It’s not news that the digitally empowered customer is changing our world. What is news is 1) the pace needed to catch up to an extremely dynamic and impatient customer and 2) the magnitude of real change needed to meet the challenges (and opportunities) of a customer-led market.
The magnitude and pace of change driven by customers, competitors, and innovation can be dizzying:
As loyalty structures erode, customers are conditioned to rapidly adopt and abandon services.
There is a fundamental division at the heart of the digital economy. Digital tools make it possible for any company to build a direct relationship with its customers. At the same time, new digital intermediaries can use the same digital tools to create unprecedented intermediary roles. Torn between two lovers, anyone?
We’re in the age of the customer, a period during which end consumers have more access to the basic economic resources that help them make more rational and empowered decisions. The theory of perfect competition dictates that market economies flourish best on a foundation of perfect information that enables perfectly rational actors. The digital technologies we all carry in our pockets — not to mention, have surrounding us in our cars, our homes, and even strapped to our bodies — have initiated a chain reaction, unleashing an unprecedented level of information, which has enabled us — if we choose to accept our mission — to behave like much more rational actors than ever before. (Caveat lector, I didn’t say “perfectly rational” for a reason. See our research on how humans make choices to understand more.)
The more those technologies spread, the more buyers and sellers enter the system, the more innovation there is — at lower cost, thanks to the economics of digital disruption – and the spiral feeds itself.
Retail CIOs have always had a tough job, but digital makes it tougher. Emerging digital technologies threaten to transform retail experiences both in stores and at home. Without a good business case, CIOs at large retailers will find it hard to prepare their business to compete with small, nimble startups. My latest report highlights the potential of today's digital technologies to radically disrupt the retail industry once more. It serves as a call to CIOs to begin shaping their strategy to digitize the end-to-end customer experience and start proving the business case in time to make the investments needed.
Specialty fashion retailer Rebecca Minkoff is creating a truly differentiated in-store customer experience by combining RFID tags with new technologies like digital mirrors in the changing room connected to employee mobile devices. At the NYC Rebecca Minkoff store, customers can select products from racks or a digital fashion wall and head to the dressing room, where they meet their personal fashion consultant. Once in the dressing room, a digital mirror displays all the products and sizes the customer has in the room. The customer can easily request a new size by selecting it on the mirror. The consultant delivers the new sizes to the dressing room without the customer having to redress or wander the store half-undressed. By extending what Rebecca Minkoff has already achieved, we get a glimpse of a future in-store experience that helps each customer quickly find more products that satisfy their desires.
Presenting today with Marketo's CMO, Sanjay Dholakia, gave us the opportunity to talk about what CMOs (both B2B and B2C) need to do to transform marketing into a growth engine. Here's a little retrospective on our conversation in case you missed it.
In 2010, Forrester introduced our "age of the customer"(AOTC) research and defined four investment imperatives needed to better win, serve, and retain customers in this digital age.
Marketo focuses here, not just as a marketing technology provider, but as a practitioner as well. They've been talking about Engagement Marketing - the evolution from mass marketing to transactional to customer engagement -- for more than a year, and practicing it for much longer. Now their advice is as easy as ... well ... learning your alphabet.
Forrester's research shows that technological change reduces competitive barriers. Building and sustaining customer relationships is the exception. In some ways, technology actually enhances relationship creation and maintenance. Top firms recognize this and get customer-obsessed to beat their competition. By investing strategy, budget, and energy in the following four areas, they:
How will digital disrupt the financial services industry over the next 10 years?
Over the past couple of days, I’ve been meeting with clients at Forrester’s Forum For Technology Leaders in Orlando. Clients mostly want to know how digital will impact their business. My approach in responding to this question is to think like the CEO of the company in question: First, understand the customer’s desires; then figure out how those desires can best be met profitably — I imagine how future technology changes might create new sources of customer value.
We’ve already seen massive change in the financial services sector: Technology is dramatically changing our customer experience and helping firms educate their customers. What more is yet to come? And what will companies need to do to win customers in the future?
