American and Canadian insurers are facing some big challenges in 2015. Customer experience expectations, their willingness to consider a growing array of new options to buy insurance, and new competitors creeping into the business of insurance are pushing traditional insurers into new digital strategies. It’s no longer a question of digital channels or “other” when it comes to the customer journey; they’re now intertwined. Digital-dependent customers are eyeing new and more digitally savvy market entrants, while demanding more control over the experience and how their personal information is used. This year, digital insurance teams are crafting agendas that satisfy their firm’s hunger for increase market share and revenue balanced with changing demographics, adaptations in response to extreme weather, and regulation that has lagged the changing realities of digital. One thing’s for sure: Insurance eBusiness teams can’t afford to wait around, but they also can’t afford to make the wrong digital decisions.
Just what are the factors propelling North American insurer agendas this year? For starters, it’s about:
Uneven economic growth in North America. The 2008 financial crisis? It’s a distant memory in much of the US, but not for all. By most measures, the US economy is thriving, driven by rising consumer demand for homes, cars, and consumer goods, and, by extension, insurance. And in oil-producing Canada the decline in gasoline prices isn’t good news: Canada is threatened with recession.
Forrester’s retail forecasts chart how the changing nature of consumer behavior will have an impact on online and offline retail sales over the next five years. During a recent webinar, Forrester detailed five key trends that the forecasts have revealed:
Worldwide online retail sales are growing and varied. Asia Pacific is the world’s largest online market; it’s more than twice the size of North America. But online retail in India and China is very different. When considering your online investments, you must take into account not just retail market size but also supply (like organized retail), consumer demand, and infrastructure maturity.
Online buyers are spending more and in more categories. In mature markets like the US, online growth is coming from existing buyers spending more online. The typical online buyer has doubled the number of categories from which they buy online over the past five years.
Web-influenced sales are greater than online sales. In Western Europe, the Web will influence 45% of offline sales by 2020. Although 93% of retail sales in Western Europe were offline in 2014, an online presence is critical to retailer success — as web-influenced sales were more than three times larger than online sales.
I’m not alone. Creating a superior and differentiated customer experience is a core strategy for most companies — a pillar of who you want to be. It’s likely in your mission statement, annual report, 10-K, strategy deck, or company culture declaration. In a Forrester survey, “improving the customer experience” was tied with “growing revenue” as the No. 1 business priority over the coming year. Great CX is the big ambition in the sky.
For many, it remains an ambition.
The feedback I get from executives is consistent with my own thinking and Forrester’s body of research in this area. CX can’t be an attitude, tagline, or one-time corporate initiative. It has to be a different way of doing business, a new kind of operating model.
That means addressing the complex areas like people, process, and culture.
At Forrester, I keep returning to the basics to help us take simple but important steps forward. Here are five observations from the frontlines:
Change your perspective. We have a sense of how customers are supposed to traverse different touchpoints and a sense of the experiences we want them to have. But that’s not the starting point. CX is about the customers, on their terms and in their voice. Sounds basic, but that fundamental reorientation requires a surprising level of tenacity and discipline.
The dictionary defines “readiness” as the state of being fully prepared for something. It is easy to compare how well prepared companies are for digital marketing by looking at their digital marketing staff strength as a percentage of their total marketing staff and at their digital marketing spend as a percentage of their total marketing spend. More-prepared marketers prioritize digital in their marketing planning. More-prepared marketers run best-in-class digital marketing programs and communicate with the customers across multiple devices. More-prepared marketers measure how well their digital programs accomplish their business goals and how channels work together to accomplish a desired outcome.
In the past, Forrester has developed tools and frameworks that help firms assess their digital marketing maturity. Forrester has now launched a new research framework: the Forrester Readiness Index (FRI) for digital marketing. This framework is a quantitative assessment that provides insights into the digital marketing environment and available opportunity for 55 countries across the globe through 23 quantitative variables.
Recently, I talked with the CEO and founder of reBuy about the shifting dynamics in the retail sector as a result of digitalization. The use of data has evolved to the point where data has become the enterprise’s most critical business asset in the age of the customer. The business model of reBuy reCommerce — the leading German marketplace for secondhand goods — can help CIOs understand how the intelligent use of data can significantly disrupt a market such as retail.
The case of reBuy offers interesting insights into how the wider trends of the sharing and collaborative economy affect retail. If you can buy a good-quality used product with a guarantee for half the price, many people will not buy the product new. Many consumers increasingly accept product reuse and see it as an opportunity to obtain cheaper products and reduce their environmental footprint by avoiding the production of items that wouldn’t be used efficiently. The reBuy case study highlights that:
Business technology is taking the sharing economy into new realms. The reBuy business model demonstrates that consumers are starting to push the ideas of the sharing economy deep into the retail space. CIOs in all industries must prepare for the implications that this will have for their businesses.
