What is digital transformation and where do you start?

While digital transformation may sound like a relatively new ‘buzzword’, the reality is that it’s now a must-have for all modern businesses. It’s undeniable that the COVID-19 pandemic has boosted the adoption of online technology, but it has also accelerated the technology itself, sailing past predictions for the next decade.

The COVID-19 pandemic was unforeseen but businesses that had the means, resources and – let’s face it – budget, to quickly adapt or shift online operations really thrived. Plenty of small, local brands also had the flexibility to change the way they worked, utilising Facebook, online booking systems and scaling their websites to turn their traditionally offline businesses into something that served their communities. However, over the same period, we also saw plenty of big brands and high-street names struggle when they didn’t embrace digital transformation either quick enough or well enough.

Carlene Jackson, CEO of Cloud9 Insight, a Microsoft Dynamics 365 Gold consultancy says, ‘We are all digital natives now and we understand that information technology can transform every aspect of our lives and businesses. For example, I don’t know where I’d be without my smartphone – and I know most people are the same.

‘This same transformation needs to happen in businesses. I’ve worked with small and medium-sized businesses for over a decade, helping them with everything from identifying and nurturing the most promising leads to closing deals by digitising. I’ve seen first-hand, countless times, how businesses drastically improve all areas of their operations when they leave behind their messy spreadsheets, handwritten contact books and overflowing in-trays.’

So, what is digital transformation? Where do you start? How can you use digital transformation to meet customer expectations? Read on to find out this and more...

What is digital transformation?

Generally speaking, digital transformation is the use of technology to make processes more efficient and often more integrated and intuitive. Using digital technologies to upgrade, update and improve your current business processes will help to meet current customer expectations and to keep them happy. The ultimate goal is, of course, to increase sales and revenue.

At a basic level, this could mean shifting from taking phone calls for orders – which may require multiple phone lines and operatives – to using something like Facebook messenger or a chatbot. This means more people can get through and place orders at the same time while reducing the need for someone to be on the end of the phone at all hours. A by-product of this is increasing customer satisfaction by making their journey and interactions with you simpler. With more and more internet users shying away from phone calls, an online booking experience could also increase purchases at a lower cost.

For larger businesses, this could mean improving links between an e-commerce store, the data you collect, a CRM (customer relationship manager) and web analytics. This has the potential to give you more insights on buying habits and behaviour, get to know your customers better and improve customer services.

Benefits of digital transformation

While there will be costs involved in a digital transformation strategy, the short-term and long-term gains from creating and implementing such a plan successfully are undeniable.

1.      Better customer experience (CX)

One of the (many) benefits of digital transformation is the improvements to the customer journey and their experiences with you.

Great customer experiences are crucial for successful businesses. There is more competition than ever before online, and customers are less likely to give businesses multiple chances to get it right – especially when it takes a quick Google search to find a competitor brand.

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Research is showing time and time again that while competitive pricing is important to reel customers in, ultimately, CX wins. A whopping 86% of online shoppers are willing to pay more for a great customer experience from a brand. As well as this, studies have shown that good CX can mean boosts of three times ARR (annual recurring revenue) over three years.

The benefits of improved CX include increases in customer retention and brand loyalty, boosts in customer satisfaction and improved cross-selling and up-selling opportunities. Remember that acquiring a new customer costs up to five times more than retaining a current customer, so the importance of creating great customer experiences cannot be overlooked.

You can use digital transformation practices to improve CX by:

  • Tweaking pricing and shipping methods to offer free delivery
  • Create personalised customer experiences based on their history with your business or brand, such as unique landing pages, customised content, or personalised marketing such as emails
  • Having AI chatbots available 24/7 to answer FAQs
  • Giving customers a range of methods to contact you such as social media, email, text, chat, and phone calls
  • Creating customer loyalty and VIP programmes
  • Optimising the customer journey with omnichannel and integrated experiences

2.      Increased revenue and profit

With happier and more engaged customers comes an increase in revenue. As we’ve seen above, customers are willing to pay more and are more loyal to businesses with great customer experiences.

Not only that, integrated technologies and improvements to your processes will also lead to an increase in revenue. Efficiency is key when looking at digital transformation, and any savings from changing suppliers, creating simpler processes, and integrating your data can lower the cost of manufacturing or supplying your product.

SAP found that 80% of organisations who have ‘completed’ digital transformation reported increased profits, while an enormous 85% said they had increased their market share. Don’t forget that while digital transformation improves your own business processes, it also sets you streaks ahead from any competitors. Not only do your own profits increase, but word quickly gets out and your market share grows too.

