Not a customer revolution, it’s customer evolution
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The fourth industrial revolution is the crucible of customer evolution.
As long as people have needs, perceptions and aspirations, change is inevitable. More so in business, where every idea is conceived and crafted to address people’s needs, and add value to their lives. Without this kernel of need, neither creativity nor innovation can exist.
People’s needs fuel development. In the late 1700s, the need to make three square meals available and affordable to a growing population set the ball rolling on the agrarian revolution. Soon people were able to save more money, which was now available to purchase other things they needed, like clothing. This fuelled breakthroughs in spinning and weaving, which made textile manufacturing more efficient and expedient. People believed in the viability of these changes and investors backed the setting up of huge factories. People who once farmed or worked in small trades at home or close to home, saw the opportunity for gainful employment and moved closer to these factories to work there. The first industrial revolution had begun.
People’s perceptions drive purchases. Emboldened by benefitting from the industrial revolution, people had begun to address their perceived needs, and not just the basics of food and clothing. Consumerism was nascent. People put their faith in industrialization and factories mushroomed to produce more goods. These goods needed to reach people and here arose the need for efficient energy sources and transportation systems. Inventions like the steam engine and the discovery of electricity provided solutions, and ushered the second industrial revolution. Though markets were stocked with consumables, people were largely unaware and marketing plugged this gap with simple advertising. The focus was to make people aware and keep them informed about consumables on offer and the needs they met.
People’s aspirations inspire inventions. The social changes of the first two industrial revolutions raised the bar on people’s expectations. They were more secure and confident about meeting their basic and perceived needs. This level of well-being gave people the opportunity to address their aspirational needs. Primary among them was the need for a better quality life, one with more time on hand to enjoy it. People needed a way to speed up mundane and automate repetitive tasks. This inspired the invention of the computer and the emergence of computing, facilitating automation and data-driven processes. The third industrial revolution went on to change the way people worked and lived. Marketing and advertising too, had to evolve to keep pace with digitization and the changes it brought to the electronic media.
We’re in the midst of Industry 4.0 or the fourth industrial revolution, which began twenty years ago with a new idea called the Internet. The technology then was rudimentary. People relied on the dial-up modem that worked at a snail’s pace, and iffy connections that promised scant stability. Not surprisingly, the Internet was perceived as an ‘also ran’ or an add-on advertising medium that could at best offer more dynamic content than print. It was seen as less of a disruption and more as a medium of marketing.
Customers are people whose evolutionary journey as customers, has only recently gained momentum. For nearly 300 years customers were seen as people who would find businesses when they needed specific products and services. Until the end of the 1900s, customers were completely reliant on business to address their specific needs. The story of customer evolution began with the technological advances made in the last twenty years, like mobile telephony and the Internet. In retrospect, we know these advances and breakthroughs together with digital convergence was the driving force of the fourth industrial revolution. IT changed the face of communication and the way customers were perceived by industry.
Customer 1.0 witnessed the birth of the dot.com. People were not tech savvy but they were curious and extremely patient. Whether it was for the dial-up connection or a webpage to load, people waited, willingly. So at first, businesses stuck to brochure-like websites to market and promote their goods and services. If there was a focus to this effort it was to get the customer to make a phone call or visit the store. Even the search engine was seen as a simple tool that could sift through piles of digital brochures and scanned images to help people find what they were looking for. Whether Web-crawler, Alta Vista, Lycos or Ask Jeeves, search engines could only help people when they knew exactly what they were looking for. Businesses continued to believe that people who felt a need for their products and services will move to find them. To this end, marketing and advertising had gone from informing people about products, to establish and reinforce to the people, their needs for these products.
Customer 2.0 was empowered by the worldwide web. The web had become a communication channel that was quick and interactive. Businesses got creative about using the Internet as a pivot to increase sales and provide support. While in their new avatar, people turned to information for a better advantage. They explored their choices and looked for new options that had earlier been too unlikely. It wasn’t long before ‘internet-businesses’ like Lyft, Amazon, eBay or match.com mushroomed, challenging traditional business models and economics. All the same businesses still perceived their customer base as a multitude of faceless people, a one-size-fits-all being. Though challenged by change and the need to innovate, businesses still continued to believe that the people who needed their product or service would find them and reach out.
Customer 3.0 plays hard to get. As an empowered being who has made the transition from acquiescing to companies, to being a harbinger of change in the consumer market, this customer can afford to play hard to get. They are widely connected, well-informed, and part of a generation that shares experiences about anything and everything. Businesses looking to stay relevant know how important this evolved customer is. Customer 3.0 loathes the idea that one-size-fits-all and gives mass marketing and mass media a wide berth. Free from the restriction of having companies deciding when, where and how they can make their purchases, they demand much more and better. This customer expects business to come find them and when they do, these customers expect to be engaged effectively and immediately. Customer 3.0 is in the driver’s seat and business is gearing up to keep pace.
