The light at the end of the COVID-19 tunnel is reason for rejoicing. Optimism has been percolating through Zoom, Teams, and WebEx meetings. Markets have rallied, with travel and tourism stocks soaring in anticipation of pent up demand (good luck getting anything done in Europe next summer).
But even if vaccine production and distribution go smoothly, many enterprises will feel the pain well into next year. As they set business goals to make up lost ground, customers and digitally driven revenue will take priority over accelerating digital transformation and innovation.
Please Please Me in 2021: Customer First Strategies
According to our latest COVID sentiment survey for Europe, around three-quarters of enterprises expect significant revenue losses this year. In response, around 4 in 10 enterprises say they will shift or add new IT budget to address COVID-19 and other short-term business issues.
Looking further ahead, in setting goals for 2021 and 2022, far and away the top priority is future-proofing the business. In practice, this means restructuring the range of available products and services around digital communications and media. For instance, challenger banks such as N26 and Revolut have pushed incumbent banks to roll out a wide range of digital banking services. Futureproofing also means the reorganization of digital and physical supply and delivery chains, rearchitecting front- and back-office systems, and integration and automation across the board.
The Not so Long and Winding Road to Customer Experience
Creating future-proof business models is tantamount to giving customers what they want when they want it (no one wants to buy DVDs when movie streaming is available with a few clicks). This in turn will impact the operational models designed to deliver goods and services to customers. Even something as ostensibly remote from customers as manufacturing processes can contribute to improved customer satisfaction once those processes have been streamlined and integrated with back-office applications and predictive analytics that anticipate customer need.
The second-highest priority named in the survey — enhancement of products, services, and experiences — can be either a driving goal of a business plan or a natural outcome of future proofing. For instance, in a digital-centric world, voice-activated appliances create convenience and opportunity for deeper engagement. It may seem like a small thing to tell your Electrolux oven to preheat to 180°C or your Samsung television to load up your favorite YouTube news channel, but those small things add up fast, and quickly weave themselves into our lives.
That deeper and persistent engagement — guided by customer-first strategies — lays a foundation for generating revenue from digitally enhanced offerings, which runs a close third in the late October survey. Enterprises that have already laid that groundwork are now aiming to monetize it.
L’Oreal is a case in point. In the first half of 2020, it scaled up its web presence and online partnerships. Sales from ecommerce shot up by more than 64%. Nike’s digital division has also had a good crisis, with digital sales soaring by more than 80% during its first fiscal quarter this year (June through August). It has also achieved its goal of 30% of all sales being online well ahead of its 2023 target date. More generally, in Europe, we forecast investments in omnichannel commerce to rise by an annual average of just under 16% through 2024, when spending will pass €18 billion.
You Say You Want an Evolution?
But aren’t future proofing the business, engaging customers digitally, and ecommerce also digital transformation? They can be, and the borders between these areas are fuzzy. Moreover, even though accelerating the pace of DX and innovation came last on the surveyed list of priorities, 30% of respondents still named it among their top three.
Rather, it is about emphasis and how enterprises approach their short- and long-term goals. Generally speaking, digital transformation is a broader term than futureproofing and implies a more disruptive change. L’Oreal and Nike had been selling their wares online for years before the pandemic. Electrolux had already launched a line of smart appliances. Scaling up of ecommerce and smart features is arguably more enhancement than disruption. The mobile-only approach of challenger banks has disrupted how banks deliver and clients consume account-based services. Nevertheless, incumbent banks matching challenger functionality are making incremental rather than revolutionary changes to their business and operational models.
It all comes back to how enterprises are framing their goals. Customer-centricity and revenue are clearly top of mind among decision makers aiming to future-proof their enterprises. They must be woven into any value proposition — whether promising incremental or disruptive change — aimed at tapping the optimism waiting at the end of the tunnel.
If you want to learn more about this topic or have any questions, please contact Mark Yates, or head over to https://www.idc.com/eu and drop your details in the form on the top right.