Think your brand is safe from disruptors? Think again!by
A new study suggests that all sectors are open to disruptor brands. So how should your brand respond?
Do you remember Juciero? You may have missed this ‘tech’ start up, the company shut down in September after 16 months in business. Their business? They were disrupting the way we access fruit juice, with a $400 internet connected juicing machine that ran on bags of juice consumers bought at extra cost. Juice, but disrupted!
Unfortunately, consumers soon found out they could ‘hack’ the Juciero, simply by purchasing the juice bags and squeezing them out. It sounds like a bit of fiasco, right? Getting a bag of juice, placing it in an expensive machine that did nothing but squeeze that juice out, but was also connected to the internet.
But Juciero attracted a staggering $118 million in 4 rounds of funding. If you can take a task and ‘disrupt’ it, through technology or the ‘internet of things’, more often than not, there’s going to be an investor that wants a slice. Just in case that disruptor becomes the new Uber or Airbnb.
Disruption sells, and it’s quite the aspirational label for many brands. So it’s no surprise to find companies billed as disruptors taking a crack at disrupting services across categories, with varying levels of success. But what is it about disruptive companies that appeals to consumers?
Why customers like disruption
Disruptors can make a huge impact, and companies are willing to risk a lot for that chance to be the new global disruptor on the block. But we wanted to understand how significant this impact really is for brands and what marketers can do to keep up. We ran a study with a nationally representative sample of 1,500 in the UK, designed to understand what consumer really think of disruptors, which consumers are likely to use them, and why.
For many marketers out there, the target consumer for disruptor brands will usually be those of certain age group. Those tech savvy, but perhaps financially sensitive - millennials. But we found that it’s not all about millennials (for once) and disruptors are certainly not only attracting the young and hip.
The highest users of disruptors were in the 25-34 and 35-44 age groups, not the 18-24 year olds. In fact, 30% of 18-24 year olds haven’t even used any of the 44 disruptor brands across the various categories we tested. But 42% of those aged 65+ had used one or more, and 20% of the segment most ‘into’ buying disruptor brands were over 55.
The appeal of disruptors is based on the perception of value, convenience and slick branding.
So age demographics aren’t very defined, but what about income? Households with an annual income of over £55K were key adopters with over 70% of them using these brands. We found that use increased with income, but we also found the biggest reason consumers are buying into disruptors is value for money. When it comes to disruptors, value doesn’t mean just price – it’s that core offering of ‘worth’ the customer feels.
However, we found that traditional demographics don’t quite provide the entire picture for marketers. We created an attitudinal segmentation, splitting consumers into five groups. Attitudes toward disruptors were developed from a broad range of factors including their views on the environment, use of technology, and ways of choosing products and services, alongside softer elements such as how they perceive themselves.
These segments run from the ‘Tried and testeds’ and the ‘Mainstreamers’, who are relatively closed off to disruptors, through to the ‘Nonchalants’, and then finally to those most open to using disruptors - the ‘Go getters’ and the ‘Too cool for schools’.
When coupled with demographics, these new disruptor segmentations provide a wealth of information about where it is best to spend your marketing budget, and the types of messages you want to get out there. These segmentations are applicable to all brands, across all sectors. They provide actionable insight to target the general consumer, and for individual brands, both established and new.
For example, when looking at the profile of Barclays by attitudinal segment, we can now see that over half of current users are either ‘Tried and testeds’ or ‘Mainstreamers’. This compares to just 15% of Monzo customers. However, a third of Barclays’s customers fell within the top two segments most open to disruptors. So, knowing this, Monzo can see the opportunity to steal Barclays’s customers from these particular segments. And Barclays can determine how to hold onto them.
What sectors are open to disruptors?
We also found that consumers in every sector we targeted; hospitality, health, telecoms, utilities, grocery and financial services, were open to disruption. The appeal of disruptors is based on the perception of value, convenience and slick branding – well executed identities that build on differences between the disruptor and traditional; a promise to consumers of something new. More traditional brands will need to look at these key drivers to ensure that they are hitting those sweet notes.
There are some sectors such as utilities, financial services and health insurance that are wide open for disruption because of a standardisation of services across companies, and the traditional lack of customer churn. For many consumers the real difference between a current account at Barclays, or a current account at HSBC is negligible, and certainly not worth the fuss of switching.
In markets with little differences in the products across companies, there is so little movement, that when a disruptor like Monzo comes along, a well-designed mobile app can seem like a breath of fresh air for consumers. These markets are ripe for disruption, with two thirds of consumers said they would consider a disruptor brand in these sectors.
From a marketing stand point it’s important to know that no sector is safe. Nor can you rely on traditional marketing thinking that only customers of a certain age or income demographic will be attracted to disruptive competitors. Even if your core customer base is an older, less technological savvy segment, there will always been a danger of losing a significant slice to a disruptor.
Disruptive brands grow in spaces where innovations have stagnated, or where consumers are making demands that aren’t being met. They begin with questions such as “how can technology add value to this service/process” and they focus on that, for better or worse.
This is where customer experience should come in for more traditional brands. Disruptors and traditional brands alike need to be putting in the legwork to truly understand their consumers and their changing needs. This makes all the difference in offering a product or service that they will be attracted to. Looking at the study from the consumer’s viewpoint revealed that any current model can, and should, be replaced on an ongoing basis if it means creating value for the consumer.
This is why brands shouldn’t see disruptors as the enemy at the gates, but rather this new paradigm should be setting a fire under you to push for depth in the understanding of consumer needs, in order to provide genuine, consumer driven marketing and product strategies. Because no sector and no demographic of yours is safe, but with the right mind-set there’s no reason why you cannot compete.
Virginia has been Managing Director of customer experience specialists Network Research & Marketing Limited since 2007 having joined the agency in 1996. She has over 30 years’ research experience with the last 10 spent helping leading blue chip businesses improve their customer relationships.
In 2013 Virginia spearheaded a revamp of...