To find and engage Customer 3.0, businesses must:
Accept that CX and purchase decisions are measured at all customer touch-points
Adapt operating models based on the standpoints of your customers.
Action CX with advances and trends in retail, gaming, search and mobile technology.
Defining Customer 3.0 as an individual would be both right and wrong. This customer is very individualistic. At the same time this customer is not of any specific age, social class or gender mix. However, they are similar in their ability to accept, adopt and apply new technologies to satisfy individual needs.
Recognising Customer 3.0 is not difficult even with their diversity of personalities and profiles. These people share distinctive traits and display similar attributes that set them apart from previous generations.
Well informed. They are comfortable with new technology and media and clued-in about the value and power of information. This customer is in the habit of gathering information that ranges from features, prices, testimonials and cx stories to help them be better informed about their choices before they make a purchase decision.
Price savvy. These people know that price is not always about money. To them it’s more about better value for money. Surprisingly, it has nothing to do with brand loyalty. The prize here is in getting more value for a better price. For this savvy customer that can be quite a rush and it can get addictive quite quickly. This leaves them in a state of perpetual yearning for the next good deal they can make.
The loyalty marketing association, notes only 21% shop for brand over price and 64% of people will go 5-10 minutes out of their way to secure a better price.
Socially visible. No other generation of people has worked so hard at being socially visible or gone so far to present themselves as they’d like to be perceived by the world. Social media makes this possible. It is a behemoth that can decide the fate of people and business. Though there’s no telling what people will take to, it’s quite clear it needs to be something that grabs their attention and/or imagination. There’s seemingly little to explain why Orkut took a dive while Facebook soared? Or who will come out on top of the online shopping business? This new media is a great leveler and on it bad news travels faster and makes its own rules.
Social media accounts for 20% of PC time and 30% of mobile time.
100 million+ people take a social action like, likes, shares, comments, on social media every week.
Smartphone users spend 25% of their browsing time on social networking sites.
Faith in the crowd. The opinion of others has become increasingly important to this new customer. Especially when it comes to purchase decisions and popular choices about anything that business or media propagates about goods and services. They’d much rather trust other customers than take the word of business. Ratings and likes can be the difference between choosing one business over the other. There are some who argue that this customer can be easily manipulated with the right triggers. The counterpoint is that this customer is media-literate and prefers the opinions of real people to avoid manipulation.
According to Nielsen’s Global Trust in Advertising report, which surveyed more than 28,000 internet respondents in 56 countries:
70% of global consumers survey indicated they trust messaging online – an increase of 15% in four years.
Shoppers prefer online ratings and reviews by a 4:1 margin to advice from store employees.
80% of people participate in online communities to help others.
Only 14% of customers trust advertisements but 78% of customers trust peer recommendations.
Needs validation. The reason social media will remain relevant for a long while to come is because the new generation of customer likes to self promote. For them this is an almost primal instinct, to feel alive and relevant in the world they choose to be connected with. No matter if it’s not directly in person, but once removed across a tech platform. Facebook status updates, like Twitter and Instagram posts are testament to the fact that human beings crave acknowledgement, approval and appreciation. Social media taps into this need for self validation.
Facebook has over one billion monthly active users and 2.5 billion content shares per day.
Wants it here and now. Obsessed with “being in the now” and driven by the fear of missing out, this customer cannot wait. With the Internet serving to save time and money and social media powering the voice of the customer worldwide, these customers want what they want and they want it now. They subscribe to the belief that it is the customer’s prerogative to decide on time and place of purchase or delivery. Plus with the convergence of tech they also expect round-the-clock support.
Forrester (2010) has suggested up to 57% of US consumers are likely to abandon an online purchase if an answer to a question is not immediately forthcoming.
No security concerns. Data security and privacy does not concern many young customers today. Born and raised in the era of rampant marketing, advertising and promotion, they have made their peace with it. Even in the face of potential threats like viruses and phishing attacks, Customer 3.0 freely uploads large tracts of data about their personal lives. They feel no twinge of regret about their personal and professional experiences in the public domain. This devil may care approach is not restricted to events but also includes payments and purchases. The converse of which was true in the last decade when customers were wary of internet payments.
Once you’ve traced the evolutionary journey of Customer 3.0 it is not difficult to understand this diverse collective of individuals, unified by their willingness to accept change and adopt new ideas with elan. This can serve as a base framework for businesses looking to build viable customer personas to craft better customer experiences.
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