The way customers view and interact with brands has been undergoing a long-term change; one that’s expected to reach a peak in 2017.
Customers are now very much in the driver’s seat when it comes to their relationship with businesses. Switching costs are low, expectations high – but there’s more to it than just customers being demanding and fickle.
Technology is increasingly enabling customers to take charge of the consumer-brand relationship.
It empowers them to become co-creators of brand image and to work alongside brands on product design and creation. Using forums and crowdsourcing technology, they can both demand and supply customer service to a peer group of customers.
As advocates and content creators, they can champion (or denigrate) the brand to a much greater degree than ever before. Customers now hold a significant stake in the brand image and they have great power over how it thrives.
Customers are also increasingly empowered to switch brands or providers. Switching costs are low and competition is high, particularly when it comes to digital services. This means business have to work harder to retain customers.
This requires them to invest more into building engagement, inspiring brand loyalty and drive advocacy, rather than focusing on acquisition efforts.
A customer-focused agenda
From the business perspective, technology is at the heart of this customer-focused agenda. It’s technology that has enabled customers to gain power in the business-consumer relationship, such as by empowering them to manage their own accounts or to access their own data without the intercession of an account manager.
Technology, and how it is used in a business context, is also vital to the customer-focused organization because the data it yields will help identify customer needs and respond to these signals.
When customers become more powerful, understanding their needs becomes ever more vital.
This intensified focus on the customer could also lead to structural changes as organizations switch away from a focus on acquisition and emphasize retention activity.
Internally, this will empower departments and job roles that focus on such things as customer engagement, rather than on acquisition. It empowers account managers at the expense of the sales team. The organization focuses less on cold calling than on activities to retain existing customers.
This new era of engagement with the customer will fundamentally change the relationship between businesses and customers. In the future, brands will be expected to give more to the relationship beyond the immediate transaction.
It means developing the relationship so that customers become advocates for the brand rather than just the passive consumers. The businesses of the future will focus on co-operating with customers rather than on making a quick sale.
The Millennial mindset
2017 is also bringing a generational shift in the consumer audience. Depending on where you are in the world, and what your audience demographics look like, 2017 could be the year that Millennials become your dominant audience.
According to Pew Research, the 18-34-year-old age group will become the largest living generation in 2017, surpassing Baby Boomers as the biggest consumer group.
What’s the significance of this? Well, this younger consumer demographic has certain expectations about their brand relationships.
According to Boston Consulting Group, the majority of Millennials have taken action on behalf of brands and share brand preferences in their social groups. Millennials both want and expect to be able to collaborate with brands and even co-create with them.
They’re comfortable with concepts such as self-service and with crowd-sourcing customer service from peers.
Sometimes this means your business and its employees need to get out of the way; these customers don’t need gatekeepers to get what they want. Instead, they’ll find their solutions from other expert customers, perhaps in a way that’s enabled by your brand (such as a customer forum or via discussion on a social media platform you own).
New generations of customers increasingly respond to experiential interactions with a brand. They expect shopping to be a fun, fulfilling experience.
This means retailers need to consider how they are meeting their expectations for adventure and memorable moments at each brand touchpoint. It changes brands into entertainment providers just as much as product creators, giving power to the marketing and events teams.
Customers are also increasingly influential on the moral values of companies. Brands are now aware that their customers care about the values they express. For Millennial consumers in particular, this can affect the brands they buy from. That’s despite the fact this consumer group is more cash-strapped than other generations such as Baby Boomers.
The Millennial demographic tends to put its money where its mouth is, and that’s something brands have to respond to if they want to access the loyalty of the Millennial audience.
Brands are now facing an empowered customer with high expectations. This has far-reaching implications, that will affect organizational structure, the morality that governs business practices, and how the company designs and markets its products.
With the Millennial audience now reaching a majority demographic, expectations are high. The business of the future can expect the customer to be very much in charge from this point forward.