According to experts, the failure rate for digital transformation was between 50-80% in 2018, despite the $900 billion in total costs put into projects.
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In today’s online driven world, organisations’ digital experiences have become increasingly integral to their levels of success. Spending on digital transformation projects reached over $2 trillion in 2019, and this figure was likely to be higher in 2020. A large amount of these projects, however, have very low success rates.
According to experts, the failure rate for digital transformation was between 50-80% in 2018, despite the $900 billion in total costs put into projects. Since then, there has been a slight improvement, but overall, digital transformation still falls incredibly short of offering firms’ desired experiences.
What’s going wrong?
There are a few different reasons behind digital transformation project failures. Organisations often let their preconceived ideas lead these projects, rather than conducting research and working to ensure they are responding to customer opinions and feedback. Apart from leading without researching, organisations are attempting to simply adapt their current physical customer processes, which shows a lack of consideration of better and more efficient digital options.
Furthermore, many organisations follow conventional methods without considering their applicability in current times. A common example is using websites, mobile channels or call centres without analysing their traffic and viability.
”It’s clear that these companies are in the dark in terms of what constitutes value for their customers when it comes to digital experiences. This, in turn, serves as the principal reason why so much money is going to waste.
Value drivers and choosing the right one
Value drivers are the aspects of customer experience that deliver paybacks for companies’ resource investments, such as increased consumer spending and market share. In a report from September 2020, Forrester identifies four specific value drivers, and they can be summarised as follows:
Economic value: Economic value refers to the perceived value of the product or promotion that is being offered. Companies strive to be on the same playing field with each other; however, if this is not the case, they’ll sacrifice on quality and standards in order to offer lower prices.
Functional value: The functional value refers to the usability of the digital experience, as well as the speed of service and convenience factors.
Experiential value: This determines the psychological benefits that the customer enjoys during their experience.
Symbolic value: The final value driver reflects how the customer perceives themselves when purchasing from a brand. This can refer to status or sustainability, or any other non-material aspect.
The most important thing for successful digital transformation is to discover which of these delivers the most value for your customer base. This proves to be difficult as very few companies or organisations have the proper data, and of those that do, the data is fragmented. Successful transformation projects are those that meticulously analyse their customer experience processes, discover which value driver is the most lucrative, and act to ensure this is reflected throughout each process.
In a report from September 2020, Forrester identifies four specific value drivers: economic value, functional value, experiential value and symbolic value.
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Tips on implementation
The initial step in tackling and overturning the high failure rate of digital transformation projects is to collect data on customer satisfaction. That is, find out exactly what they like and don’t like about customer service. This can be done through behaviour analysis, or, for those who accept, facial recognition software that picks up on their facial reactions. Also, be sure to measure everything about customer visits, including the time, the most and least used links, and how they behaved while on the site.
Collecting customer experience data goes hand-in-hand with the Peak End Rule, which is the idea that the most intense emotion felt during an experience becomes how the customer defines it. This type of data can be easily gathered by asking the customer, or deducing emotions through their behaviour and reactions.
According to Dobrev, companies often take too much of an all-or-nothing approach towards digital transformation. In some cases, human interaction serves as one of the key drivers of success, and without proper analysis, this may go unrecognised. This is where identifying value drivers will come into play.
To avoid this all-or-nothing mindset, testing becomes important in digital transformation. Before committing to a new method or procedure, first do a trial run to ensure it works for the targeted customer base. Further to this, it is easy to get wrapped up in an inside perspective and lose sight of the customer view. Therefore, having an outsider test new systems will always be beneficial for figuring out where to make improvements.
Customers are not always logical and may not necessarily think or behave the same way that professionals from the organisation do. What may work for you as an employee may not satisfy customers, and it is necessary to step into the customers’ shoes.
Shifting with the times
It’s clear that changes need to be made on the digital transformation front, especially as billions of dollars are being wasted every year. Companies need to realise that they cannot solely apply general ideas to these projects, but instead need to specialise them according to their customer base and their preferences.
Through data and research, companies can figure out what their particular value driver is, and consequently, the areas in which to apply their focus.
By following the aforementioned tips and finding the balance between digitalisation and the human touch, companies can create a tailored digital transformation program – one that caters to their customers’ needs and does not waste their budget.
As we enter 2021, it’s becoming even more obvious that the online environment is here to stay. With the proper tools, organisations can stay ahead of the curve and swiftly join the digital shift. Using its 15 years of experience as digital consultants and CRM experts, redk supports companies looking to enhance efficiency and profitability through world-class tools that optimise performance across organisations. Allow us to help you transition into the new year and the new digital norm.
CRM Transformation Practice at redk
Hideki applies over 15 years of experience in the field of CRM and Customer Experience to overcome business challenges in the customer cycle.