We recently completed one of our rapid innovation projects for a FTSE100 company in a very traditional industry. Taking a deep dive into their sector, we realised that none of their competitors are innovating within services. This is not unusual - most traditional companies seem to view innovation as something to be achieved by investing in creating “cool stuff” rather than creating easy customer interactions. This shows - according to a 2016 McKinsey study, 40% of B2B buyer’s find slow response time the most frustrating thing about working with their suppliers, particularly when trying to do something basic, such as completing a simple reorder.
One of the potential ways to innovate we looked at was making good use of the rising business models such as the on-demand services and sharing economies. These are on the rise and seem to be unstoppable. According to a PwC report, sharing economy revenues are set to grow at 35% per year which is around ten times faster than their predicted growth rate for the wider economy as a whole. By 2025, four of the five sharing economy sectors could facilitate over € 100 billion transactions on an annual basis.
At the same time, we are also witnessing the rise of the purpose-driven brand - a 2012 Nielsen study titled “The Globally Socially-conscious consumer” found that 66% of consumers around the world said they prefered to buy products and services from companies that have implemented programs to give back to society and 51% of consumers want to reward responsible companies. And as Unilever’s success with it’s Sustainable Living brands have shown, they do mean it.
How does this make us hypocrites, I hear you ask.
In that same Nielsen study, 53% of respondents also stated that they would pay a 10% premium for products from a responsible company and this is what is simply not coming true in reality. The fact is - when it comes to convenience over ethics, we are all hypocrites.
Think about it. Did you stop taking Uber rides when news of the company’s toxic culture started rolling in? Or when that video of the ex-CEO arguing with one of the drivers came out? Most of us didn’t. And we all shop at Amazon still, despite agreeing that we love the high street and the independent bookstores. Ryanair still reports healthy profits despite issues with how they treat their staff. So, when it comes to convenience or cost over ethics, we are all hypocrites.
What can companies do about this?
The CEO we presented to, raised a very good point when we presented back to him: yes, they could quite easily enter the commoditised services market and offer an on-demand service for a very low cost but, much like the black cabs in the aftermath of Uber’s market entry, they would rather stand for quality at a slightly higher price point to reflect that. And, much like the black cabs, he knows that the best way to survive in a disrupted marketplace is to innovate alongside the fast-moving, cheap-service providers, much like apps such as Gett are doing.
This means that rather than copying these, smaller more agile companies that come to the marketplace, often run by very young executives with limited experience of company cultures or marketplace intricacies, companies can choose to adopt the elements that make these companies get accepted into the marketplace so quickly: the ease of dealing with them, the consideration of how cross-channel interactions work and strong branding.
Our rapid innovation projects help established companies bring about that kind of change to their customer experience but you can start making smaller moves towards improving your customer experience by asking your customer support staff what issues they hear about the most which will also give you a good starting point.