When it comes to digitalization, there is no one-size-fits-all approach.
Each productive sector and every individual actor within each sector is at a different stage of digital maturity. The first step is to evaluate the orientation of the customer base that companies compete for. The next step is to self-assess the organization's digital capabilities.
Depending on the results, companies can then define and implement different strategies, which may include migrating customers to online touchpoints and defining digital transformation strategies.
Below are two tools that can help organizations assess their ability to digitize processes and at the same time help understand if the market in which the company operates, from the demand side, is ready and willing to migrate towards a greater number of digital touchpoints:
- Digital orientation matrix by sector;
- Evaluation sheet of the level of transition to digital – which I have transformed into a super-slim quiz for companies
“"CALCULATE YOUR LEVEL OF DIGITAL ORIENTATION"”
1. Digital orientation matrix by sector
As mentioned, evaluating demand and supply – that is, a) determining whether the consumer is ready to switch to digital and b) estimating the company's ability to internally transform to take advantage of the migration to digital – gives rise to a matrix that allows the position of a company to be established within one of the quadrants of digital orientation:
- "ORIGIN" : low digital orientation on both the consumer and company sides;
- "ONWARD": low digital orientation of the consumer but high digital orientation of the company;
- "ORGANIC": high digital orientation of the consumer but low digital orientation of the company;
- "OMNI": high digital orientation on both the consumer and company sides.
In other words:
If your business processes include significant physical interactions that are very difficult to eliminate or replace (e.g. hospitality sector, health services), your company falls into the Origin quadrant.
If your company operates in sectors such as retail, where it is difficult to migrate customers to digital despite investing heavily in digitalizing business processes, you fall into the Onward quadrant.
If your company offers products and services through physical touchpoints and struggles to manage remote employees (e.g. automotive industry, dealerships) but is driven by demand to adopt digital technologies (e.g. online car purchase, virtual reality for visually exploring model options, predictive maintenance through IoT), you fall into the Organic quadrant.
If your company operates in the high-tech and financial sectors or in sectors where digitalization is an important part of their DNA, then you fall into the Omni quadrant.
To illustrate the four categories represented in the matrix, the digital orientation of the six productive sectors that I mentioned as examples is typically evaluated: high-tech, financial services, grocery retail, automotive sector, hospitality sector, and healthcare sector.
I need to immediately clarify that the position of each sector in the matrix above is a 'snapshot' of the current situation in the United States. It can change over time with the evolution of the market, and in other markets, consumers may also have different degrees of digital orientation, as well as individual operators in each sector. Nothing is defined forever.
“"But what are the digitization strategies that companies in each quadrant of the matrix can implement?" “
Here are some suggestions.
Companies in the Origin and Onward quadrants need to provide an incentive for their customers to switch to digital channels; their customers still find value in physical interactions and therefore have little motivation to migrate to digital.
So how can we facilitate this transition?
Offer a higher value through online customer experience and show the benefits of moving online. One solution could be to offer monetary incentives such as cashback, discounts, and promotions only for consumers who interact through digital platforms; deterrents can take the form of additional costs if an offline mode is selected during interactions. Remember that physical interaction has inherent weaknesses, particularly regarding inefficiencies: queues and time losses are the main frustrations in offline touchpoints and digital can be the answer to customers' desire for quick and direct solutions. Finally, do not forget that incompetent staff and poor relationship skills are some of the main causes of complaints, so making an alternative digital channel available could stimulate behavioral change.
When instead face-to-face interactions create value and are still desirable, you can use digitally-enabled communication forms: think of video banking in financial services, virtual counseling in telemedicine - approaches that allow you to realize economies but at the same time maintain the advantages of human touchpoints. Chatbots, virtual assistants, can in some cases even replace front-line personnel.
The challenge for companies located in the Origin and Onward quadrants is therefore to equip themselves with the skills to meet the needs of digital consumers.
Invest in infrastructure - hardware, software, and IT systems - to manage and analyze big data in real-time and develop organizational capabilities to create an agile culture in the company.
Rethink your business processes. Digitization is not limited to automating routine operations, often it requires reengineering the entire system of activities to adapt to the new digital reality.
Faced with the growing expectations of consumers, companies in the Omni quadrant must not stand still. As other companies are gaining ground, these companies are forced to raise the bar and strengthen their positioning as a digital-first brand.
Considering that generations Y and Z - the digital consumers par excellence - are no longer satisfied with basic solutions, companies must integrate advanced technologies into the customer experience, which is called "the new CX," increasingly fluid.
Companies in the Omni quadrant cannot be satisfied with content marketing and e-commerce platforms, which are essential factors without which they cannot compete; they must enhance their strategic capabilities by adopting advanced technologies that are not yet widespread. Use artificial intelligence to enhance marketing activities, install sensors, and apply IoT to offer physical touchpoints but digitally powered, enliven marketing campaigns with virtual or augmented reality; focus on offering a new CX at three different levels: informative, interactive, and immersive.
2. Digital Transition Level Evaluation Form
The digital transition level evaluation form is the second self-assessment tool for companies that I recommend, as it helps to reflect on those issues that companies often forget to address. However, to still provide feedback and guide companies towards evaluating the development of a digitalization strategy rather than another, I preferred to transform the form into an online QUIZ .
In any case, I provide below the bulleted list of topics to consider, both from the company and consumer side:
1. The company is able to digitally interact with its customers along their customer journey;
2. All digital touchpoints can be integrated into a smooth and frictionless customer experience;
3. The company can create value and generate profits through digital business models;
4. Technologies are available to collect, store, manage, and analyze a large volume of consumer-related data in real-time;
5. Business processes are digitized and reengineered to integrate into the new business model;
6. Digitalization has been implemented with IoT for physical assets such as buildings, company fleets, and equipment;
7. Most employees are equipped with digital devices to work remotely and collaborate in the digital space;
8. Training digital talents such as data scientists, UX designers, and IT architects is an absolute priority;
9. There is a solid digital culture that enables alignment between managers and talents;10. The majority of the customer base is composed of generations Y and Z, who are competent in the use of digital technologies;
10. La maggioranza delle customer base è composta dalle generazioni y e z, che sono competenti nell’uso delle tecnologie digitali;
11. Most consumers have already developed engagement with the company and make transactions through digital platforms;
12. When using or consuming products or services, consumers must interact with digital interfaces;
13. Customer journeys already partially or completely take place online? (webrooming and showrooming: the consumer conducts online research but buys in-store, or vice versa, informs and tries in-store before buying online);
14. Physical touchpoints that consumers find frustrating can be replaced and enhanced by digital technologies;
15. Consumers can access a large amount of information on the internet to make informed decisions autonomously;
16. Consumers believe that digital interactions with the company are superfluous, irrelevant, and of no value;
17. Products and services are considered to be uncomplicated, therefore risks and issues related to trust are limited;
18. Most consumers have numerous incentives to migrate to digital: more choices, better prices, higher quality, greater convenience;
TAKE THE QUIZ and discover your level of digital transition!
10/02/22
Oriana Torregrossa | Digital & Communication Manager TDE
Source: Marketing 5.0 – Philip Kotler