The past few years have witnessed the rise of the digital transformation market, predicted to surpass the trillion-dollar market size by 2025, according to an IDC report (and let’s be honest, it’s only getting started). Nevertheless, companies are still struggling to reach their estimated returns on digital transformation investments.
A Deloitte report points out that 70% of digital transformation efforts fail. The reason? Organizations are focusing on short-term goals to create operational efficiencies quickly and reduce costs and not taking customer experience seriously enough. Rising customer expectations are increasingly placing more demands on every product, service, and experience, which should be one of the driving forces of your digital strategy.
The future of digital transformation is experience-driven. Industry leaders realize that creating systems that deliver unmatched always-on customer experiences; can drive incredibly consistent revenue and bring higher returns than high-performing marketing campaigns.
Challenges in digital transformation
In my conversations with leaders from businesses of all sizes, I have found consistent themes that can make or break digital maturity journeys:
Ad-lib change management: Often, in the excitement of doing something new, we fail to plan for the impending change and its impact. Therefore, we hear more stories of proof of concepts and pilots compared to real sustained transformation at scale. Digital transformation inevitably changes how organizations work, and organizational change is not a one-time event but a continuous process that cannot be an afterthought. It needs to be strategized and planned on Day 0. Transformation initiatives fail when they come as a shock to customers and employees and they are not aligned with and prepared for these changes.
Copy-paste transformation strategy: Like change, customer preferences are not static but contextually dynamic and rapidly evolving. It is a recipe for disaster if you think what’s worked for others will work for you and neglect your customers’ unique context. The predominant motive behind most transformation efforts is cost savings instead of and sometimes at the cost of customer experience — this is where I have seen a significant chunk of the ROI take a dip.
Budgetary myopia: Adopting digital technologies is a cost-effective route in the long term, but what it isn’t is a pocket-friendly investment. Or so it seems. Focusing digital strategy solely on solving for cost is like using a sledgehammer to crack a nut. It will never be a wise decision. The true potential of digital transformation is a business transformation that leads to better systems, a productive workforce, and happy customers. Moreover, the cost of failure to adapt to the digital wave should be far more concerning. I have seen that setting SMART short-term and long-term goals across quality, operations, product performance, employee experience, customer experience, and business metrics is a better way to gauge digital success and cost.
Maximize digital transformation returns through a customer experience-driven approach
Of all the success parameters I mentioned earlier, experience parameters are the most underrated. We live in the experience economy, where experience is everything and everyone talks of customer centricity. And yet how well do we understand our customer journeys and design digital interventions to improve them? Driving customer experience across their journeys should be the goal that unites everyone within the company, from the accounting department to the sales team. Here are my top five takeaways for getting the highest returns from your company’s digital investments:
1. Align change management to the purpose
To ensure the success of your digital initiatives, align them with your organization’s purpose and (over)communicate that purpose and the need for change to customers and employees at each level. The intent and language around change should focus on driving better customer experiences. Customers welcome and embrace any change that benefits them. Find avenues to involve them, for example, through a customer champion network or a customer advisory board, to build and demonstrate a continuous improvement culture.
2. Invest in human-centered digital design
Harvard Business School defines “human-centered design as a problem-solving technique that puts real people at the center of the development process, enabling you to create products and services that resonate and are tailored to your audience’s needs.”
It keeps users’ wants, pain points, and preferences front of mind during every phase of the process. And in turn, build more intuitive, accessible products and services that are likely to have a much higher success rate.
Technology is, no doubt, the cornerstone of digital transformation. But successful organizations build technology-enabled experiences, which form the bones of their business goals, strategy, and vision. Design a scalable, flexible technology infrastructure that includes automation, AI, intelligent reporting, and analytics to develop products and services aligned to customers’ imagination and deliver sophisticated, versatile, personalized experiences.
3. Re-imagine business processes
Breaking down silos from product design and operation to customer support is one of the key steps to enjoying valuable outcomes. Re-imagine your business processes from the lens of creating seamless experiences and blend people, processes, and technology to form an integrated roadmap. Engaging emotions and delighting customers are goals not just for the marketing or sales team – but for the entire organization. And for that, keep customer experiences at the heart of all your business processes.
4. Leverage agile methodologies
Keeping up with customer needs means designing experiences equally fast. And this hinges on the ability to adapt and speed up delivery times. This is where agile methodologies become crucial. Organizations prioritizing exceptional experiences have processes, measurement capabilities, reporting frameworks, etc., that are agile, with the ability to tell you what’s effective, what isn’t, and what to expect, enabling a continuous evolution. This means you are always building experiences aimed at delight and satisfaction.
5. Track and measure ROI holistically
As I mentioned, measure your experience-centered digital transformation’s impact across short-term and long-term horizons across holistic parameters. These parameters could include business KPIs, such as revenue, profits, and customer lifetime value, product KPIs such as customer acquisition, usage, engagement, churn, and satisfaction; or organizational performance KPIs, such as employee productivity and operational efficiency. Think forward and measure what is important to your business in the present and the future.
The Bottom Line: Invest in Delivering Experiences to Succeed
The rising awareness and unpredictable market conditions have led businesses to adapt to a human-centered approach to deliver exceptional customer experiences across all touchpoints, streamline their back-end ecosystem to facilitate that and consequently achieve better business outcomes.
Companies that invest in experience-driven digital transformation and shift to a more customer-centric business approach will always have the upper hand in this new wave.