Commerce Next: Optimizing the Technology industry's digital channel

Commerce Next: Optimizing the Technology industry’s digital channel

Technology Institute

At a glance

Recent PwC surveys reveal that while Technology companies understand communicating with customers through digital channels, they still lag in the fundamentals of aggregating that information to derive an efficient, omnichannel perspective.

The Commerce Next series provides PwC’s perspectives relative to the trends and challenges that businesses should consider to remain competitive in today’s evolving digital marketplace. PwC has identified a multiphase customer lifecycle that is an important aspect of digital commerce. In this paper, we look at PwC’s Technology Digital Commerce Survey results where global Technology company executives shared insight regarding their digital commerce sales and marketing strategies.

PwC 1

Key considerations

Technology companies have established a strong foundation of digital capabilities, executing the crucial areas of demand generation, customer service, and technical support.

Technology companies do well on interaction with consumers, but have work to do on B2B (business-to- business) interactions.

Technology companies’ top priority is to enhance the customer experience, but only 41% of companies consider it strategic to prioritize digital investments; even more disturbing, the percentage of companies with a comprehensive roadmap has dropped considerably.1

There is no consensus regarding which departments should fund or which C-level executives should

manage the digital channel structure; results point to IT (information technology) or marketing, or various matrixed or shared responsibilities.

Most Technology companies have significant work to do in deploying infrastructure to support an omnichannel strategy for the digital age.

How Technology companies prioritize digital investments

1 PwC: 2015 Global Digital IQ® Survey, September 2015

41%

47%

6% 6%

0%

10%

20%

30%

40%

50%

High - Strategic in nature Medium - Based onopportunity rather than

strategy

Low - No prioritization Don't know/not applicable

Source: PwC: 2015 Technology Digital Commerce Survey

Q: How do you prioritize digital investments in relation to other investments you could make? (Select one)

2 Commerce Next: Optimizing the Technology industry’s digital channel

What your company needs to know

A digital commerce strategy should acknowledge the entire customer journey from discovering, buying and using the product. Companies need not excel in all of these areas, but should build capabilities and excel in areas that support their overall strategy. In addition, the business strategy must support the omnichannel world we live in by engaging with customers and partners online and offline.

Technology companies must focus on deploying an infrastructure that delivers a robust digital experience across content, commerce, service, and community. This infrastructure must be agile to allow the company to respond quickly to establish or maintain competitive advantage. These infrastructures must also address the issues of maintaining security and privacy of financial information (whether customers or partners), with particular focus on the interdependencies between data and specific devices.2

Customers expect higher levels of personalization and customization as part of their online and offline interactions with companies. But few Technology companies offer high levels of personalization, which means they have to develop better insights into specific customers. They also need to understand how different-sized companies prefer to buy, and from whom, in order to heighten service and reduce channel conflict.

Online interactions must accomplish multiple goals. It must be simple for customers to interact online or through a mobile device whether they


are browsing, transacting, or looking for support. It must also be simple for the company to upsell, cross-sell, and service customers’ needs. Finally, the company must be able to analyze and aggregate customer activities in order to incrementally improve online interactions in the future.

Technology companies must develop strategies to target individual influencers in an organization, as opposed to solely buyers. Identifying and targeting significant numbers of influencers can result in corporate-wide sales.

Customers expect higher levels of personalization and customization as part of their online and offline interactions with companies

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Technology digital commerce survey results

PwC surveyed more than 500 executives in a variety of departments at global Technology companies regarding their digital commerce sales and marketing strategies. Many of the results were also substantiated by PwC’s 2015 Global Digital IQ® survey.

Approximately 72% of the respondents worked in companies with more than $1 billion in revenues, and 60% had more than 10,000 employees. Respondents represented multiple segments of the industry, including hardware, software, services (including cloud), and combinations of those segments, and their responsibilities ranged from C-level to middle management. Almost half were in IT, one-third in sales and marketing, and the rest in finance or other departments.

PwC believes the digital customer lifecycle consists of various non-linear stages:

Discover Transact Fulfill Care

We developed a proprietary framework called Prism to help companies think through the operational and technical capabilities needed to deliver leading digital experiences.

