Since the turn of the millennium the way that customers and brands interact has become increasing digital. It was right at the end of the ‘noughties’ when people started using the mobile Internet on smartphones and publishing on social networks. Now, almost a decade down the line, it is possible to see that the way people communicate with each other has dramatically changed and this has also changed the way that customers experience brands.
But the state of digital business as we approach the end of this decade is not just about smartphones and social networks. There are dramatic changes taking place that are affecting entire industries. Customer expectations and changing behaviours are forcing companies to change how they do business, but many are not ready for the change.
Forrester Research recently published a paper exploring how digital business will change companies in the period up to 2020. They summarised three major changes:
- Revenue will be closely connected to your digital capabilities. Most companies are not ready to be digital-first, but they will see that their income depends on it.
- Talent will be limited. People with digital skills will be in high demand so companies need a strategy for attracting the right people as soon as possible.
- Executives need to work together. The digital change is so pervasive that all areas of your business will be affected, therefore you cannot allow a single executive the task of leading the company to digital-readiness – every C-level board member needs to be working together on this.
The revenue shifts are clearly visible. Forrester estimates that the US B2B eCommerce market will be worth $1.13 trillion by 2020. Retail executives predict that 58% of sales will be digital by 2020 – almost two thirds of retail being done online. In some markets this has already happened, like South Korea where over 80% of baby nappies are sold online.
Professional services will also change. Forrester predicts that 49% of all professional services will be sold online in 2020 – a huge difference from 20% in 2014. It is clear that whatever industry you are in, the revenue is moving online so your business has to be planning for this today.
Jeff Immelt, the Chairman and CEO of GE, is quoted in the Forrester research because he admits that his own digital transformation strategy originally went off the rails. He said:
“This is something I got wrong. I thought it was all about technology. I thought if we hired a couple thousand technology people, if we upgraded our software, things like that, that was it. I was wrong. Product managers have to be different; salespeople have to be different; onsite support has to be different. We’ve had to drill and change a lot about the company. And I just think it’s infecting everything we do. It’s infecting our own IT. It’s infecting our own manufacturing plants. It’s infected everything we’re doing, I think in a positive way.”
Immelt said that his company has hired thousands of data scientists since he realised that the business requires expertise, not just new technology systems. This is a scenario that every executive will now be facing. Data science looks like a great career move at the moment because there is about to be a serious shortage of people who can analyse big data sets and advise executives.
But teamwork is needed to change organisations at the best of times. When entire industries are changing so fast, it’s critical to get everyone working together. The Forrester research highlights that the CIO and CMO relationship is extremely important, but also with a CEO that believes in the changes proposed.
Digital skills are not just required by digital marketers. The auto industry is a good example. Cars today all contain millions of lines of code. They are digital systems on wheels. This digitisation is taking place across every industry meaning that people in your teams need to be familiar with digital processes because for the customer, it’s about to be mainstream.
Constellation research recently published a similar paper, but with a focus on how the shift to more digital revenues will affect the customer experience. Their belief is that there is a missing link between companies that aim to use digital technologies to deliver a great customer experience and real business outcomes. In other words, it’s great impressing customers with your social media presence, but is your investment in a digital experience actually earning the company more cash?
Constellation believe that there are five key foundations that need to be addressed if your digital customer experience is going to translate into actual business success:
- The business team believes there is a value in investing in digital customer experience. It’s their budget, so they need to be on board from the start.
- Use metrics that are easy to understand and are customer-centric. Make sure you can measure performance based on how customers experience your brand.
- Ensure that the metrics you are using can be translated into actions, so there is a clear connection between what you measure and what can be observed.
- Make sure a process of review is in place so you can change strategy without it feeling like an emergency change.
- Ensure you create a process that allows for optimisation. It’s good to fix certain processes in place, but it you can’t flex along the way then it will be difficult.
Ultimately you need to drive your business to a place where it is pervasive, you know how customers behave and you can predict how to help them. At this point, every delivery from your company will be undertaken from the perspective of the customer. The customer experience will be exceptional because the entire strategy of the company is designed to be customer-centric.
You can’t change everything at once, but you can make a start:
- Do a gap analysis. What needs to be done to get from here to that ideal place?
- Pick the low hanging fruit. There must be a lot of projects that can be delivered quickly and offer an improved customer experience.
- Connect those quick changes to business outcomes so you can create strong business support for the more difficult changes.
Digital transformation can be a challenge, but customers are experiencing more brands through a digital environment than ever before. As you can see from the changes in revenue flows I mentioned, it’s becoming critical for companies to adapt to the digital environment and customer expectations are changing fast – they are demanding that you adapt to what they want.
Photo by Tony Chang licensed under Creative Commons.