Digital Transformation isn't just about efficiency; it's more about shaping customer value
The words, “Digital Transformation” get thrown around a lot in conversations these days. Reactions to it range from the pessimistic: “This sounds like a new catchphrase for downsizing or cost engineering” to the truly wonderous: “Are we going to be the next big thing that everyone suddenly must have?”
There’s a huge middle ground between those extremes, with lots of room for companies that want to grow.
It’s helpful to think of why companies are looking to digital transformation to solve some serious problems for them, including:
Their industry is in upheaval and becoming more uncertain. They want ways to cut through the growing unknowns and set their business up for longevity
Competition for talent (the good ones) is fierce. You want your business to be the one that attracts and retains the best possible people and scaling up can’t be proportional to the headcount
Customers expect more than just the basics these days. If your competitors are offering something appealing that you can’t beat, eventually they will lure away your customers
There is so much information available out there, more than anyone can absorb. How can your company leverage this info to create advantages?
And yes, efficiency, but more about that next…
What Matters more? Increasing revenue or decreasing costs?
Try this little thought experiment: Let’s assume you can push a magic button and reduce the costs in your business by say, 5%. How many times can you really push that button before things start to break and you fail to keep your customers happy? Once, twice, …maybe three times if your business was really inefficient?
The point is, you can’t indefinitely keep reducing costs as a way to boost profit. Something will eventually break, and for most businesses, pressing that button once is enough to put critical stress into the system.
What if you had a different button, this time one that increases sales by 5%? How many times could you press that button? 20 times, 100 times? Maybe even more? Almost no one owns 100% of their market (and if they did they would find other markets), so companies typically have lots more room to grow than to shrink. That’s the direction you want digital transformation to take you. But what does that mean, exactly?
OK, imagine one more button, only this time when you press it you magically get a new product or service, and sometimes it’s so valuable your customers can’t get enough and you can charge more money for it. That’s the potential of digital transformation - creating new customer value.
Value is more than quality (meeting specifications), a fair price, and doing things legally and ethically. Bain (one of the big consultancies) calls those items the “table stakes” that pretty much everyone has. They go on to identify 40 ways businesses can create value for customers:
Bain & Company’s Elements of Value
No business should try to deliver on all of those elements - that’s the opposite of smart and strategic, so instead look at a few of those and gauge how your company is positioned now. And then think of how you would like your company to be positioned going forward. From that positioning, you can start to pick the direction for digital transformation efforts.
Let’s say you’ve identified that responsiveness in your service delivery is very valuable to your customers. They want to know they can do business with your business when they need to, without delay. You explore that further to learn that getting your services faster than the competition is worth money to them, so they’re even willing to pay a premium price if you can satisfy that need. Suddenly, you have the business justification to look into digital solutions like:
A system integration so that the moment a customer has a problem (or is about to have one), your team gets notified automatically
You free up your team’s time from tedious tasks through automation mini-projects, which gives them the space/bandwidth to handle customer queries as soon as they come up
Virtually connecting your subject matter experts to the customer for service visits, even if they are in different time zones
A self-serve portal that gives customers the ability to check on existing service requests or make new ones any time they want
That’s a start and you can grow it from there. In fact, we recommend starting in a small, impactful way, so you can iterate and grow the effort as you learn what works better and better for your business. Isn’t that the better way?
Feel free to reach out and we’ll uncover more ways you can bring value to your customers.