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Why do businesses outsource the customer relationship? There is a #betterway...
Companies are being disintermediated by 3rd parties - and it's time to fix it.
The so-called ‘web2’ platform winners, most notably the ‘GAMMA’ and ‘BATs’ *, have amassed the most incredible numbers of daily active users.
They have the most ‘eyeballs’, as marketers would say.
It’s all down to remarkable platform economics and the powerful network effects acting across the digital economy.
Most importantly, it’s a result of the power laws around collecting and using data… the more data you have, the more you know, and the more power you can exert on the market.
Viewed another way, these powerful Data Majors now enjoy the most fantastic business and customer lock-in.
Many have now successfully walked their way into the ‘customer reputation’ business (“should we trust this person called Jamie?”). And they are now at the centre of the customer authentication business (“is it really Jamie coming back?”).
They offer rich customer profiles and insights. They help companies understand who goes where, who does what and when. And they help companies communicate with customers.
These 3rd party platforms are being used right across the customer lifecycle. And vast numbers of companies around the world now completely rely on them.
It’s been a wild success, in large part because it’s easy to make the business case. Lower short-term costs. Superior sign-up and log-in experiences. Increased transaction volumes. Lower friction. Even larger basket sizes.
From the CFO and CMO’s point of view, what’s not to love?
A big mistake?
But there’s another way to look at this.
These capabilities are right at the very core of the digital customer relationship.
Identity. Reputation. Login. Customer communications. Customer engagement. Customer data. Even payments.
All this time these businesses have been outsourcing the customer relationship to these 3rd parties.
Is this the single biggest collective misstep since the web was born?
Look closer and you’ll see the organisation has now been disintermediated.
It’s now these 3rd party providers that have the primary relationship with the customer.
It’s happened slowly, and unthinkingly. And yet company after company has been handing over this crucial aspect of the business for years. They have become boiling frogs - unaware of what’s slowly changing around them, dying one at a time.
You see, these 3rd party providers can now directly message, inform, promote (and indeed demote) certain services. They can lock customers out. They can even lock businesses out.
They control the data, and in many senses, they control the market: who can access what, and which businesses thrive or die. And they can choose to change their terms of service or pricing whenever they want.
Consider the small-medium business that doesn’t have its own IT department or skills. Without using these 3rd party platforms, they can’t offer instant log-in, seamless experiences, or one-tap checkout. They can’t easily personalise services.
The costs of doing so would be prohibitive.
So, they say, it’s worth it. Not least for the eyeballs.
Even if they have to seed control of the customer relationship to another company. And all the data that goes with it.
This is even a challenge for the world’s largest companies. Can you imagine, 20 years ago that Nike - one of the world’s greatest brands - would become subservient to another brand in a customer channel? Yep: it happened that fast: facebook.com/nike.
And just look at the URL for Disney on Amazon.com: https://www.amazon.com/stores/page/EF081BE7-FC57-4715-9A43-440C8BAF0514
It’s just another page.
That’s quite something in brand positioning terms.
Restoring real connections
Genuine, authentic brands want to build genuine authentic customer relationships.
They don’t want 3rd parties in the way.
Yet they also need to compete on the customer experience. On cost base. On customer insights.
But how to achieve these things without handing control of the customer relationship to a 3rd party?
The answer is to give customers their *own digital tools* so that businesses can connect directly with them.
So that people can connect to brands they love. To companies they want to shop with.
New digital customer tools will mean no more login. They will mean seamless experiences. And they will mean portable, trustworthy reputation. Many of the same capabilities that the Web2 winners offer today, but without the 3rd party downsides.
All in, it’s a #betterway to do business.
A #betterway to connect.
A #betterway to build customer insights.
A #betterway to login.
A #betterway to personalise.
And a #betterway to build true, real and trusted customer relationships.
No more handing over control to the Data Majors and Web2 platforms. No more disintermediation by 3rd parties. And no more boiling frogs.
It’s time to leap into the future - but this time with real connections to people.
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*GAMMA = Google, Apple, Microsoft, Meta, Amazon…. BAT = Baidu, Alibaba, Tencent