SAP’s Scott Russell: Understanding digital consumers’ choices in the new Digital Economy
By Scott Russell (President and Managing Director of SAP Southeast Asia)
SOUTHEAST Asia, with US$6 billion digital retail sales and 150 million digital customers, is poised on the cusp of an explosive growth in digital commerce. The region’s fast evolving Digital Economy will bring ample opportunities for everyone, as its size could reach US$88 billion by 2025.
Leading the charge in this massive growth will be Indonesia, the region’s biggest economy by size. It will account for 52 percent of the e-commerce pie in the region. Vietnam, Philippines, Thailand and Malaysia will also be sizeable markets on their own, ranging between US$8 to US$11 billion.
In Singapore, the only developed country in ASEAN, e-commerce will be over US$5 billion, surpassing its US$4 billion casino industry. Fueling this massive growth are a large middle-class population with a high proportion of youth under 30, increased access to internet, and growth of second and third tier cities, where access to organised retail is limited.
The opportunity and the challenges
In the Digital Economy, consumers are in charge, and they are constantly evaluating brands, products and prices. They choose the way they want to evaluate and digitally interact with a brand, which we call ‘digital experience’. If they are delighted with their brand interaction, they would be more willing to share personal information such as personal profile, health records or personal finances. This, in turn, generates big data for organizations to better understand their consumers and provide the required digital experience to delight consumers.
Understanding consumers in the Digital Economy is imperative for organizations to stay relevant. With that in mind, SAP commissioned a comprehensive study to understand the level of digital engagement across five countries in the region, involving 3,600 customers. Our study tried to measure the digital expectations of customers and the ability of brands in these countries to meet them – a digital experience score (DX Score) was accorded to each country as tabulated by the ratings of these digital consumers.
The results of the study show that across countries in SEA, (Indonesia, Malaysia, Philippines, Singapore and Thailand), the overall DX score is positive at 27 percent, with 47 percent of respondents indicating they are satisfied with their digital experience with brands. Only 20 percent of the consumers are unsatisfied with their digital experience.
On the surface, the overall DX score does not look like a cause of concern for brands. But if you scratched the surface of the data, you would see a very different picture. There are regional variations on how consumers rated some leading brands of their respective countries.
In developing countries like Indonesia and Philippines, the digital customer’s expectations are still evolving, with digital consumers more ready to positively rate digital services there. In the case of mature markets such as Singapore, the already high expectations of this digitally mature market’s consumers are less ready to rate the services received as positively.
The data has shown that there is a digital gap and that there is a section of consumers who are unsatisfied with their digital experience, which must be addressed. This also includes the consumer’s preference around the ease of switching from one digital vendor to another.
The true costs of having unsatisfied customers
This digital gap matters. A poor digital experience can often do a lot more harm than just a lost sale or lost customer, with the potential for multiple losses across multiple customers within a short timeframe. Research shows that digital satisfaction and delight lead to more consumer trust in the brand. There is a strong link between digital experience and brand loyalty. A strong digital experience is also linked to stronger customer advocacy (the willingness of consumers to recommend your brands to others).
— Mari Paz (@Mpaz31) August 14, 2016
Loyalty and customer advocacy can impact a brand’s top line. Referred consumers spend 50 percent more than the referring consumers, and there tends to be 67 percent more spend from repeat consumers.
Immediate action needed to bridge the digital gap
The existence of this digital gap in Southeast Asia indicates that businesses in the region are not adequately prepared to capitalize on the emerging opportunities from the Digital Economy. This has serious implications for not only the future success of businesses, it could even determine whether they will live or die in the market.
Clearly, to excel digitally, brands must run simple. They must align their people and processes – not just in their marketing or digital teams, but across lines of business – onto a single platform. SAP has been advocating the need for an integrated platform to help bring a company’s people and processes on a single integrated platform for more centralized processes allowing for greater assimilation internally.
This is today possible through SAP’s ‘digital business framework’ (DBF). SAP’s DBF helps digitize the entire value chain for businesses with the end-to-end customer experience in mind. A single platform that brings together marketing, sales, services, and commerce will ensure seamless digitization of the entire customer experience.
The Digital Economy is a new jungle, with its own set of rules for survival. Companies in the future can only survive in the Digital Economy if they can ensure customer delight, through leveraging the various technological solutions to make this customer delight a confirmed reality. In the digital economy of tomorrow, consumers are changing the rules, but technology is changing the game.
- Law enforcement strikes back with rewards: the fall of a major cybercrime syndicate, LockBit
- Google Gemma: An open source AI model for everyone?
- Why businesses need a unified monitoring and analysis platform for cybersecurity
- Intel Foundry: racing for chip supremacy with 18A tech and Microsoft onboard
- Is using generative AI at work cheating?