Why companies shouldn’t rush their digital transformation

PUBLISHED : Friday, 29 December, 2017, 10:16am
UPDATED : Friday, 29 December, 2017, 10:01pm

In 2017 “improving the digital customer experience” was ranked as one of the top strategic priorities by senior executives in several studies. But “digital transformation” is a slippery term. It is so often used that its actual meaning can seem vague.

It is tempting for companies to rush to get onto the digital “runway” and showcase their “digital first” strategy. After all, customers live in an increasingly hyper-connected world. The last few years alone have seen new digital tools, technologies and trends exponentially increase the number of customer touchpoints available to marketers.

Yet my research shows that a hasty and haphazard adoption of digital trends is usually worse than doing nothing at all.

To stay ahead in the digital race, take time to properly integrate digital into an existing organisational strategy instead of rushing in to adopt the latest technology. The leaders in the race recognise that digital will not replace but enhance traditional marketing and/or strategy frameworks.

Companies will have to change the way they do business, if not their entire business model itself

Companies will have to change the way they do business, if not their entire business model itself. Digital trends such as AR, VR, AI, smart sensors, wearables, 3-D printing and robotics can be seen as “software” that doesn’t function properly without having the right “hardware” in place. Just as important as technology, management disruptions such as design thinking, lean management and cross-silo coordination are critical enablers of the digital transformation process.

Most importantly, before leveraging any digital trends, executives have to understand and deconstruct the customer journey. Only then can a company identify the low-hanging fruits and isolate touchpoints where digital trends and channels can make the biggest difference to the customer experience.

Instead of thinking about “digital transformation”, companies should think about “digital transformation of the customer experience”. The ultimate goal is to offer a superior customer experience and to improve their capability to generate growth in competitive environments.

Tencent and Alibaba are benchmarks for companies in how they engage with their customer by leveraging digital trends.

Implementing digital customer experience initiatives needs to add value for the customers where customers would expect them.

So how and where do we start with optimising the customer journey?

First, it’s crucial to understand what customers really want and expect at each touchpoint.

For this, customer insights are crucial and should not be confused with data. Today’s companies have access to a colossal amount of information from search, GPS, ad clicks, social media sentiments, traditional and new media statistics and more. The data tap has become a hosepipe and it can be very difficult to ferret out insights amid all the noise.

How do you know when you’ve got a strategic insight? There are three main criteria:

1) Novelty – it’s not a “eureka!” moment unless it’s a discovery of something entirely new or an innovative approach to an old problem.

2) Credibility – the basis should be a genuine consumer challenge derived from the data, either quantitative or qualitative, or (ideally) both.

3) Actionable – the connection to business goals should be clear, even if specific next steps are not. What are the relevant goals to keep in mind? Quite simply, to become more customer-centric and drive business growth.

Modern Chinese customers are digitally savvy, demanding a convenient shopping experience, often through their mobile phones, where they simply purchase things quickly. But at the same time, they want to be able to socialise with friends and have a shopping experience that is entertaining and highly personalised – all of these can be offered offline and online.

In China, shopping is more than just a transaction. Online marketplaces such as Taobao, and platforms like WeChat have evolved into all-in-one super apps. WeChat, which had started as a social media platform, is now offering a wide variety of offline services as well. Users can make in-store payments, hail a cab, order food, get timely updates on buses, schedule a doctor’s appointment, check into a hotel, or order a bike instantly through a so-called mini program, an instant app which requires no download or installation. These instant apps are embedded within WeChat and could replace conventional apps. QR codes are the natural link for these online to offline interactions. For bricks-and-mortar retailers or any other offline service, these mini programs could boost foot traffic and connect to WeChat’s multimillion user base.

There is a clear role for physical stores, but that role is evolving.

Brands are merging the online omni-channel and physical offline retail models to create flexible experiences along all phases of the customer journey from discovery, purchase, delivery, and care to loyalty and recommendation. Companies can select from a rapidly expanding arsenal of digital tools and trends to create real value for their customers at the right touchpoints, and not just for the sake of it.

Joerg Niessing is an affiliate professor of marketing at INSEAD and programme director of leading digital marketing strategy, one of INSEAD’s executive development programmes