REPORT ZERO FRICTION FUTURE
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ZERO FRICTION FUTURE R E P O RT
BROUGHT TO YOU BY:
MEETING
THE NEEDS OF THE
D I G I TA L LY C O N N E C T E D
CONSUMER
The world is changing faster than we can keep up,
and consumers today are inundated with choices
of every imaginable kind. Digital connectivity has
undeniably improved our lives for the better but it
has in turn raised expectations as well. Consumers
have more power and voice than ever before. They
do not think twice about making a purchase across
multiple channels and are less willing to suffer any
inconveniences or invest more time
to get what they want.
As a result, the consumer experience is even more
essential in this age of instant gratification. 80%
of consumers say that the experience a business
provides is as crucial as its goods or services1.
If companies are not meeting consumers’ high
expectations, consumers can easily switch to find
one that will.
1. Salesforce, State of the Connected Customer, October 2016.
IDENTIFYING
FRICTION
IN YOUR BUSINESS
Any activity which influences or causes a consumer to abandon the purchase journey
is a source of friction. It may be an offline or online activity such as waiting in line or
entering one’s payment information, searching in-store or navigating through a mobile
application, or even laboriously filling in details on a physical or digital form.
Businesses nowadays face greater challenges with the rise of new technologies.
The more options consumers have, the more opportunity there is for friction
to arise. Across the online ecosystem, friction occurs at multiple touch points from
discovery to purchase, such as slow website loading speeds, a non-intuitive user
interface, and poorly designed search functionality.
Some businesses are already providing consumers with experiences that reduce
or eliminate pain points that cause friction. These in turn are resetting consumer
expectations, making them less tolerant of friction and more likely to switch to another
brand or abandon their purchases entirely2. As a result, businesses stand to lose the trust
of existing consumers, the attention of prospective consumers and billions of dollars in
friction costs.
2. Facebook IQ, Shifts for 2020: Mobile service economy, August 2017.
NO REVIEWS YET
REDUCING FRICTION
IN ASIA PACIFIC:
A
US$325 BILLION
OPPORTUNITY
Businesses are losing prospective consumers
and billions of dollars of potential revenue
to friction every day. BCG estimates that
the aggregate dollar amount of the cost of
friction businesses suffer in the Asia Pacific
(APAC) region can reach US$325 billion
each year 3. This represents the immense
size of the potential opportunity at stake,
and is a compelling incentive for businesses
in consumer packaged goods (CPG), retail,
eCommerce, automotive, hospitality,
financial services, travel and quick service
restaurants (QSR) to reduce friction in their
consumer journeys.
3. Boston Consulting Group, Data Analysis, March 2018.
D I S COV E RY
Awareness, Information Gaps,
Technolog y Optimisation
THE JOURNEY
TO A
ZERO FRICTION FUTURE
Fulfilment, Support, Repurchase
P O ST- P U R C H A S E
Availability, Buying, Payment
PURCHASE
Friction occurs during three distinct phases
of the consumer journey:
DI SCOVERY • PURCH A SE • POST-PURCH A SE“Every contact we have with a customer influences
whether or not they’ll come back. We have to be
great every time or we’ll lose them.”
- KEVIN STIRTZ 4
4. Kevin Stirtz, More Loyal Customers: 21 Real World Lessons to Keep Your Customers Coming Back, April 2008.D I S COV E RY
D I S COV E RY Discovery friction pain points can be categorised into three groups:
1
FRICTION
P O ST- P U R C H A S E
AWARENESS
PURCHASE
Consumers might not even be aware of a product or service because there are
Consumers expect a smooth experience and well-rounded multiple roadblocks preventing them from receiving the relevant information
support across the different stages of their purchase journey, they need. These include a lack of ads across online and offline platforms to
and it begins with finding out about the brand, business, product promote awareness, or failure to target the right audience resulting in consumers
or service. At the discovery stage, consumers want to receive receiving irrelevant ads they have no interest in.
