Register at the information session on June 7, 2016 from 18:30, in the premises of Solvay Brussels School (42 avenue Franklin Roosevelt, 1050 Brussels (Atrium on the ground floor). This completely free evening, which includes a walking diner, will let you ask the organisers all your questions.
Incumbents needn’t be victims of disruption if they recognize the crucial thresholds in their life cycle, and act in time.
A decade ago, Norwegian media group Schibsted made a courageous decision: to offer classifieds—the main revenue source of its newspaper businesses—online for free. The company had already made significant Internet investments but realized that to establish a pan-European digital stronghold it had to raise the stakes. During a presentation to a prospective French partner, Schibsted executives pointed out that existing European classifieds sites had limited traffic. “The market is up for grabs,” they said, “and we intend to get it.”1Today, more than 80 percent of their earnings come from online classifieds.2
Our framework for understanding the life cycle of industry disruption.
About that same time, the boards of other leading newspapers were also weighing the prospect of a digital future. No doubt, like Schibsted, they even developed and debated hypothetical scenarios in which Internet start-ups siphoned off the lucrative print classified ads the industry called its “rivers of gold.” Maybe these scenarios appeared insufficiently alarming—or maybe they were too dangerous to even entertain. But very few newspapers followed Schibsted’s path.
From the vantage point of 2016, when print media lie shattered by a tsunami of digital disruption, it’s easy to talk about who made the “right” decision and who the “wrong.” Things are far murkier when one is actually in the midst of disruption’s uncertain, oft-hyped early stages. In the 1980s, steel giants famously underestimated the potential of mini-mills. In the1980s and 1990s, the personal computer put a stop to Digital Equipment Corporation, Wang Laboratories, and other minicomputer makers. More recently, web retailers have disrupted physical ones, and Airbnb and Uber Technologies have disrupted lodging and car travel, respectively. The examples run the gamut from database software to boxed beef.
What they have in common is how often incumbents find themselves on the wrong side of a big trend. No matter how strong their ingoing balance sheets and market share—and sometimes because of those very factors—incumbents can’t seem to hold back the tide. The champions of disruption are far more often the attackers than the established incumbent. The good news for incumbents is that many industries are still in the early days of digital disruption. Print media, travel, and lodging provide valuable illustrations of the path increasingly more will follow. For most, it’s early enough to respond. (For a quick guide to assessing your organization’s position in the digital disruption journey, see “Digital disruption: A discussion guide for incumbents.” [PDF-7.6MB])
What’s the secret of those incumbents that do survive—and sometimes even thrive? One aspect surely relates to the ability to recognize and overcome the typical pattern of response (or lack thereof) that characterizes companies in the incumbent’s position. This most often requires acuity of foresight3and a willingness to respond boldly before it’s too late, which usually means acting before it is obvious you have to do so. As Reed Hastings, the CEO of Netflix, pointed out (right as his company was making the leap from DVDs to streaming), most successful organizations fail to look for new things their customers want because they’re afraid to hurt their core businesses. Clayton Christensen called this phenomenon the innovator’s dilemma. Hastings simply said, “Companies rarely die from moving too fast, and they frequently die from moving too slowly.”4
We are all great strategists in hindsight. The question is what to do when you are in the middle of it all, under the real-world constraints and pressures of running a large, modern company. This article looks at thefour stages of disruption from an incumbent’s perspective, the barriers to overcome, and the choices and responses needed at each stage.
Where you are and what you need
It may help to view these stages on an S-curve (exhibit). At first, young companies struggle with uncertainty but are agile and willing to experiment. At this time, companies prize learning and optionality and work toward creating value based on the expectation of future earnings. The new model then needs to reach some critical mass to become a going concern. As they mature—that is, become incumbents—mind-sets and realities change. The established companies lock in routines and processes. They iron out and standardize variability amid growing organizational complexity. In the quest for efficiency, they weed out strategic options and reward executives for steady results. The measure of success is now delivery of consistent, growing cash flows in the here and now. The option-rich expectancy of future gain is replaced by the treadmill of continually escalating performance expectations.
In a disruption, the company heading toward the top of the old S-curve confronts a new business model at the bottom of a new S-curve. The circle of creative destruction is renewed, but this time the shoe is on the other foot. Two primary challenges emerge. The first is to recognize the new S-curve, which starts with a small slope, and often-unimpressive profitability, and at first does not demand attention. After all, most companies have shown they are very good at dealing with obvious emergencies, rapidly corralling resources and acting decisively. But they struggle to deal with the slow, quiet rise of an uncertain threat that does not announce itself. Second, the same factors that help companies operate strongly toward the top of an S-curve often hinder them at the bottom of a new one. Because different modes of operation are required, it’s hard to do the right thing—even when you think you know what the right thing might be.
This simplified model, of a new S-curve crashing slow motion into an old one, gives us a way to look at the problem from the incumbent’s perspective, and to appreciate the actual challenges each moment presents along the way. In the first stage, the new S-curve is not yet a curve at all. In the second, the new business model gets validated, but its impact is not forceful enough to fundamentally bend the performance trajectory of the incumbent. In the third stage, however, the new model gains a critical mass and its impact is clearly felt. In the fourth, the new model becomes the new normal as it reaches its own maturity.