3.      A more flexible and agile way of working

One of the crucial differences between businesses that succeeded and flopped during (and after) the COVID-19 pandemic was agility and flexibility. Creating more efficient processes means faster changes and Continuous Improvement (CI).

Agile ways of working mean that businesses can almost instantly respond to business demands and changes. This also minimises risk. For example, if you’re currently running business operations from spreadsheets, using digital programmes to store data is not only safer but allows for improved collaboration within your business. Using agile technologies means:

  • Making new products, services, and offerings available quicker
  • Better control over customer data – crucial for GDPR and security as well as for maintaining purchasing lists, marketing lists and unsubscribe data
  • Less gatekeeping from upper management – empowering other staff to make necessary changes as needed (and as approved!)
  • Faster reactions to business change and external changes. Key examples of this would be PR crises, issues with suppliers, changes to rules and regulations or ‘lockdowns’ and new disruptor brands
  • Easier launches and growth opportunities for new markets

4.      Data-driven insights and decision making

Something we talk a lot about in our blogs is utilising customer data. But, to create data-driven insights and decision making, you need to have the data available in the first place. If half of your customer data is on a spreadsheet, you have a barely used CRM and customer transaction data on the back end of your website, this is not an intuitive way to use your data. With each data point siloed, it’s tricky to be 100% confident in any business decisions.

This is one area where digital transformation is applicable to every business out there. Namely, integrations of your customer data, email marketing data, customer reviews and insights, CRM, website data and website analytics. For example, if a customer reaches out to you on Facebook with an amendment to their order and you can’t easily access their order because it’s on another system or you aren’t sure where it’s stored, this doesn’t help you or your customer.

Carlene Jackson of Cloud9 Insight adds, ‘Data may sound dry, but the information businesses have on their customers is their most precious asset. It’s time to stop storing that data and start using it. 

‘Many businesses have silos of data held by different departments. The first step towards oiling the customer data engine is to consolidate this into one master set. For most organisations, a Customer Relationship Management (CRM) system, is a good starting point. CRM provides a central place to store customer and prospect data, track customer interactions, and share those insights with colleagues. 

‘Once an organisation’s data is consolidated, the next stage is to leverage data analytics tools, which can be used by even the least-technical team members to drill down into customer data. Data leads to greater insight into the things that consumers really want, and allows companies to get smarter with their marketing, sales, customer service and operations.’

If you want to make company-wide decisions that will affect your customers, having this data in a single secure and up-to-date place is the only way to reliably do so.

5.      Fewer resources required

Linked to an increase in revenue and profits, digital transformation generally reduces costs and resources for your business. Reducing the number of tools used not only makes it quicker for your employees to access customer data but it also makes your way of working faster in general.

With the average number of applications used by businesses totting up to 900, reducing this saves on costs in a big way.

Think about the tools you’re currently using. Generally speaking, they’ll include:

  • Customer relationship management (CRM) software
  • Email marketing tools
  • Social media platforms
  • Social media scheduling tools
  • Social media listening tools
  • Website
  • Website analytics (internal)
  • Website analytics (third-party)
  • Spreadsheets and reports
  • Customer marketing lists
  • Third-party dashboards
  • Internal communications tools

Integrating as many of these as possible not only frees up time for all your staff but makes experiences far more consistent for your customers and creates a central source of up-to-date data.

6.      Improved internal communications, productivity, and culture

Another great perk of digital transformation is improving the way your company works. Central sources of information make life easier for your employees and help to boost productivity. This information will be passed on to your customer experience with faster answers, quick conflict resolution and happier staff.

With a more contented workforce also comes a change in company culture. Disengaged employees can (inadvertently) cause weaker customer experiences – this can be caused by convoluted working processes, poor internal communications or even by answering the same customer questions all day every day! But digital transformation can improve all these things, which will often make your customers’ interactions more pleasant and easier to deal with; this leads to happier staff and happier customers – a real win-win situation!

Impact of Covid on digital transformation

It’s true that businesses have been transformed permanently because of COVID-19. Research by McKinsey showed that:

  • Funding for digital initiatives has increased
  • Companies have accelerated the digitisation of their supply chain and internal operations by three to four years
  • An increase in new product and service development that has jumped ahead, on average, seven years
  • Healthcare, pharmacies, financial services, and professional services have doubled their digital product portfolios
  • Remote working accelerated by 40 times, with an average of 11 days taken to adapt to remote working practices

It’s clear from this piece of research that digital transformation has accelerated in an incredible way due to the pandemic, with many of these adoptions set to stick for the long term.

