Covid-19 revealed opportunities for companies to try new things, leading to experimentation and initiative. Something shifted for customers, too, as they became more willing to leave their comfort zones. Growth comes in three stages – planting, nurturing, and harvest – and we are now seeing the digital yields of the pandemic. There are six notable trends from the last year that will continue into 2022...
#1 Capabilities stretched to the maximum
The world has been progressing from product to service to experience for the past several years. Brands realize that to be meaningful in customers’ lives, they need to solve significant pain points. Movement in the opposite direction is also apparent, as service companies begin to make products to expand their offering.
As part of this lateral thinking, brands are daring to collaborate to multiply their power. Creative, surprising connections between companies help enhance their value offers, and leverage existing assets to offer additional products and services. Any opportunity for another point of encounter with the customer is welcome. Ecosystems are expanded through additional brands, sometimes even competitors. Anything goes.
The physical world is being connected to the infinite digital universe. The Metaverse vision, blending the tangible with the virtual, is not exclusive to Facebook. We will become more engaged with the three-dimensional digital universe, at work, for leisure, where we shop, and when we travel. Its infinite size means that expansion opportunities are endless.
Tesla is far more than a product. This year, the company is launching an auto insurance service based on driver behaviour. Clients’ insurance premiums are based on scores determined according to their driving, in real-time, regardless of their claim history. Another new service from Tesla is a subscription for autonomous driving features designed to help with the demanding parts of driving – steering, accelerating, and braking – and offering active guidance.
#2 If you want good service, serve yourself
2020 pushed even the most reluctant users to rely on digital options to interact with companies, retailers, and government agencies. As it turns out, self-service – anything people can do themselves using an interface without human intervention – provides a sense of satisfaction in being able to resolve problems on our own, but only if it is quick and easy. The more direct and precise the interaction is, the less the customer experience is impaired, which may even be better than what a human service would have provide. Self-service solutions enable people to consume services, make purchases, and find answers to questions without having to confine themselves to business hours, contend with long wait times, or overcome geographical distances. Companies that have advanced to self-service interfaces and solutions can cut back on operating costs and are less reliant on staffing while also gaining opportunities to collect information from customers and create unique and accurate customer experiences. Companies may need to implement these processes gradually, but they should realize that self-service will become a standard customer expectation soon.
An element of self-service is allowing customers to plan their journey themselves, end to end. Ryanair's Day of Travel app lets users fill in their flight and passenger information, add luggage, and receive real-time airport updates. Ryanair has also rolled out a more sophisticated chat feature, so that travelers can manage their reservations without contacting customer service.
The Disney Genie, launched by Disney for its theme parks, allows visitors to plan and update a personalized itinerary based on their choice of attractions, interests, food, and entertainment options at the park. Users can adjust their schedule for unplanned changes, such as going back to the hotel for a small child’s nap or deciding to go on the same ride twice.
#3 Twenty-four flavours of e-commerce
By now, everyone has a digital sales platform. Online shopping has long since stopped trying to mimic a brick-and-mortar experience, and instead have reached new heights day by day in an accelerating evolution spinning off into the models and solutions best suited to each brand. Companies are developing multiple online sales channels operating in parallel, targeting different customers for different purposes.
Artificial intelligence and machine learning make it possible to collect immense amounts of data, mine it for insights, and provide personalized shopping experiences to every customer. Feedback loops and dynamic adaptation to continually changing consumer behaviour bring about frequent, rapid improvements in the customer experience.
Companies are now focusing some of their efforts on forging connections between experience and sales channels. Social media is embedded in our day-to-day lives; many shopping journeys begin on one channel, instrument, or space and continue in another. A good customer experience means a smooth and seamless transition among channels. Companies are seeking ways to offer value and innovation to customers. Online sales options need to respond to a real need or pain. New forms of access to online sales are evolving to make it easier for customers to shop effortlessly.
Walmart is investing in technology by a start-up company, Botmock, for shopping via voice and chat. The new system also provides an internal solution for Walmart employees at its brick-and-mortar stores, in the form of an app to answer questions and guide staff members to product locations. As a natural interface, voice is here to stay; with technology advancing at an incredibly fast pace, soon shopping without this type of assistance will seem inconceivable.
