Digitization of experience: Why customers are not just buying a product
November 4, 2020 7:32 PM
Businesses have now changed from a transactional relationship to ecosystem driven, customer focus to customer obsession, reactive to proactive, and from resolving issues to building communities.
Brand loyal customers often make repeat purchases which have a positive impact on ROI and bottom line.
By Anand Ramanathan, Rounak Baheti, and Shivika Sethi
The digital age has brought a radical shift in the way customers think, buy, and share their experiences. Every 4 out of 51 customers prefer buying online and around 90% of consumers found personalization appealing. In the span of couple of years, businesses have now changed from a transactional relationship to ecosystem driven, customer focus to customer obsession, reactive to proactive, and from resolving issues to building communities. Customers are not buying just a product or a service, they are buying an experience.
COVID – 19 has brought a convergence of physical and digital touchpoints in the customer purchase journey requiring brands to revisit how they serve and engage consumers. Knowing your customer has become pivotal for businesses. When you can generate content that meets the unique needs of your target customers, it leads to an increase in trust and connects to your brand. Brand loyal customers often make repeat purchases which have a positive impact on ROI and bottom line. Acquiring a new customer is 4-5 times more costly than retaining an existing customer. Also, on average, loyal customers are worth up to 8-10 times as much as their first purchase. (Deloitte Analysis)
Technology is playing a critical role in customer acquisition and retention. Multiple brands from hotels to FCMG are adopting digital interventions for seamless integration of various customer touchpoints. Enhancing online footprint has given brands greater information about their customers. Technologies like the cloud have increased collaboration and scalability. AI/ML has helped brands bring automation and faster conversion of data into insights.
What is digitization of customer experience?
Digitization of customer experience is driven by a strong understanding of:
1. Customer journey and experience across the purchase cycle including elements of search, buy and after-sales service 2. Business strategies adopted to provide a seamless experience that delights customers 3. Business implications that drive growth and profitability
Brands need one view of customers to build an understanding of their preferences, by integrating systems/technology and streamlining data flow. It is a foundational capability that will help businesses offer a customized value proposition. With the increase in online and digital media, omnichannel has become an integral part of the customer journey with empowering O-2-O options like buying online pick up at the store, buy at store and get delivered at home and plan online-be guided to store, basis availability, for trial and service. It is only a matter of time before these options become the new normal and businesses that successfully implement this strategy are more likely to build customer loyalty, win customers’ trust, and differentiate from the competition.
3 step process for brands to transform their customer experience:
Decide the level of customer-centricity that the brand desires to have and also the requisite IT infrastructure or transition plan. Strong visibility of customer search, purchase preferences using analytics, data, and technology Adopt measures to become a proactive, insight-driven organization with a focus on achieving significant ROI Decoding the customer expectations and experience opens up novel opportunities. Opportunities to initiate conversations with customers and shape it further. Opportunities to learn from customers, innovate for path-breaking ideas, unlearn traditional methods, and thereby increase relevance in the market.
Revenue growth is a function of driving traffic/awareness building, successfully converting customers to buy and increasing the ticket size of the purchase. Customer retention and loyalty helps enhance lifetime value and profitability. Digitization helps these efforts from both a revenue and profitability standpoint by aiding brands to better understand their customers’ journeys, develop insights on buying behavior, innovate to provide personized offerings and build a seamless experience that customers keep returning to.
Anand Ramanathan is Partner; Rounak Baheti is Director; and Shivika Sethi is Manager at Deloitte India. Views expressed are the authors’ personal.