2
clear and concise information that can be easily found across
channels and more importantly, is relevant to their needs or INFORMATION GAPS
wants. Any pain point that prevents a prospective consumer Consumers might have heard of the brand but face pain points caused by
from doing so is a cause of discovery friction. the absence of, or difficulty in, accessing relevant information that they
need to evaluate a product or service. One example of a source of friction
Businesses have to ensure that they adequately raise brand is the dearth of easy-to-find consumer reviews or ratings. 93% of consumers say
awareness online and offline, as well as provide comprehensive online reviews have an impact on their purchase decision, while 63% are willing
information that is easily accessible and localised to each individual to pay up to 15% more for the same product or service if assured of a smoother
market. Failure to do so may lead to consumers losing interest experience6. Consumers today want to get a taste of the experience before signing
and dropping off even before purchasing the product or service. up, and a growing pain point is the inability to make an informed decision based on
According to research, 51% of customers expect companies to user reviews.
anticipate their needs and make relevant suggestions5.
5. Salesforce, State of the Connected Customer, October 2016.
6. Podium, State of Online Reviews, 2017.H O W M U S I C A L . LY R E D U C E D
D I S COV E RY DISCOVERY FRICTION TO DRIVE
FRICTION U S E R G R O W T H G L O B A L LY
3
TECHNOLOGY OPTIMISATION
Technology has improved our lives for the better for the most part, musical.ly was looking to scale globally and
but when used incorrectly, can also add to the pain points consumers create a community for people to express
experience. Ads linking to the wrong page or long loading times are a themselves through videos. This meant that
few examples of friction caused by technological impediments at key transition they had to remove any potential discovery
points. Research shows that 55% of consumers in Asia Pacific wait less than friction points that would get in the way of
five seconds for a website to load before exiting it 7. raising the brand’s awareness.
They leveraged Facebook Login to provide
55%
a seamless login experience, and drove user
acquisition by using Facebook App Ads.
260% 8M
of people in APAC are not
willing to wait more than
5 seconds for a web page to
load before leaving the site
rise in sign-ups after new sign-ups from
using Facebook Login Facebook App Ads
“Through Facebook, we were able to scale musical.ly globally, increasing user
exposure through Facebook App Ads resulting in more than 8 million new
users sign-ups.”
7. Limelight Networks, The State of the User Experience 2017, 2017. - ALEX ZHU, Co-founder of musical.lyT H E F U L L L I ST O F PA I N P O I N T S
T H AT C O N S T I T U T E D I S C O V E RY F R I C T I O N I S S H O W N B E LO W:
D I S COV E RY
Awareness, Information Gaps, T E C H N O LO G Y
Technolog y Optimisation AWA R E N E S S I N F O R M AT I O N G A P S O P T I M I S AT I O N
Prospect doesn't know your brand,
Too much/too little information Ads not linking correctly
product or service exists
Prospect doesn't know they need
No expert advice Registration/Form-filling
your product/service
Irrelevant offers/ads Can't chat or ask for help Loading time too long
Fulfilment, Support, Repurchase
P O ST- P U R C H A S E
Too much time spent searching Can't see, touch or try item No language localisation
Availability, Buying, Payment
PURCHASE
Risk perceptions unaddressed Content not optimised for
(safety, privacy, etc.) all platforms
No reviews/ratings to encourage
purchase
No price information
Difficult to compare product/price“When you look at shopping and retail,
one of the top issues people have is with checkout.
Consumers are walking around with a computer
in their pocket, so let them use that computer to
complete the transaction.”
- JAMIE IANNONE 8
8. eMarketer Retail, The Future of Checkout Lies with AI, Scan and Go, March 2018.D I S COV E RY
PURCHASE These pain points can be categorised into three groups:
1
FRICTION
P O ST- P U R C H A S E
AVAILABILITY
PURCHASE
Consumers may spend significant time researching documentation, data, vendor
Long queues, clunky and inefficient point-of-sale systems, reviews, and other materials to make them feel confident about their decision.
multiple forms, limited payment options and hidden charges are Upon doing so however, they may encounter multiple barriers including
all bottlenecks that make the path to purchase unnecessarily difficulty accessing store or outlet locations, long waiting times, and stock shortages that
cumbersome for consumers. Research shows that 25% of online get in the way of their purchase journey. Research shows that 41% of online shoppers
shoppers abandon their carts due to unexpected or hidden get frustrated when they find products or services online are unavailable in-store 10.
shipping and delivery costs 9.
