15 million in UK do not make best use of the internet

15 September 2017 Consultancy.uk

More than 15 million Britons either do not use the internet, or make use of it in a limited way, as revealed by new statistics. With automation increasingly promising to see an overhaul in labour relations, and those lacking digital skills likely to suffer the realignment’s worst effects, this spells trouble for many of society’s most disadvantaged. Meanwhile, as companies press on with transformation strategies, aimed at overhauling their previous business models to cash in on new technologies, the figures reveal that a significant portion of potential consumers still have little or no means of interacting with brands through these avenues.

According to an analysis by consulting firm BCG, the internet economy of the G-20 is worth more than $4 trillion. A further study performed in 2016 by PwC subsidiary Strategy&, in partnership with social giant Facebook, suggested that over 4 billion of the world’s population currently live outside the digital economy. That study went on to conclude that global internet inclusion could lift 500 million out of poverty and increase global economic activity by $6.7 trillion.

Now, the UK’s leading digital inclusion charity, the Good Things Foundation, has suggested that in Britain alone, as many as 7.8 million people do not use the internet in any way, while 7.4 million people are “limited” users who barely make use of it. The “Real digital divide?” paper, backed by BT – a major internet and telecom provider – is based on new analysis of Ofcom’s most recent Media Literacy Survey, and has been conducted by Professor Simeon Yates at the University of Liverpool.

According to Good Things, who work primarily to support people in growing their digital skills to overcome social challenges, around 15.2 million people in the UK do not make full use of the internet, while both non and limited users are more likely to be socially excluded, with 90% of non-users being classed as disadvantaged. This includes people with poor health or a disability, people in social class DE, and people who left school before the age of 16.

Estimated non-user populations for each region England and Wales

Every aspect of business, from advertising to recruitment, is placing a greater emphasis on the digital economy and the internet than ever before. In an age of digital disruption, where a failure to engage with customers through new, rapid technologies could see companies lose market share to innovative new competitors, long-term market incumbents are turning to increasingly online-centric models, which can also help cut costs and maximise profits.

Along with services apps, social media and website innovations are coming thick and fast, creating an environment where consumers can comment and complain to companies via Twitter or chatbots and receive promotional offers from nearby shops based on their phone’s geolocation data. However, alongside the Good Things research, a study from Oliver Wyman also suggested recently that these services may only help 30% to 45% of digital consumers who are the most tech-literate. While this is great for internet natives (the generation born after the inception of the global information network), over half the population most likely remain ambivalent at best, and feel actively excluded at worst.

Usual suspects

However, while it would be easy to make sweeping assumptions along the lines of age groups, it is not just the stereotypical groups who are alienated. According to the most recent insight from Good Things Foundation and BT, while non-users are more likely to be older, with 64.4% aged over 65, characteristics of limited use are displayed across all ages, with 63% of limited users aged under 65.

The non user population split by ages groups

Meanwhile, the regional breakdown of non-users sees most populations based in the West Midlands, the North West, Yorkshire and the Humber regions, each containing a million non-users each. These regions have each been particularly hard hit by a nose-dive in manufacturing employment recently, with repetitive jobs increasingly becoming mechanised to cut costs and up productivity. 99,600 jobs were estimated to have been lost in the West Midlands, alone, the area which saw the largest numeric losses. 

Without digital skills and internet literacy, meanwhile, these individuals are likely to have an extremely tough time finding new employment, particularly with the projection that only 19% of jobs lost to automation will likely be replaced by new, digital opportunities. Employment status is a key issue for limited and non-users. While 65.1% of non-users are retired – an estimated population of 5 million people in the UK – 19.2% of non-users are unemployed. A further 21.8% of limited users are not working or looking for work, and with the rise in web-based employment searches shifting the manner in which work can be found, this further alienates them from potential work prospects.

Social class also leads to some troubling suggestions regarding internet usage. The non-user population is dominated by DE individuals (semi-skilled and unskilled members of the working class, and casual or lowest grade workers, pensioners, and others who depend on the welfare state for their income), with 49.5% coming from that social spectrum. Again, these are the members of society most likely to be hit hardest by the realignment in labour resulting from mass digital disruption, which could see as many as 5% of jobs totally replaced by AI in the future.

