Logo
Become a Client

Customer listening. Customer engagement. Both well-established and understood aspects of the customer experience arsenal that many would argue they have already covered within their CX strategies. But have they?

The challenge for many organisations is that they believe they have ticked all the boxes on customer listening and engagement, when in fact all they have done is put in place a few CX tools that are each doing a good job in one part of the CX value chain or another but are operating in isolation of each other.

These organisations fail to realise the business value that is unlocked when these components work together in a single interconnected system. Once understood and implemented as a system of interconnected technologies, a fully functional customer listening and engagement system lets organisations make full use of customer signals to actively drive contextualised customer experiences.

So, what are the moving parts of a fully connected and functioning customer listening and engagement system?

  • Signal gathering: the exhaustive capturing of customer signals across all channels
  • Data consolidation: once signal gathering is in place, consolidate all customer data into a customer data platform
  • Real-time analysis: deploy analysis on your consolidated data in real time to unlock behavioural and intent insights
  • Decisioning and engagement: once gathered, consolidated and analysed, a decisioning system is needed to identify next best actions and drive contextualised and orchestrated experiences

These components will no doubt sound familiar, because many enterprises have already installed one or more of them, or plan to. In a recent IDC survey of European enterprise CX technology decision makers, we found that for each of the four components of customer listening and engagement, 80% of enterprises have already implemented the technology or plan to do so in the next 12 months.

So there is a tremendous amount of buy-in for these individual components. But the challenge is that too many organisations are treating them as individual tools, with each one brought in to address a specific business need at a point in time.

To maximise the benefits of a full customer listening and engagement system, all four components need to be in place and working together. But in our survey, we found that only 8% of enterprises have all four of these critical components installed, meaning most organisations are a long way off systematically leveraging customer signals to create differentiated contextualised experiences.

Customer Signal Gathering

What we mean by customer signals are any indication of what a customer is doing or intends to do with a brand. A fully optimised customer signal gathering system is one that takes in signals from across the whole estate of channels that customers use, truly reflecting the omni-channel customer journey. This includes long-established voice of customer systems that many organisations already have in place, based on survey-powered feedback-gathering mechanisms.

Customer signals also include not just conversations customers have with a brand, but also those conversations they are having about a brand. Many organisations are also deploying social listening and analysis tools to capture this. There are also the insights that can be harnessed from organisations’ customer engagement systems themselves.

All the data generated across the value chain — sales, marketing, onboarding, support and service — can shed light on customer behaviour and intent. All of this represents a myriad of customer signal sources. The question is: are you capturing all of them and are you doing it systematically? An optimised customer signal gathering strategy should ingest signals from all these sources.

Data Consolidation

Having exhaustively captured customer signals from all sources, organisations then need to house all this data in a single destination — a customer data platform (CDP) — to create a single version of customer truth. Data silos are one of the major barriers preventing organisations from getting a unified 360-degree customer view.

For organisations that want to leverage all the customer signals gathered from these sources, the CDP is a critical part of the customer listening and engagement system. More organisations are starting to recognise this. In IDC’s latest Future of CX Predictions, we predict that by 2024, 50% of the G2000 will adopt CDPs such as enterprisewide central nervous systems.

Real-Time Analysis

With all of this customer data now housed in a single destination, the key to maximising the insight extracted from it is to employ an analysis system continuously and in real time. Done right, this lets organisations respond to signals — both positive and negative — at the time they are happening and enable them to respond to customers with highly relevant and contextualised responses.

One of the most powerful examples of this is responding to customers at risk of attrition — a moment of truth identified in our recent survey of CX decision makers as among the top benefits of a customer listening and engagement system. CX leaders want to be able to act on signals of attrition in real time and rescue defecting customers, generating true business value, rather than just reporting on it after the fact.

Decisioning and Engagement

This is the final component of customer listening and engagement and this is where the “rubber hits the road” and where customers really see the difference from organisations that run a fully functional customer listening and engagement system. This is where an organisation translates all those signals, the 360-degree customer view and the real-time analysis into next best actions — the actions the data tells us are the next best steps for a customer, in the context of all their interactions and their journey with the brand up till this point.

The biggest problem with traditional voice of customer systems in the past is that they focused on data gathering and were too disconnected from systems of engagement — so listening did not lead to enhanced customer engagement. In the customer listening and engagement system, these are intrinsically linked and work in concert, enabling brands to create experiences that are contextualised and orchestrated in direct response to the signals gathered.

Take Customer Listening and Engagement to the Next Level

For organisations looking to create differentiated experiences through customer listening and engagement, conduct an audit of your CX stack — understand what moving parts you already have in place and work on filling in the gaps in your customer listening and engagement infrastructure. Critically, focus on creating the linkages between the components and ensure they connect well and work together as a unified system — from signal gathering to data consolidation to real-time analysis to decisioning, orchestration and engagement.

Select the vendors that can provide the necessary connectivity between these layers to create a unified system with the full suite of capabilities, rather than a collection of individual tools completing individual tasks in isolation.

The tech market especially is well-known for change. While sales teams are usually well trained in the features and functions of a new technology, including their horizontal application across industries, they do require, however, more insight to the strategic priorities of business buyers at an industry level.  An effective training program empowers them with a sharp understanding of the technologies, the industry and enables them to build strong go-to-market plans and value-selling strategies that deliver lasting business growth.

Before building a training program for your sales and marketing teams, consider outlining your expectations of what you need your sales and marketing teams to do, and this will broaden your tech training session beyond just product features and benefits.

What do you need your sales team to deliver?

  • Increase revenues
  • Closing more business, faster, by linking your value proposition to the target persona’s priorities

What do you need your marketing team to deliver?

  • Improved demand generation
  • Winning go-to-market strategies
  • A better understanding of customers and personas and use of data to gain a competitive edge

That’s a tall order for these teams, made especially challenging when the economy isn’t participating, and some companies are leaner in response.

Build a Sales Enablement Approach That Teaches Your Teams to Fish

Ultimately, your goals are to provide your team with key industry knowledge, specific to country dynamics and covering both customer markets and the IT industry, as well as a consulting-based framework which will enable you to create meaningful value propositions.

When IDC designs our successful sales enablement programs for our clients, we work from a robust framework that can also be applied across global markets.

  • Market education for sales – Include a mix that makes the content engaging, like tutorials, case studies, virtual presentations and mastery classes.
  • Technology, persona & industry specific enablement assets – Offer as much information you can about your solution and the market. Include industry tutorials, persona buyer enablement, an industry playbook and industry brief and quick reference guide.
  • Interactive selling tools and ABM support – Offer digital, interactive selling tools that your teams can use to prove the value of your solution. IDC offers tools like a Business Value Assessment and End-use maturity or readiness assessment that leverage our data and create a trusted transaction because they prove the value of your solution to your buyer.
  • Sales Effectiveness – clearly identify competitive positioning and offer key messaging advice.

