Meeting the challenge of industry convergence
In 2016, IBM found that 6 out of 10 CEOs listed ‘industry convergence’ as their primary concern. The terminology represents the blurring of two or more previously distinct industries. It’s driven by disruption and signified by Dyson building cars, Walmart providing healthcare and Vodafone offering financial services.
Convergence is underpinned by technology. Therefore, it is no surprise that technology companies, from start-ups to business goliaths such as Google and Apple, are disrupting industry spaces and uprooting incumbents. As software becomes increasingly crucial to products and services, technology businesses with the ability to excel at coding and algorithms have a unique advantage when entering new, competitive spaces. This allows convergence to take place at unprecedented speed and enables ‘disruptors’ to redefine value, services and the customer experience.
In the face of such challenges, it is critical that companies within traditional industries are not just reactive to change. Evidence shows that more than half of today’s customers switch brands due to poor user experience (Forbes, 2017). Only by strengthening customer relationships can brands be confident about being able to fend off disruptors. The companies that will thrive are those willing to think differently and engage with customers in new and creative ways. Leading CEOs within industries threatened by convergence are already starting to focus more on customers than the competition. These leaders recognise customer experience has become a key differentiator.
Audi is a brand that is succeeding at delivering superior customer experience. Its flagship store in London is a beacon of cutting-edge technology and evidence of a business adapting to the evolving needs of its customers. Kitted out with touchscreen tables and VR displays, the brand successfully brings the online world into an in-store environment in a way that people can enjoy. Further afield, Audi is maintaining its dedication to customer experience by launching its ‘e-tron’ room in Madrid. Part educational tool, part game, the branded escape room educates participants on electric cars in a fun, engaging and interactive manner. These types of projects reinforce Audi as a future-forward brand with a focus on providing exciting customer experiences, thereby helping to strengthen its position against technologically-advanced challenger brands like Tesla.
HSBC-owned bank First Direct is another useful example of the benefits of focusing on customer experience in a converging industry. The finance industry is no stranger to the threat of convergence, however, the speed and scope of technology development today makes it a much more pressing issue. First Direct is a brand that regularly tops KPMG’s Customer Experience Excellence ranking. At the heart of its operations and embedded in how it communicates is “doing all the things customers want from a bank in the most painless and simple way possible”. This unwavering commitment to customer experience saw the brand achieve the highest NPS score for customer loyalty of any UK business in 2015. Results like this will hold First Direct in good stead against tech start-ups like Atom and Monzo as they encroach on the banking industry.
As industry convergence accelerates in line with the increasing capabilities of technology, brands operating within traditional industries must shift their priorities. Today, customers define their brands. Marketing is no longer about winning awards, but one-to-one customer communication, with customer experience key to brand longevity.