Technology adoption is a fascinating thing. Regardless of what the “next big thing” is, adoption tends to follow a consistent pattern. I’ve always thought that Gartner did a pretty good job with their “Hype Cycle” adoption curve, and as someone who has built a business around data, I enjoyed watching big data’s journey on the cycle – from its place atop the Peak of Inflated Expectations in 2013 to its steady progression down the Trough of Disillusionment in 2014.
But last year, something interesting happened. Gartner removed big data from its Emerging Technologies Hype Cycle just as you’d expect it to begin its trip of the Slope of Enlightenment. The Slope of Enlightenment is my favorite leg of the Hype Cycle journey – the place where rubber meets road and the technology starts to prove itself. Betsy Burton, the report’s author, discussed the decision, saying that “big data has quickly moved over the Peak of Inflated Expectations… and has become prevalent in our lives across many hype cycles. So big data has become a part of many hype cycles.”
I found myself agreeing whole-heartedly with that reasoning, which dovetailed with mine. The idea of big data has become so prevalent in enterprises that the phrase itself stopped having much meaning. Instead of an emerging technology, it was just the way businesses operate, defined by its applications. And, as expected, data is again just data no matter how ‘big’.
Flash forward less than a year, and we are seeing companies do amazing things by harnessing data. One of the side effects, however, is that expectations continue to soar – most notably from consumers. Consumers now expect a much greater degree of personalization than ever before – not just from Amazon, Netflix and other service providers that were built from the ground up on data – but from all service providers. Banks, for example, must understand and plan for the fact that consumer expectation for personalization is creeping into their business and impacting their ability to attract, please, and retain customers.
NGDATA recently conducted a survey of more than 1,000 banking customers designed to measure consumer views on how well they believe their banks understand them. The results were clear. A few findings stood out, most notably:
– Segmentation Doesn’t Cut It Anymore: Fewer than 30% of consumers believe that offers from their banks are customized for their individual needs, which is a huge problem for banks. Over just the past few years, consumer expectations have risen considerably, and banks are not keeping pace.
– The Problem Will Only Get Worse: Younger generations in particular are becoming frustrated. There is a strong correlation between age and expectations: 51% of respondents between 18 and 34 said they’d be happier if their banks understood them better. As respondent age increased, that number shrinks: just 27% of those 45 or older responded similarly. While older customers’ expectations are on the rise, their position as customer will continue to be replaced by younger ones, meaning that demand for individual understanding can only increase. The time to act is now as future business is at stake.
The research we conducted indicates that we’re amid a shift toward increasingly customized, personalized interactions between businesses and their customers. We focused on the banking industry, but I’d be willing to wager that similar research in any industry would return similar results. Gone are the days where customers are satisfied with being lumped into demographic segments and getting offers that aren’t catered to their individual needs and preferences.
This strong preference toward personalized offers is even more pronounced with younger consumers, who have grown up in a world powered by Netflix and Amazon recommendation engines and text message auto-completing capabilities tailored to their personal usage. The approximately 80 million Millennials in the U.S. represent roughly 25% of the American population, and their spending power will only increase. Recent research from Accenture found that this generation spends roughly $600 million per year, a number that will grow to $1.4 trillion by 2020.
The challenge of changing the way businesses interact with a generation that demands personalization will span every industry, but will be more pronounced in industries like banking that have been historically slow to adopt technology and change their processes. Segmentation and demographic-based outreach has powered marketing departments for generations, but the market is rapidly changing, and these approaches are no longer sufficient. A clear path for happier and more loyal customers is emerging, and organizations that don’t take that path will lose ground to competitors that develop a deeper understanding of customers not only at the demographic level, but at the individual level. Organizations that do this effectively will enjoy longer, more fruitful relationships with the customer of the future.
Luc is a co-founder and the CEO of NGDATA. Prior to NGDATA, he co-founded Porthus (EU, 2000), which delivered cloud-based solutions that IPO’d in 2006 and was acquired by Descartes Systems Group in 2010 (US/CA). At that time Luc became the EVP global marketing, product strategy and chairman of corporate planning office (US/CA). After leaving Descartes, Luc observed what was becoming a massive expansion of useful consumer data and realized that consumer oriented companies would need a solution to store, organize, sift and gain customer insights with what would become known as Big Data. Through his experience in artificial intelligence (neural networks, large data processing, rule based systems, …) he decided to join forces to create NGDATA. Luc holds a Master in Engineering and Information technology (UGent, BE) and Executive MBA (Antwerp, Kellog, IMD).
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