Customer purchase process
The Digital Transformation is further transforming the purchasing process, even the “habit” of shoppers. The shift of internet access to the mobile devices has further accelerated the change. Notice that here the focus is mainly on the retail market.
Let’s look at the six stages of purchasing:
- Problem recognition
More and more the problem recognition takes place through advertisement. And more and more advertisement will get customised to the single customer. The Digital Transformation by making use of data in all phases of a product/service life cycle will create an immense data space of every single –potential- customer. The increased use of personal assistant (as well as personal digital twins) is likely to change this stage, anticipating in some cases to the point that solutions will be sought through the design of a product that will meet the specific, anticipated, demand.
- Information search
The ubiquitous access to the web and the presence of basically an unlimited number of products/services just waiting to be browsed has changes the habits of consumer. As for the previous stage the trend is towards anticipation plus contextualisation. Information is most likely to be brought to the customer, rather than having the customer search for it. The likely adoption of seamless augmented reality is bound to bring this information at the right time in the right spot. One should also note the emerging trend of voice based browsing/interaction that is going to have a significant impact on the purchasing process in the mass market.
- Evaluation of alternatives
The process of evaluating alternative has changed significantly as result of crowdsourcing and social media. Even for something as simple as selecting a restaurant most people will take a look at reviews and directly make reservation from the review site. The availability of a digital assistant/digital twin will further change the evaluation process, introducing a pre-screening that will take advantage of continuous feedback (and machine learning) to finely tune decisions to expectations.
- Purchase decision
The decision, if still made by the customer (in several situations the decision may be delegated to the digital assistant… as we are starting to delegate email responses to Google…) will benefit from the analyses made through a digital assistant of some sort that will take into account a variety of parameters to a point that can change the way products are marketed. As an example, take the decision of buying a white good appliance. Each product has the information on its energy efficiency. However, the average customer would have a difficult time in translating that information into a decision parameter (yes, in general a class A is better than a class B but would that justify a 50€ increase in price?). A digital assistant, aware of the probable use of that appliance can convert the information into a value that would support a decision (like: you buy that washing machine and by the end of the year your electricity bill will be 40€ higher. That means that in less than two years, with an expected life time of 8 years, that washing machine will more than pay for the price difference). There is also another twist that needs to be taken into account. The Digital Transformation is not just optimizing the production, it is also optimising the usage. This means that more and more the purchase decision will involve considering the “sharing” of a product rather than its full ownership. The possibility to connect to other potential buyers will make this process easy and may change radically the retail landscape.
With the Digital Transformation products are likely to be offered “wrapped up” in services. Even a product like a pill for controlling your blood pressure may be offered as a service. Would you like to be monitored as you use the medicine? How often would you like your blood pressure to be sampled by sensors in your wearable and analysed by an application that is customised to your body and health profile? Do you want a personal digital twin be created specifically for this purpose or, if you already have a digital twin would you like it to be extended to cover this aspect? Would you like autonomous consultancy to take place via your digital twin? And so on …
The Digital Transformation is also offering, in many cases, the possibility of buying the use of a product, rather than the product itself. This happens when the functionality of that product are delivered through the cyberspace and also when the physical product becomes a resource managed in the cyberspace. The Gig Economy is an example of leveraging the cyberspace to make better use of resources.
- Post-purchase evaluation
By having the product present both in the physical world and in the cyberspace (represented through its digital twin) and by leveraging IoT embedded in the product (sometimes also those in the ambient) it is possible to establish a connection between the product user and third parties, including the product manufacturer. This is an important aspect of the Industry 4.0 model where data derived from the product usage are analysed to improve future versions as well as to provide pro-active maintenance and fine tuning (these latter can be monetised as service offering). This leverage on the cyberspace to deliver functionality, coupled with the increasing softwarization of products is also making possible to increase over time the functionality of the product (as part of a customer care service or as a further sales of functionality). We have become used to this in the yearly releases of our laptop/smartphone/tablet operating systems (they are provided for free because the manufacturer has a vested interest in keeping its consumers base up to date and locked in its products…).
This possibility of “modernising” a product through periodical update of its software and of the functionality provided through the cyberspace is increasing the product life span and this is clearly a double-edged sword:
on the one hand there is less consumption of materials and less waste since one keeps a product for a longer time before replacing it, and this is clearly good from a sustainability point of view;
on the other hand, many business models are based on repeated selling through a short life span of the product. The manufacturing plants usually require little changes in moving from one version to the next one, meaning that they can benefit from huge economy of scale. By selling fewer instances of a product the overall volume decreases and this increases the share of the amortization cost of the plant on each product.
Overall one can say that the post-purchasing phase is changing because of the changing nature of the products and because of the new relationships being established with the manufacturer and with third parties (using that product as a platform to deliver their services/adds on).