Technology is evolving faster than ever before, and it has become critical but harder for enterprises to keep up with this dynamic technology landscape. According to a survey, rapid technology changes are a more prominent threat to global businesses, even bigger than the political or economic changes. However, today’s enterprises have to solve for a 2-fold challenge, changing industry dynamics owing to technology advancements and ever-changing consumer expectations.
In such a scenario, to stay competitive, enterprises will have to adapt and adapt faster than ever before.Recently Forrester released its ‘Technology predictions for 2018’, giving a peek into how the technology landscape will evolve next year. In this article, we will talk about some of the most critical technology predictions which will aid businesses in defining a way forward for the coming years.
1) CX will hit a wall
In today’s digital era, customers are flooded with choices and are empowered with information. Most enterprises understand customer experiences across channels are an important facet to not just acquire new customers but to retain them as well.
According to Forbes, more of a business’s revenue comes from existing customers than new ones. Nonetheless, Customer Experience plays an extremely important role towards achieving both. However, even in the light of this insight, a lot of organisations aren’t doing enough to deliver on customer experiences. Take for instance the banking sector – according to a survey, only 40% of banking executives deem faster service and good experience critical to Fintech’s rise in popularity in contrast to 80% of consumers saying so. And it is not just the banking industry, but most industries are missing the point when it comes to customer experiences.
According to Forrester’s 2017 CX Index™, CX quality plateaued or declined for most industries and companies, and in 2018, this situation doesn’t seem to be brighter either.
In 2018, 30% of companies will see further declines in CX performance, and those declines will translate into a net loss of a point of growth.
As we head towards 2018, it will become critical for organisations to recognise the importance of building delightful customer experiences for their customers and plan for it now. Building engaging customer experiences will take a lot more effort than adding a ‘chatbot’ on their online platform. It will require a deeper understanding of not just what the customer wants, but what they need.
2) The digital crisis
Today ‘Digital Transformation’ is no longer a buzzword, but a glaring reality for businesses. Every industry, be it insurance, healthcare, airline etc. are slowly adapting digital technologies. The implication of digitisation is not just customer-facing but also revolves around improving organisations’ operational efficiencies.
But, are enterprises doing enough to create a 360-degree digital ecosystem?
According to the Forrester report:
Over 60% of executives believe they are behind in their digital transformation.
The reasons for such a staggering number of executives saying so is that digital transformation has been deemed as a responsibility of the CIO’s alone and in most organisations, business units operate in silos and have their own digital strategies and operations. To adapt digital transformation fully, businesses will need an integrated approach. The CEOs, CIOs, CMOs etc. will have to come together and work towards it.
Though, as per the report, there seems to be a long way to go for organisations to truly transform digitally –
20% of CEOs will fail to act on digital transformation and put their firms at risk.
The silver lining is that this is just a prediction. If enough enterprises take note and start acting now, the 2019 trends can move in a different direction.
3) The empowered machine
According to this year’s Internet Trends Report, there are 3.4 billion internet users worldwide, and this number will only grow in the coming years. Internet and the deluge of information that has come with it has empowered the customer. Today’s consumers know much more about a brand than the brands tell them.
Customers not just know enough about brands but are also giving more than enough information about themselves to businesses. It is no longer for marketers to create hypothetical profiles to understand who their customers are; rather these digital-natives leave enough data about their preferences, behaviours, choices etc. with every digital footprint they create. Tools for social listening, retargeting, analytics etc. are helping marketers to derive meaningful insights from this data and understand these customers deeper.
However, the question remains are marketers using this data to create interactions which connect with customers?
So far, intelligent agents like AI driven chatbots empowered with NLP (Natural Language Processing) have progressed in providing real-time assistance to customers on the brand platform, or automated email campaigns have helped customers finish a pending purchase etc. However, there is still a gap when it comes to customers emotionally connecting with these automated tools or bots. With technology advancements, this gap is slowly bridging, and enterprises are working towards creating more value for their customers online and offline both.