The non user population split by social class

People who are offline are also potentially missing out on a wide range of benefits, including access to financial savings and the chance to stay in touch with friends and family, while making better use of leisure time.

Helen Milner, Chief Executive of Good Things Foundation said, “This research is important as for the first time it not only quantifies the number of people who are offline, but also details the barriers these people face - which shows that the issues of digital exclusion are much more complicated than just skills, taking into account access, motivation and confidence as well. We’re committed to helping people to thrive in a digital world, and so it’s crucial that we tackle these entrenched barriers, and develop programmes and interventions that will really support these people.”

Ian Caveney, Senior Consultant in the BT Purposeful Business Team meanwhile commented, “At BT, we already have a number of products and services like our Basic Broadband and online content that supports the disadvantaged, and with the insight in this report we can ensure not only our current offerings support all segments, but it will enable us to develop future product and services too.”

Earlier in the year, BT came in for heavy criticism of its pricing of OpenReach, the company’s high-speed fibre optic service. Following that controversy, it was announced that broadband customers across the UK could be set for huge savings on their bills following a new ruling from Ofcom, as the UK telecoms regulator said it had begun looking to slash the cost of new connections for fibre networks across the country, while clamping down on BT Openreach – the prices of which were said to prevent millions of customers from affordable access to high-quality internet coverage – particularly if they resided in the DE social class category. The news could result in savings of around £100 million a year for customers.

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Four ways digitalisation is transforming car brands and dealers

16 April 2019 Consultancy.uk

From changing expectations from the customer to new stakeholders entering the industry, the digital transformation of global automotive industry means it is facing the wholesale transformation of its business model. In a new white paper, global consulting partnership Cordence Worldwide has highlighted four major digital trends that are transforming the relationships between car brands and dealers with consumers.

With digital transformation drives booming across the industrial spectrum, automotive groups are no different in having commenced large digital transformation programmes to improve productivity, efficiency, and ultimately profitability. Falling sales figures mean the automotive sector is facing an increasingly difficult road ahead, something which means companies in the market are even more hard pressed to find new ways to improve their bottom lines.

While it offers major opportunities, the industry’s move to digitalise is not without complications. It has triggered a series of major internal changes, which have presented automotive entities with the challenge of becoming a “customer-oriented” industry. A new report from Cordence Worldwide – a global management consulting partnership present in more than 20 countries – has explored how automotive companies are navigating the rapidly changing nature of digital business.

New business models

The level of change likely to be wrought on the automotive industry by digitalisation is hard to overstate. Automation could well lead to significant reductions in the number of accidents, higher vehicle utilisation and lower pollution levels, while leading to a $2.1 trillion change in traditional revenues, with up to $4.3 trillion in new revenue openings arising by 2030.

As a result of this colossal opportunity, it is easy to see why almost all automotive groups now have digital departments, with generally strong communication within the digital transformation and the customer approach. The changes to society which this may have are potentially distracting automotive firms from the change it is leading to in its own companies though, according to Cordence’s paper.

The automotive market is dead, long live the mobility market

Because of this, the sector’s business model is set to transform over the coming decades. With digitalisation speeding up the appearance of concepts such as car-sharing, a subscription package model will likely become more palatable. At the same time, car and ride-sharing models will cater to the sustainability criteria of millennials, who will rapidly become one of the automotive market’s leading consumer demographics in the coming years.

Antoine Glutron – a Managing Consultant with Cordence member Oresys, and the report’s author – said of the situation, “These ‘old school industries’ are now working on creating new opportunities, but in so-doing are facing challenges and threats: new jobs, new technologies, new ecosystem of partners, necessary reorganisation, different relationship with customers, and even new businesses. The customer approach topic is in fact a real challenge for car companies as it implies changing their business model and adjusting their mind-set to address the customer 4.0: from product-centric to customer-centric, from car manufacturer to service provider.”

