Why it’s customer first, technology second in digital transformation

Organisations that create exceptional customer experiences can set themselves apart from their competitors, and digital technologies are the best means of engaging with customers and providing them with a superior experience at affordable costs. The companies that are successful in their digitisation endeavours understand that they are in the customer experience business, and that how an organisation delivers for customers is fast becoming as important as what it delivers.

However, a 2015 study McKinsey & Co found that most digital transformation projects fail. Only 26% of executives at large organisations said their transformations had been “very or completely successful at both improving performance and equipping the organisation to sustain improvements over time”. While this is a slight improvement on previous survey results (20% of respondents said the same in 2012), it’s clear that the odds of transformation success are not in favour of most organisations. Where are they going wrong?

Out of touch

In 2014, research and advisory firm Altimeter released a report titled, ‘Why and How Companies are Investing in New Business Models to Lead Digital Customer Experiences’, which looked at digital transformation through an external, customer experience lens rather than focusing on the internal, enterprise-wide impact. From the research Altimeter concluded that the purpose of digital transformation is to more effectively engage digital consumers at every touchpoint in the customer experience lifecycle, and that the primary catalyst for business placing substantial investment in digital projects should be to understand the digital customer experience.

However, Altimeter found that most brands are out of touch with digital customer behaviours and expectations. Even though companies are boosting technology budgets, they’re doing so based on assumptions rather than data or research into the new customer journey.

For digital transformation to work, organisations must start with their customers, which means putting them at the centre. There’s no point in having a digital lead, acquiring digital talent, adopting digital technologies, and implementing new agile methodologies if organisations haven’t immersed themselves in their customers’ world and fully understood exactly what they want and how they prefer to interact with the company. Only this can inform how a customer service team must be organised to respond, or whether a supply chain must be re-engineered.

Transforming the customer experience

As the customer-first mindset catches on, some have begun to refer to digital transformation as ‘customer experience’ transformation, or as IDC calls it, ‘omni-experience’ transformation. In his keynote presentation at the recent CIO Summit in Sydney, Research VP of IDC’s IT Executive Programs, Mike Jennet, raised two examples of high-profile companies leveraging digital technology to deliver bespoke customer experiences. The first example was Porsche, who is in the process of transforming from car manufacturing company to digitally enabled organisation by leveraging big data, redesigning infrastructure, and automating business processes – and the benefits are already being reaped by customers. One outcome is that Porsche owners are now able to use their smartphone to remote start their vehicle and other functions such as pre-setting the air conditioning.

The other example was US department store, Macy’s, which is integrating big data and mobile technologies with cognitive computing, Internet of Things, and augmented reality – what Jennet referred to as ‘innovation accelerators’ – and in-store beacons to deliver an optimal customer experience. Macy’s has installed beacons (Bluetooth-enabled devices) in its stores to recognise and gather information about consumers, such as how they manoeuvre through stores, and their purchase history if they’re a repeat customer. This brings up a customer profile and is used to offer them a personalised experience in the form of ads, coupons, or supplementary product information. As Jennet said, “It’s no longer just IT enabled and backend systems, but customer enablement”.

Another presenter at the Summit was Gavin Gomes, Director at Canon Business Services, who spoke about the human side of digital transformation, and stressed the importance of starting from the outside-in. He opened by saying, “Digital transformation is an evolutionary path in which the customer experience comes first. If you start with the technology part, you’ll fail”. Gomes used the example of Starbucks, who has begun to implement facial recognition systems at the pay terminal in its cafes; an example of taking data and repurposing it for digital business. Last year Starbucks also added a ‘Mobile Order & Pay’ feature to their smartphone app, which allows customers to order ahead of time and bypass the checkout line upon pickup. According to Gomes, companies such as Starbucks that put their customers first in digital efforts “generally have greater profits, revenues, and better balance sheets than their peers in the industry”.

Humanising business

Digital transformation is a journey that continually seeks out how to use technology in ways that improve customer experiences and relationships. However, providing an exceptional experience to an increasingly empowered and fickle digital customer is getting harder. New offerings are hitting the market faster than ever, brand loyalty is decreasing, and the increased competition is continuing to shift power from organisations to individuals. To be successful, organisations must put the customer at the heart of everything they do. In a nutshell, digital transformation is about making businesses more human.

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Tags Digital Transformation, CIO summit, customer experience, digitisation


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