Digital transformation of the customer experience: How to measure ROI

In order to drive customer satisfaction, organisations need to successfully embrace digital transformation - and success boils down to defining measurable goals and then rolling out the technologies, skills and processes needed to achieve them.

The phrase digital transformation is used frequently to justify everything from software acquisition, to social media marketing. In my opinion, Bill Schmarzo, CTO at Dell EMC Services, gives the most accurate and direct definition, describing it as, “…the application of digital capabilities to processes, products and assets to improve efficiency, enhance customer value, manage risk and uncover new monetisation opportunities.” However, the question we need to ask, is how does this relate to a better customer experience?  

Across every industry, customers and employees demand greater mobility, with easier and more transparent access to information, along with flexible and engaging user experiences. Additionally, internal operations are being transformed as companies look to digitise and automate – be it in the office, the factory or the supply chain.

It’s hard to offer customers the sort of seamless experience that is attractive to them – in turn boosting loyalty and increasing market share – if internal operations don’t facilitate efficient processes and information sharing. According to IDC, by 2019, companies around the world are expected to have spent a total of $2.1 trillion on digital transformation, meaning any organisation not delivering better customer experiences through digital services, will undoubtedly have competitors that are implementing effective digital strategies.

Consumers now have a digital-first mentality, and there is an evolving preference for speed and personalisation. They want to complete transactions quickly, meaning digital channels – social, messaging apps, SMS and chatbots – are becoming the gateway to an enhanced customer journey. An increasing number of touchpoints across the entire customer journey puts pressure on businesses to provide a consistent message and experience, which means everyone from marketing to customer service needs information and contextual responses to facilitate an intuitive and connected experience.

Who is excelling at digital transformation and better customer service?

In order to rank in the UK Customer Satisfaction Index, organisations need to have successfully embraced transformation from a process, technology and resource perspective. As such, it is important for business leaders to assess the businesses who are successfully climbing up the list, and consider seriously the strategies they are putting into play that might be applicable to, and benefit, their own organisations.

One example of an organisation leading the way when it comes to digital transformation is United Utilities. And to reflect this, it has recently been listed as the 4th most improved company in the Customer Satisfaction Index.

United Utilities is a water company that operates in the North West of England, and has made strong progress over the past few years, developing new services and introducing a ‘right-first-time’ culture across the business.

This success has been driven by a continued focus on customer care – combined with affordable tariff plans to help provide water to an area of the UK that sees relatively high levels of deprivation. Integrated measures it has taken to improve the customer experience include:

• Introducing a system that allows customers to speak to an adviser instantly rather than navigating lengthy automated menus.
• A sophisticated online service that allows customers to manage their water accounts.
• Clearer bills in plain English.
• A welcome pack for home movers.
• A specialist careline team to support customers who need extra help, such as those suffering from ill health, a bereavement or mental health issues.

United Utilities’ comprehensive efforts to focus on the customer experience have yielded impressive results. The company posted revenue of £876 million for the six months to September 30th – a 3% increase from the previous period. Importantly profits increased by 10%.

How to measure the ROI of digital transformation

To measure ROI, it’s necessary to build a clear investment case for a transformation initiative. These steps are therefore useful considerations when defining a realistic ROI model.

• Understand digital transformation objectives – to develop a roadmap and define a business case, you must be clear on the ultimate destination. Is the plan to digitise data? Integrate touchpoints? Increase operational efficiency? Boost repeat purchases? It is probably a combination of a few different things. Knowing the objectives is the only way to understand what financial KPIs need to be measured.
• Clearly define cost centres – It is too easy to assign all the cost of digital transformation to the IT department. Instead it is important to remember that successful digital transformation must incorporate all areas of the business. As an example, considering the additional training call centre staff may need to help customers using a new web portal or app.
• Take the wider view on measurement – It is important to include all possible impacts on revenue from changes to customer experience such as customer churn, satisfaction scores, repeat purchases, referrals, and an increase in customer value (spend). This gives a true reflection of how any digital transformation initiatives are impacting customers. It is also important to allocate a figure to those customer metrics that do not have an obvious financial number – for example, can a lifetime value be assigned to a customer who rates the brand highly after their first purchase?
• Be mindful of the impact on staff - Operational costs – such as training, recruitment and even incentive schemes – will affect the bottom line, yet improved employee satisfaction and efficiency are key indicators, so should be included in the ROI model where possible.
• Set realistic timelines – Consider what period of time your business should measure the success of each element of a digital transformation initiative. If launching a new app, inbound call levels decrease in the first year because customers are better able to self-serve. However, with KPIs relating to customer satisfaction, a longer-term view is needed as people experience the benefits of new digital services and processes.
• Don’t stop measuring – Do not focus on a snapshot of the business at a particular point in time. Instead, measure continuously, keeping those defined milestones in mind. This helps map out how different factors that affect ROI, giving a more accurate cause-and-effect analysis. Continuous measurement also makes it easy to identify potential issues and address them before they have a detrimental effect.

Defining measurable goals

Digital transformation is not about innovating on the front end while staying loyal to the old ways of doing business behind the scenes. It is about designing a customer-centric approach that enables a business to capitalise on real-time data, operate efficiently and collaborate effectively.

There will always be a number of other considerations that need to be factored into any successful digital transformation initiative. Is there a chief data officer in place to collect and analyse data in order to measure defined metrics? Is the business geared up to bring the right talent with the required skills into the business to support such initiatives? Finaly, and crucially, is it scalable?

Ultimately, success boils down to defining measurable goals and working consistently and incrementally to roll out the technologies, skills and processes needed to achieve them. With the right technology partners and professional support, your organisation can achieve new levels of competitiveness and customer satisfaction – ideally positioned for future growth.