Digital customer experience

In the hyper-competitive age of the internet, even top companies face an uphill challenge when it comes to holding onto customers through brand loyalty. Digital disruption has resulted in changes to consumer behaviour, which is forcing a range of marketing strategists to reconsider their old, possibly out-dated strategies. As modern customers wield an increasingly impressive array of digital tools and online databases, they and are now able to quickly and conveniently compare prices, check availability and read product reviews.

The automotive sector is no exception to this trend, according to the study. In order to adapt to the needs of the so-called ‘customer 4.0’, car companies will increasingly need to change their business model and move away from product-centric companies to customer-centric ones, from car manufacturers to service providers.

Glutron explained, “As an automotive company, you can no longer expect customer loyalty simply with good products; you must conquer and re-conquer a customer that “consumes” your service. The offer now has to be global, digital and personalised. Your offer has to be adapted to this customer’s needs at any given moment. A key issue related to data control is to build customer loyalty by creating a customer experience 'tailored' throughout the cycle of use of the 'car product': purchase, driving, maintenance and trade-in of the vehicle.”

One way in which the sector may be able to benefit from this desire for a tailored experience is via connectivity. Consumers are generally positive about new connective features for automobiles, and many are even willing to pay upfront for infotainment, emergency and maintenance services. Chinese consumers, where the connected car market is set to hit $216 billion, are already particularly interested in paying a little more for navigation and diagnostic features in their future new car. This can also enable automotive companies to exploit a rich vein of customer data, enabling them to rapidly tailor their offerings to consumer behaviour.

New automotive segments

Digital transformation has also brought with it the rise of completely new application areas. As mentioned earlier, the most well-known example is the autonomous or self-driving car, where the last steps forward were not taken by major automotive groups but by technology companies such as Tesla. While this may have given such firms the edge in the market briefly, a number of keystone automotive names will soon be set to take the plunge into the market themselves, leveraging their car manufacturing prowess and huge production capacities to their advantage.

Before companies rush to invest in this market, however, it is worth their while to remember that the readiness and uptake for such vehicles differs greatly geographically. For example, following a study published in 2018, 92% of Chinese would be ready to buy an autonomous car, compared with only around 35% of drivers in France, Germany and US. Meanwhile, the infrastructure of different nations will also be significantly less accommodating of the new technology.

Use digital for steering thr activity

Elsewhere, Cordence’s analysis has suggested that hooking the cars of tomorrow into the Internet of Things is also likely to see a rapid change in the business model for car maintenance, providing real-time diagnostics for problems. This presents chances for partnerships to improve the connectivity of cars, especially with tech companies; for example, PSA partnered with IBM for a global agreement on services in their vehicle. Meanwhile, data could also be sold to other parties with an interest in this data, such as the government, which could use it to manage traffic levels, or ensure that only adequately maintained vehicles take to the road.

Glutron added, “With the increase in the amount of client data and connected opportunities, the recommendation is to set up data-centric approaches. The value is now in the customer data. The general prerequisites are to rework the data model and the Enterprise Architecture and generally build up a data lake including data from all sources (internal and external, structured and unstructured).”

From automotive to mobility

Relating further to the idea of connectivity, the report claimed that automotive firms must now adjust their models in line with the provision of end-to-end mobility, rather than treating the sale of a car as an end point in their relationship with the customer. In order to realise this transformation, transformations are likely to become more and more important.

A network of partner companies means automotive firms can provide a global mobility experience. As the vehicle is increasingly connected to its environment, new partners can also be cities, governments, and other service providers within the global mobility services industry in which the car brands want to take part.

According to the study, the target is clear. Companies must look to a holistic transport service, offering to move customers from A to B in a unique and pleasant way – otherwise they might as well take public transport. At the same time, they should extend the services reachable “on-board” (especially the enhancement of the connectivity between the car and smartphones or other connected devices), and reach high standards in terms of user experience (online sales, online payment, customised experience during and after the use of the car).

Concluding the report, Glutron stated, “These mobility market transformations could be considered a threat for the car manufacturers. Quite the opposite: if they take up the challenge and review their business model so that they become the service provider – communicating no longer to a driver but to a ‘mobility customer’ – they can then take advantage of their expertise and their position as a historical player. The most convenient means of transport are cars, and building a car is highly-skilled work.”