The purpose of a consumer-centric digital transformation is to drive:
✔ Simply outstanding consumer experience
✔ Profitable, sustainable revenue growth
It’s a big challenge for long-established consumer brands.
Here’s how the home appliance industry is rising to this challenge.
With examples of how digital is enabling change.
And how this benefits brands and the consumers they serve.
Digital transformation has come a long way since the first “smart appliance”
Digital transformation in home appliances has been more than 20 years in the making.
Ever since LG launched the first smart fridge way back in 2000, it seemed that we were on the cusp of our appliances managing themselves.
At around the same time, online retailers such as Coolblue and AO sprang up to alleviate consumers of the need to trudge around uninspiring physical stores looking for the product of their dreams.
Almost simultaneously, webshops such as eSpares and Partmaster opened their virtual doors to consumers.
Thereby, enabling them to interrogate online FAQs, watch “solve it yourself” videos, and buy accessories and consumables.
The advent of the Smartphone made it possible for consumers to receive push notifications.
Real-time alerts of impending deliveries, service booking confirmations, and invitations to provide feedback or benefit from promotional offers.
Finally, the Internet of Things truly came of age.
Taking consumers into a cool new world of remote appliance control via apps and voice.
Plus, integration with a whole new digital ecosystem.
An ecosystem designed to take care of everything from meal planning to automatic ordering of consumables.
How home appliance brands are leveraging digital transformation to drive consumer experience
Domestic appliances are the workhorses that help us to efficiently manage our essential home living tasks.
Such as cooking, cleaning, and clothes care.
Consumers interact with products in 3 distinct phases:
Pre-purchase – i.e. when considering buying a product for the first time or as a replacement for an existing product.
At purchase – i.e. when comparing brands and retailers
Post-purchase – i.e. when using the product
Digital transformation has positively impacted customer experience in all 3 areas:
Digital transformation of the pre-purchase experience
Before the digital transformation of home appliances, consumers would schlep from one megastore to another.
Only to be faced with a wall of similar-looking white goods.
And less than expert advice from largely inexperienced or inadequately trained shop assistants.
Today, retailer and manufacturer websites make the consideration phase effortless.
Detailed product listings, side-by-side comparisons, video demonstrations, and virtual assistants smoothly guide consumers through the process of shortlisting appliances that best meet their needs.
Digital transformation of the at purchase experience
Thanks to digital transformation consumers can continue their purchase journey online.
Or seamlessly connect their pre-purchase experience to a physical shopping experience.
Recent research by Bain & Company highlights the dramatic acceleration of online purchasing compared to in-store purchasing.
Moreover, consumers are increasingly seeking a direct relationship with their favourite brands.
Indeed, digital transformation enables this relationship regardless of whether a brand chooses to sell directly to the consumer or not.
For example, Miele is opening Experience Centres to engage directly with consumers to enable them to try before they buy.
By selling directly manufacturers can:
- Take full ownership of the consumer relationship
- Obtain first-party data and direct feedback, and
- Use this direct relationship to improve products, services, and customer journeys in the future.
Digital transformation of the post-purchase experience
Digital has revolutionised the way that consumers use their products.
No more wading through complicated instruction manuals to find the best wash cycle for your delicates.
Or to understand why your glassware is not coming out of the dishwasher sparkling clean.
If you’re one of the many millions of consumers who’ve recently bought a smart appliance, you’re able to set up your product and monitor its performance using an App on your Smartphone or by asking your favourite digital assistant.
Want to know how long it will be until your washing is dry?
Want to try a new dish for dinner and find out how to cook it to perfection?
Simply download a recipe app.
Or find out what wine to pair with it?
Of course, there’s an app for that too.
What if your appliance is not working the way it should?
It used to be that your only recourse was to call the manufacturer or their service partner for advice and support.
Now, of course, consumers can get instant help online in an array of digital formats.
