Growth-focused Private Companies Embrace Digital Tools for Customer Engagement and Research
In today's highly competitive world of compressed margins and slow economic growth, private companies are looking for new ways to boost revenue. One key way is to engage and learn about customers via digital means rather than strictly through traditional avenues such as direct mail and print advertising. According to PwC USís Private Company Trendsetter Barometer, most private companies (70%) are now doing some form of customer outreach through digital avenues, including via email and company websites. Within this group of Trendsetter companies that engage/research customers digitally, 67% are leveraging social media and mobile devices to that end.
Fast-growth private businesses in particular are embracing digital tools in their customer outreach. Among Trendsetter companies, those that use digital means to engage and learn about customers forecast 11.3% revenue growth over the next year, compared with 6.3% revenue growth projected by private companies that are not using digital tools for customer-engagement purposes.
Notably, private companies using digital means of customer engagement and research to a moderate/great degree also tend to have higher annual revenue ($244 million) than those using digital means to a smaller degree ($191 million).
Digital Tools Deliver Clear Value, But Full Benefits Depend on Data Analytics
Targeted marketing to individual customers -- for instance, via email promotions, text messages, and pop-up ads -- is the top way private companies are using digital technology for customer engagement/research (65%). Half of private companies that are using digital channels for customer engagement/research are also encouraging customers to act as brand ambassadors ó for example, by posting online testimonials about products and services and spreading the word via social media. Roughly the same percentage (48%) use digital means to solicit customer insights for product development, including innovation.
Private companies that are using digital channels for customer engagement are notably positive about the benefits, saying that digital means help their businesses do a better job of marketing their products/services to customers (76% of respondents) and improve customersí experience and overall satisfaction (72%).
Relatively fewer Trendsetter companies are using digital tools to research customers: 43% are using such tools to gather information on customers' behavior and preferences, while 40% are employing digital means to obtain demographic information. Despite these lower percentages, fully three-quarters (75%) of the companies using digital technology in their customer-focused efforts say that doing so helps them obtain better and more useful information.
Three-quarters (75%) of Trendsetter companies consider the customer information they collect (via both digital and traditional channels) relevant to their product development and innovation. This percentage rises to 84% among private firms that use digital tools to a great or moderate degree.
Nonetheless, roughly one-quarter (28%) of private companies have not yet enlisted digital tools in their customer outreach. Meanwhile, among those companies enlisting digital technology to that end, only a minority (28%) believe that doing so is currently helping them achieve lower costs.
Consumers will Spend $2.1 Trillion on Technology Products and Services Worldwide in 2012
Consumers will spend $2.1 trillion worldwide on digital information and entertainment products and services in 2012, according to Gartner, Inc. This amounts to a $114 billion global increase compared with 2011, and spending will continue to grow at a faster rate than in the past, at around $130 billion a year, to reach $2.7 trillion by the end of 2016.
The $2.1 trillion consists of what the consumers will spend on mobile phones, computing and entertainment, media and other smart devices, the services that are required to make these devices connected to the appropriate network, and software and media content that are consumed via these devices.
Mobile services are expected to generate 37 percent of total worldwide consumer technology spending in 2012 -- that is $0.8 trillion -- rising to almost $1 trillion by 2016. Mobile phones will account for 10 percent of total spending in 2012 -- that is $222 billion -- rising to almost $300 billion by 2016. Similarly, entertainment services -- cable, satellite, IPTV and online gaming, will account for 10 percent of total consumer spending on technology products and services in 2012, at $210 billion, rising to almost $290 billion in 2016.
Gartner predicts that consumer spending on mobile apps stores and content will rise from $18 billion in 2012 to $61 billion by 2016, and that spending on e-text content (e-books, online news, magazines and information services) will rise from $5 billion in 2012 to $16 billion by 2016.
The inter-relationships among the various segments are getting more critical. For example, new multidevice rate plans being announced by U.S. mobile carriers are enabling consumers to get more from their devices. These persistent connections to more phones, tablets and mobile PCs will increase the value of entire ecosystem and will drive hardware sales. Partnerships among vendors in different segments are needed to build the bridges among the various platforms and deliver simpler solutions.
Survey Shows IT is at Top of Investment Priorities, Tied with Sales
Board directors are prioritizing customers, core competencies and competitive advantage, according to the second annual Gartner-Forbes 2012 Board of Directors Survey. Half of the board directors surveyed were willing to invest in IT as a means to change the rules of competition, and they had IT as the highest priority for investment in 2012, tied with investments in sales.
Gartner and Forbes surveyed 175 board members in March and April of 2012 regarding their perceptions of the key business issues facing their organizations, and the contemporary aspect of their attitudes toward IT.
The priorities of the board directors in this survey were directly centered on customers, building better ways to drive the business forward through better core competencies, working on sustaining competitive advantage, or innovation. Gartner analysts said all of these are proactive efforts to acquire, retain or develop customers and markets.
