Segmenting Tech Consumers

Communication technologies and applications like Facebook, text messaging and Web cams are giving consumers near-limitless options for interacting with one another. This new wave of greater social interaction has migrated from our homes to our schools, and, more recently, to our offices. The reality is, the consumers of tomorrow will thrive on this kind of innovation. As a result, financial institutions face a difficult challenge: adapt, or risk falling behind in the race to meet consumer expectations.

Who are the future consumers? How will their presence affect the financial industry? What do organizations such as insurance companies and brokers need to do to prepare for this imminent change?

Let’s examine the first question. To understand the future consumer, we have to consider factors beyond age and income — we also need to think about the way they communicate with each other, and the technologies they use. Technology trends go a long way towards explaining where financial firms need to be in order to serve future consumers. Based on the research TELUS conducted with intelligence provider IDC Canada, TELUS has identified seven new market segments, four of which are the key drivers behind changing consumer communication preferences. These four key drivers are:

The Young Embracers

The early adopters of new technologies, these future consumers, between the ages of 13 and 24, are paving the technology road by favouring new communication tools such as instant messaging, live chat, social networking and frequent e-mail.

The Mobile Professionals

These educated, e-mail savvy, busy young professionals are looking for tools that will help them save not only time, but money as well.

The Laptop Warriors

These are the workplace influencers. Ranging in age from 18 to 34, the Laptop Warriors promote new ways to interact within the workplace and are keen on using tools such as live chat to communicate.

The Internet Savvy

People in this group are comfortable using the Internet and actively explore new ways of incorporating it within their homes. They’re generally older males and, like the Laptop Warriors, are open to communicating live over the Web.

WHAT DOES THIS ALL MEAN?

Although the Young Embracers have led the charge, all four of these key segments desire new ways to interact with one another. Technological adoption isn’t just for the young, it’s for the seasoned as well. There’s a significant older presence in the Mobile Lifestyle and Internet Savvy segments.

Ultimately all four groups are the key influencers of change, causing a rapid shift in an industry that for all intents and purposes hasn’t seen much movement in years. For example, although many insurance agencies and banks have embraced new communication formats such as Web chats and online services, others are just starting to test these high-tech waters. For more cautious organizations, communication with customers often comes in three formats: face-to-face conversations, phone calls and snail mail carried by Canada Post. The future consumer, who thrives on social interaction, will be looking for new ways to reach out to the financial service providers they patronize through video conferencing, instant messaging and other interactive tools.

In fact, recent research by IDC finds that among 13-to 17-year-olds, 42% prefer to use instant messaging as their communication tool-of-choice compared to the phone. Furthermore, those between the ages of 18 and 24 opt to use social networking sites.

Why is this change occurring? The answer is simpler than you might think. It can be described in one word: access. Think about how many people had access to the Web and its tools back when early Web browsers launched in the 1990s; now compare that number to the millions of people who have Internet access today. IDC’s research reports that 94% of survey respondents say they use the Internet at least once a day; nearly half report it’s “very important” that broadband Internet is available everywhere they go. Even more striking is that 60% of respondents “strongly agree” they couldn’t go more than a few days without going online. The same can be said for mobile devices, which used to be designed for the business elite but are now accessible to nearly all consumers. Indeed, we have access to more communication tools than ever before. For financial service providers, the rate at which consumers adopt these technologies indicates the need to invest in communication systems that accommodate the ways in which future consumers want to connect. If financial institutions don’t adapt quickly, they will be missing out on a substantial slice of the bottom-line pie.

However, financial services organizations have several challenges to address first. For one thing, financial services firms will have to review their customer experience strategies to make interactions faster and simpler — a challenge all the more difficult because of the ongoing need to ensure customer interactions are secure and confidential. Further to that, integrating new communication channels will add a significant amount of pressure on current technology infrastructure. Organizations will need to turn to new IT solutions and implement service-orientated infrastructure to help streamline this complex shift in technologies.

Despite this, financial services providers are finding solutions among the technologies that the future consumers are using already, including social media Web sites, wireless text messaging systems and instant messaging applications on computers. Once new and relatively unexplored tools, these programs have become consumer staples used at home, while travelling, in classrooms and almost everywhere else.

ACT SOON

The term ‘future consumer’ implies a single group, but financial institutions need to realize there are different segments, each with unique needs that will have to be addressed. The Young Embracers may find solace in their text messaging, but the Internet Savvy may require a completely different approach that emphasizes interaction through a channel such as live chat. Organizations need to examine their current IT capabilities and begin implementing these new channels immediately. Rather than waiting for change to happen, it’s important to anticipate it, understand it and plan for it.

Equally important is the consistent delivery of the customer experience, no matter what technology the consumer is using to interact with their financial institution. Educating and training employees how to manage the future consumer’s needs is therefore a pivotal exercise.

Financial services organizations must also consider ahead of time the impact their decisions will have on the customer relationship. Decisions are too often made with little consideration of the ill effects they might have on vital customer experience values, such as availability, fairness and consistency. To be successful in this field, you need to factor in these core values before any significant decisions are made.

Finally, meeting the needs of the future consumer will require financial institutions to assess their current customer experience plan and determine where areas of improvement might be addressed. Assessment tools are available that help organizations build tailored road maps to an improved customer experience strategy. After all, improving the customer experience requires more than free swag or longer branch hours. Success in an evolving industry is determined not just by early adoption of new technologies or a cultural shift internally, but through targeted customer experience strategies that are executed with the future consumer in mind.

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Technology trends go a long way towards explaining where financial firms need to be in order to serve future consumers.