Let’s step through these stages in sequence and see what is going on.
Stage one: Signals amidst the noise
In the late 1990s, PolyGram was one of the world’s top record labels, with a roster boasting Bob Marley, U2, and top classical artists. But, in 1998, Cornelis Boonstra, CEO of PolyGram’s Dutch parent, Koninklijke Philips, flew to New York, met with Goldman Sachs, and arranged to sell PolyGram to Seagram for $10.6 billion ≈ cost of 1989 Hurricane Hugo
≈ cost of 2004 Hurricane Frances
“>[≈ MIT university endowment in 2011]. Why? Because Boonstra had come across research showing that consumers were using the new recordable CD-ROM technology (which Philips coinvented) largely for one purpose: to copy music. In hindsight, this is a good example of how, in the early stages of disruption, demand begins to “purify” and lose the distortions imposed on it by businesses.5
The MP3 format had barely been invented, Napster was a mere gleam in Sean Parker’s eye, and PolyGram was riding at the top of its S-curve—but Boonstra detected the first signs of transformational change and decided to act swiftly and decisively. Within a decade, compact-disc and DVD sales in the United States dropped by more than 80 percent. Similarly, Telecom New Zealand foresaw the deteriorating economics of its Yellow Pages business and sold its directories business in 2007 for $2.2 billion ≈ Cost to buy the world a coke
≈ total US basketball salaries, 2011
≈ cost of US-Mexican War
“>[≈ Average total annual tax break to the five biggest oil companies] (a nine-time revenue multiple)6while numerous other telecom companies held on until the businesses were nearly worthless.7
The newspaper industry had no shortage of similar signals. As early as 1964, media theorist Marshall McLuhan observed that the industry’s reliance on classified ads and stock-market quotes made it vulnerable: “Should an alternative source of easy access to such diverse daily information be found, the press will fold.” The rise of the Internet created just such a source, and start-ups such as eBay opened a new way for people to list goods for sale without the use of newspaper ads. Schibsted was one of the earliest media companies to both anticipate the threat and act on the opportunity. As early as 1999, the company became convinced that “The Internet is made for classifieds, and classifieds are made for the Internet.”8
It’s not surprising that most others publishers didn’t react. At this early stage of disruption, incumbents feel barely any impact on their core businesses except in the distant periphery. In short, they don’t “need” to act. It takes rare acuity to make a preemptive move, likely in the face of conflicting demands from stakeholders. What’s more, it can be difficult to work out which trends to ignore and which to react to.
Gaining sharper insight, and escaping the myopia of this first stage, requires incumbents to challenge their own “story” and to disrupt long-standing (and sometimes implicit) beliefs about how to make money in a given industry. As our colleagues put it in a recent article, “These governing beliefs reflect widely shared notions about customer preferences, the role of technology, regulation, cost drivers, and the basis of competition and differentiation. They are often considered inviolable—until someone comes along to violate them.”9
The process of reframing these governing beliefs involves identifying an industry’s foremost notion about value creation and then turning it on its head to find new forms and mechanisms for creating value.
Stage two: Change takes hold
The trend is now clear. The core technological and economic drivers have been validated. At this point, it’s essential for established companies to commit to nurturing new initiatives so that they can establish footholds in the new sphere. More important, they need to ensure that new ventures have autonomy from the core business, even if the goals of the two operations conflict. The idea is to act before one has to.
But with disruption’s impact still not big enough to dampen earnings momentum, motivation is often missing. Even as online classifieds for cars and real estate began to take off and Craigslist gained momentum, most newspaper publishers lacked a sense of urgency because their own market share remained largely unaffected. And it’s not like the new players were making millions (yet). There was no performance envy.
But Schibsted did find the necessary motivation. “When the dot-com bubble burst, we continued to invest, in spite of the fact that we didn’t know how we were going to make money online,” recalls then-CEO Kjell Aamot. “We also allowed the new products to compete with the old products.”10Offering free online classifieds directly cannibalized its newspaper business, but Schibsted was willing to take the risk. The company didn’t just act; it acted radically.
Now, let’s openly acknowledge how hard it is for a company’s leaders to commit to supporting experimental ventures when the business is climbing the S-curve. When Netflix disrupted itself in 2011 by shifting focus from DVDs to streaming, its share price dropped by 80 percent. Few boards and investors can handle that kind of pain when the near-term need is debatable. The vague longer-term threat just doesn’t seem as dangerous as the immediate hardship. After all, incumbents have existing revenue streams to protect—start-ups only have upside to capture. Additionally, management teams are more comfortable developing strategies for businesses they know how to operate, and are naturally reluctant to enter a new game with rules they don’t understand.
The upshot: most incumbents dabble, making small investments that won’t flatten their current S-curve and guard against cannibalization. Usually, they focus too heavily on finding synergies (always looking for efficiency) rather than fostering radical experimentation. The illusion that this dabbling is getting you into the game is all too tempting to believe. Many newspapers built online add-ons to their classified businesses, but few were willing to risk cannibalizing the traditional revenue streams, which at this point were still far bigger and more profitable. And remember, at this time, Schibsted had not yet been rewarded for its early action: its results looked pretty similar to its peers.
