Trends in Finance for 2019, Part 2: Customer Demands are Changing
There has been a big shift in business since 2008. Those years in between were dominated by the recession. Today, businesses are dealing with a different landscape—a new workforce, innovation as the norm rather than the exception, and the requirement for every business, regardless of industry, to be a “technology” business.
The role of finance has also changed and must change to stay in sync. The days of the accounting and finance department being in the back office, focusing on budgets and reports, are over; today’s finance leaders have become the connecting tissue between every department of the organization, leveraging both technology and data to help guide company strategy while ensuring stability and protecting it from risk.
This is the second in a blog series on how finance has changed in 2019, discussing changing customer demands and how your finance team can adapt and help the organization leverage new opportunities while keeping customers loyal.
Part 1 is about how the role of finance has changed. They’re no longer isolated from the rest of the organization. Finance leaders are now the connectors of the organization.
Part 2: Customer demands are changing
Today’s customers expect more from businesses, and that is fundamentally changing the way businesses operate. Buying trends such as on-demand and subscription services, using social media sites to plan their next purchase, and brands selling direct to consumers are forcing companies to adapt to a new business model.
The growing number of Millennials (set to outnumber the Baby Boomers in 2020, according to Pew Research), along with the members of Gen Z now making their way into the workforce is causing businesses to prepare for a new wave of socially aware, tech savvy buyers.
The new product mix
Advances in technology and some entrepreneurial spirit have changed consumer buying behaviors. Rather than buying products, consumers are renting, sharing, or streaming them in order to get the newest products at the lowest cost.
On-demand. On-demand services, from movies to printing, is expected to exceed $57 billion this year. On-demand services allow customers to obtain what they want, when they want it, at a fraction of the cost than if they purchased the product new.
Sharing. Another popular trend is for consumers to “share” a product instead of purchasing the product individually. As one example, Airbnb allows homeowners to rent individual rooms or their entire house to travelers at rates equal or less than hotels with all the amenities of a home.
Subscription boxes. Another growing trend is subscription box services that offer consumers a monthly service delivering products unique to their tastes, covering everything from meals to cosmetics and clothing to pet toys and treats.
Anything as a Service (XaaS). Technology services are not immune to this trend, either. Using the capabilities of cloud computing, companies can offer their software, hardware components, and, in some cases, their entire network as a subscription service. While Software as a Service (SaaS), where users can access a software application in the cloud, is perhaps the most well known among these types of products, other popular technology products are Platform as a Service (PaaS) and Infrastructure as a Service (IaaS).
Socially conscious customers
While companies have long felt the need to give back to society in the form of grants and charities, consumers are now demanding that companies be more involved in their communities and social causes. Led by members of socially conscious Millennials and Gen Z, consumers are now choosing to purchase from companies that support social and environmental causes. And this trend is not lost on the boardrooms across the US. CEOs are directing their companies to make Corporate Social Responsibility (CSR) a priority in their businesses, and investors are demanding more social involvement from the companies as well.
Beginning with Apple Pay, mobile payment options are becoming more popular as more wireless phone manufacturers offer the capability and more businesses accept them. In fact, the number of Apple Pay, Samsung Pay, and Android Pay contactless users grew from 20 million in 2015 to over 150 million in 2017, and contactless payments are expected to reach $2 trillion globally by 2021.
Cutting out the middleman
Many companies are bypassing the normal retail channels and instead are reaching out directly to the consumer. This allows them to earn larger margins on their products while at the same time building a personal relationship with their customers.
Adding more value
For over a decade, brick-and-mortar retailers have had to cut costs and streamline operations in order to match the lower prices offered by companies like Amazon, who function by not having to support a physical location. Now that they cannot cut costs any lower, retailers are trying to add value back to their customers through expanded product offerings, improved customer experiences, and exceptional service.
How AKA can help today’s businesses respond to changing customer demands
To reach today’s tech savvy customers, businesses need better insight into their customers’ needs and be able to react quickly to their demands. AKA can help.
Gain greater insight into customer behavior: AKA can help your business track customer buying behaviors to predict high-performing products, identify potential problems before they occur, and help you create exceptional customer experiences.
Become lean and agile: AKA can help you improve visibility and communication across your organization so you can respond quickly to changing market trends.
Improve customer service: Today’s businesses not only need visibility into their business, but also the ability to make sense of the data in the form of predictive insights. Choose AKA to help you find ways to improve customer satisfaction and loyalty.
Catch up on Part 1 here: The Role of CFO is Changing and stay tuned for Part 3 where we focus on the tools and technology that are helping financial professionals be more proactive and productive. To learn more about finance trends in 2019 download this Microsoft whitepaper, 2019 Finance Trends Report.