A Services Landscape Transformed by Technology: Findings from the 2014 National Technology

Readiness Survey

Presented to Frontiers in Services 2014

Charles L. Colby,

Chief Methodologist & Founder, Rockbridge Associates, Inc.

For info, contact:

Charles Colby ccolby@rockresearch.com

A. Parasuraman,

Professor, Marketing

University of Miami

For info, contact:

Dr. A. “Parsu” Parasuraman parsu@miami.edu

Foreshadowing… the last slide

Photo source: www.buzzaboutbees.net

Topics Covered Today

Technology Readiness

Fastest growing e-services

TR beliefs behind their growth

Foundational technologies behind their growth

Omni-channel behavior and “Channel Foraging”

Implications for management

Our Research Program and The TR Construct

Our Research Program

National Technology Readiness Survey– Authored by Parasuraman and Rockbridge– Replicated in 1999, 2000, 2001, 2002, 2004, 2005/6, 2007, 2009,

2012, 2014

TRI Scale licensed to over 120 scholars in 30 countries, including Germany, Turkey, China, UK, Brazil, India, Malaysia, Philippines, Canada, South Africa– Contexts include financial services, retailing, communications,

travel, e-government, healthcare

Co-sponsored by the Center for Excellence in Service

What is Technology Readiness? (TR)

TR refers to people’s propensity to embrace and use new technologies for accomplishing goals in home life and at work

TR reflects an overall state-of-mind; it is not a measure of competence

It describes the person, not the technology Measured by the Technology Readiness

Index (TRI)

Inhibitors

Contributors

Components of Technology Readiness

Optimism

Innovativeness

Discomfort

Insecurity

Technology Readiness

TRI 2.0: A Multi-Item Measure

The Technology Readiness Index was first published in the JSR in 2000TRI 2.0 will be published in JSR this year*The latest scale version:– 16 agreement scaled attributes– 4 sub-scales for measuring individual dimensions

of TR– A segmentation scheme classifies individuals into

five distinct types

*“An Updated and Streamlined Technology Readiness Index: TRI 2.0”, A. Parasuraman and Charles L, Colby, Journal of Services Research, published online June 22, 2014

TRI 2.0 (16 item index)

• Give advice• First to adopt

• Self reliant• Keeps informed

• People too dependent on tech

• Technology distracts• Tech lowers relationship

quality• Distrust of virtual venues

• Distrusts tech support• Tech support unhelpful

• Tech not designed for us• Manuals are too

technical

• Better quality life• Freedom of mobility• Control• Personally productive

Optimism Discomfort

InnovativenessInsecurity

Technology Readiness

Distribution of TRI 2.0 (2014 Study)

TRI 2.0 Includes a Segmentation

% of population

Motivators InhibitorsTRI

Optimism Innovative Discomfort Insecurity

Explorers 27% 4.6 4.1 2.3 2.6 3.9

Pioneers 20% 4.3 4.0 3.7 4.1 3.1

Skeptics 27% 3.7 3.1 2.8 3.4 3.1

Hesitators 14% 4.1 2.1 3.2 3.6 2.8

Avoiders 13% 2.6 1.8 3.8 4.2 2.1

Total 3.9 3.2 3.0 3.5 3.2

Profile of TR Segments (2014 Data)

Owns smart phone

# gadgets

# eServices

Demographic Correlates

Explorers 79% 8.1 18.1 Younger, Male, Tech jobs

Pioneers 77% 8.1 16.2Younger, Male, Ethnically

diverse, Foreign born, Tech jobs

Skeptics 62% 6.6 14.5 Mirrors General Population

Hesitators 52% 5.9 13.2 Older, Female, Retired

Avoiders 33% 4.9 8.8Older, Female, not Diverse,

Less educated, Retired

Total 64% 7.0 14.9

2014 Technology Readiness Survey

Methodology

Nationally representative survey of 1230 U.S. adultsFrame: online panel from 2 reputable providersWeighted to match U.S. CensusMargin of Error +/- 3%Limitations:– Excludes “offline” population– Uses an online panel

Fastest Growing e-Services2009 to 2014

Fastest Growing e-Services

www.rockresearch.com

Low Penetration, High Growth High Penetration, High Growth

Low Penetration, Low Growth High Penetration, Low Growth

Medical tests

E-Service Categories (Based on Factor Analysis)

Category Growth* Services

Health 155% Checked tests online, communicated with professional

Small Purchases 46% Purchased items <$10, $10 to $100

Entertainment 37% Download movies, download songs, streaming music, live TV, download books, live TV, live radio, video call, watch video

C2C 20% Sold to another consumer, bought from another

Big Purchases 16% Travel, investments, items >$100

Financial 15% Online banking, moved funds online, checked utility account, managed credit card, bill paying, paid bill at provider website

Government 0% Visited federal site, did federal business, visited state/local site, did state/local business

News/research 0% Read news/mag online, researched health info

Learning -5% Online course, visited membership org site

*Growth from 2009 to 2014; not all items tracked in 2009.