These range from website knowledge articles to YouTube videos and chatbots.
Indeed, brands with digital consumer communications have higher customer satisfaction scores and faster revenue growth.
So says Forrester in this study commissioned by Google in December 2020.
Moreover, consumers now have a choice over how to budget for and manage consumables, maintenance, and repair.
Services have proliferated.
From renting appliances to taking out repair protection plans.
Or signing up to auto-replenishment through subscription services such as Amazon Dash Replenishment.
Finally, if you’re unfortunate enough to experience a breakdown or a fault, digital transformation comes to consumers’ aid in many different ways.
For example, apps that continuously monitor the health of your appliance and notify you of potential issues.
Or online repair booking systems with transparent prices and appointment times.
Of course, once you’ve booked online you also receive SMS updates notifying when you’ll service engineer will arrive at your home.
And after he leaves, you’ll be able to provide feedback on the quality of the service received.
Either by responding to a text survey or completing an online customer satisfaction questionnaire.
How brands are monetising the digital transformation in home appliances
Building a digital ecosystem to support simply outstanding service takes time and requires substantial investments in infrastructure and people.
However, the opportunities to monetise are already significant.
Moreover, these opportunities are multiplying as digital transformation gathers pace.
So, how specifically is the home appliance industry driving profitable, sustainable revenue growth?
To answer this question, it’s worth looking again at those 3 distinct contact phases:
Pre-purchase, at-purchase, and post-purchase.
Pre-purchase revenue growth
The pre-purchase stage is primarily about brand-building and helping the consumer to choose your product over that of one of your competitors.
However, it is possible to make money even before your consumer has actually bought your product.
For example, by selling invitations online to product masterclasses where potential purchasers get to try your latest products in the company of an expert.
The Miele Experience Centres lead the way in this experiential learning charging their premium customers an event fee for the privilege of attending.
More typically such events are free-to-book product demonstrations aimed at enticing consumers to move up to the next generation of appliances.
Other pre-sale opportunities arise when an existing product has reached the end of its life or cannot be repaired economically.
Brands such as Electrolux and Whirlpool refund the cost of an engineer call-out against the purchase of a new appliance.
Or offer a repair or replacement option when the consumer reports a fault.
At purchase revenue growth
The most obvious way of maximising the revenue from a product sale is to sell directly to the consumer.
This does risk conflict with retailers.
However, by following the guidance in chapter 6 of our direct-to-consumer guide such conflict can be minimised.
The key enabler for direct sales is a branded e-commerce store integrated into the supplier’s ERP system.
Additionally, brands can encourage upselling to their premium appliances with built-in experience enablers such as voice control or onboard cameras.
Finally, by working together with app developers, online retailers, and experience providers home appliance brands can tap into digital expertise at the same time as sharing in the additional revenues generated.
Post-purchase revenue growth
Once the consumer has bought an appliance and begins to use it, the opportunities to monetise include all of the following:
- Upgrading or extending the manufacturer’s guarantee as part of the digital product registration journey.
- Sales of consumables, accessories, and spare parts through email, SMS or push notifications linked to product type, product age and product use
- Launch of subscription services such as product support packages, consumables, and meal/wine home deliveries
- Predictive maintenance and remote diagnostics as a paid service
- Fixed price repairs with quality guarantees
- Sales of additional, matching appliances
- Trade-ins of older, less energy-efficient products for modern, connected, efficient alternatives
Digital transformation in home appliances has come of age
Digital transformation in home appliances has come a long way since the first smart fridge wowed visitors to the Consumer Electronics Show at the turn of the millennium.
The digital building blocks for improved consumer experience and profitable revenue growth have been:
- CRM systems
- Intelligent virtual assistants
- Connected appliances
- Apps and voice enabled digital assistants
- Direct to consumer marketing, sales, and service automation
However, the transformation is not yet complete.
The advent of digital ecosystems heralds a new era of service delivery and business building.
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