We will look at the survey results in these categories and make

recommendations regarding where Technology companies should focus their efforts in order to improve their competitive stance not only in these crucial areas, but also where they intersect.


Discover: Helping customers find what they need

Companies innately understand the value of the digital channel. Thanks to the web, they now have a round-the-clock, self-service mechanism that allows prospects and customers to search for products and services, compare them, and in some cases even complete the transaction.

That’s why the highest percentage – 41% – rightfully see the primary objective of the digital channel is to increase sales.

The objective of a Technology company’s digital channel

Another 30% cite the digital channel’s value as the potential improvement of customer experience, followed by 16% who cite it as a way to increase product or service innovation. The 2015 Global Digital IQ® survey buttresses these results, with 45% saying the top priority is growing revenue, 25% expect digital to create


better customer experiences and 12% see it increasing profits.3

But if the highest percentage of respondents want to increase revenue, why do they offer only a subset of their products online? If the goal is to increase revenue, companies must make more of

their products available through digital channels.

Furthermore, the concepts of improving customer experience and innovation are key elements, because they relate to the digital channel as a way for technologies to not only establish a relationship with prospects and customers, but to

41%

30%

16%

7%

2%2%

1% 1% Increase/improve sales

Improve the customer experience

Product/service innovation

Lower cost of operations

Security/privacy of customer data

Partner collaboration

Employee collaboration

Other


Q: What is the top objective you have for the digital channel?

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maintain that relationship. The digital channel provides the linkage for Technology companies to communicate with customers about how to improve both the selling and support process but the products and services as well.

But in this “discover” phase, Technology companies face a significant challenge. Their products – because they are innately cutting-edge – tend to be complex. They need to educate customers before they can sell them; indeed, educating customers is one of the highest priorities among most companies. However, only 24% say they provide ways for customers to learn about their products, perhaps because of this complexity. Companies need to make strides in helping customers understand product complexity, whether through videos, screen shots, or try-before-you-buy options.

Despite the need for customer education, a majority of companies have only deployed traditional methods of marketing. Their marketing toolboxes tend to focus on the websites themselves (cited by 76% of respondents), social media (61%), and email campaigns (53%). But few of those methods go far enough to help prospects and customers overcome the issues of education about complexity. That forces customers to use a variety of search capabilities to find related materials, product reviews, or other insights. Technology companies should provide better linkage between their traditional marketing and what customers really need to make purchase decisions.

Certainly, doing so can be complex, because it involves concurrent efforts on a variety of channels. Companies need to improve search engine

optimization of their websites; they need to provide better marketing support to their affiliates; they need to better understand and targeting potential influencers of purchases within an organization; and they need to ratchet up promotions to existing customers.

Perhaps most challenging, companies need to ensure that these multi-channel efforts are coordinated, so that they understand who they’re reaching, through which channel, and how successful they are. Unfortunately, PwC’s surveys show that multi-channel integration is far down on the to-do list. It should become more of a priority, not only to make these digital sales simpler for customers, but for companies to reap the benefits they know digital channels can bring in terms of revenue and customer experience.

Perhaps most challenging, companies need to ensure that these multi-channel efforts are coordinated, so that they understand

who they’re reaching, through which channel, and how successful they are


Transact: Generating more revenues more easily

Just as Technology companies have made strides in helping customers discover products and services online, they have also made strides in offering products online. But as with the “discover” phase, there is also a wide chasm between potential and reality in the “transact” phase.

For instance, only 39% of respondents report offering more than half of their base products through the online channel; only 20% of companies offer 76 to 100% of their products online. Given the complexity that comes with hardware technology, hardware companies are the least likely to sell their products over a digital channel. The most likely

hardware vendors to have digital sales, of course, are those dealing with commodities such as personal computers, laptops, tablets, and smartphones, which explains why respondents attribute 29% of sales – broken out by enterprise, small-to-midsize, and consumer – to consumers.

The percentage of base products offered for sale on digital channels

25%

18%19%

20%

18%

0%

5%

10%

15%

20%

25%

30%

0 - 25% 26 - 50% 51 - 75% 76 - 100% Don't know/notapplicable


Q: What percentage of your base products do you offer for sale on digital channel(s)?

