The phrase digital transformation is regularly used to validate a vast range of change projects – from software investment to social media marketing. And while there are many definitions of the term, Bill Schmarzo, CTO at Dell EMC Services concisely describes it as, “…the application of digital capabilities to processes, products and assets to improve efficiency, enhance customer value, manage risk and uncover new monetisation capabilities”.
But how does digital transformation relate to and, indeed, enhance customer experience? The two are, in fact, intricately linked. In order to deliver an improved customer journey in today’s fast-paced, technological environment, organisations have to digitally transform – whether that means modernising existing IT systems or deploying latest technologies.
If companies needed further convincing to put the cogs in motion, IDC recently reported that by 2019, organisations globally are expected to have spent a total of $2.1 trillion on digital transformation. In turn, anyone not delivering better customer experiences through digital services, will undoubtedly have competitors implementing effective digital strategies – thus risking getting left behind.
The evolving customer experience
Across every industry, no company is immune to advances in technology. Customers and employees alike now demand greater mobility – they crave seamless and transparent access to information, as well as engaging user experiences. Moreover, developments in AI and automation have led to internal operations being transformed, whether that be in offices, factories or supply chains.
Consumers now have extremely high expectations when it comes to customer service – and when these aren’t met, they can easily go elsewhere. So much so that 42 per cent of consumers (opens in new tab) say they would switch brand allegiance after just two negative experiences. A digital-first mentality, facilitated by straightforward access to new tech, has led to an overarching preference for speed and personalisation. Customers want transactions completed quickly and issues to be solved instantly. As such, digital channels such as social, messaging apps, SMS and chatbots are becoming the gateway to an enhanced customer journey.
Yet, it is difficult to provide customers with those seamless, connected experiences necessary for boosting loyalty and increasing market share, if internal operations do not execute efficient processes and communicate these transparently throughout the company. Every discipline from marketing and customer service to IT needs information and contextual responses to facilitate an engaging experience.
Digital transformation and CX: the companies paving the way
Organisations that rank in the UK Customer Satisfaction Index have successfully executed transformation from a technology, process and resource perspective. Therefore, it is imperative for business and IT leaders to analyse the companies on the list and take note of the strategies they are putting in place, observing their overall approach to digital transformation.
Water company, United Utilities, is one example of an organisation that has climbed to the top of the Customer Satisfaction Index. And, as a result of its successful digital transformation programme, it was recently listed as the fourth most improved company.
United Utilities – an example of successful execution
Operating in the North West of England, United Utilities has worked to develop new services, as well as introduce a ‘right-first-time’ culture across the business. From the outset, the company decided to focus on customer care, coupled with affordable tariff plans to provide water to a struggling area. The company reaped the rewards from this methodology, increasing profits by 10 per cent.
Examples of the integrated measures it has taken to improve the customer experience include:
- Introducing a system that allows customers to speak to an adviser instantly rather than navigating lengthy automated menus.
- A sophisticated online service that allows customers to manage their water accounts.
- Clearer bills in plain English.
- A welcome pack for home movers.
- A specialist careline team to support customers who need extra help, such as those suffering from ill health, a bereavement or mental health issues.
How to measure digital transformation ROI
According to research, 52 per cent of enterprise-level organisations (opens in new tab) are looking to increase their IT budgets to put digital transformation plans in motion. However, in order to gauge the success of these initiatives, defining a realistic ROI model is vital.
These steps should therefore prove to be a useful guide for any organisation embarking on a digital transformation project.
Understand the objectives – To develop a roadmap and define a digital transformation business case, you must be clear on the ultimate goal. Clarifying the objectives from the beginning is the only way to understand what financial KPIs need to be measured. Is the plan to digitise data? Integrate touchpoints? Increase operational efficiency? Boost repeat purchases?
Clearly define cost centres – It is important to remember that successful digital transformation must incorporate all areas of the business, not just the IT department. There is no doubt that there will be a greater need for new tech skills and the relevant hardware and software. However, using call centres, as an example, staff will need to be trained to confidently speak about new app integration.
Take the wider view on measurement – All possible impact on revenue from changes to customer experience such as customer churn, satisfaction scores, repeat purchases, referrals, and an increase in customer value (spend) should be considered. This gives a true reflection of how any digital transformation initiatives are impacting customers. It is also crucial to allocate a figure to those customer metrics that do not have an obvious financial number. Asking, for example, if a lifetime value can be assigned to a customer who rates the brand highly after their first purchase.
Be mindful of the impact on staff - Operational costs such as training, recruitment and even incentive schemes will affect the bottom line. However, increased employee satisfaction and efficiency are key indicators and should therefore be included in the ROI model.
Set realistic timelines – Contemplate the period of time in which your business should measure the success of each element of a digital transformation initiative. For KPIs relating to customer satisfaction, a longer-term view is needed as people experience the benefits of new digital services and processes.
Don’t stop measuring – Measure continuously and keep in mind the desired milestones and destination. This helps give a more accurate cause-and-effect analysis as factors affecting the ROI have been mapped out. Constant measurement is also helpful for identifying potential issues and addressing them before they have negative consequences.
Successful digital transformation and, in turn, improved customer service involves creating a customer-centric approach. This consists of utilising real-time data in order to deliver enhanced user experiences, while at the same time operating efficiently and collaborating effectively internally. Growth and customer satisfaction are ultimately achieved when companies work to define measurable goals, making sure the organisation has the skills and processes in place to support the deployment of new technology. By doing so, companies can reach new levels of market competiveness.
Ray Tierney, CEO, Engage Hub (opens in new tab)
Image source: Shutterstock/Wichy