Download: Recession-proof Sales Enablement Strategy. IDC’s Sales Enablement Solutions and Capabilities

Training Content That Builds Empowered Teams

The most enabled teams have a deep understanding of their product, the industry and equally important, their customers. They know all of the personas they need to create connections with, including their pain points and desired business outcomes. Fully enabled teams also know how to empathize with customers, so they can build a narrative around their strategic priorities and break these down into use cases. Finally, closers are effective because they have the right tools to carry them through ROI conversations and validation. They can confidently map your solution to their customer’s business priorities and KPIs, and they can do this with validated data.

Consider the following content framework to achieve this:

  1. Industry insight and knowledge – specific industry insights aligned to country dynamics, if necessary, as well as case studies, trends and industry drivers of change.
  2. Strategic priorities – allow your teams to research their customers through publicly available information and identify the people and decision making they are required to do, the nature and scale of operations, how they are performing, the risks and threats they are exposed and the transformation they need, the challenges and opportunities and finally, strategy and tactics for success.
  3. Hands-on learning – provide an opportunity for your training participants to put their learning and research to use by way of a sample case study, leveraging their new industry insights and understanding of strategic priorities.
  4. Learning journey – ensure that you set clear and actionable outcomes from each session and set a plan that maps how and when you will continue to engage with your teams by re-communicating the insights and action.

If you have any questions when you’re building, or updating your sales enablement tools and training, we are here to help. Contact us or learn more about IDC’s Sales Enablement practice and how it can help you build an empowered sales team.  

A robust competitive strategy should reveal how your core markets are behaving, how your products need differentiating based on the competitive landscape and finally, what is driving customer demand.

For a well-rounded template, we created this new workbook you can download. It’s designed to be a tool that is a blueprint for exceling in your market: Building a competitive strategy workbook.

The complimentary workbook takes you through the questions you need to answer in three key areas:

  • Market opportunity
  • Competitors and Share
  • Customer Dynamics

How do you answer the key questions to help you build a solid competitive strategy? What research and data can you leverage to give you the deepest insights into your buyers and markets that will enable you to take those next steps (be it either in product differentiation or new adjacencies) with confidence?

The Technology Landscape

Your competitors are equally affected by the elements of change on the technology landscape: the economy, changing social norms changing, government policies, consumer pessimism.  Utilize the research available to gain an understanding of what is occurring. In late 2022, we published this blog post that dove into what we have called “the winds of change”. Read Navigating Through the Storms of Disruption, for guidance on near-term and mid-term planning.

Predictions are a vital resource for technology vendors. Not only should you gauge these predictions for your own business, but use them when mapping out the market opportunity in a competitive strategy exercise. For example, one IDC prediction states that by 2025, with 40% or more of IT spending as a service, use of short duration capex cutting tactics will be constrained, instead requiring lasting operational expenditure resets of 10% to 30% in software and resources. Alongside this prediction and statement on budget implications, IDC also recommended tactical actions for 2023 and permanent actions for 2024 and beyond.

Download: Market Sizing Guide

In another article Macroeconomic Challenges for SMBs and How They Are Responding, you’ll find insight into which elements, from a long list of macroeconomic troubles, SMBs are responding to. If you are an SMB trying to understand your market and the competitive forces, you’ll find the insights from a recent study that looked at how these macroeconomic concerns vary by region, as well as how supply chain disruptions are complicating projects.

The latest research studies are a good temperature check and give you an understanding of what your competitors are dealing with as well. To dig deeper, however, will require customized research. If you lack the analytics then you can leverage the strength of IT research firms who specialize in your market. The breadth and depth of data is there and so is the expertise to be able to interpret it and develop reliable inferences and plans.

Download: IDC’s Custom Analytics Capabilities Book

What is Impacting Customers?

It’s critical to have a deep understanding of what is driving customer demand. IDC uses several tools to understand today’s tech buyer and consumer.

  1. Wallet: details the technology spending of over 60,000 of the world’s largest technology buyers, enabling more targeted sales and marketing campaigns
  • Consumer Pulse: surveys consumers in seven countries about their current and near-term attitudes toward the eight segments, with particular attention paid to the concept of brand trust.
  • Consumer Market Model: leverages the framework to create five-year forecasts of consumer internet penetration, online activities, eCommerce, and other services spending across 51 countries.
  • Future Consumer Agenda: seeks to provide a futurist’s view of significant trends and technology shifts across the consumer spectrum.
  • Customized Analytics: customized research that marries existing research with primary studies. It gives you tailored data to understand what the market trends are driving the purchase decisions for your specific solution, who the buyers are in the organizations you’re targeting and the purchase drivers of those buyers.

The most successful competitive strategies combine existing research frameworks with customized insights to, once again, help you understand what’s happening for your business, specifically.

The right market intelligence mix can help you overcome product and market complexities, more accurately anticipate and outpace competitive forces by providing current market data and intelligence that feeds into your strategic planning. If you have any questions when you’re building, or updating your competitive strategy, we are here to help. Contact us today, or learn more about IDC’s Custom Analytics practice and how it can help you.

Digital technology is reshaping business models, revenue streams and operations management. At the same time, the rising number of start-ups, scale-ups and unicorns in Europe — the digital-native businesses — is helping to boost digital transformation (DX) initiatives in traditional organisations.

What Is a Digital-Native Business?

Digital-native businesses (DNBs) are highly dependent on a digital infrastructure and are built from the start around modern technologies, from cloud-native applications to artificial intelligence, with data across all aspects, from operations to business models and customer engagement. By adopting new and emerging technologies, and using platform services and marketplaces, DNBs can quickly grow and scale up their business, creating new markets and disrupting traditional business models across industries.

DNBs are also defined by their market valuation — start-ups are valued at less than $250 million, scale-ups are valued from $250 million to $999 million and mature digital natives are valued at $1 billion or more. They can also be either technology-orientated companies (e.g., innovative ISVs/SaaS providers, selling technology products, software or IT services to other businesses) or technology-driven B2B or B2C companies (offering tech-enabled products or services respectively to business or consumers).

What Impact do DNBs have on Traditional Enterprises?

DNBs are disrupting some industries more than others. Fintech companies such as Revolut in the UK and digital banks such as N26 in Germany have pushed digital innovation in the past few years into a very traditional sector, whereas Sweden-based Spotify has completely reshaped the music industry at a global level.

