In our second blog on Implementing a Digital Strategy, we addressed the organizational challenges that come with going digital. We started with C-level support, addressed the all-important collaboration with other departments and looked at DevOps as a new organizational model. Now it is time to get started, and that means choosing what you’ll do yourself and for what you’ll need external help from partners. Buy or build. And while new processes are being put into place, you‘ll also need to create a steady flow of tangible results for the board to explain for all this funding and focus. So, let’s start there first.
Going digital is a time consuming, complex and expensive endeavor for any company. It affects every department and touches on all the customer interaction. And while ROI is an important tool for measuring marketing performances, in the digital world ROI works different. Getting channel attribution right is a challenge, for example, so you won’t cut budget in the wrong places.
Aiming for something completely new takes real effort and time, so there are lessons to be captured first. But that alone won’t suffice for your CFO on the long run. How do you create tangible results in the Age of the Customer?
How going digital creates value – 4 Key Figures
We started this series with the board member who is given the task to guide the company’s journey towards digital transformation. While this new territory may give you some breathing space at first, the board will be asking about ROI at a certain time. Look for the following figures to give clear evidence of the value that going digital creates:
- Higher revenue
A study by Peoplemetrics showed 13% higher revenue growth at companies with a higher customer engagement. Forrester even reported 17% higher revenue growth in their study Customer Experience Drives Revenue Growth 2016.
- Higher Customer Retention
Companies that create a strong customer engagement through digital and offline, retain on average 89% of their customers, compared to 33% for companies with weak customer engagement. (Aberdeen Group)
- Higher Customer Lifetime Value
Shoppers who buy both in-store and online have a 30% higher lifetime value than those shopping through only one channel, a 2015 IDC study shows.
- Increase Volume of Sales
According to a 2014 research by ICSC, the combination of buying online with pick-up and return in the stores creates more net sales compared to only returning in-store. Customers who visit the store for pick-up or returning their purchase, exit the store with 107% of their original purchase due to incremental items bought.
The key insight to remember: the ROI for digital is more comparable to a long term investment, than to a short term marketing campaign. That’s why measuring and analyzing should be high on your priority list: to both keep the board well informed and to follow your own pace towards digital transformation.
Where Do You Invest: Buy or Build?
The biggest budget question is: when do I employ my in-house talent and when do I work with partners? There is no clear answer on this, as it completely depends on your specific situation and market. Generally, you’ll need expertise around topics like:
- Digital strategy and business processes
- Website design capabilities - User Experience & visual design
- Software implementation & Project management
- Product Information Management and e-commerce
- System Integration & IT architecture.
The tendency may be to always choose people inside your company for these areas, but as Abraham Maslow wrote on over-reliance on a familiar tool: “I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.” By all means, people are not tools. But certainly in the digital age, you’ll need to choose the tools you work with carefully. Some tools only have intended purposes while others are more adaptable. To decide who will do what, here are the three key pointers to look for:
- Your current level: If you’re going to build a skyscraper, you’d prefer to work with builders who build these daily, not the house builders. Once you’re clear on where you want to be, look inside your organization to see who can take you there. Do they have the capabilities and experience?
- Your new level: Once your new strategy and channels are in place, what role will your own specialists have? If you intend to have them running the show by then, you’ll need to think about how to get them to that level. What training will they need? What role can they play in the transformation and learn in the process?
- The speed of innovation: Hiring people to do things you don’t know exactly what for yet, can be challenging. Typically, it pays off to hire generalists with a wide view and interest who can help you to develop new horizons. Then, when you’ve found a possible new market or product, you can start looking internally and externally for the right skill set.
Selecting the Partner for Your Digital Strategy: Go for Value and Experience
As setting a digital strategy will be all about reaching a new playing field for your organization, external experience will prove invaluable here. Growing the expertise of your workforce to that new level makes business sense, while the speed of innovation means you’ll involve partners when a project becomes interesting enough.
Go for Value
As explained in Part 1 of our series, customer centricity means providing customer value and delivering great customer experiences. The creative and technical services required, can be provided by a full service digital agency with in-house talent that bring creative digital strategies to life.
Such an agency should be able to imagine and assemble all the ingredients needed for your markets and customers, providing great experiences to your end customers and understand how you can actively manage value or devise ways to deliver more of it. It can be quite difficult to pin down what your customers truly value. A digital agency can assist and apply best practices or check whether the customer value you deliver has sufficient functional, emotional and social impact.
Go for Experience
A full service digital agency can also help you to create new opportunities to improve your performance in existing markets or break into new ones. Such a cooperation often also pays off in stronger customer loyalty and sustained revenue growth. Make sure your digital partner in your project has a proven track record in the areas of expertise we described on the previous page. Other questions to ask when selecting a digital agency:
- Who are the experts who will be working with me? What are their professional qualifications?
- What methodologies do you apply: waterfall, agile, scrum, DevOps or other?
- How will information be shared during the project? How can my people learn from you?
- What kind of services are covered in your contracts? What’s in scope and out of scope?
- Which references in my branch can you give me?
Digital Strategy by Osudio - an Exploratory Journey
Your innovation journey into implementing a digital strategy starts here. We’ll get together to escape from our mental frames. We’ll force ourselves to consider radical opposite viewpoints, making them extreme to the point of being ridiculous. Then we’ll start selecting and focusing on the reframes that open up new, interesting possibilities. Next, we formulate and test these new core beliefs with your customers.
We get out of the building together with you
Small empowered teams make for an intensive, immersive experience. Once empowered, people will take responsibility for their plans, ideas and implementations. We’ll work together on producing prototypes to anchor and communicate your new beliefs. Expect to be taken out of your mental and emotional comfort zone. We’ll look for opportunities for radical business innovation and produce prototypes for various new business models. Validated learning by using hypotheses and continuous checking of your assumptions are part of the journey we undertake together.
Next steps for team members typically include spreading the prototype outcomes in the organization, reformulating the strategy and test-driving radical proposals with potential customers. Again, an empowered team takes the lead in this process and has the autonomy to make adjustments as they see fit. We’ll help you to put the required DevOps model into work in your company.
Interested in making the first steps into Digital Strategy together with us?
At Osudio we facilitate the start of this process in our offices in Amsterdam, delivered by digital strategy experts and UX design professionals. Our offices are designed to facilitate creative teams and provide a flexible and inspiring environment.
Want to find out more? Contact Frans.