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Successful Business Digital Transformation, Part 4 – What to Expect and How to Measure Digital Transformation Success

Remember back when the idea of a digital transformation of your business was just an idea shared by an enthusiastic group of early adopters?  It wasn’t that long ago. Like all journeys, this one started with the first step, Selling the Idea, soon you were Forming Your Digital Transformation Strategy, and then you were Picking Digital Transformation Agencies for partners on the road. Now that you’re on the road, what should you expect and how will you assess progress or even know when you’ve arrived? These are common questions that may have some uncommon answers. In wrapping up this four-part series, we’ll take a look at what generally happens through business digital transformation, so you know what to expect and how to measure your digital transformation success.

Customer Experience and User Experience

As your digital transformation gets underway, one of the first things you will notice is a shift in the way the company thinks. Entire departments may be reorganized and silos of assets (data and human) will be broken down and restructured.

That’s because most successful digital transformations place the primary business focus on the customer experience and the user experience is secondary.

customer-focused corporate strategy success chart

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Both the business and the customer gain mutual value. The customer gains value as the products they purchase improve and their path to purchase becomes frictionless. The business gains value with improved customer retention, loyalty, and profit. The company adapts to the needs of their customers, not the other way around. Think Geek Squad and Best Buy. You’ll find that innovations are customer-focused, and all dimensions and touchpoints of the customer experience are systematically transformed. Instead of front-end thinking and back-end thinking you have customer-focused thinking. Data flow, processes, and technology are all important. But only as tools in improving the customer experience. You may even have a new seat at the C-suite table, the Chief Customer Officer

KPIs to Measuring Digital Transformation Success on Customer Experience

A key KPI of your digital transformation is how it impacted your net promoter score. This is a proven way to quantify that intangible feeling your customers have about your company, your products, and the way in which you service accounts. 

You know you’re great when your customers say you’re great. As a result of your efforts, your passives and detractors need to be moving up the scale. In other words, detractors that bothered to stay around should be moving up to the neutral or passive zone and your passive or neutral customers should be amazed by your transformation and land solidly in the promoter sector. 

Customer satisfaction scores can also rate how your customers are feeling on a transaction by transaction basis. 

By using net promoter scores and customer satisfaction scores you can measure if your transformation to a customer-focused digitally driven organization has been successful. 

Impact on Marketing

No where else is the impact on digital transformation felt more acutely than in the marketing function. Data-driven marketing is connected throughout the customer life cycle. 

measuring digital transformation success

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Through the business of digital transformation, marketing gathers the data necessary to uncover new insights to drive more effective campaigns. Messages are targeted to the audience and delivered via the most effective channel. Throughout, the focus continues to be centered on the customer. The customer maintains the primary focus and the tactics are secondary. This is a complete reversal from the roles prior to the digital transformation. Before the digital transformation your marketing strategy might have included leading a generalized customer lead through several stages of content focused on awareness and then building interest by promoting value before presenting offers to drive action. After your digitalization, your marketing meets unique customers on their unique journey. Now marketers look for key actions to signal that a customer has moved themselves from the awareness stage to interest. Digitally transformed marketers structure the conversation to deliver exactly the information the customer needs for their individual stage of the journey. Now, you can expect the marketing function to work as closely with IT and customer service as it does with sales. 

KPIs to Measuring Digital Transformation Success on Marketing

The most critical metric to measure after your digital transformation is the customer lifetime value (CLV). After all, when you put the customer in the center, you should reap the rewards of increased CLV. In addition to CLV, there are other different KPIs you can use on a per-channel basis to measuring digital transformation success. Since your data is now real-time, it’s important to always have a leading indicator so you can see if your efforts are starting to make an impact even if they aren’t yet generating results. 