Digital transformation strategy explained

Before embarking on a digital transformation strategy, it’s critical that you pinpoint your reason(s) for doing so. There are plenty of options of things you can do, so reduce distractions and ‘magpie syndrome’ by choosing an end goal.

On the whole, digital transformation can be broken down into four main areas, with some crossover between each:

  • Customer experience
  • Employee performance
  • Data analytics
  • Gaining or maintaining competitive advantage and market share

Below are some critical focus points for each of the four strategies.

The customer experience (CX)

  • Improving the customer journey including (but not exclusively) on the website
  • Reducing demand-supply disruptions
  • Quicker postage, more shipping options and free shipping
  • A range of payment options
  • Clear product breakdowns, customer reviews and user-generated content
  • Creating an omnichannel customer service experience
  • Integrated data to improve customer interactions across all channels and platforms
  • Chatbots and AI, fast responses to queries
  • Customer self-serve FAQs and knowledge bases
  • Secure customer data – reflecting preferences, history, purchases, CLV (Customer Lifetime Value)

Employee performance

  • Integrated data to improve customer interactions across all channels and platforms
  • Chatbots and AI, fast responses to queries
  • Self-serve FAQs and knowledge bases for customers – preventing employees from answering the same questions all day!
  • Improvements to internal communications
  • Buy-in to digital transformation projects
  • Fast access to live and trusted customer data
  • Empowering employees using technology to make customers happy
  • Comprehensive training on new systems and processes
  • Using technology to improve problem-solving and dispute resolution processes

Data analytics

  • Integrating as many sources of data as possible
  • Giving employees clear guidance and access to data from all departments as needed
  • Data-driven decision making – leading to happier customers as their needs are met
  • Improving the quality of data available
  • Boosting workflows and processes to make everything simpler to access
  • One central source of trusted, live information

Competitive advantage

Gaining a competitive advantage includes elements of the tasks above. Improving the customer experience, employee performance and data analytics will all lead to increases in competitive advantage and market share.

How and where to start?

Now you’ve understood all that there is to know about digital transformation for your business, you’ll need to get started by building a digital transformation framework.

Step one: Buy-in from the top-down

Although the benefits of digital transformation are clear, some businesses and employees are change-averse. A transformation project will mean tweaks to day-to-day processes, and if your board, directors, and staff aren’t on board, rolling out the plan will be very difficult. For example, changing customer service delivery by adopting Artificial Intelligence or tweaking processes may leave your customer success team feeling concerned. If only a percentage of them adopt the new technology, your CX will be completely inconsistent, and your transformation strategy may fail. So, buy-in is absolutely essential before getting started.

Step two: Assessing the state of play

While undeniably a hefty job, you’ll need to assess where you are at the moment as your starting point. This includes taking stock of resources, programmes, tools, processes, customer insights, customer reviews, KPIs and more. The ultimate goal of this step is to have a detailed assessment of where your company is right now. If you foresee buy-in being tricky to obtain, you could do this step prior to step one.

Rob Hancock, Head of Platform at Giacom, says: ‘At the start of the pandemic, many people would have been mistaken for thinking that work-from-home and stay at home orders were going to be short-lived. Over a year later, society’s behaviour has changed; and so has the way in which people work, seeing the rise of remote working and cloud application.

Digital transformation initiatives sped up almost overnight. And, while the initial scramble focused on business continuity and technology upgrades; across the board, the cloud evolution has not ceased, and neither will digital transformation. As organisations make committed strides towards remote or hybrid-working, they will require the right blend of technology and equipment to enable employees to be productive. This means, kitting out employees with fast, efficient, robust and secure internet and voice connectivity. And, they need to offer staff access to feature-rich communication applications, like Microsoft Teams, for unified communications and collaboration (UC&C), so that productivity can be maintained. Before the pandemic, Microsoft Teams wasn’t used effectively by many firms. However, since last March, Microsoft Teams usage for video calls increased by 1000%.

‘The need for UC&C is not going to go away anytime soon, meaning the revenue opportunity will remain available for a long time yet – especially in the SMB market. What will change over time is the need for richer features that enable people to do aspects of their job better, since they no longer meet as often in person. Therefore, CSPs and MSPs will need to work more closely to match client needs against partner technologies. Digital transformation is a long-term destination and the use of the cloud to support organisations is here to stay – be it for collaboration; data security; or to enable business applications to shift to the cloud. The opportunity is almost endless.’

Step three: Create your goal

This is the stage where you analyse what you actually want to achieve. What’s your end goal here? Competitive advantage and market share? Happier customers? Easier ways of working? Happier employees? Metrics are key to keeping yourself accountable and tracking progress.

