Breaking Through by Sandra Vandermerwe

Author:Sandra Vandermerwe
Language: eng
Format: epub
Publisher: Palgrave Macmillan

Economies of sweep

As the role of technology gets stronger in delivering customer-centric value and ‘lock-on’, so we see the cost of attachment and engagement dropping. This also has quite a dramatic impact on the economics.

Economies come about because the enterprise, both large and small, can sweep up large numbers of customers simultaneously, at very low additional marginal costs, compared to other forms of engagement. Between the economies of the Internet, and social media take-up with countless avenues for web engagement, enterprises can effectively transact and communicate with one or millions of customers within seconds, days, weeks or months, at low or zero extra cost.

Through its in-house applications, FNB is sweeping in customers and non-customers across all age groups, lowering banking costs for them and itself. Geopay, for instance, is a carefully crafted person-to-person mobile payment system, which helps the customers find other users in the vicinity and allows customers to pay them, even non FNB customers (who can upload the app). Funds are instantly transmitted for a purchase, without having to know the receivers’ banking details.

Interaction can take place with customers over multiple channels simultaneously. One only has to look at the banking innovations in Turkey to understand how far this can go. Denizbank became the first bank in the world to allow customers to access their financial details and send money to friends as well as purchase through Facebook with credit cards, which is now becoming commonplace. Turk Ekonomi Bankas (TEB) gives customers cards with built-in high-end authentication technology, complete with keyboards and tiny screens. From these, customers can punch in a password, do online banking and validate purchases. Ziraat Bank has a network of unstaffed video kiosks that enable customers to connect to branches and staff via teleconferencing.57

Plus, we need to factor in the fact that customers can spend as much time as they want, at no added cost, in order to be able to make a good decision when they communicate with the enterprise via technology. What is more, having customers who stay connected longer can save them and the enterprise expenses later on, because better decisions are taken.

This is pretty obvious in developed country markets, but the model is as significant in emerging countries, where take-up of mobile technology accelerates daily, and there are moves afoot to make smartphones the norm.

Take India Tobacco Company, which gathers millions of small farmers, at low cost, providing customized value that is individual farmer-specific. Each farmer gets real-time information and know-how, which makes a direct contribution to each farm’s productivity, increasing that customer’s ability to demand and buy better and more products from the enterprise.

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