DNBs’ influence also extends to the way traditional companies adopt and use technology. DNBs’ tech operations are often cloud native and data driven, with a customer-centric focus, employing tech-savvy developers and data scientist teams in agile environments to grow and scale the business quickly.

Market disruption and the growing interaction with DNBs are driving traditional European organisations to adopt some of the DNBs’ distinguishing digital features, such as shifting towards a digital-first organisational approach across the enterprise. According to IDC’s What Is the Impact of Digital-Native Businesses on Traditional Enterprises? — based on IDC’s 2022 European Industry Acceleration Survey — these impacts include:

  • Increased innovation: 35% of businesses with more than 1,000 employees cited this. Healthcare (37%), government/education (34%) and transport (34%) are the most impacted industries. Healthtech, edtech and the shared economy are the fastest-growing segments in the DNB arena.
  • Adoption of new working models: The implementation of agile, remote and hybrid ways of working pushed by the interaction with DNBs is most common in very large enterprises, government, education, and retail and wholesale industries. These extensively adopted remote working during the pandemic, and are now taking inspiration from DNBs to permanently adopt new and flexible working models.
  • Higher proportion of digital personnel: Finance respondents have increased the share of employees with digital skills (38%), and have a greater focus on customers and CX (31%), a trend influenced by the interrelationship with the fintech ecosystem. On a broader level, medium, large and very large organisations also say DNBs have had a major impact on organisational changes at the C-suite level.

Why Is it Important to Monitor the Relationship Between Digital Natives and Traditional Businesses?

IDC’s European Industry Acceleration Survey highlights growing coopetition between DNBs and traditional organisations. This is leading to a more innovative and digital-first organisational approach for the latter, such as a tighter focus on digital revenues, across all size categories, and greater competitive pressure in their respective markets, which may enable them to enter M&As or investment activities with DNBs.

This last trend is more prominent for utilities and oil/gas respondents, an industry where customer-orientated digital natives have pushed traditional companies towards improving their CX, also by acquiring entirely digital organisations in the process and with new market segments (such as renewables) being led by digital-native businesses.

Tech providers should target European DNBs, as this is a competitive, fast-growing segment populated by lean, agile and tech-enabled organisations. DNBs are built around modern technologies and digital infrastructure, and need to enter strategic partnerships with external stakeholders to meet their need for innovation. Tech providers are the first option for European DNBs, according to preliminary results from IDC’s Global Digital-Native Business Study.

Tech providers should also look to DNBs as precursors of the changes and trends that will affect traditional industries. Changes range from greater adoption of cloud services (cited especially by telecommunications and media, finance, and professional services respondents) to the adoption of a data-driven approach to business outcomes (cited by 19% of very large enterprises and 25% of retail/wholesale respondents). What DNBs need today will be what traditional businesses need tomorrow.

The relationship between DNBs and traditional organisations could span from tech supplier to potential acquisition target. This could change based on their business model, giving birth to interconnected ecosystems. For these reasons, in cultivating a long-term relationship with digital natives, tech vendors can also improve their positioning in traditional enterprises as trusted partners in their DX journeys.

To find out more about digital-native businesses in Europe, please contact Martina Longo.

Martina Longo - Research Manager, Digital Business - IDC

Analyst Profile
Martina Longo is a research manager in the IDC Digital Business Research Group. In her role she advises ICT players on how European organizations create business value using digital technologies. She also leads IDC European Digital Native Business research, focused on those enterprises born in a modern technological world in a mix of start-ups, scaleups, and more mature digital natives. Within the European Digital Business Research, the European Digital Native Business, Start-ups and Scale-ups theme advises technology suppliers on the market dynamics and segmentation, business priorities, tech buying patterns and go to market approaches (sell to/sell with) needed to engage digital native organizations in Europe.

A common challenge for many organizations is to accumulate and maintain valuable knowledge gained by employees as a function of their jobs. The problem is that most organizational knowledge is not effectively captured, shared, and utilized.  This means you are leaving a valuable resource untapped and, more importantly, don’t have the ability to transform knowledge into insights for better decision-making.    

So…a formalized system — to capture, create, share, use, and access knowledge — is important for today’s workplace.  The huge volume of knowledge gained by employees should be converted into something usable for the current and future organization and available on-demand for others to leverage.  This is where knowledge management technology comes into play. 

What is Knowledge Management?

Knowledge management sounds simple enough to have some sense of what it is.  IDC formally defines knowledge management as “technologies and processes designed to enable organizational insights and meet business objectives by capturing, creating, sharing, using, and accessing knowledge.  Additionally, knowledge can be derived from tacit, structured, unstructured, learned, analyzed, or processed information.” 

Knowledge management offers a path for better decision-making, which leads to real, measurable bottom-line benefits like greater efficiency, more innovation, data driven decision-making, and higher customer satisfaction. You can act and react to quickly changing market dynamics by making existing knowledge easy to find and usable in an established data repository.

Why Knowledge Management?

OK…we know what it is – now what?  The good news is that IDC research has uncovered several reasons why organizations implement knowledge management system.  What’s interesting is that the identified motivators come from many unique perspectives – collaboration, protection, training, etc. – to create different types of positive impact.  Most respondents picked between 1-3 key motivators as rationale to deploy or plan to deploy a knowledge management system. The most common responses included:

  • Improving the overall collaborative work experience.  Knowledge management can drive efficient collaboration by improving the employee/customer/partner experience of sharing knowledge.  It also enables more employee self-service processes to quickly find and retrieve knowledge that enhances productivity and helps to reduce support requirements. 
  • Protecting and maintaining knowledge.  A knowledge management system establishes protection and maintenance of legacy knowledge that could be lost due to employee attrition.  
  • Training/onboarding new employees.  A central repository of organizational knowledge allows new team members to quickly come up to speed on company operations and job responsibilities.  The time and effort to train and onboard new employees can be vastly improved by making knowledge easily accessible. 

Knowledge management isn’t new. It’s been around for several years, so why is now the right time to take a closer look at this technology? Frankly, it’s because the technology infrastructure is better now.  The market landscape continues to transition toward a digital-first mentality and knowledge management is part of that evolution. Consider knowledge management as part of your overall IT evolution in how organizations use, access, and manage their business content. 

A recent IDC survey shows that the numerous named benefits from knowledge management systems tie in with the previously mentioned motivators (see Figure 1).  The top four benefits highlight improvements in business execution, customer support, satisfaction, and employee performance that address operational gains in the business overall.  Ultimately, these benefits lead to a positive bottom-line financial impact and plainly make the case for knowledge management as an essential business operations tool. 

Perhaps one of the most compelling points identified in the data is that virtually no respondent (<1%) indicated no benefit from implementing knowledge management.  These benefits drive an awareness that knowledge management offers a solid return on its investment. 

