How customer experience is driving digital transformation

Well, haven’t times changed? Research shows customer experience (CX) has now supplanted price and product as the key to attracting and keeping business and that has created an environment where organisations are changing their business models to meet the digital needs and wants of their customers, as opposed to doing so at their detriment. In a recent survey of executives, global management consulting firm McKinsey & Co found most of them now recognise technology’s strategic importance as “a critical component of the business, not just a source of cost efficiencies”.

This is particularly so on the back of the global pandemic that has done more to change the digital landscape in a couple of years than endless planning in the decade or two leading up to it. In that same McKinsey survey, conducted in the first year of the crisis, respondents said their companies had accelerated the digitalisation of their customer and supply-chain interactions and internal operations by three to four years. Furthermore, the share of digital and digitally-enabled products in their portfolios had increased by an incredible seven years.

Make no mistake – this digital transformation is being driven by the customer. The modern consumer not only wants but expects relevant content in relation to what they’re doing anytime, anywhere and in the format and on the device of their choosing. The days of companies being able to dictate when and where customers could interact with them are over and if they want to win the hearts and minds (and wallets) of these new ‘always-connected’ consumers, they must embrace technology to deliver an unrivalled customer experience.

The good news is many organisations are already doing just that. One study shows 70% of businesses have increased or maintained digital transformation spending amid the COVID-19 pandemic, with industries such as construction, IT and manufacturing among the most willing to invest in such strategies. The rush to digitise is reinforced by statistics that show global spending on digital transformations, having clocked in at $1 trillion in 2018, is forecast to almost triple to $2.8 trillion by 2025.

Of course, not everyone has successfully made the leap across the digital divide. In its ‘Report on the State of Digital Business’, tech leader Progress revealed 47% of companies had not yet started their digital transformation, with almost 60% worried that it may already be too late for them. However, those companies would be well worth remembering the message Elton John shared in The Lion King when he sang: “It’s never too late to get back on track.”

What is Digital Transformation?

In its simplest form, digital transformation is the process of using digital technologies to create new or modify existing business processes, culture and customer experiences. To better understand the concept though, it is well worth considering what digital transformation is not.

It is not digitisation. That is the process of converting information from analog to digital, with all those physical documents turned into digital computer files. It is not digitalisation. That is the process of using digitised information to complete tasks faster and better now that data is instantly accessible and not stored in a filing cabinet.

Digital transformation, on the other hand, changes the way business get done and, in many cases, creates entirely new classes of businesses. It requires companies to take a step back and revisit everything they do with a view to adding value to every customer interaction. It is not just about going digital but reimagining how one does business and engages with their customers in the digital age.

There are few better examples of digital transformation in action than Netflix. The streaming service needs no introduction now but it was once a little-known mail order service aiming to disrupt the traditional video rental business. Then technology allowed the company to not only stream video content directly to customers but gain unprecedented insights into their viewing habits, which it could then use to do everything from enhance its user experience to drive the development of shows and movies. Netflix’s approach epitomises digital transformation in action – that is, using digital technologies to inform and reinvent how a business runs.

The Customer Experience Effect

When considering digital transformation, it is crucial to look at it from the customer’s perspective. Rather than asking what it can achieve for one’s bottom line, businesses need to ask what is most important to the customer and how digital technologies can help achieve what they want or need? No doubt the following points will be high on the list.

• Saving Time: as far back as 2016, Amazon came to the realisation that 100 milliseconds of extra loading time for their web pages were costing it 1% in sales. That’s right – they were counting their time in milliseconds and that’s because the modern consumer expects nothing less than super-fast digital transactions. Every digital transformation strategy should start with the basics and that includes faster, more reliable IT, along with addressing broken links and stylish website design. If you are not looking to save your customers digital time, you will likely be losing sales as there is little doubt your competitors are.
  
  
• Personalisation: modern sales and marketing centres on proactive and personalised connections with customers and digital transformation is the key to accessing and analysing the data that allows it to happen. Customer experience transformation once rested with staff members directly involved in customer service but in a technological age, that responsibility flows through to back-end IT teams who need to provide their customer service colleagues with the digital tools for doing so. Advanced data analysis tools are crucial in tailoring personalised content and notifications to individual customers, which in turn increases their connection with a business.
  