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But software companies can easily offer downloadable products or allow prospects to try products. Even so, e-commerce sales comprise only 12% of overall sales, while traditional direct (56%) and indirect (23%) sales methods still dominate digital channel efforts (cross-channel sales, the most desirable, make up only 9% of all sales). This indicates a gap between what Technology companies are currently achieving with e-commerce, and what they could be achieving. The question is, how can they increase e-commerce sales?

One way is to expand how and to whom they market. Fortuitously, companies already understand that there are a high number of potential personas they can target. They are stratifying their targets well, thinking about enterprise buyers (cited by 60% as a target persona), individual customers (cited by 48%); influencers (43%), partners (38%), developers (24%), and VARs (value-added resellers) (15%). But they need to improve their efforts on targeting influencers and other consumers who can drive opportunities (the so-called business-to-consumer-to-business sales).

Even while they understand that the digital channel is influencing add-on revenue opportunities, they must work harder to create these omnichannel capabilities. Thus, when it comes to transactions, there are two key areas Technology companies must focus on.

First, they must get better personalization – that is, finding out who’s reaching out to them and why. Mystifyingly, 13% use no customer identification at all, while only 28% offer only basic personalization. Only a minimal percentage – 15% – can identify specific individual customers. The technologies are available to better identify customers, and B2C (business-to-consumer) companies such as airlines, banks, and even newspapers have mastered them. There’s no reason why Technology companies can’t do the same.

Second, companies must make it easy for prospects to find or easily access third party complementary products to solve their specific problems. Some companies don’t even make the effort; 17% have no online marketplace at all. But among those who do have them, the majority don’t

make it easy. Only 34% of survey respondents say they make their online marketplace easily accessible to prospects, and only 31% make it easy to cross-sell or up-sell products and services to customers.

Technology companies should think about how to improve their transactional ecosystem. Only by providing easier access to complementary products can companies increase the value of their product, increase revenue and profit through premium pricing, and – perhaps most important – improve customer satisfaction and engagement.

Technology companies should think about how to improve their transactional

ecosystem


Fulfill: Keeping customers happy

The issues that plague the “transact” phase for Technology companies spill over into the “fulfill” phase. Fulfillment doesn’t refer only to upgrades and updates; it refers to everything relating to account management, particularly payment and billing. With subscription models becoming more important, especially for software companies (they’ve always been important in hardware licensing), Technology companies must redouble their efforts in this regard. In software license renewals especially, efforts are lacking.

Surprisingly, given that one would expect Technology companies to understand how to use technology to be

more efficient, digital fulfillment tends to be low in most companies. Fewer than 40% of companies of any size provide online fulfillment capabilities for customer orders, and only 43% of Technology companies provide self-service fulfillment.

Fortunately, however, Technology companies striving to improve these capabilities have a close model to follow: cloud-based companies. Not surprisingly, given that almost everything they do is online, from initial deployment and extension of services, cloud companies are more likely to have self-service capabilities for fulfillment and account management.

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How Technology companies design their online channels

Customer interactions that are digital self-serviced enabled


Q: Which of the following customer interactions are digital self-service enabled? (Select all that apply)

66%

46%

43%

43%

38%

29%

Subscription billing

Support

Account management

Renewals

Fulfillment

Payment


Q: Considering your online channel, what is it designed to fulfill? (Select all that apply)

60%

55%

50%48%

38%

33%

25% 24% 24%

0%

10%

20%

30%

40%

50%

60%

70%

Educatecustomersregardingproducts

Providesupport tocustomers

Generateleads through

online inquiries

Sell productsdirectly tocustomers

Provideproducts &

product fixesto customers

Provisionservices tocustomers

Providedevelopertools for

development

Provideprospect

customersability to try

products

Sell partnerproducts

through themarketplace


Care: Closing the product loop

The next phase in the Prism framework, interestingly, is one of the most developed: care. Unfortunately, Technology companies may only be best at supporting enterprise customers. No surprise there, given that those who pay the most get the most attention.

Companies have developed extensive – and expensive – means of supporting these high-ticket clients, from dedicated sales reps (cited by 69% of respondents), dedicated sales teams (62%), and dedicated customer

service portals (43%). The question is, how can companies continue to provide support for these customers, while adding others, and saving money while doing so?