Knowledge Management Use is Expanding, But…

It isn’t fully saturated.  IDC research revealed that only 45% of employees of large-sized companies (500+ employees) that have implemented knowledge management in their organizations are, in fact, using it.  Obviously, this is less than half of the employee base on average.  In two years, this percentage rises to 55%, so the use of knowledge management is expanding at a steady, gradual pace.  While the increase is encouraging, it also indicates that there is considerable room in the longer term to increase employee usage to a level that more aligns with what would be common everyday use across most, if not all, employees.  We’re not close to that today, but certainly there is potential to move in this direction. 

Figure 2 notes that knowledge management systems address a wide range of organizational information.  Given that the top use identified in the survey is in the compliance/records management and IT departments, the highest percentage of data stored in knowledge management is IT or customer service ticketing data at 56%.  This data type corresponds with the compliance/records management and IT departments where knowledge management usage is highest.  However, we also find a large variety of information assets residing in these systems as well, including customer data, business documents, process metadata, rich media, forecasted knowledge, learning modules, social streams/conversations and content blocks/fragments for dynamic document generation and others.  It demonstrates knowledge management’s ability to manage all sorts of content and data types.

Some Challenges to Overcome

Of course, knowledge management systems are still evolving and there are considerable process and technology challenges to address (see Figure 3).  The IDC survey identified the top process challenge as the “external use of knowledge is limited, manual and/or time consuming to update and maintain”.  Other significant process challenges highlight that:

  • Numerous unconnected silos of data make collaboration difficult
  • Employee behavior such as hoarding knowledge, not being incented to use knowledge management or not knowing where to find/look for knowledge isn’t yet where it needs to be to optimize knowledge management

All these process challenges highlight an inadequate level of organizational commitment to managing knowledge.  In such cases, the organization does not take the necessary time and effort to commit to managing knowledge or the organization does not instill an urgency for its employees to use knowledge management. 

The range of technology challenges are clustered closely together and speak to considerable usability issues that remain in play and limit adoption.  Several organizations also complain of the inability to determine any true benefit from its use, even though almost all organizations using knowledge management indicate beneficial gain. 

We anticipate that knowledge management providers will recognize these challenges and work diligently to address them in the near term.  This will foster greater adoption of knowledge management systems as a standard requirement in business operations.

Conclusion

Managing organizational knowledge is no longer a nice-to-have benefit.  It is a critically important tool for efficiently maintaining organizational information and to remain competitive in a rapidly evolving technology ecosystem.  Knowledge management creates a formalized process for the organization to leverage and capitalize on the employee insights gained for current and future use.  The array of benefits identified in the IDC survey clearly notes knowledge management’s positive impact on internal employees as well as external constituents that interact with the firm.  Challenges do exist, but we believe that many of these identified challenges will be addressed with evolving future generations of knowledge management as its presence becomes standard for the enterprise. 

Our advice is to be ahead of the curve.  For those who have already adopted the technology, the opportunity is now to increase usage between your employees and with appropriate parties outside of the organization to fully achieve maximum benefit.  For those thinking about adding knowledge management as part of the organization’s IT infrastructure, it’s not too late, but the time to act is now.  Knowledge management is an avenue to keep pace with the increasingly contested competitive landscape.  In the not-too-distant future, we anticipate a notable competitive advantage available to those firms that adopt knowledge management versus those who continue to hold out.

Learn More

Keith Kmetz - Program VP - IDC

Analyst Profile
Keith Kmetz is the Program Vice President of IDC's Imaging, Printing & Document Solutions programs. He is responsible for all written research in these areas, including analysis on the printer, multifunction peripheral (MFP) and 3D printing markets as well as related transformational hardcopy software/services developments. Based on his 20+ year experience at IDC, Keith's research coverage has spanned a wide variety of significant print industry topics with an emphasis on both forecast and survey analysis; vertical market opportunities; and client go-to-market strategies.

It has been said before that “proper planning prevents poor performance” and this is particularly important for IT buyers in these uncertain economic times.

The IMF has warned that “Half of the European Union and one-third of the world face recession in 2023”. Global inflation is forecast to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023 and to 4.1 percent by 2024.

Every business needs to understand the impact of inflation and recession from both a demand and supply perspective. This is a very broad topic, so let’s focus this discussion using the persona of the IT managed service buyer.

The IT managed service buyer has (amongst others) the following pain points:

  1. Understanding current market labor rates – for time & materials projects it’s critical that IT services buyers understand current market labor rates to ensure they are getting value for money from IT service providers.
  2. Validating IT budgets – for longer term multiyear budgets it’s important for IT service buyers to understand market pricing trends for both labor rates and full scope IT services.
  3. Forecasting – arguably the most difficult task and a product of the first two is forecasting IT spending over the typical 3- to 5-year horizon, so this is the area that we’ll explore in this blog.

Forecasting

The one true fact about forecasts is that they are always wrong. The more data you have, however, the better the accuracy and it can be compelling for technology buyers when coupled with deep market insights from IDC’s team of subject matter experts, analysts and researchers.

IDC’s benchmarking and sourcing advisory services has market price data from recently signed IT Outsourcing deals in the last 12 to 18 months, which show that inflation has directly impacted the market price for Outsourced IT Services and labor rates.

Annual price reductions in the region of 5% to 10% were commonplace for outsourced IT infrastructure services such as server, storage and network device management, as end clients benefited from economies of scale and automation that service providers offered from offshore delivery locations.

Over the last couple of years, IDC has observed that traditional year on year price reductions have reduced substantially and even reversed for IT services with high direct labor content, such as service desk and deskside support.

IDC research (IDC# EUR149042322, May 2022) has shown that the underlying digital transformation (DX) trend in Europe continues to be strong. Initiatives within digital service development and back-end application and process modernization have increased in priority and size in 2021. The COVID-19 pandemic has resulted in reprioritizing security, workplace transformation and related skills development.

The research emphasized the need for up-to date, evolving skill sets to ensure the resilience and agility needed in rapidly changing environments. Changes in the workplace, due to the pandemic, further increased the demand for cybersecurity and data analysis and uncovered a need to improve skills development and training.

Source: European IT Employment Forecast, 2020–2025, IDC Doc # EUR149042322

European technology employment grew 2.7% in 2021 with continued demand for DX skills, even though the COVID-19 pandemic put strong constraints on larger implementation projects. 2020 had an essentially flat growth of 0.4%, but growth in employment in 2022 will reach 3.6% as demand continues to grow.

