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This four-part series aims to help executives better understand how to succeed in digital transformation. In part one, we identified three critical pillars of success:
- The right strategy, culture and partner relationships.
- The adoption of sophisticated cloud marketing technologies.
- A direct-to-consumer brand digital commerce channel.
Here in part two, we’re focusing on the first pillar: strategy, culture and partner relationships.
As co-leaders of a digital customer experience company, we’ve found that with both leading and aspiring brands that are undergoing a digital transformation, management teams commonly focus on the technology required (e.g. customer experience management software, such as Adobe or Salesforce) to enable the types of customer experiences they envision.
However, CEOs and CMOs need to be careful that their strategy drives the digital transformation—not the other way around. This means thinking through the cultural and talent shifts needed to bring these strategies to life and working effectively with these new technologies. Additionally, brands must consider how to work with partners to support these initiatives and augment the brand’s existing capabilities.
Work backward from strategic goals
Digital transformation starts with clearly articulated strategic goals. When brands are clear about their goals, they can determine how digital can accelerate those outcomes. For example, do you want to hold onto existing customers or attract new ones? Are you seeking to open new market segments? Is it preferable to boost average revenue per order or maximize customer lifetime value?
The strategy will come from a deep understanding of your brand’s customer base. Brands that put their customers’ digital journeys at the heart of their business model—and possess the data and analytic tools to pinpoint proprietary insights from customers’ digital behaviors—can turn those insights into initiatives that drive higher conversion rates or customer loyalty, for example.
Case-in-point: MGM Resorts was able to cross-sell their entire Las Vegas portfolio by stitching customer data across all properties and finding ways to personalize offers during a guest’s stay. For instance, if you bought tickets to the UFC fight at the MGM Grand, you might get an instantly personalized email offer for tickets to a Guns N’ Roses concert at Mandalay Bay the following evening. They also can test offers to see which ones deliver higher conversions and then automatically shift to the most effective tactics.
While digital strategies offer exciting new ways to scale marketing outcomes, the key is being able to adapt the organization to the underlying opportunity, which comes down to company culture.
Transformation culture must embrace change
Culture in the context of digital transformation refers to changes in organizational talent to achieve digital objectives, business processes that are more agile and decision-making that fosters experimentation and embraces some element of risk.
We often tell our clients that success is 5% about technology and 95% about culture. That is because buying technology is relatively easy, but changing company culture is not.
It may be necessary to slow down digital transformation at first to invest in the right talent and training and to evaluate platforms, processes and partners. Executives have to take risks on the people side. They cannot acquire sophisticated technology suites and expect a legacy team to deliver the ROI from them without the right level of support, know-how and empowerment.
Consider Domino’s Pizza. Almost a decade ago, then-new CEO J. Patrick Doyle reinvented the company around its digital customer experience. Today, you can order a pizza through your device and track its progress from oven to doorstep. To execute this strategy, the company made massive changes in its organization. Half of the 800 employees at its Ann Arbor headquarters work in software and analytics, and they’re instructed to experiment with new ideas, even if short-term failure results. The outcome was their stock price appreciated 10 times during Doyle’s near 10-year tenure.
It’s worth observing that brands like Domino’s are able to connect these digital initiatives across relevant functions, breaking down silos to achieve their desired outcomes. While the idea for a new strategy may begin with the marketing department, IT, supply chain and finance must also coordinate to ensure the data, resources and institutional knowledge work together to stand up to these programs. This explains the rise of new roles such as chief digital officer and chief growth officer, positions designed to pull teams together so that transformation can take hold.
A new breed of digital transformation partner
Few companies are equipped to carry out a digital transformation without outside support. It is too hard to recruit, scale and maintain the expertise required to take on these monumental projects and keep up with the rapid change of pace in technology and software platforms.
Successful digital leaders effectively select and utilize partners that understand emerging technologies. The support required might include strategic advisory, content creation, tech engineering or data science to drive analytics programs. Just like brands need to maintain a technology stack to deliver digital transformation, they also need to align the right partners around a services stack.
When considering a relationship with a partner to support these transformational activities, companies need to keep a few criteria in mind:
Strategic business thinking
Partners need to understand and help translate the business strategy into the customer experience, back-end systems and front-end design.
360-degree data integration
Data must be at the heart of every aspect of the customer experience. Partners should offer the expertise to help brands build that foundation and drive insights from the data collected.
The ideal partner has capabilities across a range of leading marketing technologies so they can implement the systems that are best for the client. Find a partner that has truly mastered these technological ecosystems.
Digital transformation initiatives succeed or fail based primarily on an organization’s choice concerning strategy, culture and technology partners. Brands that choose a partner that aligns with their overall strategic goals will save time and costs and reduce risks.
In our next article, we will explore how brands can leverage technology and big data to deliver the holy grail of customer engagement: personalized marketing at scale.