Customer-driven digital transformation

By Cassandra Mascarenhas

The modern digital customer has unleashed the emergence of digital enterprises in the market landscape. This new type of customer is always connected, makes informed decisions and demands top-level experience. The numerous upcoming digital enterprises catering to these needs are technologically driven, are redefining customer experience and are permanently disrupting entire industries across the world.

CEOs and other top corporate personnel, witnessing this digital transformation or even complete disappearance of other industries, are now keen to understand their place in the digitally-driven era. 

It was these issues and more that were addressed at a top-level CEO Forum titled ‘Customer Driven Digital Transformation’, held by the Daily FT in partnership with 99X Technology earlier this month, which was attended by the heads of some of Sri Lanka’s biggest corporate entities. 

The keynote was delivered by representatives of Scandinavian-based Netlife Research, who drew upon their own expertise in working with European corporates in ushering them into the digital era through strategic digital investments and adoption of new technologies, to show the massive impact that it finally has on the bottom line.  

The CEO Breakfast Forum commenced with an insightful introductory presentation 99X Technology Co-Founder and CEO Mano Sekaram into how the digital revolution came to be. 

Waves of emancipation

Sekaram observed that just a few decades ago, people and businesses were cocooned in the analogue world, time-bound and hemmed in by physical boundaries. Yet, the introduction of PCs in the early 1980s signalled the beginning of the end of this analogue world. 

“The introduction of the PC brought about the first wave of emancipation – the wave of early digitisation. The second wave saw physical boundaries vanished and then came the third wave, that of social media, which made all our lives so open. What really happened was that we became gatekeepers of sorts, with strong opinions about various things,” he stated. “We even saw social media changing governments. The fourth wave was all about mobile with smartphones connecting everyone and allowing the instant dissemination of information.” 

Bankruptcy and disruption

Today’s leading companies are already becoming obsolete, he cautioned, and noted that those in the corporate industry are now worried about what is haunting them – it is nothing other than digital disruption.

Sekaram drew upon the example of the American company blockbuster, which had over 60,000 employees and 90 million customers – before digitisation hit it. Interestingly, Netflix approached them in 2000 but Blockbuster turned down the offer to purchase it. Blockbuster went bankrupt by 2010. Kodak is another similar example, “The Google of our time,” said Sekaram. In 1975, Kodak invented digital photography but kept the technology hidden as the company’s management felt it would affect their razor-sharp strategy of low-cost cameras and immense profit on the sales of film. 

“Uber, Facebook and Alibaba are examples of companies with disruptive business models that are changing entire industries. Airbnb has transformed the hotel industry, adding 20% of rooms into the tourism country in almost every country. Disruption is knocking at our door. Every industry is under threat – from music to banking to utilities,” he stated. 

Drivers of digital transformation

There are several key drivers of this digital transformation, Sekaram noted. One is consumerisation, the rise of the middle class in every country and the commoditisation of products and services. Another is SMAC – social media, analytics and the cloud. Customers also increasingly demand ‘omnichannel retailing’, a multi-channelled approach to sales. Then there are the millennials, he said, who are driving the digital transformation along with the next generation of consumers.

“20 years have passed and yet for most companies, digital is on the side lines because digital is still an experiment. We are still living in the physical world and are trying to replicate this in the digital world, and make it work. We need to react ‘digital-first’. That is a challenge and that is what is difficult because we have so much legacy within our physical world. Digital strategy is not driven by IT people, it’s driven by boards and the heads of organisations,” Sekaram stressed. 

He ended his presentation on a cautionary note: “It takes 30 seconds for a customer to make a decision – if your digital strategy is not customer-centric, you will have problems facing you in the near future.”

Fundamental digital strategy 

The speakers from the Norwegian digital agency Netlife Research, Co-Founder and Principal Consultant Jostein Magnussen and Head of Product Development Nikolai Strandskogen stepped up next to show how a properly executed digital strategy can transform a business in any industry. 

“We don’t just redesign websites. We change organisations. In our line of work, we have seen that in a lot of cases, a company can be given a glossy new website but if the organisation itself is not changed to support that new content and revamped transaction models, chances are that they won’t succeed. Without a fundamental digital strategy, your digital forays may fail,” stated Magnussen.

To switch into a more customer-focused organisational framework, Magnussen recommended following Scandinavian design tradition – practical, beautiful, minimalistic and easy to use – a winning strategy to follow when building digital products. 

“According to the MIT Sloan Management Review, digital mature companies are on average more profitable than their competitors in every industry,” revealed Strandskogen. 

He noted that to make a great digital solution, you first need to map the behaviours of customers. Strandskogen drew upon the example of a company they worked with, Norwegian Airlines, where they looked at all the different customer touch-points and then redesigned the company’s website and entertainment system, taking into account their findings from the research conducted into consumer behaviour. 

Digital pressure

“Your companies are under digital pressure – you’ve heard this story before. In the banking industry, players like Moven are coming in building a top layer on the banks. Hipster insurance companies are connecting people and allowing them to insure other people’s things; people can do this without even being an insurance company. There’s a line of disruption which is quite interesting,” Magnussen noted. 

“What are these disruptive companies really doing?” he questioned. “They don’t have revolutionising technology or huge organisations with business people. They simply fix problems for people, they make it easier to have a taxi, run a taxi, rent out homes. They are really customer-centric and their weapon is the better customer experience that they deliver.”