Labor rate inflation

It may be stating the obvious that labor is a key element of any IT managed service deal, however it’s not the only component and other elements like tools and automation are also key as they enable service providers to provide a more cost-efficient solution, using standardized offerings coupled with sheer economies of scale. The benefits of server virtualization and offshoring have plateaued for the majority of existing outsourced infrastructure deals and further cost savings are marginal for many clients.

First-time outsourcing deals can still offer significant savings to clients as offshore labor rates are still significantly lower (up to 30%) than Western Europe rates. This is a relative statement, however, and labor rate inflation is a global reality.

In a related IDC blog Brian Clark explains that the situation has evolved as both buyer and supplier behaviors have adapted to the new reality that inflation is most likely here to stay. The reasons for the price increases may be changing, as well as the areas of IT most impacted, but navigating rising prices for IT supplies, services and talent remains a challenge as we start 2023.

IDC market research has shown that AWS recently raised consulting day rates by 7-8% and Adobe increased pro-serve rates by 20%. Many more examples exist as the cost to deliver professional services continues to rise, due to high demand for this service and a corresponding critical IT skills shortage.

Recent rounds of layoffs within the high-tech community may alleviate labor shortages, but their focus will be on internal operations. The security or Kubernetes expert is expected to remain in high demand.

Inflation in the Euro Area

Data from Eurostat (the statistical office of the European Union) shows that Euro area annual inflation is expected to be 9.2% in December 2022, down from 10.1% in November 2022.

Energy is expected to have the highest annual rate in December (25.7%, compared with 34.9% in November), followed by food, alcohol and tobacco (13.8%, compared with 13.6% in November), non-energy industrial goods (6.4%, compared with 6.1% in November).

Services inflation is estimated to be 4.4% in December, and this aligns with IDC’s experience on IT Services Price Inflation, even though the underlying wage inflation is significantly higher.

Conclusion
Technology buyers should expect the price of professional services to continue to rise in the coming 18 to 24 months, as a direct impact of global inflation. The impact on multi-year IT outsourcing agreements will be less pronounced, however, as service providers leverage the benefits of offshoring, automation and efficiencies from standard offerings. That said, end user clients should expect existing service providers to enact their economic price adjustment clauses; the bottom-line impact, however, can be offset with productivity gains and strategic investment to reduce labor intensive business processes and associated services.

For additional guidance on IT spending, IDC’s Sourcing Advisory Services provides clients with the world’s leading price benchmarking service. IDC’s experts help IT buyers drive new savings across any of their technology purchases, spanning all categories across IT hardware, software, services, and labor rates.

European organizations expressed their concerns and the impact the believe they will face from Regulations in the coming years of 2023 and 2024, when asked about it in the European Enterprise Acceleration Survey (n=1500). The survey was conducted in late 2022 and we found that the top three priorities for European organizations are in the domains of Cybersecurity, Data Governance and Sustainability.

However, the perception or Regulatory impact varies within European regions, as the political and economic differences reflect in organizations’ regulatory focus for the coming years.

For instance, Western Europe and Central Eastern Europe bear significant differences as the organizations from Western Europe are more concerned about Sustainability Regulations and Safety of products (quality). Meanwhile, organizations from Central Eastern Europe see a higher impact coming from Cybersecurity and Privacy regulations.

Central Eastern Europe

Given the geopolitical context with the war on Ukraine, countries like Czech Republic, Poland and Romania have the highest concern about Cybersecurity Regulations. Those countries have already felt the geo-economic impacts of the conflict in Ukraine, and organizations can find themselves in a situation of lack of compliance with both EU and local regulations.

Particularly in the Czech Republic, there has been a push for Cybersecurity regulations by the National Cyber and Information Security Agency (NUBIK) in the last 5 years, as well as a dependency reduction from foreign parties since the war started in Ukraine. Lukáš Kintr, Director of NÚKIB, commented on the progress of the new draft legislation on high-risk suppliers assessment of technology: “The Czech Republic can have a comprehensive system for reducing the state’s dependence on untrustworthy foreign suppliers within two years. In the field of information technology, we hope to avoid the situation we are currently observing, for example, in connection with oil and gas supplies from the Russian Federation.“

Moreover, with the upcoming application of the NIS2 Directive, several industries included in the Critical Infrastructure category will be touched by the new security requirements. As the tighter Cybersecurity Regulations in the EU comes to place in the next 18 months, EU countries will need to transpose it into national laws and organizations will need to understand how to implement those.

Western Europe

Western Europe organizations hold the same pattern without great discrepancies and have a balanced Regulatory impact assessment profile. Some specificities can be found in France, Netherlands and the UK.

France

France has the highest concern with Ethical-AI Regulations in Europe. France has started to roll-out their policies about the topic from 2018 on, following the publication of the National AI strategy, and the creation of the French National Committee for Digital Ethics.

The country has been historically a leader in the Ethics of technology and AI policymaking, not only from a restriction and liability standpoint but also from a talent and skills investment perspective.

Netherlands

Netherlands is the country with the highest perceived impact of Privacy Regulations, given the high degree of awareness of their citizens and therefore the concern of Dutch organizations. Even if Germany is the leading country on the Privacy subject, Netherlands leads the Privacy Impact Assessments (an instrument for determining privacy risks of data processing in advance).

United Kingdom

The UK is the Western European country with the greatest focus on Data ownership and control regulations, hence the Digital Regulatory misalignment caused by Brexit and the harmonization needed for UK organizations to keep operating in European countries.

Nordics

On another sub-European region, the Nordics, we see yet another response to the contextual geopolitical challenges. The highest regulatory impact perceived by Nordics organizations is around Digital Sovereignty Regulations.

This is explained by the perceived risk of the geographic proximity to Russia, and the increase of the state-sponsored attacks to Nordic countries, especially after the beginning of the war on Ukraine. As the region has the highest digital maturity of European, the direct cyber response is in place (updated infrastructure, high cyber skills, security systems in place, etc.) and new concerns about business implications of the geopolitical context arise.

The Nordics has nonetheless the highest perception of impact coming from Sustainability Regulations in Europe. Historically, the sub-region has had the most relevant political push for green and environmental regulations.

Norway has a number of local regulations around the ESG dimension, such as the Transparency Act, which will required amendments to be compliant with the new Corporate Sustainability Reporting Directive from the EU. Organizations in the Nordics, even if very advanced in terms of compliance with ESG-related Regulations, have to juggle with tighter requirements and uncertainty of the compatibility of the national and EU regulations.

