3 ingredients of a new-generation business with digital success

Ernest North, co-founder of Naked | image supplied

This has created conditions in which a new breed of company can thrive. The typical profile of such a company is that it is built using digital technologies, without the legacy systems, thinking and processes that make it hard for traditional companies to adapt. It also thinks about the world in a different way, seeking profitability through purpose and sharing the value it creates with employees, customers, and broader communities—not just shareholders.

There are three major characteristics that these new generation companies have in common:

1. Customer control

Today’s customers want to be in control of their experience. They want to be able to manage their accounts themselves on the web or via an app. If they need support from a human, they want to be able to get it. And they want complete transparency into costs, terms and conditions, and other aspects of their relationship with a provider. This level of customer empowerment can only be offered through an end-to-end digital process—which is not as easily achieved as some old-school companies imagine.

In most industries, the incumbents will have legacy systems that were designed for a world where corporate employees steered the company’s relationship with consumers. Replacing these systems with new tech is complex and expensive for a risk-averse company. It doesn’t work to layer digital processes on top of these platforms because human intervention will be required at some point in the customer’s interaction with the company.

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You might need to speak to a call centre agent even when you apply online for a bond or try to get an insurance quote. The reason for this is that established companies have a lot of computer systems in place that doesn’t really talk to each other, so a human needs to step in to close the loop. Many old-school companies are now trying to automate customer support calls via chat and voice bots to save money. Yet the gaps are still there, leading to frustration for the customer. At the times you have an urgent account issue and actually want to speak to a person, you might not be able to reach one.

A digital native company, by contrast, will have modern systems that are designed to support end-to-end digital self-service. You can do most things yourself via digital self-service, but will be able to access empathic support from a human operator when you really want it, for example, after a car accident when you need an emergency tow and advice about the next steps.

2. Intelligent automation to benefit the customer

To expand on the point above, a new generation company will automate many tasks that once required human intervention. It will do so not only to enhance its own profits but also to offer a faster, smoother customer experience and to pass the cost savings along to the customer, whether by adding more value to its services or cutting its fees and charges.

For example, a computer system can now easily check whether your premiums are up to date before approving your windscreen claim in zero time with zero cost, and with the added benefit of zero human error. In the past, a human would need to do that work, leading to hours or even days of delay in carrying out a simple task.

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Not only are the systems in a new age company automated, but they are also smart. What I mean by this is that they are constantly learning from data and from interactions with customers—this is machine learning and artificial intelligence. A mixture of cloud processing power and sophisticated algorithms lets them analyse massive datasets, and then learn from experience.

3. Aligned interests

In industries such as financial services and telecommunications, there are often conflicts of interest - real and perceived - between companies’ mandate to create shareholder value and what would be best for their customers. There are many examples of this, from high roaming costs for international mobile calls to the way banks focus on selling credit solutions rather than on helping customers to improve their financial health.

However, digital competitors with innovative pricing and shared value business models are challenging old school companies to rethink this approach. They are showing business can be profitable when it is built on purpose. We are also seeing consumers demand more from companies in terms of ethics, sustainability and fairness. Leading companies are thus starting to think about how they can rebalance relationships with customers to make them fairer.

Are brands getting left behind?

We have arrived at a watershed moment where consumers are moving towards digital channels at a faster speed than the brands they interact with. Research from Salesforce finds that South African consumers and business buyers estimate that six out of 10 of their interactions with companies will occur online in 2021, up from 42% in 2019.

As they do so, many of the gaps in traditional brands’ attempts at digital offerings are becoming exposed. The reason for this is that it can be hard for an incumbent to truly revamp its processes for the digital world and to rethink age-old business practices. Yet every company needs to find a way to embrace the convenience, transparency and efficiency of digital technologies if it wants to thrive in the years to come.