Standalone products are at particular risk of sharing dynamics. The example of reBuy shows that businesses that sell plain products will come under even more pressure from shifting shopping behavior, where people are increasingly satisfied with buying used goods. These businesses need to add value to those products that are not available for secondhand purchase.
After almost every loyalty-related speech I give, I get some variation of the following question: "How does this apply to B2B?" Sure, customer loyalty programs are most frequently associated with consumer-facing rewards schemes, but earning customer loyalty is very important for B2B companies too. After all, loyal and satisfied B2B customers provide testimonials, case studies, and referrals that result in a fuller and more qualified pipeline of new business. It can be easy for B2B marketers to dismiss consumer loyalty models as inapplicable to their complex business relationships, but there's a lot more to consumer loyalty than points and discounts.
In my latest report, "B2B Loyalty, The B2C Way," I explore how B2B companies can use consumer loyalty principles to deepen their business relationships. Looking past rewards, they specifically stand to benefit from three core tenets of loyalty embraced by successful B2C loyalty marketers:
A deep understanding of customer needs and motivations. B2B companies are not immune to the age of the customer, and in order to increase their customer obsession, they must continue to grow their knowledge about the customer. Building this knowledge-base from sources like satisfaction surveys, digital interactions, and customer success management systems is especially important given the complexity of B2B purchase decisions.
Consistent customer interactions across organizational silos. Business customers interact with many parts of the organization including marketing, sales, service, and support. Reaching across the aisle to teams that interface most frequently with customers, resellers, and end users leads to more productive customer outcomes.
Discussing with Asia Pacific marketers, I often hear that they struggle to find and recruit the right social marketing skills, including data analysts. While staffing is important insofar as tactics go, having a proper team structure to execute on these tactics is, in my view, even more crucial.
In fact, they can mitigate some of these HR challenges with a properly structured social team. My report on building a usable social team structure addresses how organizational models will evolve as social marketing matures. These models include the a) Hub, b) Hub and spoke and c) distributed hub and spoke.
The Hub, for example, is meant to help firms that are starting out on social marketing. This could be a firm that is beginning to get more serious about how social is used strategically to drive business outcomes, or one that operates in highly regulated industries like banking and finance. The centralized hub model puts all of the responsibility (and money) for social marketing in the hands of one small team. This model provides training wheels for marketers for social marketing — especially in learning how to coordinate or test social marketing campaigns in the early phases of social maturity. A centralized hub acts as an incubator for social marketing experimentation and allows other teams to focus on their own objectives until the social program can be implemented at scale with minimal risk. Execution can be in-house, but some marketers partner with an external agency for additional dedicated resources.
Although 91% of retail sales in EU7 were offline in 2014, online presence is critical to retailer success, as nongrocery web-influenced sales were three times larger than online sales. EU7 includes the UK, Germany, France, Italy, Spain, the Netherlands, and Sweden. A soon-to-be-published report, Forrester Research Web-Influenced Retail Sales Forecast, 2015 To 2020 (EU-7), shows why the majority of nongrocery offline retail sales will be influenced by the Internet as early as 2017; why this influence is dependent on country, category, and consumer age and gender; and why a consistent consumer experience across all multichannel touchpoints is critical for retailer success.
How consumers are influenced by the Web depends on many factors:
Online behaviors. Price and consumer ratings are the most important online factors influencing retail sales. Online behaviors are more embedded than ever into the consumer purchase journey, as online buyers and online spend per buyer continue to grow in Western Europe. Offline populations continue to decrease, although at different rates across Europe: almost a third of Italians and a fifth of Spaniards are still not online.
Hollywood director Francis Ford Coppola once said: “The very earliest people who made films were magicians.” In some ways, things haven’t changed -- although the media producers of today seem to pull the classic reappearing act as their key trick: When content finishes on one screen, it reappears on another . . . and then another.
Video is available across myriad personal devices, and consumers’ viewing habits are fragmented across technologies. Just as channels for video consumption are becoming more profuse, the types of content that viewers seek are also increasingly diverse. In the past month alone, American audiences said hello to streaming-exclusive dramas and goodbye to long-running TV shows. This week, consumers viewed an array of films like those premiering at SXSW, and tuned into the March Madness sports frenzy.
Consumers have choices about what to watch, on which device, and when. According to Forrester’s Consumer Technographics® data, US online adults still prefer to watch longer-length video on TVs but frequently turn to smaller devices for shorter content:
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