Thirty years ago, video killed the radio star—and now digital has killed, well, human interaction altogether. As a consequence (and point of opportunity), organizations must now rely almost entirely on digital strategy to stay competitive.
Now more than ever, consumers have direct (if not mobile) access to everything they need, and organizations are disrupting their platforms to transition from human to digital engagement. Unfortunately, however, many fail to recognize that this disruption affects not just technology and engagement, but new customer acquisition – i.e. how customers will find and convert to these platforms once they’re in play.
This poses a huge threat to organizations because many are failing to reach their customer base in this new digital paradigm in a way that matched their previous human to human interactions. However, the movement towards digital also creates a significant growth opportunity for those who leverage digital strategy to remain relevant amid diminishing human interactions.
Take the financial services industry for example. No one questions the evolution from people and paper to digital and direct servicing, nor should they; it’s not about reading a newspaper, calling a broker, and making a trade anymore—but making a trade directly.
TD Ameritrade saw this coming in 1988, when it became the first company to offer automated trading via touch-tone phone—and they saw it again in 1995, when they acquired K. Aufhauser & Company, the first company to offer trading online.
Attrition Rates in Financial Services
According to McKinsey & Co., the average insurance agent in the United States is 59 years old, while a quarter of the industry’s workforce is slated to retire by 2018.
The industry, according to State Farm’s former head of digital marketing Matt Johnson, “is not a high-interest category for someone aged eighteen to thirty-five. They want to spend as little time as possible thinking about insurance.”
At that point you can’t just replace your workers; you need to replace your business model—which relied upon human agents and brokers to not just take orders, but nurture leads, support customers, convey brand narratives, and earn trust.
Resultantly, the firms that focus only on the bottom-of-the-funnel user experience (UX) and engagement rather than digital acquisition stand to lose double-digit percentages of market share.
What Can We Do About It?
One company’s loss, of course, is another’s opportunity. So those who adopt the best digital approaches, through and through, stand to earn worthy returns on their investments. Not only will the digital leaders overcome the challenges of their own businesses, but their improved digital experiences will also attract customers away from their competition who aren’t keeping up with customer experience expectations.
The industry is simply too regulated to allow for much competitive edge, making financial services “non-defensible products” that are easily copied or undercut, but too surrounded by red tape to facilitate any obvious distinctions.
Digital marketing, then, becomes a great opportunity and their largest potential differentiator. However, it’s important to distinguish between engagement, which is part of the customer lifecycle, and marketing, which involves finding new customers to enter the lifecycle. And, crucially, it’s important to focus on both—balancing interactions and UX with proper branding and lead generation.
At Authentic, our precise methodology varies depending on several factors, such as the size, industry, and competitive environment of an organization (e.g., hyper marketing, enterprise, small, medium); however, it typically requires complex integration involving content automation and delivery, taxonomy, search engine optimization, and a management system to track and sync all of this. The key, of course, is for all components to come together as one fluid experience for the customer or potential customer, not as disparate campaigns.
To summarize, the focus shouldn’t be on transitioning customers to a new system, but terraforming a new ecosystem to meet the users where they are and how they want to engage with a business in this digital-first world.
And that holds for all industries, not just financial services.
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