Tips to digitisation 

Magnussen shared a few tips to keep in mind when looking to enter into an organisational digital strategy. 

Firstly, he explained that as an organisation, companies need to shift their world view – most look at their companies as the centre of the universe. This gives them no personality and no customer engagement. “You are among many competitors and it’s the customer who is the centre of the new economy.” 

Secondly, pushing out nice photos through a website will not engage customers. Focus on the top tasks of the user when they visit your website. Cut out every sentence that is not of use to the customer. 

“Never use American corporate websites for inspiration!” Magnussen warned. “They have no personality and they all use carousels, expect users to sit and wait for the carousel to show them new images. Tools like carousels are used as appeasers to keep everyone from beating the crap out of each other.”

Forrester Research looked at the best companies in customer experience in the US and surveys showed that these companies have enjoyed a 22.5% rise in stock development, he revealed. When companies were asked if they were customer focused, 90% responded yes. Yet, when the customer was asked the same question, only 8% of customers said that companies deliver on their promise. 

The four levels of going digital

The duo from Netlife Research then shared some actionable points for corporates. “Eat your own medicine!” Magnussen recommended, sharing an example of an Italian company that made their employees fill out the same forms their customers had to fill out and they struggled to do so. 

He then stated that when looking into adopting a digital strategy, the organisation must first look at transforming from digital chaos to the second level, by having regular meetings with the digital teams. The third level is more goal driven, using KPIs to drive the digital transformation to the fourth and most vital level – innovation. “Innovation is a chaotic digital environment is a waste of money,” observed Magnussen. 

Put your money where your strategy is – companies change their strategy every one to five years but they don’t change their budgets. “If you mean really take digital seriously, look at your budgets and see if it supports the new strategy.”

He then stressed on the importance of having a digital manager within the organisation. Most teams are silos – the IT, marketing, communications departments – and they rarely communicate with each other, which can result in overlapping efforts. Magnussen drove home the need to have a digital team comprising people with different skills – user experience architects, designers, developers, business people – to work together, headed by a Chief Experience Officer or a Digital Officer. 

“We’ve been working with going digital like doing a relay – someone writes a specification, someone else writes a concept, which is delivered to designers, then to IT for development. You need cross functional teams, people sitting together and developing these products,” he said. Magnussen also highlighted the need to educate the boards of companies. 

Psychology of consumers 

He came back to a point previously underscored, the need to understand the psychology of the customer. He looked at the paradox of choice, delving into a research conducted into how people make choices in grocery shops. If consumers are given too much to choose from, people actually don’t make a choice. If there are 100 types of jam, they will choose the chocolate spread instead. 

“There are companies that really use psychology to drive sales. Booking.com is an example of this where they operate through mechanisms like ‘there are eight people looking at this room right now, only one room left!’ Booking.com uses every trick in the book in psychology to push the customer to do what they want them to do without changing their behaviour,” he explained.  

When working with one of their own clients, Netlife Research has asked questions from users, then created a website answering all those questions and cut out all the pages that didn’t answer any questions – after deleting 80% of the pages on the website, the company had 80% increased sales. “We must love the delete button more. We add stuff all the time – new pages, apps etc. but we rarely delete stuff.” 

Google search is the best example of simplicity, Magnussen noted. Google has so many apps but the most complex web service in the world is so simple. “That’s more how you should think when you design your website and other digital channels. How do we sell without banner ads? We thought of the customer journey – they come to pay bills which is not a fun task – so we started showing them ads after they paid their bills and this increased conversion by five times.”

“You need to find the overlapping point between business goals and customer needs. A lot of businesses look at their goals but the user may have other needs. What you really need to do is combine them, do analyses to understand the customer. Think about all the customer touch points and use different methods to get to know the customer,” Strandskogen stated. 

Have a customer journey map, he recommended. Think of how you could offer really good customer experience. Sit with clients and see how the customer uses the webpage, test the webpage on a lot of different devices, establish tools and success measures. “What we really want to know is what does the customer come for to the website? Did he accomplish what they came for and if not, why?”

Innovate!

To innovate, companies need to zoom out to get a new perspective on what they actually do as a company, Magnussen said. He noted that cars have been the same for nearly 100 years, until along came the Tesla. They said: “We aren’t building a car, transportation is our business.” They think of their car more as a service and their brand as an ecosystem, and not merely a physical product. Tesla has their digital team building their own cars, their own power stations with the same experience in the digital sphere – they think of themselves more as a service provider than a car provider.

Taking the banking industry as an example, he stated that banks need to think of their ecosystem in a way that offers customers financial help to achieve their goals and dreams. “The inspiration for the banking industry should actually be health apps instead of other banks. The health app industry works with changing behaviour, they try to budge people to take the right choice in their behaviours.”

He drew upon yet another fascinating instance of a company that zoomed out to get a fresh perspective, that of Norwegian paper that used to deliver their paper to over 10,000 subscribers. To innovate, they combined the person delivering the paper with the need of people wanting to have a nice breakfast. The same man would deliver their breakfast and the paper – and the company built a digital platform to enable it.

Never underestimate the advantages of buying disruptive companies: “Before we were discussing how we could eat them for lunch, now we have lunch with them! With new business models, they have the power to build products that you don’t have, so try to buy over these disruptive companies,” noted Magnussen.

Pix by Daminda Harsha Perera and Upul Abayasekara