For example, Morgan Stanley, recently launched ‘Robo Advisor’ – a platform for high net worth millennials. The platform will allow investors to do more than traditional portfolio allocation. By offering a diverse set of portfolios, the platform will enable them to invest in what they believe.
Another example of intelligent agents transforming customer interactions is Emirates’ responsive calendar on their website, which has an ‘Inspire Me’ function which allows the user to input selected information about their ideal trip, the platform then offers several different options of destinations and prices.
With such steps taken by enterprises across industries, eventually these ‘intelligent agents’ will help a great deal in helping organisations in closing sales.
According to the Forrester report in 2018,
Intelligent agents will directly influence 10% of purchase decisions.
These agents not just help in augment customer experiences, they also help enterprises gather data about preferences, behaviours, transactions, and emotions, creating a rich view of their audiences. In the coming year, as purchase decision gets guided by intelligent agents, we will see a real-time impact of these empowered machines in the time to come.
4) The algorithm wars
Digital platforms like Google, Amazon etc. are based on algorithms. These algorithms are changing every day with the objective of understanding their audiences better, catering to their demands while providing a delightful user experience.
In the year 2000, Google launched its toolbar where users could perform searches without having to go to the search engine’s website. Since those days and until now, there have been approximately 150 updates in its algorithms.
It is a humongous task for marketers to keep up with all the updates happening on numerous digital platforms. Understandably the Forrester report also points out this fact; according to the report:
Brands have been slow to understand the lingua franca of platform algorithms, especially when the brand is not part of the customer’s existing preference and the algorithm is choosing whether to introduce that brand to the customer.
Further with the advancements in AI and digital platforms becoming more and more AI driven, it will further become difficult for the marketers to be up to date with the algorithm changes and devise strategies accordingly. According to the report,
In 2018, 25% of the brands will lack expertise in the lingua franca of intelligent agents.
The good news is, 75% will keep up with these changing algorithms and will thrive.
For CMO’s it has become critical to align their resources and build a dedicated talent pool to understand and make sense of these constantly changing algorithms, interpret them and work on improving their digital platforms accordingly.
5) Customers using the intelligent cocoon to cut the noise
In today’s digital-era every business wants to connect with their customers via the digital platform. With more and more businesses going online, the customer is flooded with online ads everywhere. It is no longer about few billboards or TVC’s which one could mute or change the channel and choose not to see.
Display ads, text ads, video ads, retargeting ads, push notifications and so on are following consumers everywhere; doing little or nothing at all to enhance their online experience. No wonder, the rise of ad blocking services grew by 30 percent in 2017, and if the trend continues, we will see publishers losing $35 Billion by the end of 2020. As intelligent agents like the ad blocker software advance, the power will shift in consumers’ hands on whether they want to see an ad or not.
According to the Forrester report:
This shift will put a dent in companies’ financials. All told, 1% of the US population, with spend equivalent to $24 billion, will join the AI revolution to cocoon themselves from the noise.
Implications for brands are rather clear, in an era of ‘Inbound marketing’ they will have to strive harder to create content that leads to an engaging conversation with their customers and adds value to their lives, rather than pushing the brand communication wherever the customer goes.
6) The advertising correction
With the rise of digital media, marketers are shifting their focus to online communication. In 2017, digital advertising spending beat TV ad spending for the first time.
However, with the rise of ad blocking and consumers’ growing disinterest in ads the digital advertising euphoria might end soon. Further, as digitisation becomes a norm for businesses CMO’s too will have to deal with, and focus their energies on other pressing issues like:
- Revitalizing CX to drive affinity and stem churn.
- Synchronizing loyalty programs to customer expectations.
- Understanding how to decode digital platform algorithms.
- Advancing martech to deliver individualized experiences at scale.
As a result, the advertising spends are projected to be flat in 2018.
For CMO’s though the action mentioned above will need their urgent attention and investments. It will be critical for them to create meaningful communication to engage with their audiences to derive value of whatever marketing spends they make for the year.
