U.S. "Switching Economy" Puts Up To $1.3 Trillion of Revenue Up for Grabs for Companies Offering Superior Customer Experiences
Despite having more data and insights into consumer desires and preferences, companies in the U.S. have failed to meaningfully improve customer satisfaction or reverse rising switching rates among their customers. As a result, there is a potential $1.3 trillion of revenue at play in the U.S. market represented by the “switching economy,” according to new research released by Accenture.
The research revealed that 51 percent of U.S. consumers switched service providers in the past year due to poor customer service experiences, up five percent from 2012. Switching rates were highest among retailers, cable and satellite providers and retail banks – making companies in these sectors the most vulnerable, but also giving them potentially the most to gain.
Accenture's analysis of consumer spending forecasts and switching rates revealed by the survey shows that $1.3 trillion of revenue is being transferred between companies in the U.S., forming a sizeable “switching economy.” The findings are published along with the ninth annual Accenture Global Consumer Pulse Survey, which measured the experiences of 12,867 customers in 32 countries and across 10 industries to gain insight into the changing dynamics of today’s “nonstop” customers and assess consumer attitudes toward marketing, sales and customer service practices. The survey included 1,256 U.S. customers.
The survey found that customers are increasingly frustrated with the level of services they experience: 91 percent of respondents are frustrated that they have to contact a company multiple times for the same reason; 90 percent by being put on hold for a long time; and 89 percent by having to repeat their issue to multiple representatives. There are also frustrations with marketing and sales practices: 85 percent of customers are frustrated by dealing with a company that does not make it easy to do business with them; 84 percent by companies promising one thing, but delivering another; and 58 percent are frustrated with inconsistent experiences from channel to channel.
While up in some categories, the survey revealed that customer satisfaction levels have generally remained stagnant across industry sectors and overall satisfaction fell by one percent since 2012. Additionally, the rate of loyalty barely budged among U.S. customers, rising just one percent since 2012, and customers’ willingness to recommend a company rose by just two percent.
Against the high percentage of customers reporting they had switched providers in the last year, 81 percent said that the company could have done something differently to prevent them from switching. And, while the survey showed that price still plays an important role in the choice of provider, the customer experience is equally important.
Digital customer demands tailored experiences
The survey reveals 48 percent of U.S. customers use third-party online sources, such as official review sites, and one-quarter (25 percent) use customer reviews and comments from social media sites, to find out information about a company’s products and services. Word-of-mouth, including that shared via social media, continues to be the most important and impactful source of company information across industries and is used by 71 percent of the surveyed customers. In terms of the number of online channels used, 75 percent of respondents now use one or more online channels when researching companies’ products and services and 33 percent use mobile devices to access these online channels.
The gap between the use of digital technologies and the ability of companies to use them to improve customer experiences is highlighted by the survey’s findings that, among the 10 industries covered by the report, none made noticeable progress in providing customers with a tailored experience in 2013. In the utilities industry, only 18 percent of customers agreed their provider offered them a tailored experience. Even in industries, such as hotels and lodging and retail banking that are perceived to be leading in creating more personalized interactions, only 36 percent of customers acknowledge receiving a tailored experience, respectively.
Yet, while social media and online are regarded as important sources of information, one of the greatest frustrations customers have with companies is the perceived risk to privacy. Eighty-two percent of U.S. customers report that they feel companies they buy from cannot be trusted on how they use personal information provided to them.
The report found that companies that delivered valued customer experiences exhibited five common high impact capabilities, known as the customer-driven digital blueprint. These capabilities include:
1. Hyper-relevance: Show customers the company learns from every interaction and applies it at a more personal level, including customizing their channel and interaction preferences, so customers don’t have to repeat themselves or hit unnecessary roadblocks. This means using predictive analytics to provide a more tailored customer experience with more customization and personalization.
2. Relationships at Scale: Digital gives businesses rich channels through which to communicate with customers in much more personal ways and manage relationships with customers at scale. Use digital to bring the intimacy of the corner store to all customers and then give them more convenient access and more tailored services that matter to them.
3. Seamless Experience: Creating a seamless experience requires a multi-channel approach. Integrate information and processes that enable customers to flow easily across different channels when and how they choose.
4. Inherently Mobile: Learn from customers about what they want to do differently with mobile, and invest in mobile services and support capabilities that stand out to customers.
5. Naturally Social: Harness social media in order to deliver up-to-the-second customer preferences, greater levels of trust, a mechanism for direct and dynamic interaction and more and more usable data upon which business decisions can be made.
Gartner Identifies Top Vertical Industry Predictions for IT Organizations for 2014
Gartner, Inc. has revealed its top industry predictions for IT organizations and users for 2014 and beyond. Most industries are facing accelerating pressure for fundamental transformation, including embracing digitalization in order to survive and stay competitive.
Gartner's annual Predicts research on industry trends titled "Top Industries Predicts 2014: The Pressure for Fundamental Transformation Continues to Accelerate" features 12 strategic planning assumptions that CIOs, senior business executives and IT leaders should factor into their enterprise planning and strategy-setting initiatives.
