According to Gartner, by 2020, more than seven billion people and businesses and around 35 billion devices will be connected to the internet. This connectivity will lead to people, businesses and things communicating with one another constantly and the dawn of a new digital business era.
Werner Goertz, research director, Mobile & Wireless, Gartner defines a digital business as one where “data and information are at the core”. To take advantage of the opportunities created by these numerous information exchanges, companies will have to let go of established ways of doing business and uncover new and dynamic models.
An example is the healthcare industry that traditionally offered specialised services by highly trained professionals. Today, this industry is seeing a digital transformation thanks to sensory wearable devices that measure heartbeat, body temperature and other vitals. Apps send this information back to the cloud and use available data to recommend steps to ensure the user’s general well-being, thus reducing dependence on the above-mentioned professionals when it comes to routine monitoring tasks.
Disruption of traditional business models
Goertz lists the attributes a business needs to ride the volatile environment of opportunities and succeed in the digital era:
Flexibility: The advent of big data and the ubiquity of digital devices have led to an unpredictable environment where opportunities crop up on unexpected fronts. Businesses should now move towards building flexible models and unusual partnerships to speedily benefit from these opportunities.
For example, makers of wearable fitness devices need to partner with healthcare providers, insurance providers, nutrition firms and sports brands to create greater value. In fact, the best businesses develop the ability to create opportunities that benefit the entire ecosystem.
Building consumer trust: Information and analytics are pivotal to the new era but businesses need to be careful not to compromise on consumer trust while collecting and analysing data.
Gartner suggests two approaches to this. One is being straightforward – earn trust by being trustworthy. Allow the customer control over anything a business does with their data. The second approach is a bimodal one, where the business safeguards core data but experiments with less sensitive information to create new approaches for digital business. A bank, for instance, will not be in a hurry to experiment with core transaction data but would be quite open to innovate around its marketing and outreach efforts.
Leverage new and different revenue opportunities: According to Bard Papegaaij, research director, IT Management, Gartner, a digital business is not one that merely improves on its current business model. Rather, a digital business is one that embraces a completely new model.
Companies that have understood and leveraged this shift include Amazon, which started out selling books but is today a cloud services provider and is moving into the logistics space, as well as Google, which is now much more than a search engine: in the future, the world’s cars could be built around Google’s navigation tools. Gartner predicts that by 2017, 70 percent of successful digital business models will “rely on deliberately unstable processes that are designed to shift with customer needs”.
Using digital to improve customer experience
Competitive differentiation today is not restricted to offering the better product. Gartner predicts that by 2017, 50 percent of consumer product investments will be redirected to customer experience (CX) innovations. Improved customer experience will hinge on seamless and continuous digital experiences, with 89 percent of companies expecting to compete primarily on the basis of CX by 2016, up from 36 percent six years ago.
In the past, says Goertz, companies relied on technical competence to be successful, but in the digital era this is no longer a differentiator. With data now being available not just on the technical aspects of a product but across the entire customer experience, businesses need to focus on the entire customer journey as well. Today, even unboxing a product is an event and customers routinely expect highly competent aftersales service. Goertz says strong brands will create an experience out of this entire process and this is what will ultimately make a product successful.
In the digital era, technology will be a key enabler of top-notch customer experiences, which begin at the first 'business moment'. In retail settings for instance, the business moment kicks off when a customer steps into the premises, and engagement can typically cover:
Identification phase: When identity is established via biometric means and observational technologies with the customer’s consent.
Direction phase: Post-identification and contextualisation, CX is personalised through the use of personal devices, wearables, augmented reality, screens and gamification.
Consumption loop: Bidirectional, hyper-personal interactions can lead to purchase intent. The customer then pays using technology. Simultaneously, the system identifies upsell opportunities for the customer, hence maximising revenue at the point of sale.
According to Goertz, these technologies can maximise the value of the customer’s experience and revenue potential from the visit as well as create brand stickiness and repeat engagement. Gartner predicts that by 2020, retail businesses that use technology such as targeted messaging and internal positioning systems will see a 5 percent increase in sales.
B2B CX in digital business
According to Gartner’s survey of CMOs, most B2C marketers (77 percent) believe their firm’s digital commerce leads that of their competitors. In contrast, only 59 percent of B2B marketers express similar confidence in their e-commerce.
Traditionally, B2B firms have not kept up with their B2C counterparts in terms of customer experience. According to Papegaaij, this is because B2B firms have long believed that they are necessary and cannot be replaced. But business buyers are changing.
Business buyers today expect ease of commerce, a model that they have become accustomed to through B2C mobile apps, online shopping and personalisation. Further, as their demographic profile changes and the younger and tech-savvy millennials become buyers, they demand convenience and customisation, and are willing to pay for these attributes.
B2B marketers must urgently acknowledge this and “internally develop a customer focus mindset", says Goertz, learning from B2C marketers who are setting the standards. Recent Gartner research advises that B2B firms should learn how to harness the potential of the mobile. Currently, B2B marketers derive only 19.4 percent of digital commerce revenue from mobile, while the figure is higher for B2C (22.6 percent). Additionally, Gartner advises B2B companies to invest in CX. According to a 2014 study by the Acquity Group, 17 percent of buyers conduct research on supplier sites and then buy on Amazon Business. B2B marketers should use research and analytics to personalise their online experiences and prevent customers from purchasing elsewhere.
The era of digital businesses is already here and without exception, all businesses need to embrace this in order to thrive. CX is the differentiator in the current playing field and businesses will now need to create unique customer journeys to gain competitive advantage. B2B players who have always lagged behind in terms of CX can no longer afford to do so and must pick up a few tips from successful B2C marketers.