Majority of Organizations Struggling to Adapt Business Models to Capitalize on New Generation of ‘co-creating’consumers
Consumers are now harder to define, understand, and please than ever before; and the majority of companies are struggling to take advantage of the opportunities available to them according to a survey released by Ernst & Young today. From consumer to co-creator compiled the opinions of almost 25,000 consumers in 34 countries, across mature and emerging markets, to establish what influences their purchasing behavior and identify how companies can capitalize.
Five broad trends emerged from the survey, which covered ten different products and services including food and beverages, consumer electronics and public services:
Traditional market segmentation no longer holds true. The ‘chameleon’ consumer has conflicting preferences and facets, which need to be accommodated.
Brands are increasingly likely to influence purchasing decisions within emerging markets, unlike the mature markets where lower loyalty is challenging companies.
Personalized communication and service is a priority. There are huge opportunities for organizations that can harness digital consumers through closer ‘community’ vehicles, such as social media and other digital channels.
Consumers are now equipped with all possible product, price and stock information and can simply bypass retailers that don’t compete.
These new empowered customers want a greater say in how they experience service and to be active ‘co-creators’, not passive consumers.
Commenting on the findings Pierre Pilorge, Ernst & Young Customer Management Services Partner says: “These trends show that in recent years, customer behavior has changed beyond recognition. In becoming a ‘chameleon’, the consumer has undergone a radical ‘metamorphosis’ and this change has significant consequences for all customer-reliant organizations.
“62% of the ‘co-creator’ consumers now go online for at least part of their shopping journey, but 85% of social media users believe brands don’t use social media well to communicate with consumers, highlighting a significant misalignment between the two groups”.
The survey identifies that the level of online activity varies significantly by market; with 67% of Chinese consumers buying clothes online compared to just 18% within the Middle East. When looking at brand loyalty, the level of affinity also heavily depends on the market and sector, with the telecoms sector enjoying the greatest loyalty and financial services sector garnering the least loyalty.
These insights reinforce that in today’s retail setting, very little is fixed and many things are fluid, whether it’s behavior or brand loyalties, trusted media or shopping habits, market segments or the role of physical stores. Understanding the implications of these trends and developing solid principles of effective marketing, will help organizations navigate through this new consumer environment.
The survey highlights that digital technology is altering not only how, where and when consumers shop, but transforming their expectations and interactions with all suppliers from retailers and manufacturers to governments and utilities. This change is occurring at an unprecedented rate and many organizations are not modifying their business models to keep up with the evolving demands of consumers, and harnessing the potential of technology.
From the survey’s results five recommendations for companies looking to capitalize:
Engage in dialogue with the consumer.
Organizations must go back to basics and get to know their consumers to develop strong, profitable customer relationships by engaging in a different type of dialogue. Government authorities must also shift, as citizens become used to the swift and informal communications traffic of social media rather, than the remote formality of traditional bureaucracy.
Make service personal
The entire value chain must be aligned to provide a personalized customer journey from bespoke product and service variants and flexible delivery, to adaptable payment and communication options.
Provide an end-to-end brand experience
Customer experience is the new brand and only by delivering an all-round positive customer experience can companies build the strong, loyal brand communities.
Deliver consistent multi-channel service
Seamless service across all channels is essential and organizations need to develop their online capability. However they must be wary of neglecting the face-to-face experience as physical outlets will remain core to consumers’ preferred retail experience.
Make consumers business partners
Organizations must focus on developing collaborative relationships with consumers by opening up the research and development funnel. This will help suppliers ensure that they are building a genuine brand affinity with their target audience.
Concluding Pilorge summarizes “These imperatives offer great challenges, and great opportunities for business. Companies that harness the principles of good marketing behind these action points and truly transform their organizations and their offerings, along customer-centric lines, can achieve great competitive advantage: in the relevance of their offering, the end-to-end efficiency of their value chain and the loyalty of their customers”.