While this is a complex question, it’s not hard to imagine a very different reality to the one that exists today:
Two weeks ago, I stood on Forrester's mainstage at its 2015 Forum For Marketing Leaders in New York (see a few minutes of the speech below). There, I told an audience of hundreds of our clients about hyperadoption, a term that I'm amazed no one has coined before now. Get used to the word. Because it's the characteristic that will define the next 10 years of your personal and business experience. In fact, in our first report debuting the concept of hyperadoption — released the same day I stood on the stage — I claim that hyperadoption will cause the next 10 years to generate an order of magnitude more change in your life than the past 10 years did.
That's an audacious claim. Because the past 10 years gave you the smartphone and the tablet. But I mean it, and over the coming year, I intend to prove it in my research.
Forrester clients can read the report, which synthesizes much of the work I've done over two decades, where I've had a front-row seat to the changes in how consumers adopt, such as the first consumer experiences in what was then known as the World Wide Web, including that very rare behavior known as online shopping. That experience, combined with the neuroscience research I've followed since my own days in the lab, has convinced me that the economics of digital disruption now allow people to bypass the ancient, loss-avoiding algorithms running in our heads that used to make us cautious of new things and now no longer do.
Over the past decade, digital executives and teams at banks have made strides in digital selling by upgrading and improving their public websites — and more recently their mobile apps and sites. But conversion rates on many banks’ websites remain low — in some areas, well below 10% — even as consumers’ expectations for digital experiences rise.
To take their digital selling to the next level, digital marketing and sales teams at banks should look outside the banking industry for fresh thinking. One area to look for inspiration is retail: By adapting digital tactics that best-in-class retailers use, banking digital teams can make adjustments to their websites and mobile apps that boost conversion rates and sales overall. Forrester has just published a new report that outlines “What Banks Can Learn From Retailers' Websites.” Here are just three of the ideas we discuss in the report:
Merchandise around customers’ needs and journeys rather than product silos. Retailers have found success by merchandising entire site sections, and even microsites, around customer journeys and events. Yet our research finds that virtually all banks still use products as the organizing principle on their websites. In 2013, Wal-Mart created a complete "back to college" microsite with digital marketing on key landing pages. As a result of this and other digital merchandising efforts, Wal-Mart increased the number of back-to-school products sold on its website by 30% year-over-year.
Have you ever sent money abroad and been shocked by the amount the recipient is left with? Why can’t you ever get anything close to the exchange rates advertised on the likes of xe.com?
As a customer, transferring money internationally is often a costly experience. Despite claims of no fees, the exchange rate spreads are often significant. That’s where P2P currency exchange comes in.
Startups such as CurrencyFair, Kantox, Midpoint and TransferWise hope to solve this problem by using the power of peer-to-peer networks to match customers, both individuals and small business, with one another to significantly reduce the cost of currency exchange.
By matching currency orders travelling in opposite directions, these platforms remove the need for money ever having to cross borders, thus avoiding costly international transfer fees. Thanks to low overheads, they also offer exchange rates at (or very close to) the midmarket rate that you see on xe.com. As you can see from Midpoint’s calculator below, the savings can be substantial.
If you’re interested in finding out more about this emerging sector - one that has been backed by the likes of Peter Thiel, Richard Branson, and Andreessen Horowitz - you can read mine and Oliwia’s new report here. The report, the latest in our ongoing series about digital disruption in retail financial services, answers the following questions:
I spent Tuesday and Wednesday of this week at Finovate Europe. As always, it is a great way to spend two days thinking about digital financial innovation and how firms can deliver better experiences for their customers. Here are a few of my impressions from the two days:
Biometrics is becoming mainstream.We barely raise an eyebrow when shown authentication processes by firms like eBankIT, ID Mission, Jumio, Nice Systems and Wipro that use facial recognition, fingerprints or voice recognition because these technologies now seem almost commonplace. Yet the technologies are hugely impressive and far advanced on what was available or even possible a decade ago.
Future generations will pay differently. The credit card is one of the greatest financial innovations of all time. Yet, despite the various card innovations on show, I cannot rid myself of the belief that plastic cards will one day soon start to seem as quaint and outdated as cheques (and, indeed, business cards). There are many big obstacles on the path to mainstream mobile payment adoption, and payment habits take decades to change, but I don’t think the future is bright for plastic cards.