In time, of course, bolder action becomes necessary, and executives must commit to nurturing potentially dilutive and small next-horizon businesses in a pipeline of initiatives. Managing such a portfolio requires high tolerance for ambiguity, and it requires executives to adapt to shifting conditions, both inside and outside the company, even as the aspiration to deliver favorable outcomes for shareholders remains constant.11The difficulty is the tendency to protect the core at the expense of the periphery. Not only are there strong, short-term financial incentives to protect the core, but it’s also often painful to shift focus from core businesses in which one has, understandably enough, an emotional as well as a financial investment.
No small part of the challenge is to accept that the previous status quo is no longer the baseline. Grocery retailer Aldi has disrupted numerous incumbents globally with its low-price model. Aldi’s future success was visible while Aldi was still nascent in the market. Yet many incumbent supermarkets chose to avoid the near-term pain of sharpening entry price points and improving their private-label brands. In hindsight, those moves would have been highly net-present-value positive with respect to avoided loss—as Aldi has continued its strong growth across three continents.
Stage three: The inevitable transformation
By now, the future is pounding on the door. The new model has proved superior to the old, at least for some critical mass of adopters, and the industry is in motion toward it. At this stage of disruption, to accelerate its own transformation, the incumbent’s challenge lies in aggressively shifting resources to the new self-competing ventures it nurtured in stage two. Think of it as treating new businesses like venture-capital investments that only pay off if they scale rapidly, while the old ones are subject to a private-equity-style workout.
Making this tough shift requires surmounting the inertia that can afflict companies even in the best of times.12In fact, our experience suggests stage three is the hardest one for incumbents to navigate. As company performance starts to suffer, tightening up budgets, established companies naturally tend to cut back even further on peripheral activities while focusing on the core. The top decision makers, who usually come from the biggest business centers, resist having their still-profitable (though more sluggishly growing) domains starved of resources in favor of unproven upstarts. As a result, leadership often under invests in new initiatives, even as it imposes high performance hurdles on them. Legacy businesses continue to receive the lion’s share of resources instead. By this time, the very forces causing pressure in the core make the business even less willing and able to address those forces. The reflex to conserve resources kicks in just when you most need to aggressively reallocate and invest.
Boards play a significant role in this as well. Far too often, boards are unwilling (or unable) to change their view of baseline performance, further exacerbating the problem. Often a board’s (understandable) reaction to reduced performance is to push management even harder to achieve ambitious goals within the current model, ignoring the need for a more fundamental change. This only worsens problems in the future.
Further complicating matters, incumbents with initially strong positions can take false comfort at this stage, because the weaker players in the industry get hit hardest first. The narrative “it is not happening to us” is all too tempting to believe. The key is to monitor closely the underlying drivers, not just the hindsight of financial outcomes. As the tale goes, “I don’t have to outrun the bear . . . I just have to outrun you.” Except when it comes to disruption, that strategy merely buys time. If the bear keeps running, it will get to you, too.
The typical traditional newspaper operator, likewise, wasn’t blind to a shift taking place, but it rarely managed to mount a response that was sufficiently aggressive. One notable exception was former digital laggard Axel Springer. The German media company was “a mere Internet midget,” according to Financial Times Deutschland, until it leapt into action in 2005. It went on a shopping spree, acquiring 67 digital properties andlaunching 90 initiatives of its own by 2013.13Like Schibsted, it saw the value pools moving to online classifieds and made the leap. The lesson is that incumbents can win even with a late start, provided that they throw themselves in wholly. Today, digital media contributes 70 percent of AxelSpringer’s earnings before interest, taxes, depreciation, and amortization. The core has become the periphery.
To generate the acceleration needed at this stage of the game, incumbents must embark on a courageous and unremitting reallocation of resources from the old to the new model—and show a willingness to run new businesses differently (and often separately) from the old ones. Perhaps nothing underlines this point more than Axel Springer’s 2013 divestment of some of its strongest legacy print-media products, which accounted for about 15 percent of its sales, to Germany’s number-three print-media player, Funke Mediengruppe. These products, such as the Berliner Morgenpost, owned by Axel Springer since 1959, were previously a core part of the corporate DNA and emblems of its journalistic culture. But no more. They realized that the future value of the business was not just about the continuation of today’s earnings but rather relied on the creation of a new economic engine.
When incumbents lack the in-house capability to build new businesses, they must look to acquire them instead. Here the challenge is to time acquisitions somewhere between where the business model is proved but valuations have yet to become too high—all while making sure the incumbent is a “natural best owner” of the new businesses it acquires. Examples of this approach in the financial sector include BBVA’s acquisition of Simple and Capital One’s acquisition of the design firm Adaptive Path.
Stage four: Adapting to the new normal
In this late stage, the disruption has reached a point when companies have no choice but to accept reality: the industry has fundamentally changed. For incumbents, their cost base isn’t in line with the new (likely much shallower) profit pools, their earnings are caving in, and they find themselves poorly positioned to take a strong market position.
