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Digital threats that can disrupt relationships with customers

Being a customer-centric business will increasingly rely on algorithms and shared-access models.

Every organisation strives to become customer-centric, but how do you keep your customers happy and loyal, and how do you deal with their problems quickly?

We know that the customer of the future will be different than the customer we know today in many ways – they will be keen to bargain with their data; they may not even be people. They might be software, and may also be your competitors.

The accelerating pace of digital business is leading to some levels of transformation in organisations. Gartner has identified two digital threats most likely to cause the greatest disruption for businesses over the next 15 years:

1. The changing nature of product and service value creation: Customers will increasingly rely on algorithms as the source of value-add to customers for a product or service.

2. The consumption experience: Consumers will move away from sole ownership of a product or service to the increased use of shared access to consume a product or service.

Today’s traditional businesses tend to be situated near the intersection of these two trends. They use some algorithms, greater use of experts to create value, and a mix of consumption experiences that are both shared and owned.

As the access of products and services become more open to enable greater sharing, the ownership will become ever more customised, and the use of algorithms will explode, all happening simultaneously. Businesses will choose to pursue different customer-centric scenarios.

Two customer-centric scenarios shared below.

Platform business
Commerce is, and has always been, about the consumer and the product, no matter how many “value-added” layers of intermediation are put between them.

Platformisation amplifies the focus on the customer and the product to the degree where the store, shipper or other value-added intermediaries become ancillary, and the only relationship is between the consumer, the product and the platform.

Value-adds will no longer follow the traditional models based around supply chains and inventory accounting, but instead will focus on the unique and innovative bundling and personalisation of offers or products.

Gartner estimates that only 10 per cent of today’s businesses operate within the platform business model, but expects that this will increase to 23 per cent by 2030.

Take, for example, a grocery store. Customers see a recipe they like, they cut it out of a magazine, scan it on their device or print it, then they make a list, go to one or more stores, compare products, look for bargains and coupons, and purchase what they need to make dinner.

In a platform-centric world, customers will still be buying based on a recipe, but the act of buying groceries will change. They will see a recipe they like online, click, the “I want to make this” button, and all the shopping will be done for them, based on their preferences, from the platform they trust.

Subscription business
IT and application leaders should also realise that the ability to provide shared access to increasing numbers of underutilised products and services will create new subscription-based business opportunities.

Today a number of industries are offering this model – in transportation (airlines and trains) in media (such as The Times or The Wall Street Journal), music (such as Spotify, Deezer or Apple Music), or movies (such as Netflix, Amazon and OCS). But today, new industries are also switching.

The switch constitutes a massive change. In fact, the subscription business scenario will impact the whole business.

For example, financial systems will need updating to bill differently; the sales teams will need to be retrained or new salespeople will need to be recruited. In addition, the customer service department will need altering, and the recruitment and training of employees will be run differently. Overall, engineering might be the biggest area of change for a company.

Before your business decides to transition to a new model, challenge your executives on what value the customer is getting and what the consequences are to move to a new model. Just because it can be done and it will increase revenue streams, doesn’t mean that customers want it or are willing to pay for it.

Jenny Sussin

Jenny Sussin is the Research Vice President at Gartner.
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