These create purchase friction, where consumers experience
41%
unexpected steps and processes, having already selected a
desired product or service. Purchase friction is as prevalent in
OUT OF STOCK
the physical customer journey as it is in the digital and mobile
journeys, requiring consumers to travel long distances to reach of digital shoppers say
they are frustrated when
outlets or even navigate through complicated interfaces or products they saw online are
complex directories. unavailable in-store.
9. SaleCycle, Primary reason for digital shoppers worldwide to abandon their carts as of September 2016, March 2017
10. Accenture, Insights to Digital Commerce: An APAC Perspective, 2017.HOW 7-ELEVEN AUSTRALIA
PURCHASE PROVIDED CONSUMERS WITH
FRICTION FRICTIONLESS FUEL PURCHASE
2
BUYING
Consumers may experience road bumps that make it difficult to 7-Eleven sought to meet the changing
buy their selected product or service. These include a lack of cross needs of its consumers as more were
device/channel functionality, hidden charges, or multiple steps to demanding online options to find out
complete a purchase. about fuel prices.
3
PAYMENT It subsequently introduced a Fuel app
The rise of mobile has led to the proliferation of new forms of online to help consumers lock in the best
payment and has made the process even speedier, as consumers can local fuel price at their Fuel Stores in
now pay with a single click. Unfortunately, some transactions are not Australia and fill up at a convenient
as immediate as they should be, and consumers face various types of delays time and location.
77% 2M
during purchase including limited payment and finance options, or the inability
to make cross-border payments.
lift in app downloads litres of fuel purchased
through the app
“By adopting an omni-channel approach, we encouraged customers to
download the new 7-Eleven Fuel app. The results exceeded our expectations,
helping us achieve our three-month performance targets within two months of
launch. Facebook and Instagram were essential.”
- PAUL WALLACE, Digital Marketing Manager, 7-ElevenT H E F U L L L I ST O F PA I N P O I N T S
T H AT C O N S T I T U T E P U R C H A S E F R I C T I O N I S S H O W N B E LO W:
D I S COV E RY
Awareness, Information Gaps,
Technolog y Optimisation AVA I L A B I L I T Y BUYING PAY M E N T
Too many steps to complete
Don't know where to buy Limited payment options
purchase
Transaction/browsing history not
Store too far away Checkout not mobile optimised
stored
Actual item/price differs from Buyer has to cross devices, channels,
Limited trust for online payment
advertised locations or pages
Fulfilment, Support, Repurchase
Shopping session timed out/
P O ST- P U R C H A S E
Takes too long to find the product Transaction delay/failure
Availability, Buying, Payment
cart emptied
PURCHASE
Not optimised for cross-border
Item out of stock Hidden costs at checkout
payments
Too many options Unexpected delivery fee
Long queues, waits or application
process“Friction has a negative impact on the decision-making
process of your prospects and will tip the decision towards
“no”. The less friction the prospect encounters, the more
likely he or she will be to accept your offer. So the more
you can reduce friction, the more you’ll be able to tip the
decision back towards “yes”.”
- MICHAEL AAGAARD 11
11. 7 Universal Conversion Optimization Principles. Based on 350 A/B Tests and 4 Years of Research, 2013D I S COV E RY
POST-PURCHASE fulfilment, product and service inaccuracies, and unexpected usage costs incurred by
consumers diminishes and disrupts their overall experience.