CIOs and other IT and business leaders should use Gartner's predictions and recommendations to better understand the forces that are changing their world and develop strategies to address the requirements of this fast-changing business environment.
Top industry predictions include:
By 2016, poor return on equity will drive more than 60 percent of banks worldwide to process the majority of their transactions in the cloud.
By year-end 2017, at least seven of the world's top 10 multichannel retailers will use 3D printing technologies to generate custom stock orders.
By 2017, more than 60 percent of government organizations with a CIO and a chief digital officer will eliminate one of these roles.
By 2017, 40 percent of utilities with smart metering solutions will use cloud-based big data analytics to address asset-, commodity-, customer- or revenue-related needs.
By year-end 2015, inadequate ROI will drive insurers to abandon 40 percent of their current customer-facing mobile apps.
Full-genome sequencing will stimulate a new market for medical data banks, with market penetration exceeding three percent by 2016.
By 2016, 60 percent of U.S. health insurers will know the procedure price and provider quality rating of shoppable medical services in advance.
Through 2017, K-12 online education spending will increase 25 percent, while budgetary constraints will keep spending on traditional instructional categories stagnant.
By 2018, 20 percent of the top 100 manufacturers' revenue will come from innovations that are the result of new cross-industry value experiences.
By 2018, 3D printing will result in the loss of at least $100 billion per year in intellectual property globally.
By 2017, 15 percent of consumers will respond to context-aware offers based on their individual demographics and shopper profiles.
By 2015, 80 percent of life science organizations will be crushed by elements of big data, exposing poor ROI on IT investments.
The just-released 2014 Salary Guides from Robert Half show that U.S. starting salaries for professional occupations are projected to increase an average of 3.7 percent next year. Technology positions are expected to see the largest gains among all fields researched, with an anticipated 5.6 percent increase in the average salary for newly hired workers. Accounting and finance professionals can expect starting salaries to rise an average of 3.4 percent, according to the research.
Following is an overview of findings from the 2014 Salary Guides:
Accounting and Finance
The average starting salary for a newly hired accounting and finance professional in the United States is forecast to rise 3.4 percent next year. Financial and business systems analysts are in demand. The market for internal auditors and entry-level accountants also has strengthened.
Overall, base compensation for information technology professionals in the United States is expected to increase 5.6 percent in the coming year. Mobile applications and software developers are in particularly strong demand. Business intelligence analysts also can expect to see higher than average salary increases.
Creative and Marketing
Professionals in creative fields in the United States can expect average starting salary gains of 3.3 percent in 2014. The shortage of creative talent with digital and mobile expertise continues, with user-experience and mobile designers in particular demand.
In the legal field, starting salaries for positions in the United States are anticipated to rise 2.7 percent, on average, in the coming year. Mid- and senior-level associates are sought by law firms looking to expand lucrative practice groups or invest in new service offerings.
Administrative and Office Support
Overall starting salaries for administrative professionals in the United States are expected to rise 3.3 percent in 2014. Executive and administrative assistants and customer service managers are in particular demand. Support staff also are needed in the healthcare field and in human resources.
Technology CEOs Should Consider Nine Disruptive Forces that are Impacting Businesses
The accelerated pace of business disruption is being triggered by the impact of new technologies combined with the challenges and opportunities of creating a connected experience, which are bigger than ever before, according to a new PwC report, The new digital ecosystem reality: Nine trends rewriting the rules of business. The nine trends outlined in the report are too inter-related to be tackled with an independent strategy. PwC recommends two complementary strategies, one targeting the short-term trends and the other targeting long-term challenges.
Trend number 1: Disruptive innovation
Radical shifts in technologies translate to radical shifts in business models. In order to prepare, technology CEOs should consider a variety of steps, including: developing an appropriate innovation strategy that ties in with the corporate vision and company capabilities; determining the best ways of fostering and sustaining organic innovation; identifying opportunities for growth; determining strategic investment bets and identifying appropriate partners for highly integrated digital ecosystems.
Trend number 2: Managing cost and complexity
According to PwC, in terms of IT complexity, more than half of all companies are turning to the cloud to reduce expenses. They must also adjust their operating model to increase agility through focus on innovation both in technology and processes, in order to lay the foundation for a more-efficient cost structure. Additionally, companies are using technology to get better information faster and cheaper through using social analytics within the connected experience they have with customers and creating a connected experience with suppliers and partners through digital ecosystems.
Trend number 3: Convergence
The convergence of consumer and corporate capabilities has forced most companies across industries to become technology companies. Many companies will need to increase the pace of their customer communications in order to meet these increased expectations.
Trend number 4: Consumerization of IT
Employees have become accustomed to the ease of accessing information online, whether through mobile devices, tablets or personal computers. Companies will need to develop enterprise applications that are easier to learn to improve productivity and those that are easier to use on smartphones and other mobile devices.
