Forrester's 2019 brand outlook: drop the toys and get back to work

The market research firm Forrester predicts that 2019 will be the year companies start to focus on the hard work involved in digital transformation, rather than the "shiny objects".

The “exuberance” previously felt around emerging technologies, which saw companies race to invest and launch headline-attracting projects such as robots or “blockchain-based thingamajigs” will start to morph into more “reasoned and focused” innovation, according to Frederic Giron, VP and research director at Forrester.

Giron and his colleagues presented this prognosis at a Hong Kong event today, introducing the most regionally relevant takeaways from Forrester’s 23 2019 prediction reports.

Digital to go ‘surgical’

2018 has seen many questions raised over the validity of promises made about emerging technologies such as AI, blockchain and chatbots, said Giron, most of which are still in immature stages. In the rush to embrace them, their value to the customer has been little more than an afterthought, something that's now becoming apparent. 

In the case of blockchain, advertising is the one area Forrester expects to see investments start to pay off soon, motivated by the pressing need to reduce ad fraud and payments for invalid impressions. “In 2019 we expect 50% of the top 100 brands will start leveraging blockchain or distributed ledger technologies in order to increase transparency in the supply chain for digital advertising,” said Giron.

Regulation and business challenges, however, mean it will be “years” before companies see further benefits from their investments in blockchain. Other emerging technologies face different hurdles to implementation, including the difficulties of onboarding stakeholders with varying ideas about outcomes, explained Giron. Internal clashes between “old-school technophone leaders” and “emerging tech fanboys” are common, he said. 

Forrester's Frederic Giron

In his predictions for 2019, Giron said he expected board leaders would become impatient to see returns on any innovations, meaning an end to the days where flashy projects such as “digital innovation labs” could be established without any justifiable ROI. There may also be a shift in investment from the front end to the “hard and boring” back end, with leaders devoting more money to transforming operations so they deliver greater efficiency, rather than more “sexy”, press release-friendly projects, Giron explained.

In light of this, his recommendations to companies include scaling back large, ambitious transformation programmes into “snackable pieces”; assessing every initiative through a “customer obsessive lens”; and working on company culture, the one element that correlates with digital maturity. “If your employees have the right culture—open, experimental, iterative, taking risks—this is something that is extremely valuable because it prepares your organisation for whatever comes next in terms of tech waves,” said Giron.

What's left for AI and IoT now the hype bubble has burst

Many AI projects have failed so far because expectations were far too high, said Achim Granzen, a principal analyst at Forrester. AI can drive meaningful results, he continued, but usually in back-end-focused cases that, while not the most exciting, can nevertheless have an impact on customer experience. These will take centre stage in 2019.

The Internet of Things (IoT) is also a technology that hasn’t turned out how people expected, but its business promise persists. “Most applications for IoT were on the smart home, smart devices,” said Granzen. “That really didn’t take off.”

Going forward, IoT will shift from gadgets to services, he predicts. One company already using IoT in a different way is Tokyo Gas, which has sought to leverage its IoT smart metering system beyond the usual energy saving services to help it understand customers’ lifestyles, such as how often they eat out or go on holiday, and serve them lifestyle-based services like restaurant vouchers accordingly. “It’s an IoT platform at the back, but there is customer service at the front,” said Granzen.

Both Granzen and Giron made the point that any companies working in AI and IoT should take great care to emphasise data quality and data governance, always keeping questions over whether customers accept that their data is being used to send them value-adding services front of mind.

Proof of purpose

Brands know that customers feel more loyal to purpose-driven brands. But while 2018 saw a renewed emphasis on purpose, exemplified by brands such as DBS rebranding with the new logo ‘Live More, Bank Less’, 2019 will see brands try to move from ‘purpose’ to ‘proof’, predicted Giron. In other words, they’ll try to prove they are the responsible, trustworthy companies they are selling themselves to be.

Platform business models are increasingly interesting for brands in this respect, said Giron: Singapore’s OCBC Bank, for example, launched a parenthood platform called mumstruly.com in July in an attempt both to “serve customers where they are” and therefore understand them better, in a world where regulation means data collection is getting harder.

OCBC's mumstruly.com platform

While it is easy to build such platforms, however, Giron cautions brands against jumping into digital initiatives without a clear strategy for winning customers’ trust. People are increasingly fed up with both data breaches and with data gaps leading to misguided attempts at personalisation, Giron said.

He spoke from personal experience: a few months ago Giron received an email from a bank, welcoming him to Singapore in very friendly language. But Giron had moved to Singapore six years earlier—and had since switched to another bank. “They want to be a friend, but it’s like having a friend who never knows what you do or where you live, like having a friend with amnesia,” Giron said. “That’s the core of the problem of transformation that marketers and brands have to go through in order to move from purpose to proof. If they don’t do a good job there, customers will switch them off and—our prediction—they’ll start getting back control of their data”.

Forrester suggests that new “zero party data” will soon come into play, whereby customers will own their data and share it only when they want to. Eventually, continued Giron, AI will be applied to this in a model they call the “personal digital twin”, which will put better customer outcomes ahead of better business outcomes. 

Loyalty programmes are past it

“We’re seeing the last breath of loyalty programmes as we know them,” said Tom Mouhsian, a principal analyst at Forrester. “New models will arise.” At the heart of the problem is an imbalance between the theory of loyalty—meant to suggest a long-term relationship—and the reality of loyalty programmes, which are all about rapid, short-term consumption.

“Buy one get one free, act now, you have 24 hours to respond to this offer. They use aggressive deal tactics to make customers respond more and more frequently.” This trains behaviors that are about instant gratification, said Mouhsian, rather than loyalty.

There are 3.8 billion loyalty programme memberships in the USA, he continued, amounting to over 35 per household, but studies show that loyalty programme members are actually less loyal than non-members. “The sentiment is ‘we’ve had enough’. They’ve been hoarding loyalty cards. They finally want to get some free stuff—but that’s not loyalty”, he said. He advises brands to move away from stimulating rapid product consumption and go back to developing real brand loyalty.

Customers are also increasingly loyal to platforms that sell the products of other brands, like Google, Amazon and Netflix, rather than individual brands themselves, Mouhsian said, because platforms are more convenient, allowing for easy comparisons. “If you’re not on the platforms, you’re not visible” says Mouhsian. “Partnerships with the platforms is sort of like a necessary evil but you have to do it.”