Massive digital disruption over the last decade has caused many brands to seek a digital transformation strategy, even though management teams struggle to define the term.
As co-leaders of a digital customer experience company, we’ve seen how business models across industries are being regularly upended. Why? Consumers now value experiences over possessions, and they do not share the same purchase considerations as older generations. They’d rather rent than buy, they’re mobile-centric, and they expect highly relevant offers that speak directly to them wherever they happen to be.
At the same time, we’ve observed how many leading brands are struggling to catch up with these trends as they lose market share to digitally native competitors that did not even exist five years ago. Without crucial investments in technology and a commitment to culture change, these heritage brands risk losing their relevancy. This slow realization has caused CEOs and boards of directors to frantically search for lifesaving “digital transformation” strategies. In response, management teams often struggle to define it, let alone respond to it.
We’re sharing our perspectives based on a decade of working with brands in this four-part opinion series that aims to help executives navigate rapid change.
Customer experience is king
Customer experience is not solely a concern of the marketing department; it goes to the heart of a business’ strategy.
In the context of marketing, digital transformation is about managing and enhancing the digital customer experience, which is a critical success factor for most businesses today.
Because even on its surface, the expression “digital transformation” can mean many things. It can include General Electric embedding sensors in trains to intelligently manage rail traffic or it can be McDonald’s experimenting with drone delivery. However, for the marketers we work with, who are measured on driving customer engagement, transactions and lifetime value, digital transformation is about how they manage and enhance the digital customer experience (CX).
And customer experience is not solely a concern of the marketing department; it goes to the heart of a business’ strategy. According to a 2018 survey by Gartner, 81% of companies report that they expect to compete primarily on the basis of customer experience over the next two years. Moreover, the markets appear to be rewarding the winners. According to a Forrester study published last year, “leaders” in customer experience outperformed “laggards” in their stock price growth by a factor of 10.
Blue Acorn iCi
This helps explain the meteoric success of startups such as Uber, Airbnb and Harry’s. Despite deeply entrenched incumbent players in their respective markets, they have demonstrated the ability to capitalize on new opportunities in the digital realm. These businesses are built on solving customer pain points—hailing cabs, making hotel reservations, refilling razors—and use technology to do it at scale. They’ve created billion-dollar businesses by putting the digital customer experience at the heart of their strategy.
These businesses have clearly raised the bar, as heightened consumer expectations are pushing brands everywhere to develop new digital approaches. Brands that fail to do so will either have to lower prices to effectively compete or continue to see their market share erode; not a happy prospect for executives of those companies. Meanwhile, brands must keep pace with the constantly changing technology underpinning the digital transformation that’s driving consumer expectations in the first place.
3 keys to real transformation
Advances in cloud marketing technology allow brands to scale collection of customer data and personalization of content, essential capabilities that can radically transform how companies interact with their customers.
Powered by cloud marketing solutions, companies now possess the ability to deliver a highly personalized experience to thousands (if not millions) of customers, automated and in real-time. Good CX also increases digital engagement, which in turn produces actionable data on customer behavior. Armed with this data, brands can generate new insights that further opportunities to lower acquisition costs, boost retention and increase customer lifetime value. Because this data is proprietary—captured entirely within each brand’s customer journey—it can provide brands with a unique competitive advantage.