Your business model is under attack. And it’s not by your competitors. It’s under attack from your customers. Three years ago, Forrester identified a major shift in the market, ushering in the age of the customer. Power has shifted away from companies and towards digitally savvy, technology-empowered customers. They now decide winners and losers: Our Empowered Customer Segmentation shows that more than a third all US online adults want new and engaging digital experiences. They will switch companies to find these experiences. In this environment, being customer-obsessed can be your only competitive strategy.
In Forrester’s 2017 Prediction Reports, we are tracking firms’ progress on their customer-obsessed journeys. In our annual collection of predictions, we look at business strategy, leadership, customer experience, and technology dynamics to examine progress and predict the key events, changes, and trends that will occur in 2017.
Here are three key findings from our 16 predictions reports:
The next wave of Customer Experience will have a profound impact on firms’ P&L: The shift to a customer-led market represents an immediate and prolonged threat to company survival. Our research shows a clear correlation between the quality of customer experiences and revenue growth; it also affirms that emotion is a core driver of customer loyalty and spending. The next wave of CX will connect these dots, blending analytics, technology, and design to evoke emotions to drive affinity and directly impact revenue.
In 1860, the year Abraham Lincoln was elected President, Milton Bradley invented his first board game, the Checkered Game of Life. The game simulates a person's travels through his or her life, from infancy to retirement, with jobs, marriage, and possible children along the way. Some squares on the board help you along, with little lithographed hands pointing the way, but almost any spin from nearly every square involves a decision, a choice among as many as eight possible moves. The Checkered Game of Life requires you to make decisions — lots and lots of them — and each of those decisions leads you down a different path, requiring more decisions as you go.
Over 150 years later, the premise of the Game of Life holds as true for the decisions our customers make as it did for the personal decisions outlined in 1860.
In the post-digital world of today, empowered customers have taken control of the relationship they have with the companies they interact with. Your customers now face a maze of media, devices, conversations, and interactions as they make decisions along their path to purchase. As marketers, you must engage customers in the right way across the entirety of what Forrester calls the customer life cycle, from customers initially identifying a need to researching their options, making a purchase, and using the product.
Here at Forrester we are busy planning our upcoming Forum For CIOs And CMOs. With a theme of “Building A Customer-Obsessed Enterprise” the event explores the partnership between marketing and technology leaders. But what about our government clients? The role of marketing is associated with the private sector. Companies employ marketers to identify their target markets and the opportunities for providing goods and services to them. Public-sector organizations don't typically have the luxury of choosing their target market or their products and services. Or at least that’s what most organizations think. But even if that is the case, it doesn't mean that these organizations shouldn't get to know their "customers" and understand how best to meet their needs. While the service might be prescribed by legislation or regulation, public organizations can influence the customer experience, and the rising focus on citizen engagement mandates they do so.
In my last post I outlined the research we just finished on digital transformation. Today I'd like to highlight the key takeaways for CIOs.
CIOs are destined to play a pivotal leadership role in the transformation of business to a digital business. The nature of business is changing and, in turn, the technology investment priorities of the past must change. The report - Unleash Your Digital Business - describes the dynamic ecosystems of value that drive customer behaviors and transform the linear value chain into a dynamic network supported by open APIs. CIOs must partner with CMOs to drive the business transformation needed to become a digital business. To survive, your business will need to embrace digital customer experiences within ecosystems of value, and digital operational excellence to drive the agility and innovation required to survive and thrive in the age of the customer.
Digital Is More Than A Bolt-on Strategy
Bolt-on digital is like painting go-fast stripes on a car; it doesn’t change the underlying business. To become a digital business requires fundamental enterprise transformation; something CIOs are accustomed to leading and shaping. The partnership with the CMO must be extended to create operational excellence through digital technology, augmenting customer value with digital products and services and driving rapid innovation across the business.
Dynamic Ecosystems Of Value Drive The Ability To Win Serve and Retain Customers
Your company is likely to face an extinction event in the next 10 years. And while you may see it coming, you may not have enough time to save your company.
