From experience to participation: How 6 industries are being redefined

2020 feels like a good year for clarity.

Over the past decade, we saw an overemphasis on the "customer experience" and its myriad of manifestations across different channels. With new channels popping up—as well as advances in data and technology—the “experience” became ephemeral and commoditized without pointing to something greater. These fragmented and disjointed moments often prove vexing to the most important person in the equation: the customer.

In our new normal, customer experience has become the universal currency across every industry, every sector, and virtually every facet of our lives. We believe there’s a key element that too many organizations are leaving on the table: participation. We define participation as the elements of choice, immersive engagement, and meaningful interaction that lead to long-term retention and advocacy.

At the start of this new decade, we see six key industries poised for transformation, disruption, and a pivot from experience to participation. Here’s our take on each.

Retail

Retail faces an existential crisis with the rise of e-commerce brands luring customers away from brick-and-mortar stores. Store closures have reached an all-time high, with more than 9,300 locations shuttering in 2019 alone. E-commerce retailers offer distinct advantages over physical locations with low overhead, competitive prices, and most significantly, direct access to customers and their data. This shift has spawned a frenzy of acquisition activity of direct-to-consumer (DTC) and e-commerce brands across traditional retail.

This isn’t breaking news. Retailers now need to scale up their DTC efforts even more to keep up, such as by bringing the online experience in-store. With the help of artificial intelligence, brick-and-mortar retail is beginning to deliver personalized experiences to top customers through things like clienteling (hyper personalized 1:1 in-store experiences) and real-time product creation available for purchase or to be worn out of the store. The aim is for traditional retailers to become more proactive towards their customers and give them exactly what they want, when they want it. Retailers can do this by showing consumers that they’re thinking of them as individuals, anticipating their needs, and delivering both online and offline. The challenge for retailers will be transforming transactional customers into advocates in a sea of limitless choice.

On the horizon:
Physical stores will see a comeback as retailers invest significantly in creating in-store experiences that are personal and provide additional amenities and experiential benefits beyond just shopping. DTC and e-commerce brands will make a particularly aggressive push to move offline and capture foot traffic through pop-up stores and other physical experiences. Sustainable products will be clear winners across sub-sectors, while emerging technology like augmented reality and voice recognition will become more mainstream by delivering connected experiences.

Travel and hospitality

While the basics of this industry remain much the same as ever, the expectations of today’s traveler (often younger, and more likely to demand sustainable options) are quite different from only 10 years ago. Airports have been redesigned to meet both post-9/11 security concerns and passengers’ demands across retail and entertainment. Airline mergers and acquisitions affect flight times, destinations, and amenities—sometimes for the better, sometimes for the worse. Technology and the rise of the sharing economy are driving huge changes in the hotel and rental car sectors.

In response, individual brands are creating clever ways to elevate the traveler’s experience, smoothing out points of friction, and creating personalized moments along the way. For example, Hilton’s partnership with Lyft not only provides hotel guests an easy way of getting to and from Hilton properties, but also offers an opportunity for less frequent travelers to take advantage of the Hilton Honors program. The most innovative brands are thinking beyond their own property lines and offering richer experiences for travelers, such as dining and entertainment. To maintain an edge, travel brands will need to occupy a bigger portion of the traveler journey in ways that truly add value.

On the horizon:
The world will increasingly resemble a global village, as experience-based vacations continue to rise in popularity. Brands will create data-driven technology products that both appeal to younger travelers and allow for the creation of more personalized experiences. A rise in strategic partnerships between brands will push passengers and vacationers out of on-property and in-flight interactions to a broader world of benefits and brand engagement. Sustainability efforts throughout all parts of the travel ecosystem will impact the world travel economy and spill into other industries—setting the pace for change and increasing the volume of consumer demand.

Healthcare

Perhaps in no industry is managing change more challenging than in healthcare. Policy uncertainty, market pressure, and technological advances create an environment that demands resilience and constant adaptation. Big changes are necessary to move from the traditional siloed healthcare model to a modern coordinated care delivery system.

Change is also crucial in moving from a typical prescriptive model of medicine to one that helps motivate patients to make healthy changes. Creating resilient patients—adaptable and upbeat in response to change and adversity—takes a more conversational approach, using open-ended questions, reflective listening, and positive affirmation. Engagement can also be less touchy-feely and more high-tech: the National Cancer Institute’s mobile platform helps people stop smoking by sending encouraging text messages. By constructing a clear and inspiring picture of future health, the healthcare industry helps patients become more confident about moving forward. The challenge for the healthcare industry will be to truly foster an environment of well-being, becoming champions of health and education for consumers, and not just maintain a transactional relationship with payors and providers throughout the value chain.