In some facets, companies are doing well. For instance, they clearly understand the importance of providing support to partners; 43% cite that as one of their highest priorities, followed by the provision of marketing resources (40%) and sales tools (33%).

But according to the survey, there’s still a lot of room for improvement. Less than half of respondents claim to have digital self service capabilities around account management, payments, and subscription billing. Email (cited by 82% of respondents) and phone (cited by 78%) still remain the most popular ways of providing support to digital customers, and 60% have enabled some means of online self-service.

Methods of support provided to digital customers


Q: What methods of support do you provide your digital customers? (Select all that apply)

22%

27%

34%

45%

50%

60%

78%

82%

Mobile app

Community

Social media

Online chat

Documentation (knowledge base, tutorials, FAQs)

Online self service

Phone

Email

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But at the same time, only 45% have enabled online chat, which allows customer service agents to serve more customers simultaneously. Only 34% have enabled social media, which enables another less-expensive channel for customers to ask for support. And only 22% have enabled mobile applications for support or other communications.

Part of the issue is that a majority of companies look at their digital channel primarily as a service mechanism, rather than as a support mechanism. Some 55% offer frequently asked questions (FAQs), product renewals, and some technical support online, and a majority (56%) agree that delivering customer service is the most important role of digital in their organization. The other two important roles of digital: providing technical support (cited by 44%) and increasing awareness of products and services (42%). Interestingly, companies with revenues ranging between $500 million to $1 billion tend to use their online channel more for support more than for educating customers (even though educating customers is also important).

PwC believes that companies can potentially save money and improve self-service in two ways. First, they need to take better advantage of the online capabilities available to them, and they need to think more extensively of ways they can use the digital channel to link sales and support. Not all the advantages of such a system accrue to customers; companies could use better linkage to better understand support issues. With greater insight in what’s frustrating their customers today, they can improve product development and future upgrades.


Creating engagement across the lifecycle

Another way that Technology companies can improve how they support customers is to change the style of communication they have with customers. Even the aforementioned means of support tend to be one-to-one, from customer to company and back again. What if the methods of communication were expanded from one-to-one to one-to-many?

When it comes to supporting customers, we’ve already noted the extensive use of traditional methods: e-mail, phone, online self-service, online documentation, chat, and social media. The one with the most potential in terms of one-to-many communications is the one at the bottom of the list: communities. Only 27% have some form of online community, even though these are less-expensive and potentially stickier.

Why are communities more beneficial to both companies and customers? Because they lower costs and increase engagement. Technology companies may have super-users who understand technology better than anyone else. They discover both problems and workarounds that increase efficiency. Why not capitalize on that brainpower, enabling them to post their discoveries and insights in a closed-wall community that both spreads the word about issues and promotes the value of new features?

Communities, of course, should also be closely monitored by staff for fast response to issues, but they are really just an additional way to collect information about what customers are thinking. Companies also need to augment the methods they use to get customer feedback, according to the survey results. For instance, only 21% collect “voice of the customer” (VoC)

information monthly, while 31% collect it quarterly; 9% collect information yearly, and 10% do it on an ad hoc basis. That’s far too infrequently.

On the other hand, when companies do collect this information, however, they are using it wisely. For instance, 68% report are using VoC information to identify quality issues. Another 53% are using it to respond to customer issues, while 51% are using it to improve the digital experience, and 48% are using it to inform product planning. Those are all good reasons, but collecting it more frequently – and establishing more digital methods of communication – can make companies even smarter and customers more engaged.

Use of customer feedback information

68%

53%

51%

48%

42%

8%

Identify quality issues

Find and respond to customer issues/questions/complaints

Improve digital experience

Inform product planning

Gather competitive intelligence

Not really using it


Q: How are you using Voice of Customer (VoC)/Customer feedback information? (Check all that apply)

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Using front-end data to improve back-end operations

It’s a key to making all of this work together

In most of the preceding phases, we’ve characterized the digital channel as a way to improve the collection of customer data and improve communication with those customers. There’s a stronger, related reason to develop these channels: using the data collected to inform and improve company operations.

