It’s all very well for organisations to say they are becoming more customer-centric, but what are those customers like and how do they behave?
During a recent trip to Australia, digital transformation specialist and former Microsoft executive Nancy Rademaker gave some insights into the customers of the 21st century.
First and foremost, they are highly informed. This makes it harder for companies to cover up poor behaviour and get away with it. When consumers find out, the brand in question will be punished severely. The lesson for companies is they need to be transparent in all their stakeholder dealings. “Every company is like a glass box,” Rademaker warns.
Next, customers’ minds are full. Spending hours each day consuming information and images via their mobile devices, they have little capacity to take in yet more information and make complex decisions. They literally run out of space in their heads. In psychology parlance, it is referred to as cognitive depletion.
The response from companies should be to limit customer stress and reduce the number of choices they need to make. This is where big data can play a key role. By using customer data to determine consumers’ individual preferences, companies need only present a handful of items that should appeal.
Illustrating this phenomenon, Rademaker, speaking on the sidelines of the Guidewire Insurance Forum in Sydney, points to a bookshop in Tokyo that sells copies of just one book at a time – which she says has proved a highly successful business model.
Consumers are also impatient. “We want everything now,” Rademaker says, pointing to research showing our average attention span has sunk to eight seconds from 12 seconds in the 1970s. Millennials’ attention span is even worse at between five and six seconds – which compares with nine seconds for a goldfish. The lesson is that convenience will be rewarded.
Next, consumers are more influenced by opinion leaders and influencers, and they are more intuitive or emotional. This, says Rademaker, is because our rational brains are full, so consumers are more likely to make purchasing decisions based on emotions.
“What companies do a lot of the time is make assumptions on how and why the customers are doing stuff. They think that if you want to know how a customer makes their choice, they should just ask them,” she says. “Whereas, in my view, what companies should be doing is collecting a lot of data on the behaviour of the customer.”
Rationally, consumers might want to buy a particular item or service, but when it comes to the point of purchase, they act differently. Disney is a case in point.
“Disney asked visitors to the park, ‘What do you want to have for lunch?’ And the people would say, ‘I want juices and smoothies and salads.’ And then they would order soft drinks, hamburgers and hot dogs,” Rademaker says. “So what we do is very different from what we say we would do.”
Appealing to impatient, emotional customers whose minds are full will require companies to collect data and make better use of it. The digital specialist notes that only 1 per cent of industrial data is being used today, largely because of weak computing power. That, however, will change.
Rademaker also predicts that the future of communications will be about voice and voice assistants. “In 2009 the question was, should we build a mobile app? Today the question is, should be build a voice app? The answer is yes.”
Rademaker warns that the mushrooming of voice assistants will challenge the relationship between retailers, manufacturers, service providers and their customers. Rather than searching for a plethora of options on their mobile phones, consumers will ask their home assistant for suggestions, and may be given just a couple. For businesses, that could make life extremely awkward.