How the Digital Transformation Transformed Your Sales Function

Once the digital transformation is underway, the role of the sales force is transformed as well. The modern seller is a problem solver for their customers and may only ever engage with them in a digital only environment. The most effective sellers are engaged in less traditional sales activities and more in problem-solving and relationship building and maintaining. Indeed, the transformed sales force probably lives and breathes the CRM as their key tool to manage leads, customers, and close deals. Cloud-based solutions are allowing sales to stay in touch, even when in the field. If you aren’t seeing this change in the sales force, it might be time to touch base with your digital transformation partners for additional training. 

Another thing you will notice in the sales department is an increase in the use of social media. After the turn to a customer-based, data-driven company, sales will use social media more than ever before. No wonder that 78% of sales professionals that engage on social media outsell their peers. And the transformed sales force spends an incredible amount of time listening. As part of the pivot to a customer-focused organization, the sales force uses social media to listen and collect feedback via social media to polish existing sales tactics and formulate new tactics for generating more sales and even more revenue. 

KPIs to Measure Digital Transformation Success on Sales

Digital transformation KPIs for sales should look at conversation rates and customer acquisition costs (CAC). Because your digital transformation has broken down information silos, it’s easy to now compare CLV to CAC and optimize where necessary to keep the proper balance. 

measuring success business model

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The ratio of LTV to CAC is a great measure of the health of a business. This is the metric that truly gives insight into the overall efficiency of the business. When you successfully hold the line on spending while still getting great bang for each buck, you’re in the position to grow. As a rule of thumb, shoot for a ratio in the range of 3:1 to 5:1.

Another metric is the rate of new customer acquisition. The digital transformation has freed the modern seller to focus on acquiring new customers and leverage account based marketing to become a trusted problem solver. With improved insights into the sales pipeline, the team knows where to optimize efforts for the best results. 

Revenue per unit and churn rate are also other metrics to measure your digital transformation success on sales efforts.  

Changes to IT as a Result of Digital Transformation

Your Chief Information Officer will be deploying the technologies to make the transformation possible and integrating updates and new solutions. IT will automate processes that were previously performed manually. For example, sales orders may be converted to invoices upon shipment without the need for intervention by accounting. 

As shown in a recent McKinsey survey, companies with the most successful transformation deploy the widest array of technologies. 

successful digital transformations

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IT is now capturing relevant data. Before the company’s transformation, your company might have been like the average company that collected data but never used it. What a waste. According to Forrester Research, the average company only uses about 12% of the data they collect. Not so after your transformation. Your company will wield data like a powerful weapon to slay the competition. Gartner predicts that by 2022, 90% of corporate strategies will explicitly mention data as a critical asset, but your company isn’t waiting for 2022.

KPIs to Measure Digital Transformation Success on IT

Along with marketing and sales, IT needs to carefully monitor bounce rates. If you figure the average bounce rate is around 41%-55%, then a rate higher requires some investigation. With your digital transformation, your bounce rates should fall as customers are receiving a more individualized interaction based on their needs. If you see your bounce rates creeping up to the 70% range, it’s time to swing into action. The site might be loading too slowly, or images may not be optimized.  

Another KPI to measuring your digital transformation success is the percentage of virtual or digital customer interactions. This is a clear indication of adoption by customers. 

Finally, every CIO is concerned with technology stack use and optimization as well as revenue attributed to digital investments. These KPIs are key to measuring the success of the digital transformation.

Continuous Improvement and the Digital Transformation

The term “transformation” can be misleading. Like “metamorphosis” it indicates a process that comes to a conclusion. To the contrary, a digital transformation is never complete. An unsuccessful transformation may be abandoned, but the successful transformer is always looking for ways to improve the customer experience and drive more brand interaction. 

On a five-stage continuum that ranges from digital resister to digital disruptor, you should strive to keep your company at no less than Stage 3 – Digital Player if you want to merely survive. But who is satisfied with just keeping their head above water? Certainly not the companies that thrive. These industry leaders occupy Stages 4 and 5, Digital Transformers and Digital Disruptors. 

Digital transformers and disruptors

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Even if the transformation is never complete, there’s no time like the present to start. Find out how OroCommerce can help your digital transformation success.

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