There are any number of ways to increase revenues and market share, but to succeed they must be responsive to the demands of the market. Developing a growth and innovation strategy can prove to be a risky business and history is littered with the remnants of companies that have buckled under the pressure of trying to sustain growth as projected demand failed to materialise.
Improve customer experience to grow revenue
Research in our latest white paper, 8 reasons why your business is failing at innovation – and how to fix it, suggests that companies are taking a conservative approach to growth and innovation with most preferred strategies focusing on improving customer experience. Of those companies surveyed, only 30% had spent the previous 12 months developing entirely new products and services.
Instead, most innovations focused on improving customer experience or building on existing foundations. Adding new features to current offerings or investing in technologies to improve customer experience was favoured by 41% of respondents. While 42% of respondents said they’d also be focusing on improving customer access to products – creating new e-commerce sites for example.
Customer-focused innovation is more than just a nicety. Research from Forrester found that companies that improved their customer experience grew profits exponentially. A one-point increase in the customer experience index amounted to annual incremental revenue per customer for retail banks of $8.27. Multiplied by the average number of customers per company, which Forrester determined to be 15 million, and the total revenue increase was $124m.
Technology as a tool, not an experience
Much of the innovation in customer experience is going to be driven by technology. That isn’t to say that technology will become the customer experience, but that it is an integral part of helping companies deliver it. Customer expectations revolve around seamlessness, knowing that their providers can anticipate their needs. They also depend on channel interaction and availability. Journeys should be able to begin in an app, continue via a website and conclude via a call centre with no steps repeated in between.
Research from Oracle looked at today’s consumer banking expectations. It found that 81% of those surveyed opted for digital channels to engage with banks, while 69% want their financial lifecycles to be on digital channels. Best returns and experiences are their highest priorities with one-third of consumers looking to alternative providers following unsatisfactory experiences with traditional brands.
It doesn’t mean the end of banking brands, however, as 65% of banks were highly trusted as financial partners (even though they appeared not to provide the best rate of return or prioritise customer satisfaction). Technology that can deliver both things behind the scenes will be an important part of any provider’s arsenal.
Adapting technological capabilities to deliver the new reality
Technology-based innovation is therefore increasingly important. Currencycloud’s research supports this with 40% of respondents actively looking into cloud computing over the next year. Nearly a third (29%) will be exploring the potential of artificial intelligence and machine learning too, both already identified as key to providing more intelligent, customer-centric solutions.
How companies approach new technologies will determine how fast they can bring their innovations to market, stealing a march on the competition. Cost is also a consideration. Technology may be important but funds to invest in it are finite – whatever the potential gains.
Adapting technological capabilities intelligently – by in-housing critical functions and partnering with third parties to provide cutting edge or less core solutions – is a hybrid approach favoured by many. While survey respondents will tackle innovation through this hybrid approach (40% will develop in-house; 35% will buy in software; 30% will work with a provider), 67% agree it’s important to see what is already available in the market before building internally from the ground up.
Today’s approach to innovation may be largely incremental but it is no less impactful for it. Nor are the choices any less critical. Spreading risk by accessing expert help is a key success factor, as is identifying where changes will have the best outcome. A focus on customer experience, driven by best-in-class technology is where the future of innovation lies.