did not strive to understand their customers’ needs or objectives were likely to produce projects that under-performed.
The relationship between technology-driven changes and other drivers is very strong. It could be argued that everything is fundamentally based on technological capability. Whilst that unreasonably diminishes the impact of culture, education and social factors on consumer behaviour, it is essential to recognise and understand how they interact with technology in order to adjust to the future.