New approach from KPMG's Global Customer Center of Excellence and KPMG Innovation Labs pinpoints the drivers of choice that open and close the customer wallet — from millennials to baby boomers
A distinctive framework leveraging the Five Mys, Customer Wallet and Generational Surfing gives businesses fresher and deeper insights on consumer behavior, helping deliver a multilayered view that strengthens the race for the customer
TORONTO, Nov. 14, 2017 /CNW/ -- KPMG International today unveiled a new, distinctive customer engagement framework designed to help businesses understand the increasingly complex and multi-dimensional forces that influence decision-making and preferences of today's, and tomorrow's, ever-evolving consumer.
"Every day, new influences impact consumer motivation, behavior and consumption, and these forces are upending the conventional predictors of when, why and for what the customer wallet opens," said Willy Kruh, Global Chair of KPMG's Consumer and Retail practice, and a partner with KPMG in Canada. "Transactional data, traditional market research and demographic profiles alone are proving inadequate to explain not just what customers are doing, but why.
"It's time for an industry reset that re-orients us to understand what drives consumer engagement today. This calls for a new, intelligent, multi-dimensional model that uses predictive insights to help companies understand the customer journey and who their customers truly are."
KPMG's inaugural Me, My Life, My Wallet, is a global analysis of how the seismic influences of socio-political and economic shifts, accelerated mass adoption of new technologies, and mobility are upending fundamental beliefs around what drives consumer behavior. With surprising findings from a survey of 10,000 people across the US, UK, India and China, the report is based on comprehensive, customer-focused research methodology from KPMG's Global Customer Center of Excellence and the KPMG Innovation Labs, and incorporates human-centered design thinking for business model innovation.
The three-pronged model of how consumers make decisions: the Five Mys, the Customer Wallet and Generational Surfing
Based on what KPMG calls the Five Mys, Customer Wallet and Generational Surfing, the framework goes deeper than just the analysis of data through a single lens. From millennials to baby boomers, it aids in assessing the drivers of consumer decision-making by looking at the multiple factors that influence people's everyday lives. Together, the three dimensions of the model – behavioral, financial and demographic ─ help deliver a more comprehensive, 360-degree view of a consumer.
Julio Hernandez, Head for KPMG's Global Customer Center of Excellence and Advisory Customer Solutions, said: "Today, customers have more power than ever, and businesses across all sectors are locked in a battle for growth. Differentiating your business whether through your product, service or an intentional customer experience ─or in most cases, a combination of all three ─ requires a deep, intimate understanding of the trade-offs customers are willing to make and the forces impacting their decisions to open and close the wallet."
The Five Mys
The Five Mys focus on five key dimensions, or behavioral drivers: My Motivation, My Attention, My Connection, My Watch and My Wallet. Each of the Five Mys in isolation tells only one aspect of a customer's story. Together they enable companies to navigate the complexity of consumer decision-making, and build a richer understanding of what affects changing customer preferences and needs.
Said Mr. Kruh: "Consider two men born in the same year, both British, both are self-employed and both are extremely wealthy. They both like wine, cars, have been married twice.
"Should a business treat these two customers the same? Many companies would. One is a prominent member of the British royal family and the other, a famous heavy metal rock star ─ worlds apart in terms of their tastes and preferences. This example illustrates that a demographic profile alone is not an accurate predictor of the nuances of behavior. Applying the Five Mys together can provide a better understanding of a consumer."
The Customer Wallet
The Customer Wallet provides fresh thinking on our changing relationship with money, including the forces that influence when, where, how and why we open and close our wallets. Understanding the mix between income, spending and saving, and how this changes across generations and life events, provides a level of intelligence beyond that offered by traditional models. Grasping the dynamics of the Customer Wallet and influences by the Five Mys, can provide businesses with deeper insights in the race for the evolving customer.
For instance, according to the Customer Insights findings, 22 percent of millennials identify their parents as a source of income. To support their millennial children, baby boomer parents now are facing new, unexpected expenses which impacts what's flowing in and out of their wallets.
There was a time when understanding a particular generation such as the baby boomers was enough to predict future behavior. With extending life stages and drifting life events, riding the waves between generations isn't as predictable as it once was. Generational surfing presents a new perspective on how those life event drifts can help businesses anticipate changing needs and preferences.
One example is the growing trend of 'unretirement': Almost 20 percent of Americans aged 65 and older remain employed, with three in five retirees citing financial problems as their main reason for working past 65.
"Making sense of the signals of change is critical to keeping up with your changing customers. Finding the right ways to mine and analyze these signals will help companies better predict customers' changing needs and expectations," said Colleen Drummond, Head of KPMG Innovation Labs and a partner with KPMG in the US.
Read the full Me, My Life, My Wallet report here.
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About KPMG Innovation Labs
The Innovation Labs help clients see what others don't. We provide insights on signals of change from an outside-in perspective. Working shoulder-to shoulder with our clients in an immersive process, we apply design thinking for business model innovation to drive from signals to action. The Innovation Labs' diverse team brings strong capabilities in design thinking, trends research, customer insights, technology innovation, and investment analysis.
About KPMG International
KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 152 countries and have 189,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
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SOURCE KPMG International