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Today, from casual communications to driving, everything has become digital and with it, the word ‘digital’ has become the disruptive buzzword of our times. For the last couple of years, this has been impacting business. There is a reign of uncertainty everywhere as winners are not doing things differently anymore, as they have switched to do different things altogether. Business success is now powered by the multiplier effect of analyzing, experimenting, and collaborating in new and novel ways to bring about utilitarian innovations in all aspects of life. This is where the wave of digital transformation is leading us.
Although at the heart of digital transformation lies the customer, how would it slowly replace the traditional methods of doing work that would positively impact the customer experience is the challenge. The ways to overcome this challenge in the best possible manner is the deciding factor in today’s industry. How can digital transformation be used in fostering customer experience by leveraging all the elements of business is the winner’s key as well as the Achilles heel.
Although digital transformation happens in the three main elements of business, namely the customer’s experience, operational process and the business model but the bottom line always remains to be the enhancement of customer experience. Thus the challenge crystallizes to how all these three elements can be leveraged to bring about an enhanced and all round holistic customer experience. Let us investigate the challenges and find out ways to enhance customer experience, the most important element of business.
Simplifying customer experience models
The key elements that digital transformation influences and is influenced by are changes in the business model and the operational process which aims at enhancement of customer’s experience. This demands many factors and the prime among these is agility of any organization. In an era where a mortgage loan takes just few minutes to get approved, the organizational processes need to be agile. They need to change so that they can accommodate and innovatively compete with the external changes. This requires that the rate of change of changes has to happen faster. For this to happen all the processes of the organization has to work in tandem in reacting and preventing the changes in the environment through constant analysis, experimentation and collaboration.
In this exercise, it is quite inevitable that there has to be a change in all the functions of the organization and they have to be measured in terms of the experience of the customer. In reality, many organizations feel that they have adopted these changes and have become agile as they incorporated few of the agility principles like test and learn or the PDCA (Plan-Do-Check-Act) cycle in few of the operational models or in the cross-functional teams. Most often, it is true for part of the processes and the change may not permeate throughout the organization. Thus, in many cases, the organizations reap the results of digital transformation partly when it comes to customer experience.
Although the change has to happen, keeping in mind the goals relating to the end user, a constant analysis of the overall situation with continuous measurement for improvement would keep the agility improving. Loopholes are often noticed in coordination between IT, Legal, finance, HR, and the back-end processes. This makes a great dent in the overall customer experience. An example would be, a customer may have had a splendid experience but for some reason, he may have opted for a refund.
Because of lack of communication between customer service, back-end processes, and the finance department, there may be a delay in refunds that might make the customer dissatisfied. Thus, although the company might have managed to satisfy the customer in their overall journey but have failed at the last touch point. If you are not agile throughout, then there is no agility and after all the customer experience gets affected. This is what may create a problem in this age of disruptive technological innovations and instead of being a competitive advantage, it can prove to be the Achilles heel.
Thus the change through digitization has to happen in tandem with all the digital efforts harmonizing under a common vision that percolates to all the levels of the organization. The three main elements identified in the process of digital maturity of any organization are described below.
1. A vision for transformation
When there are rigorous changes in the organization uncertainty creeps in, with a lack of clarity in the minds of people. This can create resistance to change and bring in impeding factors that may prove to be a hindrance. Thus a fundamental prerequisite is having a vision strong enough to enable the change and communication of it to the people, how different the organization would be in the future and in what aspects, becomes imperative. This would help the organization members understand where they are heading and which former values and assumptions may not be valid in the new model. What is even more important is the communication of the services, the company renders to the end users and how that affects the lives of the customers. This helps the employees to redefine their roles in the new environment. The whole organization should be aware of the changes they are attempting to make in the takeaway of the customers.
