A colleague explains how the digitalization has changed customer expectations

Digitalization Alters Customers’ Expectations

Many companies consider the digital transformation primarily as technical innovation to obtain greater efficiency and reduced costs. They often fail to see that digitalization has changed customer expectations. Successful companies have, by contrast, recognized the disruptive potential of the user experience.

German companies are world champions in the evolutionary development of products. Time-tested products and applications are powerful and frequently offer an unlimited number of functions. The problem? User expectations have changed dramatically. The intuitive interfaces from the smartphone world are one indication of this. Apple did not only improve the concept of the cellphone, it thought in a totally revolutionary manner. The operation and functions were radically preconceived for the needs of the user. The smartphone became a fast and mobile computer, and the user became able to choose precisely the applications he or she needed.

Companies that only improve their products in an evolutionary development think that they have already adapted to their customers’ expectations. That is why 75 % of companies think that they are customer-oriented. But only 30 % of the customers see it that way according to Capgemini Consulting in their study "The Disconnected Customer". Of the remaining 70 %, eight to ten are so dissatisfied that they are prepared to pay for better customer experience. A forward-thinking digital transformation is therefore doomed to failure without precise knowledge of customer expectations.

The User Experience Is Decisive for Customer Bonding

A user experience (UX) that does not match the expectations has negative consequences for the customer’s relationship to the provider. The bond to the brand decreases, orders drop, sales decline.

Seventy-four percent of consumers say they will change providers if customer service is poor. According to the SAP Hybris Study on consumer behavior, a rapid response to a customer service query is important. Of the study participants, 89 % expect a reaction from customer service within 24 hours.

Source: SAP Hybris Study 2017 on consumer behaviour “Markenliebe schaffen“

Source: SAP Hybris Study 2017 on consumer behaviour “Markenliebe schaffen“

”Our research shows a clear connection between an improved digital customer experience and added value.“ (Capgemini, „The Disconnected Customer: What digital customer experience leaders teach us about reconnecting with customers“ (2017)) According to that, the digital customer experience promotes customer satisfaction: Companies that link their business processes closely to the customer experience have greater advantages in customer satisfaction and achieve positive customer perceptions, finds the Capgemini study.

Organizations that put the focus on customer experience exceed business objectives and prove to exceed their competition as well: (Adobe and Econsultancy, "Digital Trends 2018" (2018))

  • Organizations with a “cross-team approach in which the customer is the center of all initiatives” are almost twice likely to exceed their primary business objective (20% to 11%).
  • Organizations in which creativity has a greater value, have a 46% higher probability of significantly exceeding their business objectives (19% to 13%).
  • Organizations with well-thought-out customer journeys that have a clear communication and a smooth transaction” have a 57 % higher probability of significantly exceeding their business objectives (22 % to 14 %).

Transparency Through the Customer Journey

Companies, especially from the fields of “consumer goods”, “telecommunications”, “media” and “trade” are amongst the digital leaders and already produce a significant portion of their sales with digital products and services or through digital sales channels, according to a LĂŒnendonkÂź study. (LĂŒnendonk, „Der Markt fĂŒr integrierte Digital Customer Experience Services in Deutschland“ (2018)) According to this study, the transparency through the customer’s journey and their preferences is an important factor in success. On this foundation, it is possible to generate a customer experience with which one can rise above the competition. It is possible to draw conclusions from the data-supported analysis of the customer behavior and his/her interactions for new customer journeys that can serve as the basis for new business models, apps and frontends.

The market segment "Integrated Digital Customer Experience Services" has great potential according to the LĂŒnendonk study. The companies surveyed in 2018 invested an average of 4.1 % percent of their sales for digitalization of their customer interfaces (2017: 2.8 %).

Source: LĂŒnendonk, “The Market for Integrated Digital Customer Experience Services  in Germany“

Customer-based strategies are no longer hype as a result of altered customer demands in the digital era, but rather a requirement. Source: LĂŒnendonk, “The Market for Integrated Digital Customer Experience Services in Germany“

One-Sided Efficiency Is Not Sustainable

The former one-sided orientation of the digital transformation on the gains in efficiency and lower costs are not sustainable and in the long-term not even successful. The development of a customer-oriented strategy with a user-oriented product development leads, by contrast, to another operational logic. It is decided to generate ideas faster and more user-friendly. Flexible development methods, early feasibility studies and design prototypes should secure user acceptance in an early stage of development and may even reduce development costs.

Another aspect is the agile development approach and the modified use of products. Almost every business model is in the meantime based on software, and companies are in the position to sustainably change entire markets with limited investment costs. (Marc Andreessen, „Why Software Is Eating The World“, in Wall Street Journal (2011)) Products are acquired more and more frequently through the cloud by software as a service and product development is becoming smarter.

Source: LĂŒnendonk, “The Market for Integrated Digital Customer Experience Services in Germany“

Many companies see themselves as pioneers in their fields with their digital transformation. Source: LĂŒnendonk, “The Market for Integrated Digital Customer Experience Services in Germany“

Smart Product Development

Traditional products are still developed with the customer excluded and then presented to the market in the expectation of positive customer acceptance. With the user-oriented product development, the product concept and the complete business model are, by contrast, developed in parallel. The product is planned, tested and developed iteratively in tiny partial steps. The goal is to present an executable version of the product as early as possible that can be tested by users. This version is then refined step-by-step in short development stages, tested repeatedly and developed into a final version. In this manner, product versions with no user acceptance can be stopped early on.

Another effect: With the early inclusion of the user, the traditional technology and function-focused orientation is replaced by user-oriented product development. Unnecessary functions are dropped, the complexity is reduced. The technology applied is oriented on the (reduced) functional needs of the user. Simplicity, usability and customer satisfaction are at the forefront.

The User-Experience Design

The studies also show that customer expectations for digital products and services continuously increase with digitalization. Customers expect a better shopping experience in their customer journey. An intuitive frontend design in apps and online shops is decisive.

“We are at the beginning of a ‘renaissance of design and creativity’,” according to the Adobe Study "Digital Trends 2018". According to the survey, just about three-quarters (73 %) of those surveyed responded that their company “invests in design” so as to raise its brand above that of the competition. Organizations that describe themselves as “design-oriented” are 69 % more likely to exceed their business objectives than the competition (22 % to 13 %).

”Design-oriented“ companies are 69 % more likely to exceed their business objectives than their competitors (22 % to 13 %).

”Design-oriented“ companies are 69 % more likely to exceed their business objectives than their competitors (22 % to 13 %). (Source: Adobe Study "Digital Trends 2018")

The primary orientation of the design on optics and aesthetics is expanded by the demand for a good general usability. Incorrectly placed, incomprehensible displays or unnecessary functions overwhelm, cause stress and result in poor experiences with the software. Instead of a broad functionality, a user-based simplicity is the goal.

Conclusion: Good User Experience Pays Off

The studies confirm that good design and user-friendliness are a combination that strengthens the image of the brand. Improved customer acceptance increases customer bonding, products are recommended and increases sales.

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