Digital transformation: driving customer value

Digital transformation investments often fail to realise the potential and the returns that were first imagined by the boards signing off the business cases for them.

The expected uplift in commercial performance and increased competitive advantage have simply not materialised for many organisations.

In 2018, McKinsey&Co commissioned a survey in which only 16 percent of respondents said their organisations’ digital transformations had successfully improved performance. Of that 16 percent, half the organisations revealed their performance had initially improved but that those improvements were not sustained. 

Boards are becoming frustrated with the pace of genuine innovation, and badly applied agile development methodologies are all too often responsible for delivering sub-optimal products. It doesn’t matter how quickly you deliver if the product you deliver is not fit for purpose. 

Since the global financial crisis, cost reduction and operational efficiency have driven most global businesses. Investments in digital transformation have been focussed on automating processes and cutting operational cost. But, too often the customer, and improving their experience or service, was not the focus of these initiatives. In reality it was often a case of tech for tech’s sake.

To respond to the challenge of tech start-ups present across sectors, businesses need to innovate, create new business models, deliver improved customer outcomes and differentiate themselves from their competitors. Then, and only then, will we see genuine value creation from digital transformation investments.

Value creation is back on the agenda

Established brands are having their market share eroded by challenger brands who are beginning to improve dated business models and, using the latest technologies, provide personalised omni-channel experiences.

Accenture report: “A number of companies are using digital technologies to offer customers unique and unforgettable experiences, as enterprises are seeing customer experience as an increasingly important differentiator.” And that consumers: “Expect personalised and highly relevant interactions, catering to their individual contexts.”

As a result, value-creating digital transformation is back on the business agenda, as businesses seek to remove friction across touch-points for customers and employees, to drive long-lasting advocacy and loyalty.

But value-creating digital transformation is only derived from a deep and intrinsic understanding of the human-centred design process. Without this, businesses will fail to generate genuine and sustainable customer value.

This means owners of these digital initiatives must create a business-wide focus on delivering customer value. From simplifying outdated internal processes to completely reimagining customer experience – an investment in digital transformation should deliver measurable experiential improvements across all touch-points.

Harnessing the power of CX for greater value creation

To create consistent value, businesses must place customers at their core and design digital offerings around their requirements. They must also consider the cultural and operational changes required to deliver experience at speed and scale.

Businesses that have organised themselves around their customers and using this to inform infrastructural change typically enjoy the biggest successes.

Singapore-based DBS, a client of ours, is a great example of this. In 2009, their COO employed similar tactics and in two years they went from bottom quartile in customer satisfaction to the very top. 

After extensive research, the team launched ‘The customer hour’ because most criticism was rooted in slow, arduous processes.

This simply expressed ‘north star’ was embraced by the whole company and informed much of its decision making around improvement projects and the implementation of further technology along their transformational journey.

Within a year, DBS prevented 250 million hours of wasted customer time and became the best rated bank in the world.

Breaking down internal silos and letting customers in

DBS’ success story also makes a strong case for reimagining company culture. Organisational silos, entrenched practices and a lack of collaboration across business lines can compromise the quality and ultimate success of digital transformation projects.

That’s because it's hard for people inside a company to think like a customer. For example, if you've worked in a mortgage business for five years, you’re conditioned and therefore can’t put yourself in the shoes of a first-time-buyer.

It’s important for organisations to find ways to encourage and reward thinking from outside the business. Genuine customer insight and understanding should be referred to and harnessed throughout the decision-making process.

Place customers right at the heart

Monzo is another great example of a business that places customer understanding at the heart of its operational model.

Whilst the general direction and vision for the business is set by the board and its sphere of operations are known, they have the confidence to let customers guide their priorities and set their experience strategy to create greater customer and business value.

The team at Monzo don't wait for top-down internal decisions on what features/functions are required in the next release of their banking app; they engage with customers to find out what they need most, what additions they'd value, and how they'd expect them to work.

They make beta versions, get customers to trial them and ask how much they'd pay for enhanced features. Effectively, Monzo is developing its strategy with the help of its customers who test and rate iterative prototypes. 

Summing up

To save millions and ensure the success of digital transformation initiatives, companies must focus on improving customer experience across all touch-points by rooting it in customer needs, wants and expectations.

When coupled with technology, this mindset becomes an enabler allowing you to break inertia and deliver value. Remember: successful digital transformation initiatives share a desire to help customers. For a jumping-off point - bring customers into the decision-making process.

A version of this article was published by Business Chief earlier this year.