Aspire Thought Leadership! Ever wondered about digital transformation strategy?. Find out more on what has changed with digital transformation strateg
No digital transformation strategy can work independently of the orgdigital transformation strategyanization it is built within. Integration is vital to any successful marketing strategy. The key areas to be covered are:
- Customer centricity
- Business model
- Global strategy
- Brand
- Vision
- Culture
- Research and insight
- KPIs
If there is one message to take away from this post it is that your digital strategy must not and cannot be built independently of your business strategy if it is to truly succeed. We are in the technology age and this brings new By the end of this post you will understand how to align your digital strategy with your business strategy.
Opportunities for the digital marketer every month. This means that every digital strategy evolves at pace and so the temptation to move your digital strategy forward independently of the restrictions that your wider organization brings can be too much to resist. In this Post we look at how aligning to your broader business pricing strategy is important and so this temptation must be resisted. We examine some of the areas to consider when ensuring that your strategy is aligned with your business.
Digital transformation strategy: Customer centricity
Many organizations claim to be customer centric, many of those include customer centricity in their value matrix, but not all of these businesses truly make their key decisions with a customer-first mentality. So what? Why does it matter that some do and some don’t? In short, it doesn’t. We are not looking to define what your business strategy should be the important consideration here is that you are honest about what your values are, as that means you can truly work towards achieving your goals.
Being customer centric, in its purest form, means making your decisions around what is best for your customer value proposition. This might mean making some financial sacrifices, reducing profits or creating work that does not directly benefit the organization. If your business claims to be customer centric then a good question to ask yourself is whether you really are putting the customer decisions ahead of the financial decisions. This is not to say that putting your financial decisions ahead of your customer decisions is a bad thing.
There are circumstances where this is entirely appropriate. For example, your shareholders may demand a profit or sales target that you are not likely to achieve without increasing your strategic pricing, or you may not be able to afford the improvements that the customer demands without compromising the financial performance of the business.
According to research by Deloitte Consulting and Deloitte & Touche, customer-centric organizations are 60 per cent more profitable than those that are not and they have lower operating costs (Deloitte, 2014). This may motivate your business to take this strategy seriously but the most important thing is to ensure that your organization is open and honest about its true motivations, as this will dictate your strategy. Building a strategy that is customer centric in order to fit with the business values will create serious problems if these values are not truly lived. For example, a customer-centric strategy may involve setting up a dedicated social service team to ensure a fast turnaround to customer messages. It may involve purchasing CRM software to enable deep personalization and could also include spending money on paid search to ensure customers find the relevant pages, even if they have no commercial goals. If, however, the organization is not actually customer centric then these initiatives may well come under scrutiny for not generating financial value, but it would be too late to remove the people who had been recruited and so your strategy may gain a poor reputation amongst your stakeholders.
It is worth ensuring that your strategy is truly aligned with your genuine level of customer centricity.
Digital transformation strategy: Business model
Your business model could be one of many and ensuring your digital strategy fits into this is crucial. Creating an aggressive e-commerce strategy for a relationship-based B2B business would not be a good fit. Likewise, leading with a pure content and social media strategy for a sales-focused retail pricing strategies is highly unlikely to deliver the sales volumes you need to achieve. It is vital that you therefore fit your strategy to your business model. There are many different definitions of business model and within those there are many models. Below is a list of three common business models, some of their qualities and how they apply to your digital marketing strategy.
Digital transformation strategy: Mass market B2C
This model includes organizations that sell products that appeal to a broad range of consumers at an affordable price. [How to fight a Price War] An example of this type of business is fast-moving consumer goods (FMCG) companies. Selling a large number of products such as food, clothing or toys involves being able to attract a high volume of customers to your website and stores. This means creating awareness through above-the-line advertising, acquiring visitors and converting them into customers. This would also require a robust customer service process. Therefore all digital channels are relevant here.
Digital transformation strategy: Niche B2C
This model is a direct-to-consumer business that has a highly targeted service. This could include products for people living with a specific disability or products to ultra-high-net-worth individuals. Whilst this model also appeals directly to consumers, it works with a specific niche such as those in a specialist trade or ultra-high-net-worth individuals. Using broadcast media is not relevant in most of these scenarios as the majority of the viewers will not be potential customers. Creating trust and advocacy is essential, however, so a deep content strategy and first-class experience are crucial to success.
Digital transformation strategy: B2B
The B2B model includes organizations such as wholesalers or technology resellers that are selling directly to other businesses. Here you are dealing with other business people rather than end consumers. These business people are of course still individuals and it is important not to forget that human psychology still applies. They do, however, have very different expectations. You may be seen less as a brand and more as a supplier, which creates a very different relationship. Your customers may be more cynical or aggressive than B2C customers as they have specific objectives and goals to achieve. You may find that traditional marketing messages and sales techniques are less well received. Therefore the focus should be more on relationships through CRM, content and direct value-added discussions rather than through advertising. It is still important, however, for these customers to be able to find your site and the information they need to get to.