7) Retail experience harmonisation
Retail industry is one of the early adopters when it comes to using technology to create interesting experiences for their customers. From augmented reality and virtual reality experiences or chatbots, we have seen retail industry using innovative technologies to engage with their customers.
Today’s customers are present everywhere and are buying from all channels – online and in-store. According to an Accenture report, 41% of millennials examine merchandise in-store and buy it online owing to the discounts and offers they get. While in a long-term, retailers will need to create an omnichannel experience for their customers, it is important that they work towards creating delightful shopping experiences on both the channels aiding customers throughout the purchase journey from discovery to order to final purchase. Intelligent agents like AI, chatbots etc. will help retailers in doing so. Some retailers have already started working towards making the purchase journey easier for their customers using technology, e.g.–
- Lowe’s mobile app allows customers to search and see the entire catalogue, and purchase for in-store pickup, have items delivered directly or find Lowe’s store near their vicinity.
- Retailers like Walmart and Nordstrom have adopted live chat to improve user experience on their platforms.
However, most retailers have still not cracked the code of leveraging technology to create engaging experiences and also making the purchase process easy for the customers. And, this will be an issue which will still not be addressed in 2018. According to the Forrester report:
Only 33% of retailers understand the disruptive nature of intelligent agents; 67% do not.
8) The AI reset
AI is the new dot com. Every business wants to use AI in some form or the other. According to Forbes, 80% of enterprises are investing in AI. However, a lot of these investments aren’t thought through. As the Forrester report points out:
In 2017, investments have focused on discrete use cases and projects to prove immediate business value. Those benefits are too narrow and will be short-lived.
The hype about the AI isn’t new; in the 1980s the Silicon Valley saw the first batch of AI start-ups coming up. However, most of them failed since there wasn’t any true business value derived out of the AI-based products, and soon the commercial interest of investors also ended in the technology – a time now referred to as AI winter.
According to ‘Gartner Hype Cycle’ of emerging technologies in 2017, AI will be the most sort-after technology for the next five years. However, the hype around the technology has also led to inflated expectations. While AI is evolving, it is still a complex technology. For organisations wanting to use AI, there are challenges of complexity and cost requirements that need to be addressed. According to the Forrester report:
In 2018, 75% of AI projects will underwhelm because they fail to model operational considerations, causing business leaders to reset the scope of AI investments.
Hence going forward, business leaders will need to set realistic goals and reset their objectives and scope of their AI investments to derive true benefit from their AI projects.
9) Blockchain inches forward
Blockchain technology has opened up opportunities for industries beyond the financial sector as well. For e.g.
- Blockchain technology in the airline industry can have various use-cases like identity management, tokenization of frequent flyer programs, airline maintenance, building a robust data security system etc.
- Similarly, Blockchain technology in the retail industry can have use-cases like consumer payments, supply chain management etc.
Enterprises are still exploring the technology and while the benefits are promising, the results last year were rather bleak. According to the Forrester report:
In 2017, 80 percent of blockchain projects failed to meet expectations.
The reasons were:
- Marketers oversold blockchain.
- Teams ran narrow tests that delivered underwhelming results against high expectations.
- Teams applied blockchain-like approaches to problems that they could have solved with existing technologies.
In 2018, the technology will slowly grow but will see limited gains.
However, 30% of proofs of concept will accelerate blockchain for those companies able to consider its operational impact.
Like every other technology, enterprises will have to weigh-in the use of blockchain for their business, set defined goals and consider operational costs and requirements to gain value from implementing it.
2018 will be a year of reckoning for those that have held on too long or tried to bootstrap their way through transforming their business.
Customer expectations are changing every day and technology is advancing faster than ever before. These two factors will push enterprises to adapt fast. Enterprises that will do so will be leaders and thrive, and laggards will struggle to keep up. Further, the gap between what customers expect and what businesses offer is growing, and this will cause a dent in revenues eventually. Businesses will have to work towards creating strategies that can counter both the above-mentioned challenges to retain customers and sustain themselves not just in 2018, but to be future-ready as well.