Your customers' digital experiences with other suppliers already shape their perceptions of value. Today, your customer assess the value of your services based in part on your ability to integrate into their digital world. The future belongs to companies able to harness digital to create new sources of customer value - these companies are destined to become digital predators, swallowing up lesser digital prey.
As a business leader, do you get the feeling that you're no longer playing the same game that you once were? It's not you; the world has changed. The things that used to set companies apart — such as economies of scale, distribution strength, and brand — are far less potent than they used to be. Why? Because digital technology has fundamentally changed two things: the dynamics of the markets in which you operate and the speed needed to remain competitive.
The latest report in our series on digital business – Unleash Your Digital Predator – updates our thinking on digital transformation and includes analysis of data from our latest executive research study on digital, conducted in partnership with executive search firm Odgers Berndtson.
Many firms proudly point to their mobile app and proclaim "Hey, we're digital!" While they may be driving incremental revenue, all they have done is bolt another digital touchpoint onto the existing business. Digital transformation goes much further, fundamentally reshaping the way you create value for your customers and drive revenue growth. Achieving this requires that firms approach digital business from the outside in, pursuing two dimensions of digital in parallel: digital customer experience(DCX) and digital operational excellence (DOX).
It turns out executives are hugely optimistic about how digital will change their business. Forty-six percent of executives surveyed believe that in less than five years digital will have an impact on more than half their sales. This suggests not only huge awareness of the potential for digital to change today's business but also an expectation that their company will be successful in making the transformation needed to bring this expectation to fruition. And it's in the biggest companies, where change is hardest, that executives expect the greatest change.
In B2B industries like consumer packaged goods (CPG), wholesale sales, and professional services, the shift is expected to be dramatic — Forrester estimates that the US B2B eCommerce market will be $1.13 trillion by 2020.
CPG execs expect digital to have an impact on almost half their sales. Even though the percentage predicted by 2020 is still less than 50%, if CPG companies were to generate anything close to 45% of their sales through digitally enhanced products and services or through online sales by 2020, it signals a dramatic shift in the CPG landscape. The ripple effects of the digitization of more and more CPG will be felt through wholesale and retail channels.
As a preview of the report, here are two of our predictions for 2016:
APIs and open platforms will take center stage. APIs are becoming the most powerful technology in digital business design. Done right, APIs open new angles for business strategy. Financial services providers have been relatively slow to recognize and act on APIs as an opportunity to transform their businesses and, ultimately, better win, serve, and retain customers.* This will change in 2016, as digital executives collaborate with CIOs to champion big investments in internal, B2B, and product APIs. APIs won’t only help firms increase agility and provide services to clients and partners: They will enable financial firms to build dynamic ecosystems of value, reconnecting a fragmented value chain. They will be part of a wider, and longer-term, shift to open platforms as the foundation of digital financial services strategy.
Over the past seven years, mobile banking has gone from little more than an extension of online banking to what one digital banking executive now calls “the most important part of my job.” eBusiness and channel strategy professionals at banks are under intense pressure to differentiate by offering mobile features, content, and experiences that meet — or exceed — customers’ needs and expectations.
To help executives and digital leaders better understand where mobile banking is today — and where different banking providers stand in terms of their mobile offerings — Forrester conducts an annual mobile banking benchmark. This year, we evaluated 41 different banks from more than a dozen different countries across four continents. We recently published the findings in our 2015 Global Mobile Banking Benchmark report.
Two years ago, digital executives at Scotiabank looked at the state of mobile banking and recognized the opportunity to roll out targeted mobile marketing to existing customers using the firm's mobile apps. At the time, too few banks were leveraging mobile as a marketing, sales, and cross-selling touchpoint — a problem that is still evident among US banks.
But rather than simply throwing random banner ads at mobile banking users, the digital team at Scotiabank opted to take a targeted approach that served up relevant offers in the user's context, made the "buy" task flow as convenient as possible, and put the bank in position to expand the effort in future years.
As a result, digital executives at Scotiabank have seen mobile cross-selling rates — as measured by year-over-year growth in unit sales via mobile banking — more than double, up 165% since the firm launched this effort.
Scotiabank’s mobile cross-selling initiative is just one example of a brand embracing the idea of mobile moments. Forrester’s wider research shows that mobile moments are becoming a major battlefield in banks’ efforts to win, serve, and retain customers.
Forrester has just published its 2015 US Mobile Banking Functionality Benchmark. The report reveals important insights about the mobile offerings from the five largest retail banks in the US: Bank of America, Chase, Citi, U.S. Bank, and Wells Fargo. Forrester clients can find the full benchmark report here:
All of these bank brands are relatively strong, providing customers with the services and functionality they’ve come to expect from mobile apps and sites. But perhaps the most significant takeaway from our research is that no single bank is leading: When it comes to mobile, the big US banks are achieving parity, not breakthrough.
Overall, the US banks are meeting customer’s needs... The US banks achieved overall scores of 65 or higher out of 100, scoring particularly well for enabling a wide range of touchpoints and transactional features. All five banks have extensive functionality across bill pay transfers and P2P payments, like mobile remote deposit capture and adding a payee from within the app.
Forrester has just published its 2015 Canadian Mobile Banking Functionality Benchmark. The report reveals important insights about the mobile offerings from the five largest retail banks in Canada: BMO, CIBC, RBC Royal Bank, Scotiabank, and TD Canada Trust. Forrester clients can find the full benchmark report here:
But different banks excel in different areas of mobile banking. CIBC and Scotiabank received the highest overall scores, each earning an impressive 75 out of a possible 100 in our benchmark. The two banks achieve mobile banking success with strong core banking features plus enhancements in key areas: For example, CIBC offers excellent product research tools, while Scotiabank recently launched a best-in-class help service within its mobile apps (see image below).
What’s the difference between a digital bolt-on and transformative digital disruption?
In the two years I’ve been on the road talking with executives around the world about digital business and delivering keynotes on digital transformation, I’ve been most frequently asked about bolt-on vs. transformation; what’s the difference?
A digital bolt-on is a digital project that is added to the existing business model that might improve the customer experience in a small way, but doesn’t fundamentally change how value is created for, and/or delivered to, the customer. For example, when a company updates a website and provides customers an electronic ordering platform, they are not changing the existing business model; they are simply providing an alternative channel through which the customer can buy products. The value proposition remains the same: buy and experience our product and you’ll gain value from the experience. Digital (in this case an online sales channel) has been bolted to the existing business model in much the same way a teenager bolts a spoiler onto an old car to make it "go faster".
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:
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.