Achieving digital disruption
What makes digital disruptors so successful and what can new challengers learn from their forebears?
6 August 2018
Author: Dominic Zammit, Head of Digital
A decade ago, the presence and proximity of the bricks and mortar of a bank were a key factor when choosing a provider. Trusting your savings to a business without physical foundations on the High Street was almost unthinkable. First Direct had cornered the market as the first true ‘direct’ bank, but innovation in the sector remained slow and digitisation was low on the agenda for most institutions. However, fast-forward 10 years and a new wave of digital challenger banks has disrupted the industry, driving change in consumer behaviour and innovation in service provision.
And the banking industry isn’t unique. With brands like Uber and Airbnb now household names, businesses without a physical presence are dominating key industry sectors and further threatening the future of the traditionalists.
But what is it that makes these digital disruptors so successful? And what can new challengers learn from their forebears?
Establish your purposeWhen establishing as a digital-only brand, centring the company narrative, operating model and customer experience around a single-minded purpose can help create brand resonance with potential customers.
This purpose needs to be relevant to your offer, compelling to your audiences, and above all authentic to you as a brand. Consumers are increasingly savvy and can easily differentiate between the genuine and mere gimmickry, so defining an authentic proposition is essential.
TOMS has famously placed social purpose at the core of its offering, donating a pair of shoes to someone in need for every pair sold. By establishing its ‘one-for-one’ ethos with the consumer, it has cleverly positioned the commercial interaction with the brand as a by-product of the overall feel-good customer experience.
Meanwhile, Monzo’s focus on ‘community’ has allowed it to play down the transactional side of its offer and to instead indicate a greater purpose: facilitating relationships and collaborating with customers to build ‘the bank of their dreams’.
Humanise your brandIt is hard to win trust in a world where physical connections with a brand are becoming a rarity. It’s even harder when a brand has no legacy clientele to fall back on and is entering a market saturated with well-established incumbents. And yet, it can be done.
Being human (honest, authentic and engaging) as a brand is something that sector giants typically struggle with. The traditions, processes and values that have built stability and credibility for generations are the same factors that make implementing meaningful change so difficult. But by building these values into the DNA of a brand from conception, digital disruptors are able to cut through in stagnating markets and offer a refreshingly personal approach that will resonate with the sometimes-unloved consumers.
Airbnb’s premise is simple. It is about creating a universal sense of belonging. The brand’s logo itself, known as Belo or the symbol of belonging, when deconstructed articulates this vision as a visual formula.
This sentiment carries through every element of Airbnb’s brand, from its slogan ‘belong anywhere’ to its tone of voice, reportage photographic approach and warming illustrative style. It is also central to the digital manifestation of the brand itself, which encourages users to search not just by place, but also by experience.
The adoption of human sentiment as the unifying thought of the business has played a significant role in Airbnb’s success and is a testament to the merits of humanising digital-only brands.
Focus on the customerCustomer-centricity is core to the development of a successful digital disruptor. It places customer needs, expectations and behaviours at the very centre of a brand’s service or product development. Convenience is often cited as a key factor in digital disruption when compared with traditional service delivery models (Amazon’s focus on convenience has changed the way in which consumers expect to buy FMCG products), and it is through the adoption of a customer-centric strategy that this standout is achieved.
Customer-centricity is often associated with a shift in focus from pre-purchase decision-making towards post-sale retention and loyalty. This shift from acquisition to retention correlates with the snowball effect often associated with disruptor brand awareness. By focusing on delivering an exceptional post-sale experience, digital disruptors encourage customer advocacy and drive the organic growth of their business.
Uber is a brand that has become synonymous with disruption. From day one, its strategy was clear. It identified an area of people’s lives where frustration around taxi wait time, price and anonymity was pushing what should have been moments of simplicity and ease to moments of anxiety. By focusing on the customer need, the Uber experience has addressed each of these areas simply and effectively and as a result is accepted as the go-to method of travel for people in most major cities around the world.
Uber’s customer-centric approach to service design has allowed it to move beyond identification of customer needs to actively influencing change in consumer expectations and behaviour.
Embrace the value of designIt may go without saying, but ensuring a brand is well designed is essential to succeeding when launching digital-only. Companies that adopt a design-centric business model have been proven to financially outperform their peers on the S&P 500 Index by more than 200% (DMI Design Value Index).
In digital terms, design necessarily goes beyond the aesthetics of a logo, typeface and colour palette. Every interaction with a customer must be meaningfully created to heighten the brand experience. When disrupting a market, it is the individual moments of delight that can add up to secure success.
MailChimp is a brand that has adopted design-centricity as a core differentiator for its business. Each interaction in the customer journey – from onboarding to list population – has been identified, enhanced and designed to deliver a seamless experience that is helpful and humorous, and importantly a contrast with traditional e-marketing providers.
Its tongue-in-cheek tone of voice and highly stylised identity is now immediately recognisable among its target audiences and as a platform it has designed a user interface that is simple and engaging.
Stay focusedDon’t try to be all things to all people. The best disruptors have identified a very specific ‘pain point’ or customer need and have focused all of their efforts on addressing this area better than anyone else in the market.
Diversifying the business too early can dilute the offer and introduce barriers to winning hearts and minds among customers and prospects.
Have a planThere is a perception that entrepreneurs are strategy-free, but the reality of achieving digital disruption is that it requires serious planning. Having clarity over a brand’s positioning, identity, technology, route to market and five-year goals are essentials for achieving sustainable growth.
As digitisation has become a topic of serious boardroom attention among industry stalwarts, it is all the more important that digital challenger brands develop, document and regularly review a strategy for growth that is ambitious yet realistic, actionable rather than theoretical, and intrinsically tied to their overarching brand purpose.
In 2018, people simply expect more from the brands they engage with. Shifting consumer behaviour towards instant gratification is driving a culture centred around personalised, real-time and on-demand services. For brands with archaic business models and cumbersome processes this poses an unenviable challenge, but for those that embrace these principles as part of their core offer, the opportunity is huge.