On the horizon:
Greater consumer influence will push forward big changes in value-based care. The transition to an actively engaged consumer base will require investing in innovative care delivery models and advanced digital technologies that can help build a smarter health ecosystem. Companies can navigate uncertainties by pivoting to technological advancements and evolving care models, shifting away from treatment-first to prevention and early intervention.

Financial services

For the financial services industry, a crisis must have seemed looming in the rise of fintech companies and new technology, such as mobile payments. Between Apple Pay, Google Pay, Venmo, and others—we’re well on our way to becoming a cashless society. Some Swedish banks no longer handle cash, and it’s the method of payment for only 15% of their retail sales (in the U.S., consumers use cash in only 26% of transactions, mostly for small-value purchases).

In the meantime, data collection gives financial institutions a clearer picture of their customers’ finances. Understanding and anticipating customer needs—and arming those same customers with real-time data—helps them make smarter financial decisions. Fintech companies are now embracing data-centric strategies (e.g., getting closer to the customer, understanding customer needs, providing on-demand services) to retain existing users. Companies like Lloyds Banking Group are also using their various communication channels to share compelling stories from across their organization, engaging employees as ambassadors of their new strategy to meet changing customer needs in today’s digital world. The financial services industry will have to work hard to be much more than a bank to earn the trust of its customers while keeping competition and disruption at bay.

On the horizon:
Cryptocurrency and its foundational blockchain technology are here to stay, and savvy financial institutions will embrace the disruption. The accelerating pace of technological change is the driving force of advancements in the financial services industry. Fast-moving start-ups are using new technology to improve the customer experience, streamline their own analytics processes, and expand services, enabling once-stagnant financial institutions to occupy a much more intimate space in consumers’ lives and futures.

Energy

Energy companies must evolve to keep pace with a changing world and changing customer needs. Typically, customers interacted with their energy provider only when they looked at their bill or if something went wrong. Today’s utility customers play an active role in their energy choices—and expect personalized communications, tips, and tricks from their provider. Companies are finding they have to reinvent their customer relationships in order to foster a bilateral connection with an emphasis on diversity, equity, and inclusion.

At the same time, companies are balancing the need to reduce energy use and better manage energy loads with demand-side management (DSM) programs to encourage consumers to modify their demand for energy, with the goal of driving energy efficiency through various methods of behavioral change, such as financial incentives, education, and gamification. The growing number of energy startups centered on technology and renewable options are also pushing traditional providers to make corporate commitments to climate targets. The challenge for energy companies will be evolving from merely resource providers to resource stewards, and transforming a complacent customer base.

On the horizon:
Artificial intelligence will enable energy and utility providers to sift through millions of customer data points to track and understand energy consumption, reduce waste and increase efficiency, while also allowing utilities to predict and prevent large-scale failures before they happen. The increase in extreme weather events, such as hurricanes and wildfires, will drive energy utilities to grow their investment in the Distributed Energy Resources (DER) market, and early adoption of blockchain technology will emerge across peer-to-peer networks and energy trading. Taking the lead from Google, Facebook, and Microsoft, we will see a surge of large non-tech companies making significant corporate commitments on emission reduction and renewable energy, driving down the price for consumers.

Food & Beverage / Consumer Packaged Goods (CPG)

How we eat is both very personal and yet also influenced by global trends. This has been happening for a while (the rise of international cuisines led salsa to first outsell ketchup in the U.S. back in 1992), but how it happens is different now. Photographic appeal on Instagram and other social channels has led to the rise in popularity of food movements on both a macro and micro level. While the CPG sector previously made decisions and forecasts based on data culled from supermarket purchases, what they lacked is a 1:1 relationship with the customer. Ecommerce and the ubiquity of social media gives brands the ability to establish two-way communication directly with consumers.

And what consumers are increasingly insisting on is more information. Much more of it. They want to know where the products they buy come from, what’s in their food, and its impact on the environment. Consumer demand is pushing both CPGs and food & beverage brands towards increased transparency on nutrition, food production, sourcing, and sustainability. Consumers realize they now have more of a voice than ever before—not just through their consumption choices but by using social channels and other platforms to demand healthier and greener products. The biggest challenge for brands in this space will be to move beyond thinly veiled mission statements to establish a sense of shared values and clear purpose with their customers.

On the horizon:
Technology will continue to be the answer to consumers’ demands for transparency, sustainability, and healthier food, whether that’s in the form of new plant-based meat products or new innovations in food packaging and waste. Pressure will come from new directions, with both traditional media and social influencers pushing for more conscious consumption to address the role food production plays in the climate crisis. In response, we will see an explosion of startups across the industry, while the push to transition to DTC relationships—through e-commerce, expanded apps, grab-and-go store locations, and even branded restaurants—will only intensify.