The 5 Trends Fueling the Rise of the Digital-First Economy
While making the strategic decisions crucial to the success of your business in a digital future is not easy, understanding the five trends contributing to the evolution of the digital economy is critical.
Making the strategic decisions crucial to the success of your business in a fast-moving and uncertain digital future is not easy.
While technology has driven social, cultural and economic change in our lives for well over a decade, these changes have accelerated over the last 18 months, catalyzed by our collective efforts to reduce the impact of the Covid-19 pandemic.
Today, business leaders in the private sector face significant challenges to ensure their companies thrive in an environment where digital technologies have become critical to their brand, acquisition of new customers and increased revenue growth.
When assessing the ability of their business to succeed in a post-pandemic normal, business leaders would do well to consider the five trends contributing to the evolution of the 21st-century digital economy that we are all too familiar with today.
1. The rise of mobile
Since the launch of the iPhone in 2007, mobile smartphones have been foundational to the digital transformation of the global economy. However, while our social, emotional and often financial personal identities are tethered to these devices, the vast majority of businesses have generally assumed that mobile devices have no role in their business success beyond advertising.
These assumptions have had to be reconsidered as a result of the pandemic. While prior to the pandemic mobile applications were only relied on by workers in the gig economy to earn a living, the pandemic has forced many businesses to restructure their operations around the mobile devices of their workers and the digital technologies that facilitate remote working.
As a result of these changes in behavior, political and business leaders are beginning to consider conditioning one’s participation in the broader economy with access to mobile devices. Restaurants ask customers to use their phones to scan QR Codes to complete contact tracing surveys and access digital menus. Governments are even beginning to use mobile devices to implement and enforce vaccine passport policies, barring people who aren't fully vaccinated from many non-essential activities.
With customers increasingly choosing to support digital businesses over their traditional counterparts, start identifying the digital technologies that enable you to deliver value to the mobile devices customers already have access to. Doing so will be critical in creating a competitive advantage in your business over your competitors'.
2. The rise of social media
The rise of mobile in our personal lives may be attributed to the ever-expanding presence of social media in how we live, work, socialize, date and play.
Prior to the pandemic, WeAreSocial estimated active social-media users across the globe totaled over 3.8 billion people, using various platforms to connect with friends, family, and even complete strangers. WeAreSocial's 2021 report, released earlier this year, demonstrates that social media usage increased during the pandemic as a result of lockdowns and stay at home orders:
The number of active social-media users around the world increased by more than 13% over the past 12 months to 4.2 billion.
The typical user of social media spends roughly one full waking day of their life each week on social media.
At least 98% of users of any given social-media platform use at least one other social platform.
In considering this trend, consider designing digital strategies and marketing messages around the needs of your users. In addition, take the time to identify which digital platforms your customers are spending most of their waking hours on. After all, the authors of the above report suggest at least 98% of the users of any given social-media platform use at least one other social platform. You don't need to be active on every platform, just as traditional advertisers didn’t need to buy every radio or TV station.
3. The rise of video
Over the last decade, our viewing habits have shifted from traditional media sources to streaming services. In the decade prior to the pandemic, online TV and video consumption increased from 1.7 hours to 7 hours while offline TV and video consumption declined from 13 hours on average per week to 8.6 hours. Similarly, Cisco forecast in 2017 video streaming and downloads to grow to more than 80% of all consumer internet traffic by 2021.
The pandemic has transformed our daily consumption of video as well as our use of video at work. WeareSocial reports the average amount of time that people spend watching videos on YouTube has increased by as much as six times in some countries over the past year, and Zoom Cloud Meetings was the fourth most downloaded mobile application last year. It’s no wonder that as a result of the pandemic, business leaders discovered that video conferencing is not only effective at sustaining key relationships, but is also significantly cheaper when compared to pre-pandemic business travel expenses.
With video becoming critical to creating digital experiences in both professional and business relationships, consider making these technologies a cornerstone of how your business markets itself to customers and operates internally. Doing so may be the foundation of success in a digital-first world and help your bottom line.
4. The rise of ecommerce
While consumers were turning to ecommerce and online shopping well before the pandemic, the pandemic has expedited this shift in consumer behaviour. IBM's annual U.S. Retail Index study suggests this shift has been accelerated by at least five years.
With ecommerce facilitating a migration of people from urban areas, more than 40% of U.S. consumers intend to shop more often online for products they would have previously bought in stores. These findings are consistent with surveys conducted by McKinsey, suggesting between 15% and 30% of customers in America expect to continue to make a portion of their purchases online after the pandemic than they did prior.
As customers continue to move towards shopping for goods and services online, consider how you can participate in the digital economy by selling to customers directly via the internet.
5. The rise of digital customer experiences
Most business owners are well aware of the importance of customer experiences to the success of their business. Positive customer experiences are more likely to result in the customer becoming an advocate for that business and a potential source of future referrals. Negative experiences meanwhile may result in customers who encourage others to do business elsewhere. It's no wonder that research by Accenture indicates that the profitability of companies that focus on delivering exceptional experiences for customers, employees and society are at least six times that of their industry peers.
Digital customer experiences have taken on significantly more importance as a result of the pandemic. During the pandemic, customers have become increasingly comfortable with a digital-only experience of ordering food, groceries and other purchases online. For these customers, a positive experience can be delivered by way of a series of well designed and seamless series of digital interactions. This digital supply chain has been critical to the growth of ghost kitchens, grocery-delivery services and flexible co-working spaces across North America.
As digital customer experiences become more vital to a positive relationship with your business, consider investing the time and energy to understand the journey a customer takes in your business. Understanding your customer’s journey is vital to both improving the value your business offers to customers as well as unlocking greater revenue generating potential in your business.
Once upon a time, phone companies would annually deliver phone books filled with the names and phone numbers of every phone subscriber. Businesses even saw value in paying for advertisements in these phone books, believing these adverts were a source of new customers.
While Google may have put an end to the age of phone directories, similar fates may be in store for businesses that do not recognize the importance of adapting their business model to the digital-first economy, an economic landscape where the profitability of a business is linked to its access to digital technologies and how well it utilizes digital technology to provides customers and staff an exceptional digital experience.
Irrespective of whether these experiences are delivered through mobile, social media, video or ecommerce, capturing these trends in your business model is critical to the future of your business in the digital age.
Entrepreneur Leadership Network Contributor