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Developing CX Strategy in the Age of Digital Transformation Blog Feature
John Zimmerer

By: John Zimmerer on May 18th, 2020

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Developing CX Strategy in the Age of Digital Transformation

Strategy | Customer Experience

Digital transformation requires more than simply integrating new digital technologies. True digital transformation translates to overhauling processes, re-architecting operations and reimagining products and services. But are companies truly considering the customer in their digital strategies?

This is the age of the digital customer, an era where 79% of customers have used a digital device to make a purchase. In one study sponsored by Seagate, IDC research predicted that two-thirds of CEOs worldwide would focus on digital transformation by the end of 2019. Meanwhile, 85% of company decision-makers recently reported in another study from IDC that they have an average of two years to affect meaningful digital transformation before they risk suffering financially and fall behind their competition. Seriously? What have you been waiting for?

Many business leaders begin with the obvious low-hanging fruit: digitizing manual, analog processes such as contracts and customer communications. However, these efforts tend to be internally focused and limit the scope of digital transformation to increasing operational efficiency. That’s not a bad place to start, but that should not be the end, as otherwise, companies risk leaving customers behind in their strategy.

Improving customer experience is more than a priority: it is a strategy that should be closely tied with digital transformation. Companies that successfully execute customer experience strategy as a core part of their digital transformation end up reinventing what they do and how they do it for the customer.

So what happens when the customer gets left behind?

CX Fail: Cautionary Tale

Two drivers of digital transformation include a type of digital Darwinism—society/technology grows faster than we can adapt to—and customer centrism: brands must be responsive to a customer’s changing needs.

Companies make tech-focused investments only to find that those investments often impede their ability to connect with customers. For example, the retail-banking sector spent roughly $20.2 billion last year on hardware, software, services and internal IT staff to develop digital transformation initiatives. To some extent, the investment worked. According to the 2018 U.S. Retail Banking Satisfaction Study, 28% of retail bank patrons are digital-only customers. Banks reduced cost by moving customers to digital channels; however, digital-only customers have the lowest scores of all retail bank customers when it comes to customer satisfaction.

At first glance, the investment into tangible technological assets is a good one, but we have to scratch our heads and ask: why the low numbers among customer satisfaction? Most likely, banks took bold and positive steps toward digital innovation but left the “C” out of their CX strategy.

Turns out that digital-only bank customers felt the information received from their personal bank was not customized to them or their experience. Customers not only lacked an affinity for their bank, but they were also less likely to understand benefits, features and the fee structure of their account. Banks put digital reach before personalization and left out the most critical factor: the customer.

CX strategy: Focus on the art of the possible

CX strategy properly implemented lets you focus more on the art of the possible.

CX Win: Where to Begin

Per McKinsey, digital transformation occurs in three stages:

  1. Define Value
    • Secure senior management commitment
    • Set clear and ambitious targets
    • Secure investment
  2. Launch and Acceleration
    • Start with lighthouse projects
    • Appoint high-caliber launch team
    • Organize to promote new, agile ways of working
    • Nurture a digital culture
  3. Scale Up
    • Sequence initiative for quick returns
    • Build capabilities
    • Adopt a new operating model

So, where is CX strategy in this digital transformation model? McKinsey notes that:

“Targets are needed for each source of value creation—cost savings, revenues, improved performance of agents, and satisfaction of employees and customers—and for new ways of working and the new capabilities required."

What about this notion? Value creation goes beyond key performance indicators (KPIs), and company culture must be CX-driven. What else should companies consider when developing a CX strategy?

  1. Release legacy ideals of how a business should operate. The old business models are analog as well.
  2. Develop a company-wide CX-driven culture. Companies with excellent customer experience have 1.5 times more employee engagement than competitors. Don’t be afraid to break open silos to bring awareness to the value of CX championing.
  3. Link KPIs with defined value disciplines: customer intimacy, product leadership, and operational excellence. CX strategy is more than a feel-good motivational tool. In fact, it’s measurable. Soon, CX strategy will outpace products and price as the key driver of customer choice according to a recent Digital Trends report. Companies should treat customers as individuals whereby the firm customizes offers with guided recommendations based on predictive analytics inside DX architecture.
  4. Identify key metrics to measure that link KPIs to strategy across key stakeholders, such as customer satisfaction (CSAT), customer lifetime value (CLV), net promotion score (NPS) and revenue growth and cost reduction. One Topdown customer developed a metrics matrix based on our suggestions, aligning micro and macro metrics to the Value Disciplines, to determine the successful long-term value of their CX strategy using INTOUCH.
  5. Employ empathy mapping. How can you grow relationships along the customer journey and extend your reach? Analysts and senior leaders must design strategies and metrics that measure the value added for the customer and the company, including employees. To drive a successful integration, companies must link high-level metrics (such as increasing revenue) down to the various levels of operational metrics.

CX strategy and business strategy must align like two rails of the same train track, as well as the value created for company and customer. Once a company has outlined its strategy—identifying appropriate KPIs based on value disciplines—they are ready to consider the technology necessary to deliver a high-quality customer experience with true personalization.

Next Steps

Digital transformation challenges you to consider less the re-implementation of the past that you would get all dressed up in shinier armor. Instead, companies can choose to seize this moment and view digital transformation as an opportunity to include customized customer interactions at every touchpoint across the board. Focus less on what already exists and more on the art of the possible.

If you’d like help with strategizing or operationalizing your digital transformation, then get in touch with Topdown. For four decades, we’ve been helping companies improve customer experience by reimagining and re-architecting their customer communications. Pick our brains. We’re here to help.

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About John Zimmerer

John Zimmerer is the senior director of marketing at Topdown, where he leads market research and outreach efforts for the company's customer communications and customer experience products. Most recently, John has been researching and writing about the future direction of the technologies that power customer experience, and is regarded as a thought leader in this area. John has nearly 20 years of software product marketing experience. His areas of expertise include market research, analyst relations, public relations and digital marketing.

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