The rapid advancement of the digital age – the confluence of social media, smart devices, big data and cloud computing – represents a massive opportunity for businesses. Data is at the heart of this opportunity. But as digital matures, we will also see new opportunities emerging for consumers to gain advantage from their data.
To describe these opportunities, we should first consider the "three waves" of the digital age.
First digital wave: commerce
The first wave is digital commerce. Typically, a previously offline business opens up digital channels, such as online shopping malls, alongside existing routes to market. This can be extremely valuable for cost efficiency and top-line growth.
Digital commerce has been with us for many years now. But smart devices and an emerging generation of digital natives are changing the dynamics and creating new opportunities. Owing to its simplicity, usability, and, for them, normality, digital is their chosen channel. Digital natives shop in-store and on digital devices simultaneously. They almost want to walk into a website when they shop on the high street! So even if a company has been online for years, many opportunities still exist to create additional performance and advantage.
The first digital wave is thus about the economy of products and services.
Second digital wave: outcomes
The second wave is all about helping people achieve goals they care about. Simple goals can be delivered by well-engineered products. The goal of opening a bottle of wine can be perfectly delivered by the corkscrew.
But as goals become more complex, creating products and services that deliver them becomes challenging. Personal fitness, healthy eating, a cleaner home, safer driving, greener/cheaper household heating – these outcomes can't be purchased off the shelf in a traditional product form.
So, to achieve these outcomes the customer will need three things:
- Better understanding of their own behaviour
- Assistance with matters of discipline and willpower
- A supplier that understands their needs and wishes very well
Digital technology can help brands and customers achieve these things today. Sensor technology, like the Fitbit wristband, can monitor what we do and help us understand our behaviour. In-car telematics can help people drive in a safer or greener way, and increasingly look at their cars as "service platforms".
Firms that utilise these technologies to understand customers and anticipate their needs will thrive. In the last example, an insurance firm can use information on car usage to calculate better premiums for consistently safe and responsible drivers (and many insurers do this today).
The possibilities are endless. And they have an additional advantage. The provision of real-time information for consumers provides them with a "life videogame". The game is engaging, interactive and good fun. But its goals are real.
This second digital wave is all about the economy of outcomes.