Step four: Understand the gap

So, you have buy-in, your current state of play, and a goal. Now’s the time to identify how you get from A (right now) to B (your end goal).

Step five: Create a digital transformation framework

Your digital transformation framework should include:

  • What needs to be done
  • Priorities: urgent short-term, intermediate, long-term
  • Goals and KPIs
  • Milestones, benchmarks, and check-ins

While this should be relatively set in stone, remember that digital transformation is about keeping things agile. Leave yourself plenty of time for each task and allow yourself the flexibility to switch things around as needed.

Digital transformation trends in 2021

Here are some digital transformation trends that we’ve seen that are set to stay. It’s important to acknowledge that the mass adoption of these technologies and shifts mean that customer expectations have risen in kind. Remember that these digital trends are set to be here for a long time!

1.      AI and chatbots

A big change has been a large acquisition of chatbots and the use of Artificial Intelligence. There are plenty of benefits to doing so, such as faster customer responses, fewer ‘human’ resources needed and 24/7 customer support. The technology for chatbots has also improved during this time, as customer-service heavy businesses such as banks and service providers have been inundated with calls and emails. With pre-written responses, FAQs, and machine-learning technologies in play, chatbots have evolved significantly to provide an experience that rivals that of contact centres.

During COVID-19, there have been some standout examples of this, including:

  • NHS creating an AI chatbot with over 200 answers to provide up-to-date guidance for trainee doctors and dentists, with a 93% correct answer success rate.
  • Versus Arthritis creating a chatbot to reduce calls to its helpline and help people in need quicker. It provided information on medication, conditions, isolation guidance, financial help and more to those suffering from arthritis in the UK. This had 89% positive user feedback and handled over 10,000 messages a week.
  • Chatbots were also used for COVID-19 screening to support remote health management and reduce the strain on A&E departments and hospitals.

2.      Customer-centric attitudes

Another so-called ‘trend’ is a shift to customer-centric cultures. While companies such as Amazon and Slack have always led with the ‘customer obsessed’ attitude, more and more companies are seeing the benefits of this.

Slack, in particular, creates a culture of customer obsession by focusing on NPS (Net Promoter Score) rather than sales or revenue-focused metrics. This means its team is evaluated on customer happiness and their likelihood to recommend Slack to their friends, family, and colleagues, rather than their sales volume.

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Alexa Greaves, CEO of AAG IT Services, says, ‘A customer-focused company culture understands every stage of the customer journey and puts the client at the forefront of every decision that is made. Customers know they matter and that their voice is heard. This creates long-term, loyal partnerships rather than just a customer/supplier relationship.

‘To create this culture, you need to care for your employees in the same way. Focusing on the people that drive your business builds a solid foundation for exceptional customer service. The benefits of this type of culture are numerous. It creates an environment where customers give feedback as they know it will be listened to and acted upon and where innovation thrives to solve problems – which inevitably supports growth. This may well lead to operational efficiencies that support the bottom line.

She adds that ‘loyal customers who are listened to are willing to talk about their positive experiences and refer new clients. They also buy more and are more focused on relationships and not transactional sales.’

3.      Contactless payments

One brilliant use of technology and agile ways of working includes contactless payments. Now, 83% of people in the UK use contactless payments and no age groups fall below 75% usage. Banks and businesses quickly adapted as contactless spending limits were swiftly increased from £30 to £45, and this trend looks set to stay, with another contactless payment limit lift to £100 on its way in October 2021. Apple Pay and Google Pay have taken this one step further, with no limits on transactions using their technology. This includes online payments using their devices, offline payments using phones and other wearables such as the Apple Watch or Android smartwatches.

This has no doubt accelerated our spiral into a cashless society, with contactless debit and credit cards, Apple Pay (for example, Samsung Pay, Google Pay, Fitbit Pay) and smart cards providing fast, secure, and simpler ways to pay.

Summary

There’s no doubt that online shopping behaviour has changed for the long term as a result of the COVID-19 pandemic. Advances in technology, increases in customer expectations and more intuitive ways of providing services are set to stay.

For businesses that want to succeed in 2021 and beyond, digital transformation is essential. With benefits including increased customer retention, market share boosts and higher profits, it’s impossible to ignore. Use our guide above to put together everything you need for a successful digital transformation project for your business.

While it’s not an overnight process, starting now will get you ahead of the competition in the short term and miles ahead of the rest in the long term. Gain employee buy-in, invest wisely, plan strategically and stick to your goals for the best chances of success.


Net Promoter® and NPS® are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.


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