  
• Loyalty: Winning new customers can be challenging, which is why it makes sense to keep the ones you already have for as long as possible. Not only are satisfied customers more likely to continue purchasing but they are best positioned to become brand advocates and talk up your products and services to peers. CRM software solutions, for example, allow businesses to keep track of customer relationships and help deliver a CX that keeps them coming back for more.
  
  

Digital Transformation in Motion

Amid all this positive talk of digital transformation and customer experience, it is worth remembering that not every such strategy is successful. Indeed, Harvard Business Review highlighted a study that showed 70% of all digital transformation initiatives fail to reach their goals and of the $1.3 trillion that was invested in the area in 2019, more than $900 billion was wasted.

With that in mind, here are a variety of tactics to keep top of mind when getting started with your own digital transformation.

• Strategy Before Execution: with new technologies entering the market at unprecedented rates, it is essential that businesses have clear and defined plans for embracing them. A long-term digital strategy will always win out over quick fixes and allow companies to adapt, compete and survive in the new age. When devising a digital transformation strategy, consider where you are today, where you want to be tomorrow and what you need to do to get there. Protecting a business from digital disruption is just as important as considering what technologies need to be adopted and that’s why it is crucial to understand one’s core systems and processes before rushing to transformation.
  
  
• Design CX From the Outside In: if the goal of digital transformation is CX transformation, it stands to reason that the input of actual customers is essential. Too many businesses make the mistake of forcing digital change on customers without making a concerted effort to listen to them and then deploy the change they truly want. Rather than believing that one miracle tool or app will enhance CX on its own, many smart organisations conduct surveys of customers and learn that they actually desire smaller-scale changes to various tools at different points of the customer journey. The key to knowing where and how to make change is through seeking extensive input from customers.
  
  
• Appreciate Replacement Fears: few corporate strategies succeed without the enthusiastic support of a majority of employees and the mere mention of the words ‘digital transformation’ can put that in jeopardy in this situation. When team members fear that digital transformation might threaten their jobs, they are likely to resist the changes even if only on a subconscious level. Then, should the strategy prove ineffective, their hope may be that management will abandon the effort and their jobs will be saved. That is why it is essential that digital transformation leaders recognise such fears and work with staff to assure them that the process is an opportunity to enhance their skills to suit the workplace of the future. Identifying potential staff and executive advocates will also go a long way to helping allay fears and bring teams along for the ride.
  
  
• Facilitate a Flexible IT Environment: a digital transformation strategy is nothing without the right technology to support it, yet studies have found that 45% of executives believe their companies lack the necessary tech to achieve success. From the cloud and chatbots to virtual reality and voice recognition, there are infinite tools to deliver an improved customer experience framework, while SaaS applications such as customer databases and data analytics can provide businesses with the in-depth knowledge they need to create a holistic view of their customers. The days of cutting corners when it comes to digital investment are over as the rewards for improved CX are too great to ignore.
  
  
• Consider External Help: while some large companies are fortunate to have the internal resources to map and deliver a quality digital transformation strategy, countless other organisations would benefit from the input of consultants, partners and tech vendors for helping navigate the process. Experienced operators will have helped various other businesses through similar situations and know not just the foundations needed to build a successful plan but also the tricks and pitfalls that are common to such exercises. The word ‘consultant’ can cause some managers to fear the bill they will ultimately receive but the reality is any investment only needs to be as large as is comfortable and will often pay far better dividends than cutting corners and trying to walk the digital transformation path on one’s own.
  
  

Summary

It is never too late to start a digital transformation journey but with the rate of technological change happening faster than ever, it is imperative to not waste another second in seriously considering doing so. With today’s customers always connected, digital transformation is the key to allowing companies to engage with them regardless of where and how they want to interact and thus deliver the seamless customer experience they not only want but expect. CX is no longer just a buzzword – it lies at the heart of every successful organisation and may well be the motivating force you need to enter the new digital landscape.

Overhauling one’s entire technology architecture can be daunting, let alone when your company services 7 million users in numerous cities across the world. This case study explores how a global transport company overcame significant technological challenges to deploy a roadmap that engaged key vendors and multiple stakeholders and delivered a highly structured solution to overcome a complex landscape including different languages, time zones and resourcing levels.