Recommendations for Tech Providers

  • Geo-based sales enablement: Base your go-to-market strategy, sales message and product offerings on the regulatory priorities of organizations for the next two years, taking into consideration not only industry but specific geography (sub-region and country).
  • Target the top regulatory concerns across the continent: European organizations will be required to comply with many new or update regulations at the EU and local level. Target the three top areas first: Cybersecurity, Data Governance and Sustainability.
  • Focus on technology to help automate compliance procedures: Technology should be a facilitator of the compliance process. Provide your customers with Digital Regulatory Intelligence Solutions, the technologies for monitoring, data processing and reporting.

 

If you want to know more about this Research, access the report or contact Anielle Guedes.

Pandemic-accelerated change is combining with the unique habits of Gen Z and Millennials to drive massive changes in the consumer technology marketplace.  Those who anticipate and understand these changes will find opportunity and growth; those who fail to do so will be blindsided and left for dead.  There is no middle ground.

Now that the COVID Pandemic is Behind Us, Not All Boats are Rising

With the high level of consumer spending provoked by the pandemic, firms across the board were able to show revenue and profit growth – even those that lost share.  Not anymore.  Now is the time to make sure you understand where the market is headed and how you will drive growth for the future.  If you are in a legacy business with a customer base largely made up of Gen X and Boomers, buckle up!  Even companies who already resonate with Older Millennials must understand the unique attitudes and behaviors of Gen Z and Younger Millennials.  IDC’s Consumer Pulse uses quarterly surveys in seven countries to identify the ways technology intersects with the life of the Future Consumer.

The Home: The Versatile Center for Everything

Forced to stay at home, consumers came to have a new view of their homes and lives.  Their homes became the center where they do everything: work, play, learn, exercise, and more.  6 in 10 said they were ready for the tech demands of working and learning from home, with predictable differences by income.  Connectivity was the area consumers reported the highest degree of readiness. Devices and accessories were areas of felt need.

Consumers had LOTS of time on their hands and were forced to use technology, engaging more deeply.  Time spent on entertainment increased by 30% from pre- to peak pandemic.  With little to do or nowhere to go during their free time, they upped their engagement with social media and online entertainment.  They gamed and posted more frequently, putting out TikTok videos for all the world to see.  Some even found they could make money at these new endeavors – doing what they wanted to do.

Re-thinking Work & Life More Broadly

An increasing percentage of workers found themselves aware of the choices they had.  With newfound control over their time, broader market acceptance of work from home, and alternative income sources at their disposal, a growing share of workers redefined what was best for themselves and their view of success. 

No longer would it be necessary to think of a corporate job in an office and a promotion as the means to success.  In this new world, they reasoned, “I can work as much or as little as I want, when I want, doing what I like.”  Energized by their opportunity to be their own bosses, workers resigned in droves, pursuing their own gigs or gravitating to employers willing to work under a new, different work framework.  Others simply cut back on their work hours.

Content Creation:  The Race to Empower and Enable Creators

Content creation and gaming, once considered niche activities, are now mainstream, fueled by the energy and ambition of Millennials and Gen Z.  More and more, “everyone” is a content creator.  In fact, 78% of consumers create and post content at least monthly, led by videos (62%).  1 in 6 report earning at least some amount of money with their content. 

Those who earn money use 3 to 4 devices including real cameras and have a much more sophisticated content creation process requiring a seamless experience across form factors.  Amateurs use only 1.3 devices on average, with most relying almost exclusively on their smartphones.  The opportunity is ripe for companies across the marketplace to provide devices, software, and platforms which offer a seamless experience and empower content creators to do what they most want to do – build a following and make money.  This means helping them to move along the continuum from amateur, to prosumer, and beyond.   It also means understanding the dynamic, ever-changing environment. What role will generative AI play? Will short-form video continue to be the rage?  What about long-form? Stills?

Tech-enabled Income-generating Activities Drive a Larger Tech-enabled Lifestyle

It’s not just content creation. Tech-enabled side hustles are on the rise. Half of households report engaging in at least one source of tech-enabled income-generation. Besides content creation, peer-to-peer commerce and rideshare driving top the list. Over 60% of households headed by Gen Z or Millennials report such online income. This trend, seen worldwide, was corroborated by a recent U.S. study by Lending Tree. 

Importantly, engagement in online income-generating activities is a powerful catalyst to broader adoption of a tech-enabled lifestyle – a tipping point in individuals’ lives. The opportunity to earn income drives initial openness to the usage of tech-enabled apps and services.  Successfully earning income then produces confidence to adopt tech-enabled approaches in other areas of their lives.  This is true across all demographics.  Online income-earners more intensely use digital payments platforms, spend more on devices, and subscribe to a wider breadth of tech-enabled services.  Consumer-facing companies with tech-driven solutions would do well to target them.

An Online First Mentality is Predominant

When it comes to shopping, consumers have clearly embraced an “online first” mentality, leading online purchases (50%) to overtake in-person purchases (43%) for the first time; phone purchases remain at 7%.  Usage of online grocery shopping has broadened dramatically – 72% now report they buy at least some of their groceries online, even if just occasionally.  Home delivery is driving the biggest part of this growth – expanding its share from 25% of purchases (pre-COVID) to 35% of purchases (now).  Gen Z and Younger Millennials drove this growth – along with Boomers, demonstrating how the habits of these younger cohorts are impacting the broader marketplace. 

Interesting “Crossover” Activities are Emerging

There is an interesting mash-up happening between social media, gaming, and e-commerce.  Enabled by technology, consumers are connecting areas of their lives previously seen as separate.  Gamers are posting videos of their gameplay on Twitch and Instagram.  Shoppers are using TikTok to discover where to eat or which supplements to take.  Business opportunity exists wherever consumers want to connect previously disconnected areas of their lives.  A future Metaverse is a potential place for that. 

Two-thirds of consumers have heard the term Metaverse, but familiarity and knowledge with the concept behind the term is very low.  Roughly 1 in 4 consumers are highly interested in the concept of the Metaverse.  They prefer immersive experiences and are more willing to spend on tech, including smartwatches and AR/VR headsets.

Re-shaping Meals and Dining

When it comes to meals and dining, the attitudes of Gen Z and Millennials increasingly point to a very different lifestyle from previous generations.  They have a much more positive view of the quality of delivered food and a much less negative opinion of its value for money.  Their habits are re-shaping the marketplace, giving rise to a flurry of drive-through only restaurants and ghost kitchens.  As Gen Z and Younger Millennials age and reach the family stage, the implications will be even more dramatic, as their “practical and convenient” orientation gives rise to the opportunity for alternative business models, including combined meals and groceries subscriptions.