#4 The age of multidimensional loyalty is here
Companies invest in loyalty because they understand that their relationships with existing customers are more profitable than chasing after non-customers. Studies show that customers with higher emotional involvement spend more on brands to which they are loyal to. This doesn’t mean that people no longer seek transactional rewards, such as points or discounts, but it does appear that a new era of multidimensional loyalty has begun. Companies need to know their customers emotionally, which encompasses their preferences, values, aspirations, and dreams. Every customer wants to feel like a unique individual and feel that the brand aligns with their values.
Companies that take loyalty seriously develop their apps to support this approach, enhancing the experience and granting them better familiarity with customers’ habits and preferences. This is another area where systems are developing, with strategic alliances forming between companies in different categories to allow loyalty programs to enrich their value offers. The goal for companies is to become integral to customers’ lives; smart collaborations are necessary to make that happen. The new loyalty model operates from the inside out, grounded in each company’s unique core values. The value offer of a loyalty program consists of three levels: transactional, functional, and emotional; each level comprises different components.
For example, Starbucks has introduced a special offer for club members: coffee delivered straight to their cars. Customer’s order using an app and park in a reserved spot, and the barista brings the coffee to them. The company is also considering a program for customers to return cups independently and receive a rebate and rewards in points through the app.
#5 Painless payment
Think about how many payments we make every day. Research shows that when people pay for something, the parts of their brain that register emotional and physical pain are more active. It’s not just about spending money; this response also has to do with the energy required to perform the transaction, and the wasted time. Recent technological developments aspire to make the payment experience increasingly seamless and painless. The pandemic has also spurred the transition to contactless forms of payment. As payment methods become more accessible and less noticeable, consumers will prefer them even at the expense of brand loyalty, placing retailers who fail to adopt these methods at a disadvantage.
Amazon has expanded its biometric scanning technology at stores across the United States. The Amazon One scanner allows customers’ handprint to be matched with their means of payment, adding a new option for payment at the register or identification at the store entrance. Linking handprint data to shoppers’ Amazon accounts provides a payment experience that doesn’t require a wallet, a phone, or a credit card.
Buy Now Pay Later (BNPL) methods allow customers to spread the cost of their purchases over a series of interest-free payments. The loan is often granted by a third party (such as Jifiti) or even a fourth party (the banks that provide credit to companies like Jifiti), but it is presented to customers as a service offered by the retailer. This form of payment allows customers greater flexibility and makes products more accessible to young shoppers who do not have credit cards; Apple persuades consumers to use Apple Pay on their iPhones instead of a credit card. Many companies in various fields have introduced BNPL services this year, including the bank Monzo, Ikea, Amazon, and PetSmart.
#6 Turn it up to 11 in the last mile
As the digital markets expand, consumer demands and expectations are changing as customers seek fast and inexpensive shipping options. People tend to remember their first and last interaction with a company. The efficiency and convenience of the “last mile” – the step where the package is delivered to the customer’s home – is critical in securing customer loyalty to online stores.
Many of the challenges associated with the last mile are beyond the companies’ control. Unpredictable variables such as traffic, weather, and vehicle trouble can delay or disrupt this stage. Although it is the shortest part of the shipping process, the last mile accounts for a quarter to a third of total shipping costs. Companies that develop efficient last-mile delivery processes will stand out and differentiate themselves from competitors. Coping effectively with this challenge is imperative for success in e-commerce.
Kiwibot and Sodexo launched robot food delivery services on three university campuses this year. Their vision is to create a subscriber program allowing access to user-friendly, efficient deliveries within the campus. Consumers’ growing desire for convenience in deliveries leads to the need for solutions suitable for businesses that are smaller or in remote locations. Quick, efficient deliveries that don’t require added staffing offer a convenient and cost-effective solution.
To close, as in so many other parts of our lives, innovative digital projects can make us pause and ask, who am I to try to create such an innovative experience? There are always endless excuses for not doing something which is why we should adopt what Seth Godin refers to as “lifeguard” mode: any one of us can make a difference and have an impact. On lifeguard duty, we would jump into the water without hesitation- the same should go for digital innovation. Israel is a great example of a community that has adopted this model, for the digital fruits that have ripened in Israel this year are entirely in our own hands.
Written by Yael Kander, Head of Digital, BDO Israel