Within these broader business models there are of course many specific models. A B2B IT company may be a hardware product provider or a service support provider. The service model would require more of a focus on screen sharing and CRM whilst the product model would require more of an acquisition and conversion focus. A B2C model may be simply to sell products at a significant margin or simply to gain traffic in order to make advertising revenue.
Digital transformation strategy: Freemium
One interesting trend in business models in recent years is the freemium model. This model has grown in popularity and is essentially the method of attracting users by giving a percentage of your product or service for free and offering a more interesting, deeper experience for a price. A good example of this is the music-streaming industry with businesses such as Spotify and Deezer employing this technique. One other point here is that business models can shift and shape over time. There are many examples of this such as IBM, but there are also some more recent changes in the digital space.
Global strategy
Globalization can be a very challenging process for any organization. It can also take some companies by surprise as they outgrow their initial local plans. This brings cultural, language, process and many other challenges. With the growth of digital, almost all businesses have an international presence through the internet even if their target audience is very localized and so some aspect of global strategy should be included in almost every digital strategy even if that aspect is to ensure that global presence is minimized.
Culture
There are many cultural differences around the world, too many to count, and the relevant ones must be understood when building a global strategy. This can range from religious beliefs to manners and it is impossible to know what we don’t know – so doing your research is important here. For example, did you know that Mexicans celebrate New Year’s Eve by eating 12 grapes at the stroke of midnight? That the colour red is lucky in China? That Suriname’s land is 91 per cent jungle whereas there are virtually no trees left in Haiti? These facts can affect your copy, conversations, brand and many other factors.
From a digital perspective there are several cultural considerations. You should look at whether each region you are targeting responds well to buying online and, if not, whether your strategy should focus on thought leadership, brand awareness and directing people to your offline conversion channels. Understanding the penetration of smartphones and tablets alongside mobile coverage will also influence your different pricing strategies. For example, at the time of writing, Google’s Consumer Barometer tells us that Norway has 79 per cent smartphone penetration whilst Japan, perhaps surprisingly, has only 54 per cent (Google, 2015). This could mean that moving to a responsive website is more or less of a priority for your business and you may not require the app that you have budgeted for. You will also need to understand broadband speeds and coverage as this will dictate how fast your website and off-site content will download and, therefore, the design of your assets.
Lifestyle points such as working hours and average commute times will influence your targeting and customer support programmes. Even weather, which is not cultural itself but does influence culture, is an important factor to consider as it will affect the amount of time spent indoors (near computers) and outdoors (on mobile or offline). It is also important to understand that the digital landscape may be very different in territories away from your local country. In Europe and the United States you would most likely consider Twitter at the core of your micro-blogging strategy whereas in China you would be more likely to need to look at Sina Weibo. Thoroughly researching cultural points and ensuring you are working with, or at least speaking to, local people with strong knowledge are important considerations – getting this right can be incredibly powerful and getting this wrong can be extremely damaging.
Language
Language is perhaps the most obvious consideration but one that must be considered very carefully. To give a potent example of how important this is, some organizations have been guilty of not considering language when creating their global brand and identity – leading to a name that, when translated, has been found to mean something rude in other countries. There are many examples of this and it leaves your business with four very difficult options: don’t trade in that country, create a separate brand just for that country, change your brand name entirely, or do nothing and accept the damage and criticism. The prouder leaders often go for the last option, whereas option two is perhaps the most sensible. Some interesting examples of this are that Galaxy chocolate in the UK is known as Dove in many other countries; Burger King in Australia is Hungry Jack’s; and T. K. Maxx is the international name for the company that is known as T. J. Maxx in the United States.
For digital marketing, language is clearly important when considering digital presence. This is not only in ensuring that our call to actions are correct and powerful but also in dealing with languages with different characters to our own. For example English, Russian, Mandarin and Arabic are all widely spoken languages but all use different characters that need to be accounted for. This can create tricky design challenges when building your site.
Payments
This is a very specific category but one that is worth highlighting as it can dramatically affect the result of your digital strategy. Payment methods are often overlooked when constructing a global penetration pricing strategy but it is very dangerous to assume that the world uses the same methods. Even countries that you would assume are very similar to your own may in fact be very different. One example of this is Germany where roughly 80 per cent of transactions are conducted in cash. For comparison, this figure in the United States is less than 50 per cent (Bagnall et al, 2014). Germans hold roughly twice the amount of cash in their wallets as people in France or Australia. This behaviour is of course vitally important to appreciate when developing an e-commerce strategy.
