Customer expectations are being reshaped by innovation and digital technologies (mobile devices, big data, analytics and social media platforms). Digital technologies for example are boosting consumer power, allowing consumers to be mobile and to freely express their views about products and services on social media. They offer competitive advantage for organizations, for example by taking away manual processes, reducing waste and introducing more automation (digitization).
Digital transformation presents immense opportunities and challenges for organizations across industries, to name a few opportunities for example using big data, analytics, artificial intelligence (AI) and machine learning, Google now, makes recommendations before you ask for them; and based on content you consume, Netflix makes recommendations about other movies you might like and Amazon, makes recommendations for books etc. Organizations that are using business models only based on bricks and mortar (traditional business serving customers in physical buildings) are feeling the pain the most. According to the Business insider article, “Dozens of malls in America have closed in the last 10 years, and many more are at risk of shutting down as retailers like Macy's, JC Penney, and Sears – also known as anchor stores –shutter hundreds of stores to staunch the bleeding from falling sales. The commercial-real-estate firm CoStar estimates that nearly a quarter of malls in the US, or roughly 310 of the nation's 1,300 shopping malls, are at high risk of losing an anchor store. Many analysts attribute those declines to shoppers' changing preferences and the rise of online shopping. Studies show that Americans are increasingly choosing to spend money on technology and experiences like vacations over apparel. When they shop for clothing, an increasing number of them are going to discount stores like TJ Maxx or ordering from Amazon.”
Digital Technologies are introducing a new paradigm shift, putting the consumers in the driving seat. Today’s consumers are using mobile technology to their advantage and have the power to go online to search for product information, compare products and get reviews from other consumers. Consumers are now more demanding than before and continuously seek better products and improved service levels. Superior and differentiated customer experience is no longer a nice to have for any organization. Companies that focus on providing excellent customer experience using digitalization will be able to retain their customer base and acquire new customers. This strategy will offer them a better competitive edge. We are also witnessing the rise of a new customer that is tech savvy, taking over the reins from the old generation.
Who is this new customer?
The Millennials or Generation Y (1980 – 1995) and Generation Z or Boomlets (1996 –2010) are the new customers. This generation of customers are born into a world of Digital and Technology. They interact with the world in a completely different way to their parents or grandparents. They are the ‘digital first’ generation and have grown up with computers, email, mobile phones, the Internet and social media, as an integral and accepted part of their everyday life. Some of the defining characteristics of this new generation, according to the recent research done by TelkomBusiness Connexion are:
They are always on – connected in some way with some device and at ease with tech.
They are multi-channel – they can split their attention between their phones, TV, games, computers and importantly from a retail perspective, enjoy multi-channel shopping.
They are knowledge driven – they have knowledge at their fingertips and they use it.
They are socially and environmentally conscious – they care about the world and what’s on it.
They live in a virtual world, an augmented world where everything is possible – no boundaries.
Now many organizations are faced with a challenge to service both, the old and new customer. The old customers are Baby Boomer Generation (1946 – 1964) and Generation X (1965 – 1980) etc. The established retailers, telecoms and financial services institutions are mostly impacted by this new paradigm shift and ever changing customer demand. The challenge is that, most of their business models were created with the old customer in mind. The emergence of a new customer forces these organizations, first to understand this new customer and then transform their ways of working. Transform means unlearning old ways of working (structures, processes, culture etc.) and learning new ways (Lean & Agile, DevOps, Cloud, Exploratory Innovation etc.) to provide excellent customer experience. Organizations needs relevant strategies that will enable them to re-imagine and re-invent their business models to meet the demand of the new customer.
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