This is where print media is now. The classifieds’ “rivers of gold” have dried up, making survival the first priority, and sustainability and growth the second. In 2013, the CEO of Australia media company Fairfax Media told the International News Media Association World Congress, “We know that at some time in the future, we will be predominantly digital or digital-only in our metropolitan markets.”14True, some legacy mastheads have created powerful online news properties with high traffic, but display advertising and paywalls alone are for the most part not enough to generate a thriving revenue line, and social aggregation sites are continuing to drive unbundling. Typical media firms have had to undertake the multiple painful waves of restructuring and consolidation that may be needed while they seed growth and look for ways to monetize their brands.
For the incumbents who, like Axel Springer and Schibsted, have made the leap, the adaptation phase brings new challenges. Having become majority digital businesses, they’re fully exposed to the volatility and pace that comes with the territory. That is, their adaptation response is less a one-time event than a process of continual self-disruption. Think of Facebook upending its business model to go “mobile first.”15You can’t be satisfied with the first pivot—you have to be prepared to keep doing it.
In some cases, incumbents’ capabilities are so highly tied to the old business model that rebirth through restructuring is unlikely to work, and an exit is the best way to preserve value. Eastman Kodak Company, for example, may have been better off leaving the photography business much faster, because its numerous strategies all failed to save it. When a business is built on a legacy technology that is categorically different from the new standard, even perfect foresight of the demise of film or CDs would not have solved the core problem that the digital replacement is fundamentally less profitable.
The simple fact is that new profit pools may not be as deep as prior ones (as many newspaper publishers have come to believe). The challenge is to adapt and structurally realign cost bases to the new reality of profit pools, and accept that the “new normal” likely includes far fewer “rivers of gold.”
The reality is, most industries are still in stages one, two, and three. That’s why the early experiences of media, music, and travel companies can prove so valuable. These first industries to transition to a digital reality highlight the social and human challenges that by their nature apply to companies in most every industry and geography.
In an industry where discussion about the future is never lacking, it is time to stop talking and make the commitment and investment necessary to improve the basics of the customer experience across all channels.
Over the past year, I have had the opportunity to write extensively on the future of banking. Many of these articles and research reports have centered on using advanced analytics to provide an improved customer experience and the importance of changing many of the pillars of the legacy banking organization to better serve the consumer (back office systems, a siloed structure, physical branches, etc.). The majority of these writings were well received, with almost uniform agreement on what is needed for financial institutions to succeed in the future.
As I prepared for a recent presentation, I realized that many of the talking points I was going to use were not too dissimilar to what was discussed within the banking industry in the 1980s. Then I wondered, why is there so much inaction on such important keys to success that so many banking executives agree upon? For that matter, why should the consumer believe we will make banking better for them when we have failed on so many fronts for the last 30 years?
It has been said that when a word is deprived of its dimension of action, the word is changed into idle chatter and into an alienating “blah”. Further, it has been said that words without action will end up costing more in the long run. I believe that this is a lesson that banking needs to learn.
Some of the most important improvements to banking that we have discussed for decades with limited progress include:
Customer Relationship Management (CRM)
While the terminology and acronym may have changed over the past 30 years, the importance of using customer data to improve the personalization and contextuality of marketing communications, product development and offers, and the overall customer experience has been at the forefront of banking’s “to do list” since the advent of the modern computer. Having access to a treasure trove of data, from basic demographics to account ownership and behaviors, banks and credit unions have more insight into their customers than virtually any other industry.
So why, after decades of discussing the importance of customer relationship management,1:1 marketing, and the removal of silos can’t most financial institutions know that I have a small business account if I walk into a branch with a question about my personal banking relationship? For that matter, why do insights around my mortgage loan and credit cards also reside in separate silos and not part of an overarching 360 degree view of my relationship? Without this overarching view, consumers are forced to start from scratch each time they want to expand their relationship at most institutions, providing information that already resides on the organization’s database.
Potentially more important, as the banking industry seeks to replicate the digital experience of such consumer-centric organizations such as Uber, Apple, Facebook, Amazon and others, banking is usually unable to leverage the insights on customers for the benefit of these same customers. Where Uber can provide a ‘contextual commerce‘ experience, including a digital hotel keys to the hotel I am being driven to, and restaurant suggestions around my destination (along with integrating the payment process), many legacy financial organizations can’t provide more than historical transaction data on a mobile device.
Despite the almost universal agreement that the banking industry needs to improve the use of data to deliver an enhanced consumer experience, and the decreasing cost of technology to deliver on this promise, advanced analytics remains a low priority according the Digital Banking Report, State of Financial Marketing. In addition, while banking organizations indicate they want to deliver real-time insights to customers, less than 20% of the industry currently has this capability according to the Digital Banking Report, The Power of Personalization in Banking.
Of more concern is that roughly 40% of all but the very largest financial institutions place themselves in the ‘Static’ self assessment category.
Ease of Engagement
Since I was a management trainee at National City Bank in the late 1970s, the banking industry has tried to make it easier for the consumer to conduct banking. From the advent of the drive-up teller, credit and debit card, ATM and direct deposit, to more recent developments like mobile banking and remote deposit capture, the industry has leveraged technology to simplify engagement. The problem is, much of this advancement has been focused on taking costs out of the banking process as opposed to focusing on improving the consumer experience.
