Successful CIOs focus on a zero-friction customer experience

Customers now expect a seamless cross-platform experience.

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The Internet has created a new sense of community – without borders or long-distance charges.  This digital frontier has forever changed the way we live our offline lives. CIOs play a more pivotal role in shaping the way we interact with brands than ever before.

Sharing a house, a car, or even pets, are all possible thanks to a digitally enhanced economy. The digital generation prefers access over ownership. Instead of building a life around what they own, they prefer finding meaning and satisfaction in having access to things and interacting with people in the process.

CIOs at the forefront of modern commerce

Forward-thinking CIOs have been sounding the alarm for more than a decade. Brands that want to survive the digital transformation have to quickly evolve - with mobile accessibility, sleek online stores and a user experience that virtually eliminates the role of the traditional salesman. The keywords are FAST and RELIABLE.

Ask any retailer or brand manufacturer and they will tell you that consumer behavior has changed more in the last five years than it did in the 150 years prior. Technology is at the heart of this change.

David Clark, a senior research scientist at MIT’s Computer Science and Artificial Intelligence Laboratory, was asked about the future of the Internet in 2014. So far, his response has been spot-on:

“Devices will...have their own patterns of communication, their own ‘social networks,’ which they use to share and aggregate information, and undertake automatic control and activation. More and more...decisions are being made by an active set of cooperating devices. The Internet (and computer-mediated communication in general) will become more pervasive but less explicit and visible. It will, to some extent, blend into the background of all we do.”

Brands investing heavily in digital assets

As the Internet becomes more like electricity – so embedded in our daily lives that we forget it is a luxury humans once never had – cornerstone brands are finally heeding the CIOs alarm - creating Internet and app-driven businesses that capitalize on the connected structure to better their communities, countries, and the world. The services that on-demand companies provide attract more than 22.4 million consumers annually, generating $57.6 billion in revenue.

But strangely, CB Insights recently reported that funding to on-demand startups fell to a two-and-a-half year low in the fourth quarter of 2016, continuing to freefall from the category’s 2015 peak. Globally, on-demand startups attracted just 55 funding rounds in the last quarter of 2016; compared to 78 deals the prior quarter; and 116 deals in the hottest quarter of 2015.

The fall of service-based apps & startups

As an entrepreneur who has moved from the ecommerce world to the on-demand service world, Scot Wingo, founder of Spiffy, believes the dwindling support for on-demand companies is because they put financial decisions in front of customer experience. But he maintains there’s hope.

“I believe the on demand economy has a shot at being as big if not substantially bigger than e-commerce,” said Wingo. He cites the four consumer behaviors that drive rapid adoption and believes the on-demand economy sits squarely at the intersection of all four:

  1. Mobile – The average American looks at their phone 82 times a day.
  2. Social –  Facebook’s 2016 Q4 results found there are 1.8b monthly users and 1.2b of them (66%) are daily users.
  3. Bifurcation – A term coined by Deloitte referring to consumer behavior after the 2008 downturn. US consumers had two reactions to the recession – they either became value oriented or convenience oriented and they have split pretty evenly.
  4. Zero Friction – Commerce speeds up when barriers to transactions are reduced, something on-demand companies do well.

If you are a CIO and you aren’t spending a large chunk of your time figuring out how to make a zero friction consumer experience - your competition is, and it’s a serious threat – consumer expectations have changed.

“Conversely, if you can give consumers a disruptive and innovatively low or zero friction option, you will win their hearts and minds. Instead of DIY (Do It Yourself), create a business that gives consumers DIFM (Do It For Me). Create an app and communicate with them that way. It’s all about flexibility and transparency. Put the control of the transaction in their hands, versus yours,” says Wingo.

Amazon sees the huge market opportunity of convenience, so much so that they are willing to forego profits just to please their customers. IBD wrote about Amazon executives that have described rapid delivery as both difficult and expensive, but have acknowledged that their customers love it. And Amazon seems committed to following the trend, so much that CEO Jeff Bezos has said the company will forego profits in the near term to execute their strategy.

Any company that fits in the realm of instant gratification, convenience, transparency and overall minimal to zero friction is part of an already large on-demand space. Over time, this space can outgrow e-commerce, “because if you look at US GDP, goods are 20% and services are 80%,” says Wingo.

The takeaway is clear. CIOs have to keep sounding the alarm in companies that are slow to adopt an aggressive, expensive path to zero-friction commerce - both online and offline. The rewards are too great to pass up.

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How do you compare to your peers? Find out in our 2019 State of the CIO report