Frankly, challenges remain in linking the front of the digital channel to back-end manufacturing. What’s the issue? Companies see handling complex products that have various configurations and options as the biggest challenge for their digital channel, with only 37% believing that their IT infrastructure exhibits leading practices for supporting their organization’s strategy.

While two-thirds (66%) believe that support is digitally enabled, less than half believe that the back-end is enabled for digital self-service, particularly in the areas of account

management (cited by 46% of respondents), payment and fulfillment (both cited by 43%), and subscription billing (38%).

Companies are also concerned about their ability to share customer data across departments. But what’s the point of collecting data if it’s not going to be aggregated and analyzed? Improving the digital channel is only going to create more data, not less, and Technology companies need to be prepared to take advantage of this new influx of insight.

But only half of survey respondents believe that they are analytics leaders, with a central repository for sharing data and decision-making. Among others, only 29% believe they have limited sharing capabilities and 8% believe they have no cross-channel visibility or data sharing capabilities whatsoever.

This data provides multiple levels of insight. Having a high level of analytics is crucial to providing omnichannel capabilities and providing a seamless customer

experience. These analytics also enable companies to attribute sales from multiple channels to specific customers, which ties back to personalization. The question is, how to use this visibility to improve operations?

This lack of visibility creates other challenges for operations. The biggest challenge for the digital channel, in fact, involves product complexity. According to the survey, which also breaks down responsibilities, IT and sales worry about the ramifications of complex products with various configurations, while marketing worries about educating customers on these complexities. Not only does this product complexity and inability to communicate it clearly make creating a holistic customer experience difficult, it hinders the ability of the company to understand where complexity exists and how to simplify it, whether in design, manufacturing, support, or communications. The back-end is inexorably linked to the front-end, but not digitally.

Technology companies’ biggest challenge for the digital channel


Q: What is the biggest challenge you see for the digital channel? (Select one)

1%

8%

15%

17%

25%

34%

Channel conflict

Complex products requiring help to understand

Complex products with various configurations/options

Other

Product pricing

Creating a holistic customer experience


Conclusion: Making all segments work together

This is why companies have to think about all of the phases within the framework holistically. They may be deployed in a non-linear fashion, but there must be some focus on how they will eventually fit together. As with any cultural shift, executive alignment is crucial in order to execute a successful digital vision across the company.

The benefits of improving the digital channel are clear. Digital capabilities have become a competitive advantage, and top-performing companies are more likely to have a comprehensive business strategy for the digital age. These top performers are currently cloud, software, and multiproduct companies. According to Forrester, "Software and tech consulting and systems integration services will grow the fastest" in the Global Tech Market.4

The majority of companies benefit by striving to aggregate their digital and omnichannel efforts. To help ensure success, companies should work to confirm that all segments of their strategy work together. The payoff could result in an improved customer experience, with higher engagement, and more efficient back-end workflows, with lower costs.

4 Forrester Research: The Global Tech Market Outlook For 2015 To 2016, January 2015

www.pwc.com

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. At PwC, our purpose is to build trust in society and solve important problems. PwC is a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com/us. © 2016 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

PwC can help

For a deeper discussion about PwC’s Technology Digital Commerce Survey, please contact one of our leaders:

Joseph Lamano Principal, Digital Commerce Leader 408 817 4427 [email protected]

Let’s talk

Please reach out to any of our Technology leaders to discuss this or other challenges. We’re here to help.

Pierre-Alain Sur US Technology Industry Leader 646 471 6973 [email protected]

Kevin Healy US Technology Assurance Leader 408 817 3834 [email protected]

Kayvan Shahabi US Technology Advisory Leader 408 817 5724 [email protected]

Diane Baylor US Technology Tax Leader 408 817 5005 [email protected]

Acknowledgements

The following PwC professionals contributed their experience and knowledge to produce this paper:

Tejasvi Devaru Director, Digital Commerce 408 817 1226 [email protected]

About PwC’s Technology Institute The Technology Institute is PwC’s global research network that studies the business of technology and the technology of business with the purpose of creating thought leadership that offers both fact-based analysis and experience-based perspectives. Technology Institute insights and viewpoints originate from active collaboration between our professionals across the globe and their first-hand experiences working in and with the Technology industry.

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Commerce Next: Optimizing the Technology industry's digital channel

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