In the annual 2016 Retail Banking Trends and Predictions, published by the Digital Banking Report, ‘removing friction from the customer journey’ was the second most mentioned trend/prediction by close to 100 financial services industry leaders surveyed. Despite being a primary focus since the beginning of my banking career, why do we still require the consumer to visit a branch to open a new account at most institutions? Why do most mobile banking applications appear to replicate online banking as opposed to being designed like the most popular non-financial mobile applications, with a mobile-first intuitive design and minimal steps to process completion?
The potential cost of not making it easier to conduct banking is the loss of the customer. How long will a consumer who shops for their new banking account using their computer or mobile phone settle for leaving their device to act on their purchase decision? They don’t need to leave the Amazon app to visit a store or purchase a movie, or leave Apple.com to buy music. Maybe the perceived tolerance of this ‘broken process’ is because only 20% of the major banks currently offer a mobile-first account opening process (see Banking’s Digital Account Opening Process is Broken).
The consumer is making their voice heard, however. According to the 2016 U.S. Retail Banking Customer Satisfaction Study published by J.D. Power, the biggest banks have the best customer satisfaction scores for the first time ever, with the potential to steal business from smaller organizations. The advantage in customer satisfaction was attributed almost entirely to the investment by the larger banks on digital delivery that is focused on an improved customer experience.
Ease of engagement is only the first step as we move forward. According to Accenture, the consumer has indicated they would like their banking experience to be seamless and an almost invisible part of their daily life. This is a tremendous opportunity for those financial institutions who stop talking about the future of banking … and start delivering this level of engagement. Especially as we enter an era of the Internet of Things.
There is probably no objective that has stood the test of time more than the concept of cross-selling. As an industry, banking has always known the importance of garnering ‘share of wallet’ to decrease attrition, increase revenues and improve loyalty. So, why is the new customer onboarding process non-existent at some organizations and underdeveloped at most others? And in a great example of “actions speak louder than words,” despite being near the top of every State of Financial Marketing survey over the past 6 years, less than 10% of financial institutions connect with the new customer using multiple communication channels more than 3 times during the first 180 days of the relationship (5-7 contacts has been found to be the optimal contact level according to JD Power).
Beyond the basics of new account onboarding, very few organizations leverage online or mobile channels to deliver contextual real-time offers based on personalized needs identification.
The difference between the beginning of my banking career and today is that, back in the80s and 90s, we had the opportunity to meet and understand customer needs better (and offer the right solutions) on a weekly basis when the customer visited the branch. With the vast majority of consumers visiting a physical facility much less often (or not at all), the need to deliver relevant offers via digital channels is no longer just an option … it is a necessity.
The required technology already exists to deliver these offers based on timing as well as location (as Uber and other organizations do today). The consumer is expecting this level of engagement.
The banking industry has always coveted the position as a “trusted financial advisor.” Over the past 40 years, the status of a bank and credit union in this role has changed dramatically, as financial service offerings have become more complex, new competitors have entered the marketplace and the prestige of banking as a career choice for financial advisors has waned. Add the dynamics of the financial crisis and the reduction in visits to a physical branch into the mix, and there is no wonder that 79% of consumers view their banking relationship as transactional or commoditized rather than advice-driven.
This is certainly not good news for an industry that relies on securing a greater share of wallet to make an overall relationship profitable. Especially when interchange and other forms of transaction fees have come under fire. In addition, the ability to provide personalized financial solutions and advice is becoming one of the more powerful capabilities of digital start-ups. It is clear that simply adding licensed agents at physical branches will not be enough to turn the tables.
The vast majority of legacy financial institutions say they want to partner with consumers as they make their financial choices. While these organizations have vast amounts of insight that could be the foundation for this partnership, most insight provided today amounts to nothing more than a “rear-view mirror” view of what has already occurred. Today’s consumer wants a “financial GPS” view of what they need to look out for (financially) in the future. And they want this delivered digitally … in real time.
Again, there is a vast void between what banking says they want to be in the future and what they are prepared to deliver.
Actions Speak Louder Than Words
It is time to put our money where our collective mouths are.
While the vast majority of banking relationships have proven to be highly resilient to changes in the marketplace, with minimal churn, this could be a matter of lethargy on the part of the consumer. As we enter a period of increased digital engagement, switching of accounts (and relationships) may occur with zero advanced notice. The signs of this potential are all around the industry, as satisfaction and convenience are both being defined more by digital capabilities.
So, while this is definitely not the first time this list of “must-do’s” has appeared, it may be the most important. It also represents the most basic requirements to satisfy an increasingly demanding consumer.
Customer Relationship management (CRM): Develop an advanced analytics strategy that includes customer insights from across the organization (all silos). Use this insight to drive all customer communication and to provide a more robust online banking and mobile banking solution. Deliver this 360 degree perspective to all internal customer-facing entities as well.
Ease of Engagement: Build a digital account opening solution that is optimized for mobile devices and does not require a new customer to enter a branch during the process. This solution must include digital identity verification, mobile funding and information pre-fill for ease of relationship expansion and the digitization of any paperwork that is currently required.
