“The cliché that the customer comes first has taken on new meaning in the digital age. Not only is the customer first, they’re telling you how to run your business.”
That’s how Willy Kruh, global chair, consumer & retail, at KPMG International sums up the technological, demographical and geographical revolution that is redefining the relationship between customer and company in the 21st century.
Kruh was commenting on a new report, Me, My Life, My Wallet, from the KPMG Global Consumer Insights team. In a nutshell, the report’s message is that companies are misreading customers by failing to recognise that the factors underlying their decision-making have become exponentially more complex since, as Kruh puts it, “the mobile phone has become the remote control of our lives”.
Here are five insights from the report that every CPO needs to consider.
1. Nomophobia – fear of not being connected – is a global phenomenon.
Drawing on responses from 10,000 consumers worldwide, KPMG found that, given the choice, 71% of Chinese consumers would rather lose their wallets than their mobile phones. In China, technology has taken ‘remote control’ of young people’s lives – 83% of millennials in that country turn to their mobile device to relieve boredom and 41% use their phones 6-20 times a month to make purchases. In complete contrast, 74% of Americans would rather lose their phone than their wallet. The sheer amount of time millennials spend on their phones is already changing shopping habits but, as the report makes clear, much greater disruption lies ahead.
2. Homer Simpson isn’t alone in suffering from information overload.
Springfield’s most famous patriarch once observed: “Every time I learn something new, it pushes old stuff out of my brain.” Today, more media is being created every 60 seconds than we can consume in a lifetime and consumers are turning off in silent protest: 41% of those surveyed feel totally overwhelmed with information and avoid it if they can. Every company needs to think hard about what they say to customers and how they engage them.
3. The patterns of people’s lives are changing.
As the report says: “Most businesses have built their operating model based on life event norms, and those are primarily based on the boomer generation that created the mould.” These norms do not apply to generation X or millennials who, for example, don’t regard their first car as a milestone in the way that boomers did. On average, KPMG estimate, millennials are 10 years older than boomers when they buy their first home – and 10 years older than boomers when they have their first child. Even boomers are affected – although they are the first generation to retire on defined contribution pension plans and are living longer, they are haunted by what KPMG calls FROOM (Fear of Running Out Of Money). Millennials are putting an unexpected strain on family finances: 22% identify their parents as a source of income. Is your operating model fit for an era when millennials have the most spending power?
4. The killer app is … frictionless
In an age when we have to come to regard instant access as the norm, too many companies are making it burdensome, confusing and time-consuming for consumers to engage with them. The goal is to make each customer interaction, to use the jargon, “frictionless”. The figures suggest we are a long way from such an ideal: just over two out of three online shopping carts are abandoned before purchases are completed, a trend that cost e-tailers $4.6trn in 2016. Some apps/websites are so hard to navigate, it’s as if they have never been user tested. A recent survey by Aspectiva couldn’t find one positive customer review on a Japanese e-commerce giant’s website. Do you know how well your company scores – and what it needs to do to improve?
5. If you want to see the future, go to China
Every day the health app Ping An Good Doctor delivers more than 400,000 diagnoses to patients in China. Backed by insurance giant Ping An, the service has grown spectacularly in a country where many consumers don’t trust doctors and, in rural areas, struggle to get access to them. Given the global pressure on healthcare budgets, it’s easy to imagine such a service becoming popular, regulators permitting. The Chinese consumer’s “thirst for, and adoption of, new technology is unparalleled”, KPMG says, and is reflected in the popularity of the WeChat social platform which the report describes as a “combination of Facebook, WhatsApp, Instagram, Google, Amazon, Venmo, Open Table and Uber”. At the time of writing, the stock market capitalization of Tencent, which owns WeChat, was higher than Facebook’s. China is a complex, unique market, with different cultural, regulatory and social norms. Western companies might do well to ignore the differences, focus on the similarities and imagine how they might disrupt their business.
☛ The author is editor of KPMG Consumer Currents magazine.