Consumer Electronics: Focus on the Customer
- Average sales prices are trending downward. To offset this, many CE players are looking to find new revenue streams.
- Product innovation is not enough. Service add-ons are increasingly important.
- Customer expectations continue to rise, demanding more for less.
- Digital convergence blurs the lines among traditional industries, increasing market competition.
CE is undergoing a paradigm shift from producing devices to supporting differentiated customer experiences. Innovation for its own sake is not enough: Getting closer to customers is the key to success. As products become smarter and customer interactions evolve, the amount of customer data is growing exponentially. CE companies can leverage technology to analyze data, generate insights and cultivate deeper, more intimate customer relationships.
For example, the proliferation of eBook readers and digital content can be characterized as smart consumer electronics innovation. US sales of eBooks was nearly $70 million in January 2011 – a 115 per cent jump compared to the same period last year. Total adult hardcover sales during the period dropped 11.3 percent to $49.1 million, while adult mass market paperback sales slumped 30.9 percent to $39 million. Adult paperback sales were down 19.7 percent to $83.6 million, making it conceivable that eBook sales will quickly surpass that category as well.**
At the end of 2010, Amazon’s third generation Kindle 3 eBook reader was its bestselling product ever. Its development reflects a laser-like focus on its most important customer, the average book reader. By doing just one thing well, the Kindle is elevated away from tablet wars. Today the Kindle weighs less than or equal to a typical paperback, is attractively priced at $139, features no glare, and has a battery life of one month.
Amazon’s consumer electronics service delivery platform orchestrates and manages the reader experience. Responding to one of the biggest complaints about Kindle, Amazon now offers the page numbers on more than 10,000 books for those who upgrade their Kindle software. In a blog on its website, Amazon wrote, “We wanted to be able to display real page numbers that have value and are useful for those who need to cite a specific passage in a book for class, follow along with their friend in a book club, or simply point a friend to a favorite part of the book.”
Amazon generates significant economic value from each of four focus areas that maximize ROI. *
- Capture the data – generate new insights by collecting and standardizing information
- Optimize insights – apply intelligence to collected customer and business information using proactive analytics
- Revamp development – increase appeal through more intuitive and relevant products
- Enhance the experience – extend the value of the product through the introduction of new value-added services
CE companies are uniquely positioned to take advantage of technological advances. In a connected world, companies can work on getting it right even after the product is shipped. Customer intimacy can be realized by developing smarter product and service innovation capabilities. Ultimately, companies can change fundamental processes and lower the cost of doing business.
*”A Smart Approach to Maximizing ROI in Consumer Electronics Innovation”. IEEE-sponsored webinar, featuring presenters Bruce Anderson and Scott Burnett, IBM Global Electronics Industry. ** Association of American Publishers’ (AAP) monthly sales report.