Relationship Expansion: Create a multichannel, multitouch onboarding process that helps a new customer make the most out of their new account with your organization. Make sure the contact strategy has a sequence and cadence that optimizes both sales and customer satisfaction. For more on how to accomplish this, refer to the Guide to Multichannel Onboarding Digital Banking Report. Secondarily, but no less important, leverage advanced analytics to deliver financial solutions to customers digitally and in real-time based on contextual insights.
Financial Advice: Increase the use of digital alerts and notifications beyond simple messaging around financial events that have already occurred (overdrafts, NSFs, etc.) to include ‘advanced warnings’ of potential issues. As with most deliverables for the digital consumer, providing proactive advice will require a much greater advanced analytics commitment.
It is not a matter of educating the banking industry about what is needed to succeed in the future. Virtually all research studies over the past few years indicate bank and credit union executives know what is required in the future. It is now a matter of committing to the investment of time and money requisite of a successfu
The 2015 Digital IQ Survey identified 10 critical capabilities that correlate with stronger financial performance. Those organisations that embraced these attributes – our Digital IQ® leaders – were twice as likely to achieve more rapid revenue and profit growth as the laggards in our study.
The Top Ten
The CEO is a champion for digital.
The executives responsible for digital are involved in setting high-level business strategy.
Business-aligned digital strategy is agreed upon and shared at the C-level.
Business and digital strategy are well communicated enterprise-wide.
Active engagement with external sources to gather new ideas for applying emerging technologies.
Digital enterprise investments are made primarily for competitive advantage.
Effective utilization of all data captured to drive business value.
Proactive evaluation and planning for security and privacy risks in digital enterprise projects.
A single, multi-year digital enterprise roadmap that includes business capabilities and processes as well as digital and IT components.
Consistent measurement of outcomes from digital technology investments.
The CEO is the natural leader as the focus on technology has shifted from operational efficiency to growth, and the stakeholders and conversations have changed. CEOs have ambitious expectations for digital, prioritizing disruption much more highly than the rest of the executive team.
Digital trends and barriers
In addition to establishing the direct linkage between digital investment and corporate performance, our research revealed important trends about the nature of disruption and the barriers organisations face in its wake.
1. Digital for today’s business – not tomorrow’s.
Despite the market fervor, companies are not investing in technology to disrupt their own or other industries. They are almost entirely focused on applying digital to grow their existing business models and the short-sighted view is cause for concern.
2. Yet plenty of disruption inside of organisations.
Leadership’s desire to capitalise on digital technology is so strong that it’s disrupting the enterprise operating model, as evidenced by shifting spending patterns, new digital roles, and undefined working relationships.
3. And companies are held back by a slow-tech approach.
Staying ahead of both market and internal disruption requires thinking and acting more like a nimble startup. Companies need to accelerate productive working relationships, how they learn and partner, and skills-development.
Full Report: http://www.pwc.com/gx/en/advisory-services/digital-iq-survey-2015/campaign-site/digital-iq-survey-2015.pdf
1. ELLE EST LA CHAMPIONNE D’EUROPE DE L’E-GOUVERNEMENT
C’est ce qu’affirme une récente étude de l’Organisation des Nations unies. La France prend la tête du classement européen et la 4e place du classement mondial fondé sur trois critères : les services en ligne proposés par l’administration, les infrastructures de télécommunications, et le niveau d’éducation des habitants. Et en termes de services en ligne, elle est même championne du monde, notamment grâce au site service-public.fr ! Cocorico !
2. ELLE EST LE PAYS DU WIFI
La France est également le pays du wifi ! Selon les statistiques du cabinet spécialisé Maravedis Rethink, elle dépasse largement, avec plus de 13 millions de bornes publiques, les États-Unis (9,58 millions de bornes). Et ce n’est pas fini : la France devrait accroître de 80% son parc de bornes d’ici à 2018.
3. ELLE EST AUX AVANT-POSTES DU BIG DATA
C’est ce que révèle une étude réalisée par Teradata auprès de 300 entreprises françaises, allemandes, et britanniques. La France serait au coude à coude avec l’Allemagne, loin devant le Royaume-Uni. Selon cette étude, 3 entreprises françaises sur 5 utilisent des techniques évoluées de traitement analytique pour doper leur efficacité et concrétiser des gains de temps. Une maturité en big data due en grande partie à la qualité de la formation des ingénieurs français en mathématiques et en statistiques. La France est en effet le 2e pays en nombre de médailles Fields !
4. ELLE FAIT COURS EN LIGNE
En un an, 400 000 étudiants, salariés et personnes désireuses d’approfondir leurs connaissances ont suivi ou suivent 53 MOOCS (Massive Open Online Courses) sur le site de France Université Numérique, et dans des domaines très variés. Le catalogue continue de s’enrichir : 23 nouveaux MOOCS ont été proposés depuis la rentrée 2014. De quoi souffler dignement la première bougie de #FUN.
5. ELLE EST CONNECTÉE
83% des Français utilisent internet, contre 75% en moyenne en Europe, selon l’Insee (2012). L’internet mobile a le vent en poupe : près de 40% des personnes l’utilisaient en 2012 contre seulement 10% en 2007.
