Are your customers Millennials or just highly evolved?
Anjali Lai explores the nuanced picture of consumers beyond traditional demographic categories such as generation.
This article originally appeared in The Versus Issue, our February/March issue of marketing.
Charles Dickens once wrote, “Change begets change. Nothing propagates so fast.” In today’s evolving marketplace where innovators are setting new customer expectations and companies are racing to meet rising demands, Dickens’ words ring especially true.
The first step on a company’s path to thriving in this environment is understanding customers accurately – specifically, identifying how consumer expectations are changing and how quickly.
Consumers in Asia Pacific are in the midst of a digital transformation, one that is progressing at different rates across the region. Here in Australia, around 81% of Australians own a smartphone, with 45% of smartphone users purchasing products on their device. And these numbers are expected to continue growing.
This transformation leads to higher consumer expectations and rising demands, and only the companies that can innovate to meet these demands will succeed. Forrester has analysed its years of consumer data and found that, globally, consumers are evolving in five important ways:
- willingness to experiment,
- digital/physical integration,
- information savviness, and
- device usage.
These five key shifts explain changing consumption trends and lead to a sense of customer empowerment: consumers are willing to experiment, reliant on technology, inclined to integrate digital and physical experiences, able to handle large volumes of information and determined to create the best experiences for themselves.
Forrester’s Empowered Customer Segmentation measures critical shifts in customer behaviours and attitudes to gauge how consumers are both responding to innovation and demanding it, along the five dimensions of change. At one end of the spectrum are Progressive Pioneers, who rapidly evolve and feel most empowered. At the other end are Reserved Resisters, who are wary of change and innovation.
While the segments are globally consistent and apply across markets, we see significant differences when comparing countries. Our analysis of five countries in Asia Pacific reveals that the most rapidly evolving customers, categorised as Progressive Pioneers, dominate in metropolitan China and India, while Convenience Conformers are most prevalent in Australia.
Third of Australian online adults fall into the most empowered segments – Progressive Pioneers and Savvy Seekers – another third are Convenience Conformers.
Forrester Data research shows that 45% of online Australian adults engage with new products and services, and 25% are savvy enough to compare prices or look up product information on their mobile phone when in a physical store. However, Convenience Conformers are distinct because they use technology to make their lives easier only after the technology has gained acceptance in the market. For example, half of these Australian online adults use a tablet, but only 4% use a smartwatch.
Australian consumers’ levels of empowerment mean that mobile payment options are gaining significant traction – already, 58% of online adults use PayPal to make purchases. As the number of online buyers grows, Australian retailers that invest in more convenient online offerings will win the hearts and business of the less empowered customers – Australia’s online adults that are Settled Survivors (15%) and Reserved Resisters (20%).
Brands in Australia aren’t contending with consumers that are changing as quickly as they are in China, India
or even the US. But Australian companies have a unique opportunity to engage customers through digital. Convenience Conformers are driven by digital services that simplify their life and add speed and convenience, without much additional investment. They are looking for ease and seamlessness.
Overall, we believe this research helps to present a more nuanced picture of consumers beyond traditional demographic categories. How so?
The average age within the Progressive Pioneers segment is 34, while in Savvy Seekers it is 38, suggesting that young people in their late teens or early 20s are not necessarily the most engaged or demanding when it comes to new technology.
This proves that Millennials aren’t one isolated group that poses the greatest threat to companies today. Evolving consumer behaviour and attitude isn’t just a function of age or even a life stage.
Whether your customers are Progressive Pioneers, Savvy Seekers or Convenience Conformers, these different forms of customer empowerment will lead your consumers to demand more from their relationships with brands. We expect the Progressive Pioneers segment to grow over time and for the Reserved Resisters category to shrink – this shift is partially driven by the new digital tools that are available to people and the novel experiences that are on the horizon.
For brands to keep pace with – and exceed – their empowered customers’ expectations, business leaders must refine their understanding of customer motivations and track the growth of empowered customer segments.
Once brands can o er the right type of digital experience that caters to that core appetite for convenience and simplicity, they are more likely to pull these customers into their ecosystem, engage them in relevant ways, and safeguard themselves from the rapid pace of evolution where they are quickly beaten out by emerging disruptors.
While the rate of empowerment will vary widely by country and context, digital, economic and cultural forces will continue to drive consumer perceptions and decisions. In the future, brands can expect more consumers to evolve toward Progressive Pioneers, so they must stay ahead of the curve by refining their understanding of customer motivations and deepening their customer relationships.
Business leaders who understand and anticipate customer demands for new services and experiences can ultimately prioritise their investments in digital innovation, pinpoint the customers most likely to reward innovation with new revenue, and identify which consumers threaten to churn.
Anjali Lai is data analyst at Forrester.
Forrester is a Marketing content partner, a leading organisation with which we collaborate on content for the magazine as well as exclusive benefits for Marketing Pro Members.
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