Consumerism in the Digital Economy
Rick McNabb
The Digital Economy offers opportunities, as well as threats to all businesses. Each industry is being impacted by new enabling trends, but the timing of these trends is varied and impacting different industries at various stages and evolutions. One of these trends that have emerged is Consumerism.
One explanation of Consumerism is defined as:
New technology has empowered consumers, and they have unlimited access to information and demand products and services when and how they want. Social media has given consumers a bigger voice and new channels to communicate with brands and share their opinions with peers. Based on this definition, the stakeholder that owns the consumer relationship will be the long-term industry winner.
Another trend that amplifies the Consumerism risk to traditional businesses is the advent of platform companies. Amazon today is considered a platform company. Although they began as an internet bookseller, they evolved into a consumer platform delivering an infinite set of goods and services, timely and efficiently to the consumer’s doorstep. The result has introduced another trend in the Digital Economy, the entrance of new competitive non-industry players. These new entrants have access to the customer’s likes and dislikes, overall buying habits, and know all about consumer preferences. As an example, Walmart and Amazon are entering the Healthcare space. But, what if Google decides to sell insurance? They have more consumer intelligence than the Insurance underwriter issuing policies today.
Historically, legacy companies have been designed and centered around a product mentality which for the most part was marketing a push strategy of those products to their customer base. Consumerism enables a pull strategy of likes and dislikes, behavior, and experience, assisting companies to better understand what products and services need developing. This requires a completely new customer interface and experience allowing for new information exchanges between business and customer (B2C). As the business cycle accelerates, the criticality of this new information is a must to keep up with the necessary speed of new products and services development.
For those companies lagging behind the trends and that refuse to acknowledge the Consumerism movement, they will likely lose and be disinter-mediated over time. Companies that embrace Consumerism will prosper and become more market-adaptive, an essential and successful strategy in this new accelerated economy. Also to be gained is a new “consumer stickiness” allowing for increased long-term consumer retention.
Consumerism requires businesses to enable new processes, technologies, and culture. Companies must move from a product culture to one of a consumer culture seeking a more real-time connectiveness with the customer. This is achieved by designing new customer digital experiences and marketing programs throughout the product life cycle.
Now, is the time for action in building a more adaptive consumer-focused business model in this accelerating digital economy!
Considerations for Change
Case Number 1
An international insurance company was losing revenue and margin with traditional product lines as customer demographics evolved. After an extensive strategic review of products and customers, the company determined the millennial generation was not buying into the current product portfolio as the older customers aged out.
Result: Designed a new suite of digital products, i.e., high volume, low margin, self-service, along with a digital experience selling directly to consumers. These new products focused on a younger generation selling more low-cost life event-based products, e.g., vacation insurance.
Case Number 2
A large media company only had access to the eight existing cable companies with no access to end consumer likes and dislikes. As the consumer movement emerged and new competitors entered the market, the need to have access to customer preferences became necessary.
Result: The media company developed a direct-to-consumer distribution and streaming service along with new digital experience processes and systems. Including the cable operators, the end consumer was acknowledged as a valued customer.
Case Number 3
A large health insurer began to lose value-added services with existing employers and was continuing to see its products become more commoditized. This was happening as new nontraditional retailers, e.g., Walgreens, Best Buy, and Amazon, began attracting their members with more health services. Ultimately, their employer relationships became threatened. Profits were eroding.
Result: The health insurer began developing stronger digital experiences with the members and offering new access to new enabling health technologies that created a more proactive versus reactive health experience. These efforts enabled an earlier intervention which leads to a cheaper intervention which leads to a higher quality outcome. With these new enablements, member retention stabilized.