6. ELLE LIKE LES RÉSEAUX SOCIAUX
Les Français sont également actifs sur les réseaux sociaux ! Selon une étude de l’agence We Are Social il y a 28 millions d’utilisateurs Facebook actifs en France, soit 42% des Français. On like ?
7. LE NUMÉRIQUE PÈSE DANS SON ÉCONOMIE…
Le numérique représente actuellement 5,5% du PIB français. Selon une récente étude du cabinet McKinsey, la France pourrait accroître la part du numérique dans son PIB de 100 milliards d’euros à l’horizon 2020, à la condition que les entreprises accélèrent nettement leur transformation numérique.
8. … ET CRÉE DES EMPLOIS !
Selon la même étude, les emplois directs liés à ce secteur comptent pour 3,3% des effectifs salariés nationaux. Mais des efforts restent à faire pour profiter pleinement du potentiel de cette révolution d’usages et de services. “Le Gouvernement agit en ce sens avec volontarisme et détermination”, a rappelé Axelle Lemaire. En savoir plus
9. ELLE ENCOURAGE LE FINANCEMENT PARTICIPATIF (ET ÇA MARCHE !)
152 millions d’euros ont été collectés en 2014 grâce aux plateformes de financement participatif, appelé crowdfunding, qui permettent aux internautes de financer directement des projets. C’est deux fois plus qu’en 2013, selon le baromètre réalisé par Compinnov pour l’association Financement participatif France auprès de 46 plateformes françaises. Il s’agit pour l’essentiel de prêts (88,4 millions d’euros), en grande partie rémunérés, mais les plateformes de dons arrivent en deuxième position avec 38,2 millions d’euros collectés. Viennent ensuite, avec 25,4 millions d’euros collectés, les plateformes de crowd equity qui proposent d’entrer au capital d’une petite entreprise. Afin de renforcer la place de la France au niveau international, le Gouvernement a fait évoluer la réglementation : une ordonnance, entrée en vigueur le 1er octobre dernier, supprime ainsi, notamment, le monopole bancaire sur les prêts rémunérés, ce qui permet aux particuliers de financer des projets en prêtant de l’argent contre un intérêt (dans la limite de 1 000 euros par investisseur et 1 000 000 euros par projet).
SUMMARY: Digital marketers are under increasing pressure to deliver ROI. But at Argyle’s digital marketing leadership event in Boston, there were encouraging signs. Here are eight takeaways .
1, Go where your customers are, even if that means paying for visibility. It’s one thing to hear a startup complain about the lack of organic reach on Facebook. But when a digital executive from the Boston Celtics says that Facebook is now a pay-for-play platform for brands, we’d best pay attention:
This Celtics executive (Peter Stringer) did not abandon Facebook, however. Instead, the Celtics doubled down on paid Facebook placements, once they determined that their videos received vastly more exposure on Facebook than their own site (the contrast was 2-3,000 video views on their site versus 60-100,000 per video on Facebook). As Stringer put it, and I paraphrase, “I don’t care if my own web site traffic goes down, as long as I keep my audience.”
2. Branding is falling short as a marketing goal, supplanted by a view of improving the “customer journey” with measurable data to prove it. For the marketers assembled, branding as a goal was low on the priority list. The conference survey of marketing goals for 2015 had branding in dead last with only 3 percent citing it as a priority when I took my screen shot. In first place? “Better leveraging data to understand your customer” at a whopping 64 percent.
But the end goal isn’t just understanding the customer – it’s about using that data to provide a higher caliber of experience. During my podcast with SDL’s Howard Beader, he put it this way:
Customer experience is really about how customers are creating relationships with their customers. How they’re able to help their customers move from anonymous to known, known to customer and ultimately customer to advocate throughout that customer journey.
3. Mobile is non-negotiable, and now includes the complete transaction. Now that mobile is becoming a dominant platform, not just for Facebooking but for completing transactions, the stakes of the mobile experience are much higher. During a presentation titled “Why mobile matters more than your web site,” IBM Canada’s Warren Tomlin shared the latest Black Friday mobile stats, including:
Users on Apple iOS accounted for 21.9 percent of all Black Friday sales
Mobile web traffic exceeded PC web traffic on Thanksgiving Day
The average smart phone user checks their phone 150 times a day
Tomlin’s most persuasive comment, however, was: “Two of the banks we work with the closest care more about whether their mobile platform goes down than their own web site.” The Celtics’ Peter Stringer shared plans to emphasize mobile streaming and video, given that smart phones are now getting larger and more tablet-like with every release.
4. Even companies in regulated industries can re-invent marketing with the right content and social guidelines. One of the more memorable sessions of the day was the first, a “Fireside chat” with two executives from State Street Corporation. Despite operating in a heavily-regulated financial services industry, State Street found a way to help turn its employees into public advocates and succeed with ventures on LinkedIn (75,000 followers), YouTube, and Facebook. They also launched their own Ted talk partnership, Ted@StateStreet, with significant views driven by employee presentations.
By sourcing their own employees for stories and videos, State Street proved the excuse that “content is hard” is weak. It’s more about building a culture that supports employee content creation with sensible guidelines – thus eliminating the fear of repercussions. And as State Street joked, “With an advertising budget of 375 dollars, we have to be scrappy.”