Travel Rewards Opportunity with Gen Z and Millennials

Travel suffered significantly during the first year of the pandemic.  Over the past 6 to 9 months, travel exploded!  But travel is the ultimate discretionary expense and inflation pressures are now weighing on consumers’ disposition to travel, particularly among those with lower and middle incomes.  Consumers have already widely adopted the internet for planning and booking travel and these habits have been stable for the past 3 years.  Still there is opportunity for disruption here.  While 29% of Gen Z and Millennials have dining-related rewards programs, only about 15% are active in an airlines or hotel rewards program.  This clearly signals an opportunity to gain a footing early with these consumers, with a long lifetime ahead of them. 

Multi-mode Personal Mobility & Gen Z

71% of consumers use at least two modes of mobility for a significant portion (10% or more) of their monthly mobility time.  With their proclivity for urban living, more than any other generation, Gen Z use public transport, bikes, scooters, rideshare, and mobility services. The Future Consumer will have a broader, multi-mode mobility strategy using multiple modes alongside the continued use of personal cars which remain consumers’ strong preference.  Battery electric vehicles continue to face barriers; but new more affordable entries are coming to market.  This will reduce Tesla’s first mover advantage. 

Lifelong Learning is Nearly Universal in Reach; Opportunity Remains

Online Learning is increasingly ubiquitous, used by 6 in 10 consumers overall, 70%+ of Millennials, and 80% of Gen Z. Online learning is a perfect fit for Gen Z and Millennials who are digitally self-sufficient and motivated to achieve.  Online Learning continues to offer strong growth opportunity; the breadth of possible learning topics is tremendous, with many consumers pursuing topic after topic.  While consumers see paid content as more trustworthy than free content, YouTube remains a dominant, free source and Gen Z has become more skeptical of the value for money of paid online learning offerings.

Wellbeing is Ripe with Opportunity

With COVID, at home’s share of consumer workout time grew from 36% to 56%.  With the end of the pandemic, this has fallen but remains well above the pre-COVID benchmark at 44%.  The pandemic had a big impact on mental health. The younger the consumer the worse the impact.  Due to its perceived mental health benefits, more people are exercising now than before the pandemic.  Millennials have shifted most strongly to working out at home due to their busy lives and their purchase of home workout equipment.  At home, self-developed routines are most prominent as consumers leverage online workouts (free and paid) and companion apps.  A segment of consumers is open to using AR/VR for their workouts.  All these factors make wellbeing ripe for activity and change.

On top of that, consumers are nearly universally dissatisfied with the bureaucratic, manual nature of healthcare systems and providers in their country. Healthcare operations and logistics are ripe for disruption and can be a point of provider differentiation. Consumers are widely receptive to tech-driven change in all aspects from scheduling, to prescriptions, and related price research, medical records, and alternative tech-focused insurers and providers. 

Near-term Consumer Digital Transformation Opportunity Momentum

Consumer-facing Brands that Fail to Prepare for the Future Consumer are Dead

Gen Z and Millennials embrace technology across a wide swath of their lives. Their unique habits offer opportunity, their attitudes signal their future interest.  Firms which truly understand and meet their needs and expectations will cultivate their trust and build increasing relevance.  Those that do not will find themselves increasingly ignored as stagnant or irrelevant.  Business as usual is not an option.

We tried to assess the potential uses that a manufacturing organisation could make of chat-enabled generative AI technology and assessed the potential impacts of this technology for the industry by analysing the very answers an open tool has given us.

We questioned none other than ChatGPT, which stands for Chat Generative Pre-trained Transformer. ChatGPT is based on OpenAI’s GPT-3.5 series, which can perform a variety of natural language processes*.

With the professional version available, assuming that outage and availability problems are now past, does it make sense for a manufacturing organisation to fork out the few dollars of monthly subscription? Let’s find it out.

When we asked ChatGPT how it can be useful in manufacturing processes, the response listed the following areas:

“Quality control: ChatGPT can be used to analyse written reports and data from quality control inspections, identifying patterns and trends in product defects.

Predictive maintenance: ChatGPT can be used to analyse sensor data and logs from manufacturing equipment, identifying patterns and trends that indicate when maintenance is needed.

Document summarisation: ChatGPT can be used to automatically summarise large amounts of technical documents, such as manuals and procedures, making it easier for employees to find the information they need.

Natural Language Processing: ChatGPT can be used to process natural language input from users, such as voice commands, and translate them into actionable instructions for manufacturing robots or machines.

Chatbot: ChatGPT can be used to create a chatbot for customer service, handling customer inquiries and complaints.

Language Translation: ChatGPT can be used for language translation for multi-lingual communication with customers and suppliers.

These are just a few examples of how ChatGPT can be used in manufacturing. The specific application will depend on the needs of the manufacturing company and how they want to utilise the technology.“

We then proceeded in investigating some more details for each of the answers. The follow up question was “How can ChatGPT be used in quality management in manufacturing?”

We are now providing the actual answers, with a brief comment and our verdict.

“ChatGPT can be used in quality management in manufacturing in several ways. One way is by analysing data from quality control inspections to identify patterns and potential issues. The model can be trained on historical data to predict when quality issues are likely to occur, and can also be used to generate reports and alerts to notify quality control personnel.”

Any modern Quality Management System (QMS) application can already be augmented with an embedded AI analytics module to achieve this. This is very useful to help companies figure out complex root cause structures, and in general, investigate their “known” and “unknown” unknowns. In our case, it is unclear on which data Chat GPT is going to rely. So, at the present time, we think that ChatGPT is overselling a little bit here.

“Additionally, ChatGPT can be used to generate automated test plans and reports to increase the efficiency of quality control inspections. ChatGPT can also be used to generate automated documentation for compliance with regulations and industry standards. This can include generating standard operating procedures, work instructions, and other documents to ensure that quality management processes are followed consistently.”

This is quite interesting. This can help a lot with the simplification of clerical work and create multiple reports for different audiences very easily and at scale. But for the real business impacts to materialise, a company should first do some preparatory work and carefully define business rules, templates, formats, and audience requirements.

“Another way ChatGPT can be used in quality management is by analysing customer feedback and complaints, and identifying patterns and common issues. This information can be used to improve the quality of products, and to prevent similar issues from occurring in the future.”

The good old “feedback loop” story: understanding user habits and recurrent issues to feed back to the quality department with relevant information. But in the manufacturing industry, the problem for most companies is how to bypass distributors and access timely and good quality market information directly to feed the analysis. If ChatGPT only relies on publicly available information and does not tap-in any market intelligence database, everything it would talk about is things a company should already know about. So, as an add-on to a market intelligence subscription, it could become an intelligent way to consume the data, otherwise, mostly of little use.

“Overall, ChatGPT can be used to improve the efficiency and effectiveness of quality management processes in manufacturing, and help to identify and prevent quality issues before they occur.”

