Today, as digital – and increasingly mobile – technologies become the key route to consumers, I believe we’re seeing a fundamental change in the competitive landscape. As more players scramble to capture a disproportionate share of each customer’s total lifetime value, everyone is targeting the same goal: consumer relevancy.
This is a far cry from the business environment I first joined 15 or 20 years ago. In those far-off pre-digital days, any consumer-facing business knew who it was up against. Supermarkets competed with supermarkets, automakers with automakers, broadcasters with broadcasters. So far, so simple.
By comparison, today’s competitive landscape is a bewildering free-for all. Everyone is vying to define their role in an ever-changing landscape – striving to expand choice and reduce cost for consumers in a new customer-centric value chain that allows customised and personalised relationships to be built.
Radical disruption in one industry…
In the entertainment and media industry, online video distributors are competing in content creation to drive subscriptions. Content companies are going direct to consumers, bypassing distributors. Broadcasters are bundling broadband to take on telcos. Telcos are responding by snapping up premium content. And advertisers are competing with nearly everyone by creating and distributing their own content.
…is replicated across many others
Extrapolate these dynamics across the universe of companies selling to consumers, and you get an idea of the scale of the disruption. The result is an intensifying battle for the end-customer involving the entire ecosystem of consumer-focused, digitally-connected companies – from retailers to utilities, and from device manufacturers to app developers to healthcare providers.
As this battle escalates, my daily interactions with clients confirm that the key competitive advantage they’re scrambling to achieve has moved beyond the customer ‘experience’ to customer ‘relevancy’, which I discuss in a recent video blog. This aim is no longer to target a consumer segment with an experience or offering designed loosely for that group of people. Instead, companies are looking to meet individual consumer desires, engaging and capturing their interest, imagination and spending. Companies must be creative in using multiple techniques to learn about their customers. For example, in our recent consumer research on television viewing, we were surprised to learn that some consumers prefer recommendations based on actual viewing rather than from friends or family, given the technology ‘knows’ their ‘real’ viewing preferences.
Risks and rewards: trust comes to the fore
In my view, the companies that fail to achieve this degree of relevancy will find themselves supplanted in their own value chain by others that succeed in doing so. And those that do achieve relevancy will gain admittance to the consumer’s ‘inner circle of trust’, positioning themselves to capture more than their fair share of that individual’s lifetime value.
To secure this position, I believe all businesses need to understand the core drivers of the connected consumer’s evolving behaviours and expectations. For example, consumers don’t like intrusive or irrelevant mobile advertising – but they are willing to share their personal data in return for value. And they want the ability to search instantaneously and interactively for – and get personalised recommendations on – any content, product or service, increasingly via the ‘second screen’ of a smartphone or tablet.
Imperatives for relevancy
As these drivers continue to reshape consumer expectations, we’ve identified four imperatives for companies to achieve customer relevancy and trust:
- Connecting with the consumer – Speaking to – and providing solutions that meet – an individual’s needs at a specific time, place and context, while remembering there’s a fine line that must not be overstepped on privacy.
- Building an audience through discovery and curation – Helping consumers navigate to services, content or offers they will like across multiple channels and platforms, supported by personalised recommendations.
- Meeting consumer expectations while driving profitable growth – Staying abreast and ahead of evolving customer demands and wants by investing and innovating in offerings they will value and pay for.
- Advancing relationships through choice and flexibility – Gone are the days when companies could just tell consumers what they’ll receive. Companies need to really understand and match their customers’ evolving preferences across multiple touchpoints.
Any business that delivers against these four imperatives can enter the ultimate destination: the consumers’ inner circle of trust. The prize will go to those who get there first in the most cost effective manner, and then innovate to maintain their position within the circle. The race is on.
Deborah Bothun is a Partner in the Advisory practice in the New York office of PwC. She leads the US Entertainment, Media and Communications practice, focusing on assisting clients in adapting to the changing content and distribution marketplace. Deborah specialises in market entry analysis, commercial and financial due diligence, corporate business planning and strategy, and crisis management. She has over 20 years of experience working with Fortune 500 E&M clients.