Empowered consumers demand digital innovation in ‘age of customer’: Forrester

Consumers are increasingly empowered by new technologies, rich information resources and a wide choice of brands and are demanding digital innovation from businesses as a result, a new Forrester report claims.

“To keep pace, businesses must understand how their customers are evolving and at what rate,” Anjali Lai, lead author of the report on Forrester’s Empowered Customer Segmentation in Asia Pacific, told CMO ahead of the report’s release.

“The power has shifted from the business to the customer. Consumers have rising demands and a new understanding of speed, the brand relationship and personalisation, and these new levels of expectation and standards of customer experience have upended traditional business models,” Lai said.

“The ways in which customers are changing creates the demand for businesses to innovate digitally, or even set the pace for how quickly companies are innovating.”

Lai cited five key shifts in consumer behaviours, attitudes and expectations fuelling customer empowerment: Willingness to experiment, device usage, digital/physical integration, information savviness and self-efficacy.

“As human beings, we are hardwired to avoid risk and minimise loss, but the economics of digital disruption mean that it’s much easier to engage in new products and new services than it has been in the past,” Lai continued. “Customers are much more accustomed to seeing innovation and to trying these new products and services, or entering into new experiences.”

With the number of gadgets on the planet officially surpassing the global population, customers have also become reliant on technology to accomplish their everyday tasks, Lai said, adding customers no longer think their digital experiences as separate from their physical ones.

“There has been this convergence. As a result, customers have rising expectations for digital seamlessness. For example, they’ll have this impulse to be able to use their mobile phone in a store to scan a QR code, or look up additional product information.”

In addition, consumers are information savvy and consuming greater volumes of information than ever before. At the same time, they have developed a greater finesse for navigating this information and discerning valuable information and making decisions based off of that data, Lai said. Then they are sharing more information across social channels.

Additionally, customers are more driven to take control of their experiences and to ensure the best possible and most emotionally satisfying experience for themselves.

“In the business sense, customers are willing to churn, willing to abandon their products or break off their current brand relationships far more easily than they have in the past in order to seek out an alternative that they strongly believe is better,” Lai said.

Aussies crave convenience

To cope with the five key forces of change, Forrester is espousing five new customer segmentation categories: Progressive pioneers; savvy seekers; convenience conformers; settled survivors; and the reserved resistors.

According to the report, the most rapidly evolving customers, categorised as ‘progressive pioneers’, dominate in metropolitan China and India, while Australian consumers crave convenience.

While a third of Australian online adults fall into the most empowered segments — progressive pioneers and savvy seekers — another third are convenience conformers. They use technology to make their lives easier but only after the technology has gained acceptance in the market, the report said.

For example, half of Australian online adults use a tablet, but only four per cent use a smartwatch. Mobile payment options have also gained significant traction, and 58 per cent of online adults use PayPal to make purchases. As the number of online buyers grows, Australian retailers are investing in more convenient online offerings, the report revealed.

Compared to other Asia-Pacific regions, Lai said Australia recorded the largest group of ‘convenience conformers’.

“It shows that brands in Australia aren’t necessarily contending with consumers that are changing as quickly as they are in China, India, or even the US. But they have a unique opportunity to engage customers through digital means,” she said.

“Convenience conformers are the individuals that are really driven by digital services that simplify their life and add speed and add convenience, without requiring investment on the customer side. They are looking for ease and seamlessness.

“Once brands can offer the right type of digital experience that cater to that core appetite for convenience and simplicity, they are more likely to pull these customers into their ecosystem and really engage them and are safeguarded from rapid pace of evolution where they are quickly beaten out by emerging disruptors.”

In order for brands to keep pace with – and exceed – their empowered customers’ expectations, Lai said business leaders must refine their understanding of customer motivations and track the growth of empowered customer segments.

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“If the brand finds that the majority of its customers fall into that progressive segment, that is incredible revealing because it tells the CMO that their customers are changing most quickly. . . They are drawn to other experiences based on novelty as well as this need for digital seamlessness. And they are restless; they are most willing to do their research and find alternative providers.”

Lai said the trends highlighted in Forrester’s new resource are ones business leaders may know about intuitively.

“It is not just empirical proof, but it measures the rate, the gauge and pace of customer empowerment,” she said. “Businesses can quantify the urgency for CMOs to develop their digital business initiatives. It enables them to prioritise innovations according to the motivations of their different segments.”

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