by Howard Tiersky, author of “Wining Digital Customers: The Antidote to Irrelevance“
The world is changing rapidly, and once-loved “legacy” brands are falling out of favor. The reason is painfully simple. At one time these brands exceeded customers’ needs and stood for something they cared about. (That’s how you earn love.) But today’s customers are different. Very different. The vast majority are living a lifestyle that has digital at the center… and many companies haven’t transformed to meet them there.
Digital is no longer just a ‘need’ for customers. Expecting to access a seamless digital experience on demand is more like a value. If you can’t provide that, you’re not only not resonating with their lifestyle, you’re in conflict with their fundamental worldview.
The move toward total digital immersion has been happening for a while; COVID has only accelerated it. And here’s the thing: Almost all businesses have digital operations, so you may think yours is meeting customer expectations. But there’s a good chance it’s falling short.
To deliver ‘digital’ at the increasingly elegant level today’s customers expect, most of today’s large companies need to reinvent themselves in a variety of ways, and quickly. Unfortunately, many aren’t designed for this kind of rapid change. They might lack an aligned vision, or encounter resistance, or have the wrong technology. Maybe they’re entrenched in a way of thinking that just isn’t customer-centric. And so despite their best efforts, they fail.
Let’s say your organization is already using digital for marketing and e-commerce, but you are not truly “digitally driven.” Maybe you provide customers with a good app — but it’s really just an add-on. You’re not aggressively creating products and experiences that take full advantage of the potential of digital. You can’t honestly say you’re digital at the core. If this describes you, is it truly necessary to change?
Most likely yes. Here are just a few reasons why.
REASON 1: You Need to Remain Relevant to the Customer.
Customers today demand a superior digital experience. A Salesforce study found that 80 percent of customers view “the experience” a company provides as equally important as its products and services. But across industries, most experiences offered today are simply not up to customers’ expectations. PwC found that 49 percent of U.S. consumers say that companies are providing a “good” customer experience today.
Brands also spent a lot of energy on online content about their brand and products. But market research shows that consumers today have massive cynicism today about what brands “say” about themselves. As Trinity Mirror and Ipsos Connect found in a study, almost half of consumers have a general distrust of brand and 69 percent specifically distrust their advertising.
So how do consumers evaluate your brand and products if they assume most of what you say is a lie? Mostly, from their own digital experiences. If your website is confusing and disorganized, that is the message people will take away. If your signup process is cumbersome, they assume that your product will be as well.
REASON 2: You Need to Gain the Efficiencies to Be Cost-Competitive.
Companies that are winning in the digital economy are delivering a dramatically improved value proposition — offering customers more for less. It helps to have investors who are patient about whether the company operates at a profit. But more long-term, these companies are able to operate in a different way — harnessing tools like crowdsourcing, AI, and process automation.
If you don’t have access to these types of opportunities to increase efficiency, it’s difficult or even impossible to be price-competitive with those that do.
REASON 3: You Need to Attract and Retain Talent in the Organization.
Millennials want to be a part of companies that are digitally savvy. This might be the most important reason of all to ensure that your company has a high level of digital effectiveness.
A study by the market research firm Penn, Schoen, & Berland found that 82 percent of millennials can be swayed in their career decisions by a digitally equipped office, while 42 percent would leave a company due to “substandard technology.” Similarly, Microsoft found in a study that 93 percent of millennials polled cited modern and up-to-date technology as one of the most important aspects of a workplace.
REASON 4: Digitally Driven Companies Have Greater Revenue Growth.
A study by the Aberdeen Group found that the top 20 percent of companies as measured by their “quality of digital customer experience” enjoyed an average year-over-year increase in revenue of over 35 percent, compared to a 7.7 percent average for the rest.
“Digitally advanced” companies create 9 percent more revenue than their industry competitors, as reported in a study conducted by MIT. And digitally “mature” companies are almost three times likelier than lower-maturity organizations to report annual revenue growth significantly greater than their industry average, according to yet another study, this one by Deloitte.
REASON 5: Digitally Driven Companies Have Better Profit Margins.
Despite the investments they need to make to transform, studies show that digitally driven companies deliver better returns. A Harvard Business School study found that the three-year average profit for “digitally centric companies” was 5 percent more than that of those companies “behind the curve.” A different study at MIT concluded that “digitally mature companies” are 26 percent more profitable than competitors.
What’s more, digitally effective companies tend to be highly customer-centric. A KPMG study showed that “customer-centric” companies saw a projected profit growth rate that was 3.6 percent greater than “non-customer-centric” companies.
REASON 6: Digitally Driven Companies Have Higher Valuations.
Lastly, and perhaps most importantly, digitally driven companies have consistently higher valuations.
According to MIT, more digitally “mature” companies achieve market valuations 12 percent higher than competitors.
Forrester calculated that in recent years, the stock price of “leaders in digital customer experience” grew by nearly 30 percent more than that of lagging brands.
Bottom line? It’s a new era. There have been many periods of time when businesses could operate in more or less the same manner for decades, updating their advertising campaign periodically, creating marginally “new and improved” products every few years, and making small incremental changes to keep cutting costs and drive profits higher.
Those days are gone. You need to reinvent yourself, and there’s no time to waste.
Whether your business is window washing, restaurant supplies, maritime navigation, or podiatry, your customers’ expectations are digital. Your competitors are leveraging digital to drive better customer experiences and increased operational efficiencies — enabling them to offer more compelling value propositions to customers. If you aren’t doing the same, it’s going to be tough to remain relevant and price competitive.
Howard Tiersky is the author of “Wining Digital Customers: The Antidote to Irrelevance“. He has been named by IDG as one of the “Top 10 Digital Transformation Influencers to Follow Today.” As an entrepreneur, he has launched two successful companies that help large brands transform to thrive in the digital age: FROM, The Digital Transformation Agency and Innovation Loft. His dozens of Fortune 1000 clients have included Verizon, NBC, Viacom, Avis, Universal Studios, JPMC, Crayola, Morgan Stanley, Condé Nast, the NBA, Visa, and digital leaders like Facebook, Spotify, and Amazon.