Trend number 5: Changing dynamics between developing and developed countries
Technology companies will likely be looking to emerging markets for new business opportunities. Therefore, technology CEOs should think about rationalizing their global operations and simplifying and standardizing business processes and products so that development can be applied across any region, and also tailored for a particular region.
Trend number 6: Social media
According to PwC surveys, 90 percent of technology companies are focusing on strengthening relationships with customers and clients by increasing engagement and 84 percent are enhancing their focus on social media in search of new customers. Companies can use social media to interact on a regular basis, to deliver information and advice, and thus potentially increase the value of the experience.
Trend number 7: Data explosion
Technology companies must be able to accommodate input from social media with input from sales results in order to harness the broad flow of information. This requires developing a variety of systems, for example: data warehouses, analytic tools, storage systems, and business intelligence.
Trend number 8: IP and data protection
Being able to compete in the global world of technology requires maintaining a balance for technology companies. Companies need to ensure that their systems are accessible to their friends (i.e. employees and business partners) and unavailable to their competitors.
Trend number 9: Changing political and regulatory landscape
Technology CEOs have already been subjected to extensive regulatory conditions, therefore they must be prepared to track manufacturing and product information, and to be audited on a regular basis.
To address these nine trends, PwC recommends that technology companies focus on extending their own digital transformation across their business units, including manufacturing, supply chain and finance. Digitization supports automation, which decreases response time and increases the accessibility of information which in turn enables companies to be more agile and able to respond to change faster.
Gartner Identifies the Top 10 Strategic Technology Trends for 2014
Gartner, Inc. highlighted the top ten technologies and trends that will be strategic for most organizations in 2014. Gartner defines a strategic technology as one with the potential for significant impact on the enterprise in the next three years. Factors that denote significant impact include a high potential for disruption to IT or the business, the need for a major dollar investment, or the risk of being late to adopt.
The top ten strategic technology trends for 2014 include:
Mobile Device Diversity and Management
Through 2018, the growing variety of devices, computing styles, user contexts and interaction paradigms will make "everything everywhere" strategies unachievable. The unexpected consequence of bring your own device (BYOD) programs is a doubling or even tripling of the size of the mobile workforce. This is placing tremendous strain on IT and Finance organizations. Enterprise policies on employee-owned hardware usage need to be thoroughly reviewed and, where necessary, updated and extended.
Mobile Apps and Applications
The Internet of Everything
The Internet is expanding beyond PCs and mobile devices into enterprise assets such as field equipment, and consumer items such as cars and televisions. The problem is that most enterprises and technology vendors have yet to explore the possibilities of an expanded internet and are not operationally or organizationally ready. The combination of data streams and services created by digitizing everything creates four basic usage models – Manage; Monetize; Operate; Extend.
Hybrid Cloud and IT as Service Broker
Bringing together personal clouds and external private cloud services is an imperative. Enterprises should design private cloud services with a hybrid future in mind and make sure future integration/interoperability is possible.
Cloud/client computing models are shifting. In the cloud/client architecture, the client is a rich application running on an Internet-connected device, and the server is a set of application services hosted in an increasingly elastically scalable cloud computing platform. The cloud is the control point and system or record and applications can span multiple client devices. The client environment may be a native application or browser-based; the increasing power of the browser is available to many client devices, mobile and desktop alike.
The Era of Personal Cloud
The personal cloud era will mark a power shift away from devices toward services. In this new world, the specifics of devices will become less important for the organization to worry about, although the devices will still be necessary. Users will use a collection of devices, with the PC remaining one of many options, but no one device will be the primary hub. Rather, the personal cloud will take on that role.
Software Defined Anything
Software-defined anything (SDx) is a collective term that encapsulates the growing market momentum for improved standards for infrastructure programmability and data center interoperability driven by automation inherent to cloud computing, DevOps and fast infrastructure provisioning. As a collective, SDx also incorporates various initiatives like OpenStack, OpenFlow, the Open Compute Project and Open Rack, which share similar visions.
Web-scale IT is a pattern of global-class computing that delivers the capabilities of large cloud service providers within an enterprise IT setting by rethinking positions across several dimensions. Large cloud services providers such as Amazon, Google, Facebook, etc., are re-inventing the way IT in which IT services can be delivered. Their capabilities go beyond scale in terms of sheer size to also include scale as it pertains to speed and agility. If enterprises want to keep pace, then they need to emulate the architectures, processes and practices of these exemplary cloud providers.
Through 2020, the smart machine era will blossom with a proliferation of contextually aware, intelligent personal assistants, smart advisors (such as IBM Watson), advanced global industrial systems and public availability of early examples of autonomous vehicles. The smart machine era will be the most disruptive in the history of IT. New systems that begin to fulfill some of the earliest visions for what information technologies might accomplish — doing what we thought only people could do and machines could not —are now finally emerging.
Worldwide shipments of 3D printers are expected to grow 75 percent in 2014 followed by a near doubling of unit shipments in 2015. While very expensive “additive manufacturing” devices have been around for 20 years, the market for devices ranging from $50,000 to $500, and with commensurate material and build capabilities, is nascent yet growing rapidly.