2
FRICTION
P O ST- P U R C H A S E
PURCHASE
SUPPORT
From the moment payment is completed, consumers expect No matter the industry, customer and service support is an essential part
rapid fulfilment, support for their product or service, and of any successful business. Consumers might face difficulties with their
status updates, including purchase confirmation emails and newly purchased product or service, such as not fully understanding its uses,
delivery timeslots at every step. Post-purchase friction occurs operational challenges or even unexpected faults that make their purchase redundant.
when consumers experience impediments to receiving the Furthermore, a poor returns process or bad customer service experience that doesn’t
products or services as promised, or are unable to easily access address a consumer’s issue increases the likelihood of them switching to a competitor.
the guidance needed to use or repurchase the product. Research shows that 52% of consumers have switched brands because of poor
customer service 12.
Pain points that cause post-purchase friction can be categorised
into three groups:
1
Fulfilment
Just as important as it is that consumers are able to shop
and browse on their own terms, it is equally vital that
consumers are able to get their hands on their purchases
52%
however, wherever and whenever they want. Slow or limited order
of consumers have
switched brands because of
12 Accenture, Digital Disconnect in Customer Engagement, 2017 poor customer serviceHOW THE TESCO LOTUS APP
POST-PURCHASE MADE IT EASY
FRICTION T O G E T YO U R G R O C E R I E S
3
REPURCHASE
Satisfied customers bring repeat business. However, the absence of Tesco Lotus noticed that today’s consumers
mechanisms for timely, effortless repurchase causes friction. For don’t want to waste too much time and
consumers, it should not require extensive efforts to repeat a prior effort on everyday grocery shopping.
purchase, whether for groceries, shoes, or a vacation. Research shows that 66% of
consumers have switched to a competitor because of a poor purchase experience They introduced the Tesco mobile app to
where the brand failed to take note of consumers’ previous interactions 13. make the shopping experience as frictionless
as possible. The app makes repeat purchases
66%
easier by allowing customers to order by
5X
scanning the barcode of the product they
already have at home. It also offers one-hour
of consumers have switched delivery slots within Bangkok, as well as an
to a competitor because of
a poor purchase experience option to have their delivery waiting in a smart
higher order completion
where the brand failed to take locker at several locations in the city. rates on the app
note of consumers’ previous
interactions
“This really appeals to customers who are working during the day. They return
home in the evening and their shopping’s been delivered to the box, or they
pick up their shopping, along with other things like their dry cleaning, so it’s a
one-stop shop for them. These are things that we’re seeing a really good pick-
up rate on.”
13 Accenture, Digital Disconnect in Customer Engagement, 2017 - MARK ROUGHLEY, Chief Marketing Officer, Tesco LotusT H E F U L L L I ST O F PA I N P O I N T S
T H AT C O N S T I T U T E P O S T- P U R C H A S E F R I C T I O N I S S H O W N B E LO W:
D I S COV E RY
Awareness, Information Gaps,
Technolog y Optimisation FULFILMENT S U P P O RT REPURCHASE
Slow delivery Poor returns/redressal process No loyalty programme
Customer or purchase history
Customer not home for delivery No channel for feedback
not stored
Actual item differs from order Customer support delays No customer re-engagement
Fulfilment, Support, Repurchase
Support only accessible through
P O ST- P U R C H A S E
Item doesn't meet expectations No upgrade/upsell option
Availability, Buying, Payment
limited channels
PURCHASE
Unexpected usage costs Poor customer service
Long collection queue/poor order
tracking
Long wait for check-in1 2 3
MAP ANALYSE IMPLEMENT
S T R AT E G Y
FOR REDUCING FRICTION
While the opportunity, pitfalls and certain solutions
are clear, the key question remains – where does one
begin? We recommend three simple steps to reduce
friction in your business.
1 2 3
MAP ANALYSE IMPLEMENT
Getting to know your consumers must be Once the results are in, it’s important to Following the analysis, formulate a strategy
a top priority. You first need to understand make a point to examine the data and that will reinforce the benefit of your core
who your consumers are and what has evaluate how these friction points affect service or product and help your business
brought them to your door. Identify what steps they your business. This includes evaluating which friction gain a competitive advantage over your competitors.
have had to take to complete their journey and most point caused the biggest missed opportunity. Removing friction should not just be about improving
importantly, what pain points they have encountered. your business; more importantly, it must improve and
Identify the stage at which most consumers face benefit the consumer experience.