5.It’s all about “programmatic” marketing, delivering personalization at scale. While the presenters did a nice job of avoiding buzzwords-du-jour, the “programmatic” phrase popped up a few times. At some marketing shows, programmatic borders on an obsession. Simply defined, programmatic is the attempt by digital marketers to bake their customer data into algorithms that automatically trigger actions based on pre-definined business rules.
The ultimate goal? Move beyond segmenting groups to segmenting individuals, where each person receives just the promotions and content they need in just the right moment (including real-time geo-locational triggers). The technology to accomplish this type of personalization has improved, but there’s a big catch:
6. Personalization across channels won’t be possible without an improved marketing-IT relationship. Most of the programmatic success stories I’m hearing about are tied to one software initiative or one channel (such as improving sell-throughs by implementing “abandoned shopping cart” triggers). But the so-called “customer experience” is rarely tied to one channel. Maintaining that level of data visibility across channels remains a very sticky wicket. That means you can’t just buy a marketing cloud and start automating web behavior triggers. There needs to be a relationship with IT to pull the channel interactions together.
7. Digital marketing ROI needs big improvement – attribution tracking can help. Digital analytics are great at measuring clicks, but this does not always translate into a precise trail of the factors that resulted in a purchase. As a result, marketers continue to struggle to demonstrate the ROI of digital ventures. Improving the corporate awareness of the informed buyer and the role of search in purchasing decisions can help, but search is not the only factor.
One possible way forward was presented by Kathy Bachmann of MarketShare. MarketShare is addressing the problem at attribution. Typically, marketers attempt to set up triggers that are influenced by the various “attribution” factors that result in a sale (e.g. email newsletter link, social recommendation, on-site FAQs and product demos).
What MarketShare found, however, is that the amount of digital attribution factors go beyond what marketers typically measure. If they can prove this, they can make a powerful case for an increased digital marketing budget as resources are re-allocated to emphasize the touch points driving sales. Typically, digital marketing is under-attributed by 20-30 percent according to MarketShift’s data. Bachmann shared this slide which shows the range of attribution factors that are factored into their algorithm:
The point of crunching the attribution data is to determine which touch points genuinely result in consumer responses and business outcomes. Taking an algorithmic approach to attribution beats the heck out of the rudimentary means of tracing and weighing attribution many firms use. Bachmann cited Citrix as a customer example that has achieved a five percent lift in sales by utilizing this approach.
8. The battle for attention is not just against your competition, but against any form of consumable entertainment your buyers have access to. To win attention, content doesn’t need to have cinematic production qualities, but it does have to be deeply relevant to the target audience – enough to override their endless pings and distractions. As Victor Lee from Hasbro put it in his closing keynote, “I’ll be interested – if you’ll be interesting.”
On en a maintenant l’habitude, Manchester City est un des clubs les plus actifs en terme de dispositifs digitaux. Et leur nouvelle application en témoigne encore une fois.
Le club Mancunien est le premier à lancer une application second screen pour suivre les matchs en direct. L’application propose des stats en temps réel, des vidéos ainsi que du contenu sur les coulisses des matches.
Comme l’indique le club, l’application Match day commence des le réveil, le match dure 90 minutes mais un jour de match, c’est bien plus que ces 90 minutes.
Ainsi avec cette appli, le club propose a ses fans de passer la journée entière à préparer le match du soir. Les spectateurs qui utiliseront l’app dans l’enceinte du stade se verront également privilégiés car ils pourront accéder a du contenu vidéo additionnel non accessible de chez soi.
Enfin, l’appli permettra de favoriser les échanges entre fans puisqu’elle donnera la possibilité à tous de partager photos, tweets ou autres vines…
The latest edition of the annual Internet Trends report includes: 1. Key Internet trends showing slowing Internet user growth but strong smartphone, tablet and mobile data traffic growth as well as rapid growth in mobile advertising. 2. Emerging positive efficiency trends in education and healthcare. 3. High-level trends in messaging, communications, apps and services. 4. Data behind the rapid growth in sensors, uploadable / findable / shareable data, data mining tools, and pattern recognition. 5. Context on the evolution of online video. 6. Observations about online innovation in China.
The ideas about technology that have become lenses and points of view I return to as I try to makes sense of how things are changing, and what can be done. This is a digital world, so none of this is etched in stone. But from what I’ve seen so far, these things seem to be true.
Selon une enquête de Gartner, menée entre juillet et septembre 2013 auprès de marketeurs américains de grandes entreprises, les budgets de marketing digital devraient augmenter de +10% en 2014.
En 2013, le marketing numérique représentait 28,5% du budget marketing total, contre 25,5% en 2012. La plus grosse part du budget était consacrée à la publicité digitale (12,2%), contre 10,3% pour le site internet corporate, 9,6% pour le commerce numérique et 9,5% pour le marketing mobile et social. En moyenne, les entreprises ont dépensé 10,7% de leur chiffre d’affaires 2013 sur l’ensemble de leurs activités marketing, et 3,1% en marketing digital, contre 2,5% du CA en 2012, soit +20%. En 2014, les dépenses en marketing digital devraient représenter 3,3% du CA.