Business leaders don't think of digital as central to their business because in the past, it hasn't been. But now your customers, your products, your business operations, and your competitors are fundamentally digital. While 74% of business executives say their company has a digital strategy, only 15% believe that their company has the skills and capabilities to execute on that strategy (see figure). These are just some of the findings from our latest research (Forrester clients click here).
For the past few years, companies have been bolting “digital” onto their existing business like teens paint go-fast stripes onto their cars. “Look, we’re digital” is the message CEOs want to send to investors. But the piecemeal strategy of bolting digital channels or methods onto the business is no longer sufficient. Instead, you must think of your company as part of a dynamic ecosystem of value that connects digital resources inside and outside the company to create value for customers. To do this, you must fully harness digital technologies, both to deliver a superior customer experience and to drive the agility and operational efficiency you need to stay competitive.
"Hello, I'm Laura Ramos, and I write for chief marketing officers."
That's the standard line around here. It'll take a little gettting used to saying it. Heck, I still find myself saying "Xerox" instead of "Forrester" from time to time, but I hope to get out of that habit soon.
Luckily, I won't have to break my habit of thinking and writing about the issues that face large companies that sell highly-considered products and services to other businesses through a direct sales force or channel partners. I've always been a business-to-business (B2B) girl, and I'll stick to that focus here at Forrester.
I recently spent a few days in Connecticut, USA, with Pitney Bowes. So why, you ask, is a CIO advisor who spends most of his time talking about the future of business technology in Asia Pacific spending time with a company that makes machines that stamp mail? That is a good question, and one I hope to answer while at the same time showing where I believe Pitney Bowes can help in your organisation.
So Pitney Bowes stamps mail. Yes — but they see it differently. They see that they enable communications with customers. Interesting. But mail is declining — right? Yes, it is, and Pitney Bowes has made many acquisitions to position itself as the leader in the digital mail space. And they have gone from just providing the communications capability to working across the entire customer lifecycle. Acquisitions of Portrait Software, MapInfo, Group 1 Software and many of the other firms they have acquired in the last 10 years have given them the ability to do:
- Customer profiling and segmentation
- Data preparation and composition
- Multi-channel customer output
- Customer response management
- Response analysis
Recently my colleague David Cooperstein and I had the opportunity to meet with Robert Mead and Michael Mathias, the CMO and CIO respectively at Aetna. They will be speaking at our upcoming CIO-CMO Forum on September 22 in Boston, so this serves as a bit of a preview to what should be an eye opening presentation. Enjoy!
David Cooperstein: What external changes drove you to build a deeper partnership with your technology peers?
Robert Mead, Senior Vice President, Aetna Marketing, Product & Communications: The U.S. health care system is fragmented and well behind the curve in terms of price transparency and consumer-friendly products and services. The deep partnership between technology and marketing at Aetna lets us put leading-edge technologies and powerful tools and applications directly into the hands of people so that they can be confident consumers and informed patients. Our close collaboration with our colleagues in technology is driven by a few external factors:
the increasing cost of care and the corresponding changes in employer-based insurance – consumers are being asked to take more ownership of their health and wellness and their health care spending;
the introduction and rapid adoption of technology that empowers consumers (and patients) to engage in the health care system where they are in life and in the way they want to be connected; and
health care reform, which aims to bring millions of previously uninsured Americans into the marketplace as consumers.
We at Forrester have written a lot about the “empowered era” in the past year. We’re talking about the empowerment of customers and employees, the consumerization of technology, and grass-roots-based, tech-enabled innovation. There are lots of great case studies around illustrating these forces and how they can benefit the enterprise, but those success stories are only part of the picture. Behind the scenes, there is disruption and confusion about who’s planning the road ahead regarding the technology in our organizations’ future. It used to be that the CIO made sure that happened by making it the exclusive domain of strategic planners and enterprise architects. But isn’t centralized — and IT-based — tech planning the opposite of empowerment? Wouldn’t sticking with the old approach result in missing out on all this employee innovation that’s supposed to be so powerful? Should the CIO no longer establish the technology the enterprise will use? Does the empowerment era mean the end of tech planning as we know it?