Conduct customer surveys, ethnographic research friction points in their journey and consequently drop
and stakeholder interviews to identify inefficiencies off. Also, determine which friction caused the biggest Once you have formulated and developed a fool-proof
in your existing process. When you empathise with revenue loss and what the expected business growth and viable friction-busting plan, proceed to implement
potential consumers and understand why they need is if these pain points are removed. Hold ideation it and regularly ensure that your business stays
your help, you can remove friction and make their sessions and workshops, and prioritise areas that friction-free.
experience more pleasant. impact your business the most.HOW A LEADING
FINANCIAL INSTITUTION
IN SOUTHEAST ASIA
REDUCED FRICTION
A leading financial institution in Southeast Asia was experiencing substantial drop-out
rates for its mortgage application business, with less than 20% of applications eventually
going through.
Consumers were spending hours searching for information online, had to submit
documents physically and in person, and were having difficulties communicating with the
institution’s customer service as there was no single point of contact.
The company worked closely with BCG over the course of eight months to analyse the
various friction points and build a deeper understanding of consumers’ needs. It fully
digitised the mortgage loan application process, put in place dedicated mortgage consultants
to address consumers’ needs and hastened approvals for the application process.
The changes led to a rise in conversion rates and consumer satisfaction. Now, the time
required for the institution to make a decision has been reduced from one week to
under 48 hours. Employee productivity also improved, with time spent per application
cut by more than half.REDUCING FRICTION IN A
M O R T G A G E L O A N A P P L I C AT I O N P R O C E S S
LEARN ASSESS APPLY PROVIDE CHECK WAIT SIGN
ABOUT PROPERTY LOAN ELIGIBILITY FOR LOAN MISSING LOAN STATUS FOR LET TER OF OFFER
AND FINANCING DOCUMENTS LOAN DECISION
BEFORE AFTER BEFORE AFTER BEFORE AFTER BEFORE AFTER
Spend hours online Comprehensive Submit physical Mobile app for Call mortgage Timely Meet consultant One-time meeting
searching for information on documents in document consultant notification via for the 4th time with consultant
information one app person submission app to sign LO
Call bank with Dedicated Mistakes due to Smart checklist 1-click call
no single point mortgage generic checklist to customise to assigned
of contact consultant submission consultant
BEFORE AFTER BEFORE AFTER BEFORE AFTER
Use basic calculators with 6-clicks accurate Arrange additional Document 1 week 48 hours
no rate/eligibility feature simulation of meeting to submit resubmission
Meet in person eligibility and rate missing documents via mobile app
with a consultantCONCLUSION:
ZERO FRICTION FUTURE
NOW
Friction hinders businesses from making a real Here is a checklist to assess whether your business
connection with consumers. While technology has has friction:
made it possible for businesses to get closer to their
consumers, it has also raised consumers’ expectations. Do you observe a high percentage of drop-offs in
As a result, consumers are more likely to abandon the consumer’s purchase journey but are unable to
the purchase journey or switch to a competitor that ascertain the reasons behind it?
promises a smoother, more hassle-free experience. Do you have a strong brand, but the sales number or
Multiple sources of friction will negatively impact your market share does not often reflect this?
profit margin, and ignoring these pain points can lead to Do you see increasing complaints or feedback
higher marketing costs, a loss of your consumers’ loyalty from your customers on the current forms of
and trust, and a lower market share ultimately. communication?
Is a significant portion of your business processes
Now, more than ever before, businesses must take manually driven?
the necessary steps to reduce and eliminate points of Do you see your competitors jumping onto the
friction. Where are the bottlenecks in your business? digital bandwagon or offering more omni-channel
What obstacles are your consumers facing in getting and streamlined services?
what they want?
Businesses that successfully identify these sources
of friction and remove them will gain sustainable
competitive advantages over the others, and thrive in
a Zero Friction Future.ABOUT ABOUT
FAC E B O O K I Q BCG
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