2. Building digital capabilities
There is a need of change in the governance, not only digitally but functionally and principally as well. This ensures that the new coordination mechanisms adopted are tested, verified, and retested to optimize results. Many organizations appoint a central cell or a digital transformation team to assist, regulate, and coordinate in building the digital capabilities. Few organizations are also noted to appoint a group or divisional level, Chief Digital Officer who reports directly to the CIO or the CEO. The group level CDOs coordinate with the central unit constantly and hold joint meetings to gauge the organization-wide change in optimizing the business performance metrics.
3. Engagement of internal and external customers
Most often than not, many factors become an impediment to change. The conservative culture of a company, resistance to change, unions, etc. may prove to be hindrances. How these factors can be conglomerated to bring about the change with the maximum engagement of internal and external customers are a deciding factor. In this attempt, many organizations use worker’s participation in management decisions and attempt to break old styles that are often necessary. This requires planning and foreseeing of the outcomes of the decisions taken.
Although IT drives the change, the impact of it goes to all sectors and stakeholders of the business. The more the digital maturity of the organization the more the organization gains from the digital advantage. The digital intensity should be introduced around the commonalities of the interdependent departments that exploits complementary capabilities and mutually supplement the loopholes. This should be brought about by a harmonious combination of digital capability and efficient management. A shared understanding between the CIO, CTO, and all the department heads is a necessary prerequisite for success. This helps in furthering the digital transition, agility, and speeds up the rate at which digital transformation reaches maturity. This, in turn, helps in maximizing the revenue returns of a company as well.
Transition to digital transformation
One of the best practices that companies can adopt is to select a cross-functional team of digital specialists and functional experts who are agile in their own processes and work. This team often referred to as the war-room team can then formulate measures, hold departmental meetings, assess, analyze, and implement the whole digital transformation process in parts. A step by step approach is outlined below for the war-room team to formulate and implement the digital transformation process.
1. Coordination with department leaders and setting expectations
After the war room team is formulated the next step for them is to work with the marketing, sales and other departments to align departmental objectives in tune with the organization’s goals. Subsequently, the war-room team goes ahead and establishes the ground rules of the organization and documents the policies. The agile culture of the organization has to be formulated keeping in mind the speed, collaboration, experimentation, avoidance of casual business routines, organization’s adaptability of change, and most importantly the ability of the organization to put the customer first.
2. Analyzing data to improve customer experience and identifying opportunities
The second task of the team is to develop insights based on analytics and the vision of digital transformation. The aim should be to identify pain points, anomalies, and issues that customers face and the opportunities that are presented in improving the customer experience in their journey. The ideal practice is to deliver a report of each day’s work and set targets for the next day to accomplish tasks faster.
3. Designing of solution models and prioritizing tests
The ideas for improving each experience of the customer and resolving the issues along with taking advantage of the opportunities in the identified areas come next. The ways to improve on the issues and testing mechanism for the ideas suggested are formulated. The testing models and the KPIs (Key Performance Indicators) for each hypothesis are subsequently prepared. The potential tests are then prioritized based on the impact on business and ease of implementation. The higher priority ideas are then tested and verified and the KPIs stipulated.
4. Running the tests
The tests are then run for one to two weeks and are validated to see whether the prescribed KPIs are obtained and to what extent the approaches have been effective. This can be followed by A/B testing to see whether the alternative ideas are more effective. An example would be whether an offer for a particular segment of customers or a change in the call to action plan works better. These kinds of efforts help companies to increase levels of customer satisfaction, engagement, and conversion rates.
5. Iteration and finalization of the ideas based on test results
The war-room team must effectively track the mechanisms improvised to report the performance results of each test. The feedback from all the concerned departments, customers, and the stakeholders should be analyzed and decisions made within a stipulated deadline.
For the purpose of making the organization more agile the war group teams should be focused on a single target at a time like customer acquisition, decreasing complaints, increasing conversion rates, and the like. When each of the groups work with running and testing ideas, the feedback and the impacts on the whole organization can be observed and assessed. Subsequently, more war groups on the improvement of different aspects of businesses can be added to accomplish the whole task of digital transformation that addresses all the issues and concerns that arise.