Digital platforms can enable new growth opportunities, improve customer retention, and are a key component for building an innovation culture.
The decision about approaching and executing on digital playbooks is not a new issue. The question has often been framed around how to move from a technologist’s to a strategist’s point of view.
Digital change has been playing out in recent years across industries and verticals at an accelerating pace. The problem is that many companies have not invested in building the foundation for a successful transition.
“81% of decision makers indicated Digital wasn’t top of mind until the most recent 2020 economic shock”
There is still an unparalleled gap in catching up with competitors that are digital-first and now capturing the rewards.
In this article, we look at the three critical steps companies can take to become digital leaders and beat the competition despite having a late start.
Building a digital strategy
A strategic approach to digital is not a plan of implementation but rather a framework around how business leaders can organize teams and resources to deliver on broader goals.
We recommend taking a step back and evaluating a 360° view of your existing business, product lines, and customer needs. From which, define a clear objective to achieve long-term changes.
If the ambition is to optimize risk, consider the following from our analysis on Fintech CX: Customer Journey Strategy.
“In retail banking, consumer credit poses statistical risk to loan portfolios. By using IoT sensor data from smartphones, Canada’s major banks have been able to accelerate early risk indicators while delivering engaging digital experiences.”
Similarly, the approach should span both growth and structural objectives to enable delivery. Here’s four key areas to consider where opportunity matters: customer experience, product development, and business-model innovation.
Understanding CX - Customer Experience
It all begins with understanding what your customers truly need answers to. Customer Experience is coherent to an account plan that can be leveraged for creating new intersects between product and sales-led growth.
We propose four key questions for leadership to ask and acknowledge that the answers may be uncertain especially during challenging times:
- Have our sales teams connected with customers to identify what’s top of mind outside of our existing business?
- Will customer concerns still exist tomorrow, the year after, and in five years?
- What are market leaders not addressing for customers that have left them?
- Are customers building digital intensity in their own business?
“Innovation comes from one’s ability to grasp customers’ unmet, unarticulated needs” - Satya Nadella, Microsoft CEO
In doing so, we’ve established a baseline for qualitative metrics around potential customers for a new value proposition. CX is not a one-shot approach, these will need to adapt and change to streaming Data Pipelines that deliver actionable insights for decision makers.
By analyzing customer behaviors and unit economics, we can compute expected Customer Lifetime Value (CLV) as a function of Customer Experience (CX), the frequency and amount of time customers actually spend on your solutions. Which itself makes go-to-market with a product or service significantly easier.
Optional Read: Consider the data scientists’ perspective on formulating metrics that highlight issues and opportunities:
1CLV(CX) = (x | k) * (t% * j)23t(%): The percentage (%) of customer time (t) spent on your products, services, and solutions4k: The frequency (k) of interactions with your product or service in the same unit as the payment plan (i.e. monthly)5x: The transaction value (x) of product or subscription sales ($)6j: The average cost of overhead from customers' salaries, wages, or materials spend
In this example, suppose your business has identified a need for streamlined operations in the industry and decides to ship a SaaS platform that uses your unique process IP (intellectual property).
An enterprise customer that initially signed up for 10 x $20/mo. seats subscription whose employees engage with the app 32 times over the course of a month. While the divisible economic cost is $6.25 per transaction, it’s not the true cost perceived by the customer.
It’s imperative that we factor the customer’s experience, 20 hours a month which is spent on using the app is an inherent opportunity cost with associated salaries, wages, or materials that need to be added as overhead of ($32.50/hr * 20 hrs) = $650.
Hence, the value proposition must be either compelling enough to justify the overhead - an important factor that creates resistance during sales cycles or meet critical questions such as:
- How much time does the solution save the customer?
- Does the offering truly solve the customers innate problem?
- Are we maximizing the customers value output from their expected input?
Get in touch to learn more about deep dive analysis on CX metrics for your industry.
Firms that blend engagement with product features, serve to best optimize the use of its sales team efforts and are able to track resultant customer impact.
Creating an Agile Product Cycle
The most effective business leaders are developing a clear understanding of their customers’ pain points and potential needs, as well as a holistic plan for addressing those needs.
By adapting the lessons from customer experience goals into the next phase of the digital transformation journey, a solid foundation for making progress during product development can be made.
Telecom has been the long-standing sector for high volume, high touch customers - with 5G deployments, we expect to see a wave of CX data flows to enable new offerings such as game streaming.
Product development is not a one-way street from identified customer needs but a starting point for an agile cycle of evolving needs. To learn more about building an organizational structure and customer-focus to ship solutions more effectively, read our analyses on Designing Platforms for Innovation Leadership.
Approaching Business Model Innovation
Digital has spawned a number of business models that have allowed companies to move quickly and with great agility to address customer pain points. But a product is only viable as it’s underlying business model i
Social networks, affiliates, and content aggregators have become increasingly important to modernize sector delivery.
In retail banking, apps have created new opportunities for payment, lending, insurance, transport and more. These digital platforms have enabled developing new and compelling value propositions for customers. The execution of which couldn’t be otherwise possible without partnerships with countless third-parties like clearinghouses and retailers.
However, BMI can quickly become a costly mistake and it’s only advisable to evolve on approaches that are proven, less cyclical, and embrace a customer-centered solutions to have the best chance of thriving in the digital age.
Action Plan
Growth leaders need to be both thoughtful and flexible enough to adapt teams quickly to execute on digital transformation strategy - and to be both focused and disciplined enough to not only deliver what customers want but also to learn from those customers when it comes to how to improve and adapt solutions.
Despite the overcast, innovation in late-cycles has considerable benefits by taking advantage of the lessons learned by market leaders, and of proven go-to-market playbooks.
We’ve highlighted key components every growth leader must know for building an effective digital strategy: framing your approach, customer experience, product development, and BMI around delivery.
Get in touch to learn how we can deliver a turnkey solution with proven growth tactics for your business.
(i) “Four Paths to Business Model Innovation”, Girotra and Netessine. Harvard Business Review. 2014.
