We continue to see how technology disrupts traditional business models, resulting in new trends, products, and services, as well as how it dramatically transforms customer behaviors. Technology and innovation are considered great enablers, with the potential to rapidly remake the way we live, work and play. Yet, nearly all of today’s greatest disruptions have one common element — at their very core, these innovations are again empowering people.
Centuries ago, business transactions happened between individuals. Consumers and vendors had control and flexibility to transact within their limited geographically-based market, as in a village. Contrast this with the industrial revolution. Power shifted to the hands of companies with the technology, machines and infrastructure to operate mass production facilities. Fast forward to the present — the digital revolution returns the power to ordinary consumers and vendors through an unprecedented level of control and flexibility, direct peer-to-peer transactions, and a wealth of information and content to empower their own lives at a personal level within a vast global arena.
SOME COMMON ATTRIBUTES OF DIGITAL TECHNOLOGY
Most people grew up in a culture with pre-defined norms, e.g. one works eight hours, earns a wage, and spends these wages at a physical store operated by a business or company. However, this was one of the first paradigms to go out the window with the rise of technological platforms that now provide an incredible level of control and flexibility to people over the use of their time, assets, resources, and the work and services they provide.
Take the sharing economy, where digital platforms facilitate the exchange of goods and services among peers, allowing those in a network to transact directly with each other at the time and engagement level of their own choosing. Online platforms have made it much easier for those who wish to monetize their assets, time or skills at their own convenience. This has also led to the rise of the gig economy, where freelancers can work and earn on their own terms on a project basis. Consumers can cater to each other in this peer-to-peer setup, developing reputations that can be defined by reviews provided by fellow consumers to reward high performers.
Blockchain, the technology behind cryptocurrencies, is commonly described as a tamper-proof digital record that can securely exchange and track assets on an end-to-end process. Blockchain is another example of peer-to-peer setups among users. Due to their ability to facilitate transactions on a secure platform, blockchains have the potential to displace intermediaries, allowing consumers and vendors to independently transact with each other online without a third-party to facilitate payment.
Online shopping also allows consumers the privilege of purchasing goods any time by almost completely automating the sales process. Research by Gartner in their Customer Experience Summit 2018 predicts that by 2020, 25% of customer service operations will integrate chatbot technology or virtual customer assistants (VCA) into their channels, automating self-service while still providing the ability to escalate complex situations to a human agent.
Information dissemination, or how easily an individual can share information, is best seen in the context of social media. This technology empowers an individual with the ability to create, publish, and share information on public platforms any time a connection is provided.
Dissemination is no longer confined to small groups with access to broadcast media. The connectivity of these platforms is further enabled by mobile devices, allowing anyone to create and share content, amplifying their voices to anybody who would want to listen. Some creators take this ability a step further and make a name for themselves in social spaces, giving rise to viral popularity. While many talents have been brought to light from obscurity thanks to these platforms, their brands’ resulting products and services are more easily provided at a flexible pace they can dictate for themselves.
Another aspect worth considering is how technology and disruption elevate the capability and potential of today’s workforce. With automation and artificial intelligence set to replace repetitive jobs (such as data entry, assembly line manufacturing and cashier sales), technology is giving room for the individual to develop new skills and competencies. Carl Frey and Michael Osborne in the 2017 study The Future of Employment: How Susceptible are Jobs to Computerization predict that 47% of existing jobs in the US will be at high risk of automation in the future. This gives the employees previously holding these jobs the incentive to pursue their passions or engage in creative, imaginative and strategic work. Though automation rendered and will continue to render certain jobs obsolete, history shows us that it also introduces new forms of employment.
THE INFORMED, EMPOWERED CONSUMER
Modern consumers are better equipped to consume greater amounts of data to make informed decisions. These decisions are often disseminated through social media, which in turn, can potentially influence fellow consumers. This level of awareness raises the standards consumers apply to their customer experience, resulting in a demand for personalization in a company’s marketing efforts.
According to Anjali Lai, lead author of 2016 report Forrester’s Empower Customer Segmentation in Asia Pacific, “The power has shifted from the business to the customer. Consumers have rising demands and a new understanding of speed, the brand relationship and personalization, and these new levels of expectation and standards of customer experience have upended traditional business models.”
This poses the question of how companies can adapt to meet the demands and expectations of modern consumers.
In the digital age where change is constant and innovation is key, companies who respond fastest gain the most traction. To remain competitive and relevant in the market, companies need to reinvent themselves by maximizing the opportunities that emerging technologies bring. To begin transforming a traditional business model and adapting to technological disruptions, companies can start by asking themselves four important questions:
1. Who is their customer?
2. What experiences are important to their customers?
3. How can their business model support these experiences?
4. What digital tools can enable their business model?
While today’s consumers are empowered by technology, companies will find that adopting and properly utilizing digital tools will help them improve the overall customer experience. Digital technology also allows them to relate data to customers on a micro level, providing more resources than ever to aid in their anticipation of the customer’s needs.
According to the EY Megatrends report, delivering rich customer experiences has the potential to generate more income and improve profit margins. Companies will have more to gain from listening to customers and tailoring their services to their needs. By leveraging digital platforms, adding value, providing a more personal and engaging customer experience, and creating a seamless balance of automated and personal touch points, companies have the opportunity to turn consumers into loyal stakeholders, and potentially, even into voluntary endorsers on social media and other platforms.
As we said at the beginning of this article, digital technology and platforms are once again empowering customers and individuals. Companies need to understand that while innovation will clearly be a key driver of future competitiveness, the ability to more closely engage today’s empowered customers by providing fresh, dynamic and bespoke experiences may prove to be the greater challenge.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.
Ramil C. Cantoneros is a Senior Manager in the Advisory Services of SGV & Co.