Disruption is in the Consumer Experience
It seems like every industry is being disrupted in some form or other. From auto to retail to mattresses, the traditional forms of business have shifted dramatically due to changes in consumer behaviors and new technologies. While upstart companies are capitalizing on these trends, more traditional organizations are trying to figure out how to steer their massive ship in the right direction.
Why so much disruption?
Organizations and consumer expectations have predominately been focused on three areas to drive the business; acquisition, purchase and loyalty. Over time, traditional organizations have built massive business units around each of these consumer phases to ensure that they become the best in the world; and the consumers went along with it.
As things evolved, these three functions started becoming independent of each other and growing themselves, continuing to find new ways to add value to their respective outcome. Like adding financing at the point of purchase, providing incentives to drive acquisition and saturating the retail marketplace to make purchase easier. These business units started working with their own profit and loss, autonomously from the one another. As they became more successful, decision making was more geared towards what’s right for the business versus what’s right for the consumer.
As a result, we have created a consumer experience journey that is littered with pain points for consumers and legacy systems and operations that continue to have life because that’s what we’ve always done. Now, with the evolution of technology, new companies are coming in and attacking key pain points that consumers have and providing a more seamless experience for the consumer, forever shifting their expectation for service in a particular industry.
How is it happening?
Disruption happens in many ways. Some big, some small. Some fast, some over time. But it happens almost every day. Upstarts can come in and shake up an industry, gain quick market share and transform consumer behaviors quickly. All while the traditional organizations in that sector have the handicap of being so large and rooted in process to shift or pivot as quickly as the upstarts. Here are a few examples of how this has happened.
Casper is one of many bed-in-a-box mattress companies that have come onto the scene to shake things up. They looked at the pain points in the mattress category like shopping, buying and delivery and quickly attacked those head on. Their bet was on the experience over product selection. First they used a new technology that allowed foam mattresses to be able to be packed in a box for easy delivery. Then they created an intuitive and simple decision making e-commerce portal where the decision was soft or firm mattress and size. No other choices were needed. Going direct to consumer, Casper had the pricing power to layer on extremely competitive pricing and an aggressive in-home product trial period to alleviate concerns of buying the wrong mattress.
The combination of these experiences completely redefined the expectations of shopping and buying a mattress that has started to eat away some of the market share in the mattress category.
Dollar Shave Club
Dollar Shave Club saw massive pain points in the men’s razor category. Innovation was happening at the product level by adding more and more blades to razors, but no innovation in terms of the experience. The consumer was forced to pay ridiculous prices for refills for razors, that is if they remembered to buy them when they were at the store. Dollar Shave Club created a subscription model that not only provided new razors when the consumer needed them most (taking the decision for repurchase out of the journey), but they were able to sell the razors at a lower cost by selling direct to consumer without the retail middleman.
This strategy gained massive acceptance and at the time of acquisition, they had 7% of the total razor market share and 30% of all e-commerce razor market share.
Warby Parker is a fascinating story in disruption and growth. The founders saw a monopoly forming in the eye wear space with massive mark ups on frames that made eye wear almost unattainable for some consumers. They also saw the pain point of shopping for frames of having to physically go into the store to try on frames in an awkward environment. Warby Parker set out to manufacture eye wear and sell them direct to consumer online. They tackled the pain points of high cost by selling direct to the consumer and lead their entire business strategy with the consumer in mind with a design sense. The result has been amazing. Since their founding in 2010, Warby Parker has created state of the art technology that allows consumers to “try on” frames from their computer or mobile phones. They’ve even created vision tests online that allows the consumer to figure out what prescription they need to purchase. They’ve also moved beyond e-commerce and into owned brick and mortar stores based on e-commerce and purchase data.
What can we do about it?
There is no denying that startups and upstarts have built businesses that are nibbling away at market share within certain industries. But the fact remains that the traditional organizations maintain the leadership positions; for now. There are ways that traditional organizations can transform themselves to capitalize on the shifting consumer behaviors and offer new value-added experiences for top-line and bottom-line results for their business. The roadmap below illustrates how larger, more traditional organizations can continue their leadership position while innovating for the future.
Understand the holistic consumer journey for a specific audience (from their perspective):
Every industry and company will have a different consumer journey based on the audience type, the business model, how products and services are delivered and how an organization is set up. Understanding, from the perspective of the audience, the path or journey they take to interact with and purchase your brand will give you insight in where opportunities and obstacles might lie.
Identify the pain points associated with your company and your industry.
Once you have an understanding of the consumer journey, you can quickly find moments of pain for the consumer by layering on research or data. For example, if there are 10 steps in your e-commerce transaction you may see an opportunity to streamline. Or if there is a disconnect between online shopping and in-store experience, there could be an opportunity to enhance the connection for the consumer.
Capture and define the expectations consumers have at key moments throughout that journey.
Another great way to find incremental value and to disrupt your category is to capture the expectations consumers have with your industry, company and journey. As we saw in the Casper example, the expectation for shopping for a mattress was to awkwardly lay on a bed in a store with someone standing over you asking you questions. Casper redirected this expectation to valuing online shopping and buying to alleviate this frustration. Intimately knowing the expectations of your consumer at key moments will give you insight in how you can transform your value offering.
Transform your organization to solve these pain points and redirect expectations
Finally, once you have a strategy to alleviate pain points and redirect expectations in the consumer journey for your brand, there are organizational changes that will need to be implemented. Restructuring how service is provided or increasing communication or data connectivity between departments can vastly increase the probability of success. And it could make your organization more agile.
As technologies evolve and consumer expectations shift, disruption will continue to plague traditional industries and companies. The way to get ahead of this is to have build a culture continuous improvement to streamline the consumer experience journey and find new ways to redirect expectations in a value added manner.