Matt Katz is featured in this Barron’s article examining consumer spending over this Black Friday and Cyber Weekend.Learn More
In 2020, digital transformation accelerated and shifted corporate innovation from a “nice to have” to necessity and sparked new innovation for many companies. Organizations across various industries had to act fast to engage their customers at home and implement services and user interfaces that were manageable for the onslaught of digital “newcomers.” As a result, we saw retail leverage AR to power try-before-you-buy services, financial services companies partner with fintechs to serve clients at home, and healthcare embrace the widespread use of telehealth services for patients and providers. Now that the fires have been put out and these solutions have been implemented and embraced by consumers, leaders need to take a step back and determine if what they’ve implemented is still the best solution and that it is sustainable for the long term.
The urgency fueled by the pandemic’s uncertainty and severity forced companies of all types and sizes to move swiftly and do things that they would have been uncomfortable with in any “normal” scenario. Now it is time for them to revisit the solutions they developed over the past year and work out the best use of them moving forward. We have seen many of the digital solutions implemented over the course of the pandemic readily embraced internally and externally, leading us to believe that they will remain influential and relevant in some form in the future. But what was built and implemented at the height of the pandemic may not be necessary as things open up and get back to normal. Now is the time for leaders to dive deeper into what worked and what didn’t and determine if the changes implemented are going to remain a permanent part of their organization as they currently stand or if there is a better way to integrate them based on what they think is on the horizon. Identifying the parts of the new technologies and innovations that can still add value and combining them with what is known to already work for customers can complement, and even enhance, the solutions provided moving forward.
What worked in digital in 2020?
Every industry had to meet the new needs of their customers this past year. For many, this meant engaging with people who were confined to their homes due to the variety of health, social, and economic forces of the pandemic. We saw savvy companies leverage a variety of digital tools to reach their customers and survive and thrive in a very difficult period. It is likely that many of the technologies implemented were already being considered and will remain as options to consumers moving forward.
Augmented reality, or AR, has grown in popularity in recent years as a tool for retailers to bring their products into their customer’s homes—virtually. A recent article in Harvard Business Review (HBR) looked at how this ‘nice to have’ tech served as a lifeline for some fashion and beauty brands during store closings throughout the pandemic. Jewelry brand, Kendra Scott, introduced AR to allow its customers to ‘try on’ different products using their mobile devices without ever stepping foot into a store. According to the company’s president, the brand also plans to expand the implementation of this tech to in-store experiences in the future. Even after stores opened, many sectors still faced hurdles in showcasing their products and engaging customers. Health and safety concerns prompted many beauty brands to pause product sampling in their stores. AR gave beauty retailers like Ulta the tools to virtually enable customers to ‘try on’ their products. Ulta’s tool, GLAMlab, saw a 7-fold increase in usage compared to pre-pandemic numbers.
Despite being slow to embrace digital in the past, the financial services industry was also forced to quickly employ digital tools to meet pandemic demands. A recent MIT Technology Review article examined how COVID-19 acted as a wake-up call for financial institutions—even ones that were considered ‘digitally advanced.’ Forbes reported that legacy players like Fidelity saw new mobile banking sessions increase by 200% in the early months of the pandemic. Many of those faced with a flood of online activity and serving customers at home turned to partnerships with fintechs as a quick solution. This strategy allowed legacy institutions to leverage the agility and technology of these companies without direct investment.
For the healthcare industry, digital quite literally acted as a lifeline for patients and providers alike this past year. Telehealth systems shifted virtual care from a sporadic offering to an industry standard and acted as a key to managing increased demand fueled by COVID-19. HBR reported increases in telemedicine patients by 50 to 175 times previous amounts during the peak months of the pandemic, and other studies claim that nearly 90% of Americans state they would continue using telehealth even after the pandemic declines. These digital services enabled patients far from healthcare hubs to be given care and helped providers reduce strain on struggling systems.
What does this mean for the future?
While these digital trends have been integral throughout the pandemic, the next big question is how they will continue shaping each of these industries in the future. The retail industry has been on a digital trajectory for years, and the trends of the past year will only continue to amplify this. Many customers have gotten accustomed to, and enjoyed, shopping from home, meaning retailers will need to find ways to elevate and personalize the at-home shopping experience to keep them coming back for more. With e-commerce brands reporting a 94% increase in conversion rates when products have AR content verse when they do not. As a result of digital technologies like AR, investment in technologies that make it easier to navigate through the purchase funnel remotely will become more widespread. Moving forward, these digital tools will begin to act less as a lifeline and more as a tool for accelerating profitability.
Despite the widespread rapid adoption of digital banking throughout the past year, digital-only customers reported the lowest levels of satisfaction. This means financial institutions need to find ways to replicate the in-person banking experience— digitally. This can be accomplished by leveraging tools like digital payment services, which were proven to be the highest adders of customer satisfaction. Banks that invest in P2P services or acquire similar fintech operations will excel at satisfying digital-only customers and be successful moving forward.
The increased reliance on healthcare services this past year did not necessarily translate into profits. In fact, healthcare systems still lost an estimated $202.6 billion throughout the pandemic. As the healthcare industry begins to heal from COVID, telehealth can act as an accelerant for industry profits. Telemedicine increases access to healthcare systems and will result in new patients once individuals become more comfortable with elective procedures and non-essential services. Recent studies predict that digital health technologies could account for over $100 billion in healthcare spending over just the next two years. It is clear that this technology is here to stay and will play a big role in the healthcare industry’s recovery and acceleration in the future.
Digital has proven to be more powerful than ever and the need for continuous innovation is apparent. As was clear over this past year, you never know when an uncontrollable force might create an urgent need to pivot. Hindsight is 2020, and digital leaders should leverage the takeaways to drive opportunities to innovate and build digital processes to promote agility in implementing such changes in the future. Leaders should regularly scan the horizon to understand the different scenarios they may face and have a vision of their company’s strategies and solutions for the future.
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Matt Katz was featured in this Reuters article speaking about consumer spending during cyber weekend.Learn More
Matt Katz was featured in this Digital Commerce 360 article about why the beauty category is poised to win big this holiday season.Learn More