Technology Readiness Beliefs behind Adoption

Correlation of TR Dimension with # of Activities

Category Opt Inn Dis Ins TRI Influencers

Health .06 .09 0.03 ns 0.03 ns 0.04 ns Not important

Small Purch .22 .21 -.15 -.15 .25 All 4 beliefs

Entertainment .35 .46 -.20 -.19 .42 All 4 beliefs

C2C .20 .23 -0.05 ns -.08 .20 Motivators

Big Purchases .24 .25 -.09 -.10 .24 Motivators

Financial .25 .26 -.17 -.10 .27 Motivators & Disc

Government .20 .20 -.07 -0.05 ns .18 Motivators

News/research .18 .13 -.18 -0.04 ns .18 Opt & Disc

Learning .16 .20 -.08 -.10 .19 Motivators

Foundational Technologies behind Services Growth

18%29%

36% 36% 37% 40%46%

51%60%

66%71%

78%

96%

Key Technology Growth andProjected Penetration in 2016

2012

2014

2016 projected

Foundational Technologies

Portable GPS

Portable video player

Portable music player (MP3)

Digital video camera

Digital point and shoot camera

eBook reader

Usage of Applications on Single Function And Multiuse Devices

Multi-function device Both Standalone device

The Ubiquitous Do-it-all Device

14%

22%

18%

16%

13%

20%

Omni-Channel Service Behavior

2010200820062004200220001998

The Not-So Old Days

The Changing Consumer Journey

20142012

Types of Shopping Journeys ($50 or more)

In-person Only

Shoppers; 29%

Superficial In-person Shoppers;

17%

Methodical High Touch Shoppers;

16%

Simple Digi-tal Shop-pers; 20%

Analytical Digital

Shoppers; 16%

Phone Or-derers; 3%

Store checkout:

62%Onlinecheckout: 36%2%

6%

Checked out with smartphone

SHOP NOW

25 %OFF

Half of Purchases are Complex

Uni-Channel (52%)

In-person Only (29%): Offline channels, store visit, store

purchase

Simple Digital (20%): Research & order online, ship to home or

work

Phone Orderers (3%): Completely by phone or

smartphone

Omni-Channel (48%)

Superficially In-Person (17%): research online and offline,

store purchase

Methodical High-Touch (16%): intense info search in multi-ple

venues, store purchase

Analytical Digital (16%): intense info search, store

visits, online purchase

Technology Readiness Correlates

Pioneers [high on motivators + high on inhibitors] are more likely to engage in methodical high touch and analytical digital purchase processes

Avoiders [least techno-ready] and Hesitators [optimistic + high on inhibitors] are more likely to engage in in-person only purchases

Explorers [most techno-ready] tend to prefer online channels

Bank Channel Convergence

Branch

Mobile

Call Center

Online

1 2 3+

Market 21% 33% 46%

Explorers 16% 26% 58%

Pioneers 18% 25% 57%

Skeptics 19% 40% 42%

Hesitators 23% 47% 30%

Avoiders 41% 31% 28%

Number of Channels Used (Self-reported)

Implications

Service Transaction of the Future?

Channel Foraging:“To search about; seek; rummage; hunt”

Questions for Service Managers

How techno-ready are our customers?

How do we provide information, purchase capability and servicing across multiple platforms?

Do channels meet the needs of all TR segments?

Do we offer maximum flexibility for fulfillment? (Ship anywhere, pick-up anywhere?)

How do physical locations fit into our service model?

How do we prevent customers from taking advantage of expensive bricks & mortar channels (look but not buy)?

How do we get our message in front of consumers who use a wide variety of info sources in small doses?

Questions for Researchers

When does TR matter for a technology-based service? When do different TR components matter?

Can we forecast demand using TR as a proxy of innovation?

How is the service purchase and usage process changing? Is “channel foraging” truly the future?

What is an optimal “show rooming” solution (that charges customers for using physical channels)?

What will be the impact of emerging technologies (e.g., robotics) on services behavior?

Is the management and operation of services businesses taking on the same complexity as customer behavior, augmented by technology? Should it?

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Thanks!