Any firm that sells to consumers must understand how four factors will influence their customers as well as their own business, and they need to start planning now to harness these trends to maximize the value of customer relationships.
Forrester recently explored changes in how consumers buy products and services. The relationship between consumers and businesses is undergoing a multifaceted transformation based on four factors: the economic impact of marketplaces, next-generation product experiences, consumers’ perception of brand values and brands’ adoptions of business models. Any firm that sells to consumers must understand how these factors will influence their customers as well as their own business, and they need to start planning now to harness these trends to maximize the value of customer relationships.
The effects will be far-reaching. Firms must not only navigate the four broad and interconnected forces of change, but they must be prepared to innovate continuously as these factors evolve. Optimizing for the future of consumer buying isn’t a one-off step change; it requires rapid and regular reinvention. Many firms have shown themselves capable of focused change based on new circumstances — for example, Lettuce Entertain You Enterprises adapted its traditional restaurant management and licensing business model with a meal subscription service in response to the COVID-19 pandemic. But long-term success requires firms to proactively evaluate their options with a willingness to innovate every aspect of the business in three stages:
- The customer: What fundamental changes are consumers experiencing? Start by determining how consumers’ lives are changing and the impact on your target buyer. Which short- and long-term trends affect customers, and what is the impact on your addressable market?
- The product: What offering will meet customer expectations and needs? With customer insights in hand, evaluate product-market fit. Do existing offerings still meet customer needs, are there gaps to fill and potential improvements to make, or are there opportunities for entirely new products?
- The business: What is the optimal structure to match the market with products? Finally, consider the optimal approach to building, distributing and selling your offerings to target buyers. How effective will your current business model be as the market changes, and do you need to consider new or multiple business models?
Streaming giant Netflix offers an example of how a firm reinvented itself repeatedly across all three dimensions for long-term success:
- The customer: Netflix recognized the growing consumer market as internet bandwidth grew, digital content lagged, and customers used diverse content delivery platforms.
- The product: Netflix determined that a new product was necessary to serve customers, creating a streaming service as an alternative to physical media delivered via mail.
- The business: Netflix shifted its business to optimize effectiveness of the product for its customers by adding a second business model to become a content producer.
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This post was written by VP and Principal Analyst Joe Stanhope, and it originally appeared here.