Brand
Your brand is one of the key parts of your business that you must align with at all times. This is understood by most people and so I am sure there is no need to spend too much time convincing you that this is the case. There are, however, some vital reasons for this that are worth examining. I often talk to people about how considering your company’s brand as a person can be a powerful framework. [mindfulness in the workplace] The values of your company are like the values that you hold yourself. You may try to be polite to everyone you meet, you may be someone who wants to achieve a lot in life and you may be always looking to learn more and grow your knowledge. These values in a business could be translated as service, sales and innovation and they create the personality of your business.
Further, your brand has what non-marketers often consider a brand to be a visual identity. What is your logo and how does it look in different scenarios? What is your colour palette? How do you design your materials? Again, this could translate into what do you look like, do you keep fit, how do you dress and what are your favourite colours? By combining your values and visual identity you create your personality and look, and therefore your brand. When you assess whether something strays from this brand you get a very easy to understand perspective about whether this feels right or not.
Values
As we have just discussed, the brand values of your organization are its personality, and having a consistent personality is important to enable consumers to understand you and therefore believe in you. Your digital strategy must therefore stay true to these values and to how they are expressed elsewhere (unless how they are expressed elsewhere is poor and you can drive improvement in those areas).
Visual identity
Your visual identity can be difficult to control and easy to compromise online and so discipline is important. There are many opportunities to stretch your logo or tweak your colour palette to fit in with another website or digital opportunity, and staying true to your guidelines is vital here wherever possible. Compromising your visual identity can create a lack of trust as you can appear less like an organization that is in control. To that point it is key to remember that your guidelines must work for digital. It is certainly less true now than it was 10 years ago, but some guidelines still are not built with digital in mind. An understanding of accessibility rules for colours, challenges around using your logo on other sites such as affiliates, and creation of logos or icons that work in limited spaces, must be built into your guidelines. Your identity may already be in use in newspapers, on television, in direct mail and on stationery. Your consumers will be seeing these in their day-to-day lives and so ensuring consistency with these is vital. Further we look at how consistent messaging at every step on your digital channels, such as paid search, creates a far more powerful result – and the same is true of your brand.
Innovation and pushing the boundaries is important, especially in digital, but not at the expense of a consistent face of your business as this will be detrimental to your organization as a whole.
Vision
We look at your mission and how you build your goals and objectives from this to effectively plan the delivery of your premium pricing strategy. Sitting above all of this, however, is your vision. This is the statement that must embody everything your business is striving to achieve and everything it represents. Your company is likely to have a vision in place and if not you should consider whether it is appropriate for you to review this with your leadership team. This summary of what you stand for can be powerful when talking to investors, shareholders and customers alike. Whatever your company vision, it is important that every strategy within your organization fits within this vision, otherwise you run the risk of delivering something that does not align with the direction of your business.
A vision would read something like this:
‘To be Earth’s most customer-centric company; to build a place where people
can come to find and discover anything they might want to buy online.’ (Amazon)
‘To bring JOY to the lives of our customers, whether they are kids or kids at heart.’ (Toys’R’Us)
You can ensure that your strategy aligns with your vision by adjusting some of your goals, channels and messaging. Using the above examples your strategy could be adjusted as follows. If you were building a digital strategy for Amazon you may want to ensure that you have robust service response processes in place on social media and through other channels and you should consider everything we discussed above on customer centricity. You should also be focused on creating a deep level of personalization to be able to deliver the latter part of the vision.
For Toys’R’Us on the other hand, you would want to look at how your site can create enjoyment through the experience of accessing it and to ensure that there are activities for all ages. Understanding the needs of children as well as the adult shoppers is also important in order to be able to create a fun and therefore enticing experience.
So we can see from this that the focus for Amazon would be on personalization and service whilst for Toys’R’Us it would be on content and experience. This is of course oversimplifying the facts, but it is clear that aligning to these visions will have an impact on your strategy.
Culture
The culture of your business will likely be unique. Every business builds its own culture from the day it launches. This culture stems primarily from the decisions and behaviours of the leadership team. It also, in turn, stems from HR policy, office layout, growth plans, recruitment, location and many more factors. This culture has an effect on everything you do as an organization. Your culture may encourage your staff to be hungry for career success and willing to take risks to show they have what it takes to be the next leaders of the business. It may on the other hand simply encourage staff to be careful and try not to cause any issues and risk being fired. You may have a culture that drives towards growth and therefore a high percentage of sales-focused employees, or you may be comfortable with your market position and therefore have staff who are excellent at service and the softer skills of customer relations.