Here it seems a definitive oversell.

Then we followed up with the next use case: predictive maintenance and this is the answer.

“Analysing large amounts of data from manufacturing processes and equipment to predict when maintenance will be needed. This can include data from sensors on equipment, as well as data on past maintenance and repair history.

The model can also be trained on historical data to identify patterns and make predictions about when equipment is likely to fail.

Additionally, ChatGPT can be used to generate reports and alerts to notify maintenance personnel when maintenance is required, and can also be used to optimize maintenance schedules to minimize downtime and improve overall equipment efficiency.”

We are not doing a point-by-point analysis here, but in general, we are seeing the same pattern as the use case before. Overall, ChatGPT can be used to improve the efficiency and effectiveness of document management processes in manufacturing and help to identify and extract important information from documents quickly and accurately.

Good for clerical work simplification, redundant for other functionalities, but definitely overselling itself sometimes.

Now, let’s analyse the other points that ChatGPT has brough forward: Document summarisation, Natural Language Processing, Chatbot, Language Translation.

A quick glance at the detailed answers highlighted that here ChatGPT was not providing additional business use cases, but rather outlining some basic principles of how it works. A little bit like if we asked an intelligent washer-dryer machine what it does, and the reply was: “Washing clothes, drying clothes, having a spinning drum inside, being heavy, consuming electricity, etc.”

Any Missing Areas?

Now we also thought about some obvious “missing areas” in its self-assessment: for example, idea generation. Using the generative text functionalities as a way to explore concepts, visions, user needs, like a “crowdsourcing” tool that prompts ideas that may just not come to mind to a decision maker considering several options.

Another obvious miss was code programming. Our research has constantly highlighted a critical need for digital skills in factories and the importance of low/no-code applications to address this (we have been talking about the notion of “buyilders” — a hybrid between “build” or “buy” software users), enabling workers on the shop floor in general act as/programmed as interactive tool/personal assistant, digital work instructions, etc…

As personnel with some knowledge of coding become more of a frequent sight in plants, having a conversational tool for programming can easily lower the threshold for digital skills in disciplines such as data analysis, machine connectivity, and operational improvement.

What Are the Risks that a Manufacturing Company May Incur While Using this Type of Solution in Their Business Practices?

First, the risk of losing the grip on information quality. Over time, managers can lose grip on the practical aspects of information they have to evaluate (where it comes from, how it has been created, are there inherent biases in it? etc.), with an increased risk of “garbage in/out” effect (a side note: with examples of answers such as “gnothi seauton”, or “42!” we can think of plenty of “oracles” providing unintelligible answers to poorly structured questions).

It is true that sloppy interns will get wrong information as well, but the system has no way to check the quality of information, at least not yet. Eventually, there is a risk of having supervisors that have never done the job in the first place because the step is not done anymore.

Also, these tools automate a lot of “entry-level”, clerical, repetitive transactional tasks (filling repetitive reports, data entry, data check, etc.). This is not bad per se, but it could be an issue in organisations where the “learning by doing” career growth is heavily based on those menial activities.

The risk is that there could be no available route for juniors to learn and grow in these organisations.

Hampering radical innovation reduces the questioning of the status quo. The widespread use of generative tools will also force companies to reinvent excellence.

In its answers, ChatGPT tends to converge to a median level, the “common knowledge”. So not only can this lead to a risk of preventing “disruptive discovery” if not used properly, it can also amplify and reinforce organisational biases, favouring routine and procedural consistency over innovation. Removing the transactional costs of procedures (i.e., clerical work is boring and expensive) can make organisational streamlining less of a need.

Making the fulfilment of useless steps automated and cheap may lead to the accumulation of inefficiencies. When nobody has the ownership and burden to execute these tasks, nobody questions the procedure, and the risk of procedural errors or bottlenecks arising from convoluted processes is never addressed.

The advice is to take this technology with a grain of salt. Companies have to look at it with an eye for process transformation. Automating something manual is not a benefit by itself, it is a benefit when it simplifies the organisational structure, saves time, and increases the focus of key decision makers to more relevant tasks that create real business value.

Purpose is a word that is often talked about. But what does it mean and how does it impact your business?

Purpose is not just about what you sell, but the value you bring. Not just about the products and services you produce, but your company ethos. The impact of what you sell, how you make it and the effect your company has on the wider community.

Purpose impacts everything from buying decisions to employee productivity. Purpose, therefore, drives not only what you do but how you do it.

Download eBook: Essential Building Blocks for an Effective Growth Strategy

A purpose gets to the why of the company. Why do your products or services exist? What value does your company bring? Beyond making a profit, what are you providing?

But why does this matter?

Customers are not just concerned with the performance of the products they buy, but who is providing them. Interest in things like a company’s carbon footprint, the working conditions of employees, even the charities a company donates to influence a customer’s decision to buy.

What you stand for is impacting if people buy from you. So you need to ensure you can demonstrate the value you bring. What your “purpose” is.

Your brand purpose is also important for your employees.

It helps build strategy and focus goals. Helps with decision making. It needs to be more than a PR statement — an ethos that can help drive the company. Something that an employee can look to and ask, does the work I am doing contribute to our purpose?

It promotes an aligned and connected organisation that delivers value. Purpose enhances performance and creates value.

Brand purpose is an important keystone for any business. Brand purpose should influence everything from your strategy to messaging to recruitment.

Download eBook: Essential Building Blocks for an Effective Growth Strategy

Your company may already have a brand purpose. If you do, it’s good to revisit it and see if it still reflects the ethos and goals of your business.

There are key questions that you should be asking when thinking about your business that your purpose should answer.

Questions to ask when looking at brand purpose:

  • What does our business help people achieve?
  • How does our business impact the societies we operate in?
  • What value(s) do we have while building our products and services?

Customers are becoming more concerned about what a brand stands for. More likely to check whether your business is doing what you say it does. Performative actions without substance (such as greenwashing) will not go down well with potential customers. Purpose can be aspirational, but it must be honest.

Examples from major companies:

  • Coca-Cola. Our purpose: Refresh the world. Make a difference.
  • HP. We are a technology company born of the belief that companies should do more than just make a profit. They should make the world a better place. Our efforts in climate action, human rights and digital equity prove that we are doing everything in our power to make it so.
  • Nike. Our mission: Bring inspiration and innovation to every athlete* in the world. (*If you have a body, you are an athlete.)

Purpose goes beyond a slogan.

Purpose should tell whoever encounters it what your company stands for and what it provides.

Purpose is a factor in a business’ reach and awareness within a market. It can determine whether a customer buys from you, or not. A driver for success.

Act with purpose.

 

For more information and resources, click here.