Eighty-six percent of respondents said they believe that IT's strategic contribution to the business will increase by 2014.
The fastest-rising priority is pursuing greater diversity in the business portfolio, which will drive mergers and acquisitions (M&As). Gartner recommends that IT leaders review their plans for integrating acquired company systems. They should also prepare plans for divestitures as the investment portfolio is restructured for lower risk.
The Gartner-Forbes 2012 Board of Directors Survey asked board directors to rate each of 30 different choices from extremely low importance to extremely high importance. The top five priorities were:
1. Attracting new customers
2. Retaining and enhancing existing customers
3. Focusing on core competencies
4. Maintaining competitive advantage
5. Fostering innovation
The top spots were dominated by issues that have a direct connection to revenue and profit. The fastest-rising priorities point to the rise of pursuing greater diversity in the business portfolio, which is usually a move to reduce the overall risk of an enterprise.
As boards seeking ways to build or extend their competitive advantage increasingly look to IT as a source of that advantage, Gartner believes that IT-enabled business models will be useful as advances in technology continue to gain ground, and the reputation of IT as a means to improve productivity persists.
Gartner Says Worldwide IT Spending On Pace to Surpass $3.6 Trillion in 2012
Worldwide IT spending is on pace to reach $3.6 trillion in 2012, a 3 percent increase from 2011 spending of $3.5 trillion, according to the latest outlook by Gartner, Inc. Gartner's 2012 IT spending outlook has been revised up slightly from the 2.5 percent projection last quarter.
Gartner's global IT spending forecast is relied upon by more than 75 percent of the Global 500 companies in their key technology decisions. The market segments are analyzed by more than 200 Gartner business and technology analysts who are located in all regions of the world.
However, there are some bright spots for IT providers. In contrast to the rather lackluster growth outlook for overall IT spending, Gartner expects enterprise spending on public cloud services to grow from $91 billion worldwide in 2011 to $109 billion in 2012. By 2016, enterprise public cloud services spending will reach $207 billion.
Worldwide IT services spending is forecast to reach $864 billion in 2012, a 2.3 percent increase from 2011. Demand for consulting services is expected to remain high due to the complexity of environments for global business and technology leaders. Gartner analysts said consulting itself is becoming increasingly technology-based with the rise of analytics and big data, having deep implications on the future of consulting services.
The global telecom services market continues to be the largest IT spending market. Telecom services growth is expected to come not only from net connections, especially in emerging markets, but also in mature markets from the uptake of multiple connected devices, such as media tablets, gaming and other consumer electronics devices.
Key Risks Not Being Continually Monitored; Social Media Plays Increasing Role
A new Deloitte and Forbes Insights survey reveals that fewer than 25 percent of executives report that their organizations continuously monitor risk. While the majority of respondents anticipated that the global economic environment will remain the greatest source of risk through 2015, more than one in four (27 percent), predicted that risks posed by social media would play an increasingly important role.
Forty-one percent of respondents said that they saw the global economic environment as the most important source of risk over the next three years, and nearly one-third put government spending and budget into that category. Regulatory changes were of concern to 30 percent of respondents and both social media and financial risk were seen as a concern by 27 percent. The top areas of concern regarding increased volatility over the next three years included financial risk (66 percent of respondents), followed by strategic risk (63 percent) and operational risk (58 percent).
More than 50 percent of executives believe that regulatory, technological and geopolitical risk will increase in volatility, and 55 percent of executives surveyed reported that their organizations will revamp their risk approach within the next 12 months; roughly nine in 10 (91 percent) reported that they plan to reorganize their approach to risk management in some form or other over the next three years.
When asked how they planned to accomplish this, the majority (52 percent) said that they would elevate the profile of risk management throughout their organizations. Other areas viewed as key included reorganizing risk management processes (39 percent), additional training for staff (37 percent), incorporating new technology (31 percent) and integrating risk into strategic planning (28 percent).
Despite advances in risk-related technologies as well as concern about unstable risks, the survey found that automation tools and tools used for continuously monitoring risk are underutilized. Most monitoring is done periodically, on a monthly, quarterly, biannual or annual basis.
Additional Survey Findings:
Risk viewed as C-suite issue. Risk management has become a C-suite issue. Twenty-six percent of those surveyed said that the main responsibility for overall risk management belongs to the chief executive officer, with 23 percent assigning this responsibility to the chief financial officer or treasurer. Interestingly, the chief risk officer or head of risk came in third place, with 19 percent.
Automated risk management systems and processes. Dashboard reporting for senior stakeholders, data analysis and self-assessment are most often a mix of manual and automated processes. Twenty-eight percent of respondents said that their companies were in the process of automating their risk reporting.
Budgeting for risk expected to remain stable. Respondents indicated that strategic risk and technology risk were the two areas where budgets will increase the most. Around 50 percent of respondents said they expect minimal change to risk management budgets across the board. Fewer than 15 percent of respondents across all risk areas said risk budgets would decrease over the next three years.