Understanding the digital consumer from research outside of the travel industry is both relevant and timely.
CapGemini one of the leading professional service companies has just published its latest Digital Shopper Relevancy Research Report 2014.
The study makes for interesting reading, as we try to understand how the consumer researches, shops and transacts.
The changing nature of the shopping and transacting process affects everything. There is nothing that is not connected.
In the earliest days of the web, travel was actually THE pioneer in driving digital adoption and, some argue, led the web revolution.
However that leading role has somewhat faded as the consumer now engages digitally with just about every retail category. There is no longer any product or service that has no “digital relevancy”.
Indeed, the percentage of which that can claim to be luddites and don’t/wont interact digitally is falling fast.
This doesn’t mean that everyone does everything digitally all the time.
I had read the previous report in 2012 and found it interesting, but really needed to see more of the trend data. Well here it is.
In this article I will review some of the key elements and try to bring some relevance and context to our hallowed travel sector.
Here is one of the opening statements from the report:
Since out study of 2012, we have witnessed a significant change in both the market and market behavior, most notably:
The widespread adoption of the smart phone for calls, texts, entertainment and transactions
The explosion in use of social media channels such as Facebook and Twitter to publish and consumer real-time information.
And issues surrounding Big Data.
What this has led to is an ever-larger digital footprint left by a sizeable proportion of society, with a growing trail of personal data and consumers concerns about privacy.
The study was conducted in early 2014 and covered 1,000 consumers per market who were “digitally engaged”. The surveys were conducted in 18 countries, which split into so-called mature and high growth markets.
The mature markets were identified as these 13 countries: Australia, Canada, Finland, France, Germany, Italy, Japan, Netherlands, Portugal, Spain, Sweden, UK and the US.
The high growth markets were: Brazil, Russia, India, China and Mexico.
The report looked at five specific product categories (not travel):
Food Health and personal care Fashion (clothing, footwear and accessories) DIY (and home improvement) Electronics – including computers and large consumer products like TVs
In the report CapGemini, identifies the traits of seven types of digital shopper:
Reluctant Digital Shoppers
Not comfortable using technology, prefer physical stores and avoid social media and smartphone as shopping channels
Value-Conscious Digital Shoppers
Prefer in-store shopping, use Internet and email, but less comfortable using smartphones, tablets and social media. This is the dominant form for mature markets.
Socially-Engaged Digital Shoppers
Heavy users of digital technologies, comfortable using social media and relaxed entrusting their data to retailers
True Digital Shoppers
Purchase online the most frequently, use apps to compare products, track delivery and are happy sacrificing personal data for customized deals.
Uninterested in digital technologies, prefer stores, and share personal data with retailers, but not via social media
Interactive Digital Shoppers
This is the dominant form in emerging markets. At ease with all digital technologies, regular online shoppers, and love retailers that embrace technology like QR codes and mobile apps
Technophile Digital Shoppers
Willingly adopted digital technology, make online purchases regularly, trust retailers with personal data, but want opt in/out flexibility.
There are some important and highly relevant information insights that come from the data collected on such a wide sample of consumers to the Travel category.
I have picked out four of my own which should make those of us who operate in travel sit up and pay attention:
1. Is Social Media THAT important?
Interestingly this is a key trend that should have emerged as “Yes, social media is important”. But perhaps reflecting the maturing nature of the digital shopper, it did not!
The report looked at the five major attributes of the shopping process:
Access Experience Price Product Service
For travel, this is a trend that could hamper the current nature of social media and its relevance to the shopping process.
True, we have TripAdvisor as a surrogate for third party services in the physical world such as Yelp and Urban Spoon.
But has TripAdvisor moved too far and created its own set of problems by moving into the purchase path? Will Yelp and others start to become broader as we are indeed seeing in the case of Russia and such services as Yandex having more relevance than pure travel categories such as Skyscanner? And how does that perception change over the next few years?
Illustrative example of shopper needs, considerations and perceptions across five attributes
It doesn’t change, indeed it just stagnates or declines.
Change in importance of social media, 2012 to 2014, across the shopper journey
2. Travel is always challenged on payment
Here is an observation I have pulled from the report on the importance and perception of trust.
In recent years this has increased and become a major impediment to travel commerce. The expectation of ease of use has been tempered by rampant fraud committed at both the consumer end (think Nigeria!) and the supplier end (think Target, JAL and Home Depot).
There is an expectation that the physical processing of credit cards at a store is a safer method than online.
However the recent massive fraud committed against large scale retailers in the physical space such as Target and Home Depot will have a major impact on consumer perception of safety in digital transactions.
Many countries are now adding regulation (in an inconsistent manner) in efforts to combat the level and sophistication of the fraud.
Relative importance of the physical store in the purchase and payment of products
3. Personalization – yes, but when?
Personalization is seen as a goal for just about every supplier and intermediary in travel.
Yet, travel is very complex, and massive amounts of data demand some method of making the synthesis of the data to usable information be a goal for all.
But the current incarnation of personalization is only starting to show benefits.
When and where in the process should personalization be introduced? Overt or subtle? This is indeed a challenge for all providers in travel.
Looking at the observations from the report – this is clearly a challenge. We have a lot to learn.
Relative importance of personalized offers at the awareness stage, listed by country
4. And for the future?
Looking at the three years ahead of us, consumers expect to see the following:
How the role of digital channels will change over the next three years, listed by country
I draw your attention to the small difference between the online stores and the direct-from-manufacturer adoption.
While greater than 50% the differences are relatively small.
This indicates the sense that the supplier direct channel, in a constrained market (such as the US airline product category), will show a shift of importance to direct.
I conclude from this that there are tough times ahead for the pure OTA model.
High quality search (as opposed to low quality metasearch) will emerge as a key consumer requirement. Trustworthiness from personal service agents will have greater relevance. Suppliers and Intermediaries would be foolish to ignore this trend.
Google is already focusing here.
The authors of the CapGemini study noted that new technologies and channels are “increasingly converging and transforming the way we shop and consume”.
They note that consumer expectations and demands are rising, “of a seamless customer experience – irrespective of channel, device, location or activity”.
They opine that the power in the transaction relationship is moving steadily towards the consumer. I am not so sure I agree that this is the case. In my view, with a shortage of choice in key travel categories such as airlines, this is not the case.
The report’s authors believe that “most companies are already on their digital journey in some shape or form”.
The report is both relevant and timely for all product categories even those not tracked.
Travel must sit up and pay attention to the consumer behavior outside of the sector, as the lines of product categories blur and the consumer’s true digital personas emerge.
NB: Report methodology overview:
CapGemini leveraged the benchmark set by their previous report from 2012. Digital Shopper Relevancy 2012. It kept many of the research parameters: digital and physical channels; five product categories (food, health and personal care, fashion (clothing, footwear and accessories), DIY, and electronics); and interviews with consumers who had used digital technology during the shopping process in the last three months.
NB2: Consumer journey image via Shutterstock.