The culture of your organization will have a direct effect on your digital strategy for many reasons but some specific ones should be considered. If your business is a results-focused business then this suits channels such as paid search very well, as it is performance focused and relies on enterprise data management to accurately track performance. If your culture is not performance focused then you may find that this allows more flexibility for your content strategy but this may frustrate your paid search team. If your business is highly focused on service then ensuring that social media is fully set up for customer service, has robust procedures in place, is aligned with your business processes and is fully resourced are all vital considerations.
Whichever culture your business has it should be positive and energizing. If it is not then you should at least be trying to create that within your area.
Research and insight
Research is a driving force behind any strategy and so understanding what your data is telling you is vital to the success of your strategy. You may have a specific research function and separate insight team, both together or neither. Whatever the capabilities within your organization it is important to bring broader research into your digital strategy. Figure 2.1 is an interesting piece of digital research that clearly demonstrates that the percentage of consumers buying online is, in most countries, far beyond the percentage of businesses selling online. Understanding this data for your specific market will allow you to understand where the gaps are for your artificial intelligence in business to exploit.
The data you gain from your activity will inform future plans and tactics and even the shape of your strategy. This data, however, has one main restriction that takes two forms. This restriction is simply that it can never tell you what it doesn’t know. That may sound obvious but when we look at the two forms we can begin to understand why the broader picture is vital.
First, your data cannot tell you what has not happened yet. But how can you build a strategy without understanding what is going to happen? By gaining insights into your customers’ and consumers’ behaviours, understanding what motivates them and how they respond to other materials, you will be able to gain an advantage that will set your strategy on a positive path from day one. Second, your data is digital and so is not tracking anything outside of your digital marketing. You may be able to use search volumes to give an indication of the success of a television advert but you cannot see directly what people thought about your creative. You may be able to see a peak in response rates when you send an e-mail about a specific product but you cannot see whether people think your competitors’ products are better. By using both qualitative and quantitative research from across the organization you can understand buying patterns, interests, competitive analysis, creative feedback, customer behaviours, primary areas of dissatisfaction and many other data sets that would otherwise be unavailable to you at the start of your strategy or even when it is very mature.
Quantitative research is usually used when trying to gather data to validate a hypothesis or support a business case. This is the type of research that some would consider more ‘real’ in terms of there being a clear story backed up by undisputable facts. The limitation of quantitative research is that whilst it can give you a clear view of the ‘what’ it does not always tell you the ‘why’. So if 100 people were to visit your website from a competitor and 300 from a news website then you will be able to make some decisions about media buying such as whether to continue your display advertising on the news website and expand to other news sites or whether to put more resource into competing with your competitors more effectively on the search channel. Without understanding why this happened, however, you cannot get to the bottom of the issue and therefore cannot understand if this will be an ongoing trend or a single peak.
Qualitative research has quite the opposite challenge. With this research method you can gain a deep understanding of the motivations and thoughts of customers and consumers. You can understand what they like and do not like about you or your marketing materials. You can understand what excites them and what really gets them down. You cannot, however, directly apply this to sales. If someone says they don’t like your advertising then this does not necessarily mean that they will not buy your product.
One commonly used research method is therefore to use both qualitative and quantitative together. An example of this is to circulate a data collection method such as an online questionnaire in order to gain quantitative data from which to construct a qualitative piece of research. That research would then be gathered from the same participants and the data could tell a more compelling story [Big data in retail].
KPIs
Key performance indicators (KPIs) are an essential method of measuring the success of your campaign. The reason for taking a quick look at this now is to ensure that, when building your reporting and dashboards for your campaign, you align the measures of success with those of the business. We have discussed that there are different business models with different objectives, visions and cultures. These will ultimately dictate what the business KPIs are – and if you are going to ensure that your strategy is accepted by your decision makers and is perceived to be a success then you will need to be shown to be delivering what the company needs to deliver. As well as this consideration you will also need to be agile enough to align with any changes to the company’s KPIs that you may not be expecting. It is entirely possible, and in fact quite common, for a business to change its primary goal, for example, from acquiring a large volume of customers to maximizing profit. This could be due to market conditions, shareholder demands or activity by the competition, amongst many other factors.
Business KPIs could come in hundreds of different forms such as customer numbers, customer satisfaction, profit, sales, retention and share price optimization the more top-level metrics that determine the success of a business in a given period.
We have looked at a range of factors that must be considered if you are to align your digital strategy with your business strategy. It is vitally important that you do not build your strategy independent of the wider business, as that will give it a high chance of perceived failure or actual failure. We examined whether your business is truly customer centric, what your business model is and what traits that might create and how to work with a global strategy. We looked at your brand and vision and how they might impact your plans. We examined how the culture of your company has an impact, how research and insight can provide some vital information and how aligning to the wider KPIs of your business is vital to ensure that your story is consistent with that of the business.
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