Digital CX disaster: What to do when digital transformation goes wrong
In 2019, companies spent over $2 trillion on transformation projects to improve their digital experiences and 2020 is likely to have been even higher. But estimates suggest that 50-80% of these projects end in failure.
An organisation's digital experience is vital to their success. We have been getting a lot of clients asking for a review of their digital experience. Many recognise that their digital transformation hasn't resulted in the experience that they hoped it would be. On a recent podcast, we had our lead on digital transformation Zhecho Dobrev, principal consultant for Beyond Philosophy, tell us why that might be.
Dobrev shared some fascinating statistics about both digital transformation and customer experience. In 2019, companies spent over $2 trillion on digital transformation, and even more in 2020, with COVID-19 driving many of these projects this year. However, success is not high with digital transformation. Experts estimate that anywhere from 50 to 80% of digital transformation projects failed in 2018. These projects came with a collective price tag of around $900 billion.
Unfortunately, that trend is not improving by much, per Dobrev. While there have been improvements in common metrics this year, the movements have not been significant. When added to an overall stagnation of the customer experience movement, digital transformation does not deliver the results that firms expected.
There are a few reasons for this result. My best way to explain it is through a recent experience I had buying glasses online. I didn't want to go in for glasses because of the pandemic, so I ordered them online. After placing my order, however, I noticed that it was taking a long time. When I went to the site, I found no way to track them. I later learned that the holdup was because I missed an email where they asked me to measure the distance between my eyes (because they need to know how big to make the glasses). It turns out that their solution was for me to take a photo of myself with a credit card between my eyes.
To me, this solution didn't seem very technical and did not portend a good fitting pair of glasses (that cost around $300-$400, thank you very much). Also, I felt like a bloody idiot doing it. The glasses turned out fine, but I am not sure I would do it again when I reflect on the experience.
My reaction to the digital experience is not unusual, Dobrev says. He says that organisations often come into digital transformation projects with preconceived notions of what to should do that are not necessarily true or take the existing physical customers' process and digitise it. Also, organisations often use a set number of channels (e.g., online, mobile, and call centre) without regard for whether those channels will be useful. Add that to the fact that organisations do not know what provides value for customers in digital experiences, and you have a recipe for disaster. These value drivers are essential to success.
Forrester's four categories of value drivers
Before we go any further, perhaps I should first explain what value drivers are. Value refers to what the organisation gets as a payback for their investment of resources. These paybacks can range from increased customer spend, market share, or Net Promoter Score (NPS). Value is the result of value drivers, which are the parts of the experience that would inspire this type of customer behaviour.
Forrester, a research and consulting firm, refers to four types of value drivers in a recent report from September. Dobrev details them as:
- Economic value: Economic value concerns the perception of the value of your product or offer. Most organisations are trying to get on level terms on this part of digital transformation; otherwise, it's a race to the bottom on price.
- Functional value: This term refers to how easy the digital experience is to use and the speed of service and convenience factors. In many ways, these are the transactional areas of the digital experience.
- Experiential value: This area is how the customer feels during the experience. Dobrev says that per his research and Forresters', the Experiential Value delivers more than the first two areas outlined by the report.
- Symbolic value: The last area is about the customers' self-image and how they feel about themselves when purchasing a particular brand. For example, you think differently about yourself when you buy a Jaguar vs. a Chevrolet. Dobrev says an exciting subset to this term is social causes. Many customers like to feel that they are working with a company that supports their social reform desires, whether that's being green or lifting a social group, etc. The symbolic value driver area of digital transformation is one we talk about a lot on our podcast.
Dobrev says that Forrester identifies one of the most significant challenges to digital transformation: knowing which area of these four steers the most value for your customers. Few companies have data on which of these drivers is most important for their customers. Organisations do have data, but it tends to be fragmented.
In reviewing Forrester's list and my glasses experience, it occurs to me that if they had injected emotion into the experience, it might have improved my feelings about it. For example, I felt silly with the credit card on my head. Perhaps if they had explained it more or had me print out a guide that seemed more "technical" to me, it would have alleviated that negative emotion for me a bit.
Another way to go would have been to embrace the silly; by making the dumb part of putting the credit card on my head even sillier with graphics or funny messages, it might have improved that moment. It is these types of design adjustments that Forrester's #3 area addresses. To me, digital transformation success depends on recognising these moments that drive or destroy value for you.
So, what should we do with this information?
Digital experience isn't going anywhere, certainly not as the pandemic carries on. The problem with unsuccessful digital transformation isn't going away either. However, there are some things you can do to avoid them.
One of the things I love about digital experiences is all the data you can collect, even about emotions. Customers will let you know how they feel at different moments with their behaviour. You can also measure people's emotional responses to moments with technology like facial recognition software, which detects micro-expressions that denote emotional reactions to stimuli (like a widening of the eyes, a pursing of the lips, or shifts in body posture, etc.).
Moreover, concepts like the Peak-End Rule, which describes how we remember our most intense emotion in an experience and how we felt at the end, will help you define the moments people will remember. The good news is all of these things are measurable in a digital experience.
Dobrev also suggests that you analyse your current customer journey with an eye toward what should be digitised and what should not. Some moments can digitise beautifully, and others that require a human touch to provide value to customers. For example, he learned on a project with an insurance company that a key-value driver for customers in that experience was a human interaction during claims handling. Responsiveness was vital for them there, and the insurance company was previously relying too heavily on email, which was not delivering enough for customers. Dobrev says using Forrester's four areas of value drivers is essential in this exercise. Then, test your choices, he says. The test results will help you identify where you need to tweak your designs either way.
Perhaps most importantly, this effort requires a strategy rather than a "check-the-box" attitude. Empathy helps, too. You need to understand what is driving value for your firm from your customer experiences. If you don't understand that, you are throwing darts in the dark and hoping for a bullseye. It can be dangerous and passes up a lot of excellent opportunities.
Furthermore, I would add that you need to look at your digital transformation from a behavioural science perspective. Customers are not logical, and they do not behave logically as customers. They don't like putting credit cards on their forehead and taking their picture to get their eyeglasses to fit. You have to take those things into account and design an experience that understands that about customers.
Finally, it is vital to measure everything. See how and when they came into your digital experience, where your customers went while they were there, what they felt (using facial recognition technology), how long they stayed, and which way they left. All of this data will tell you what's working in your digital transformation and what isn't, among other things.
Another option is to consider an outside opinion. Sometimes you are too close to the project to see what could be a potential problem for customers, and, even worse, have an inside-looking-out perspective that might not realise how different moments make people feel. We have a tool we use called a Digital Experience Health Check to assess what they are doing well in their digital experience and what can use some work. The outside-in approach is more straightforward when the person approaching is on the outside.
Honestly, $900 billion in wasted resources chasing a digital transformation goal that you can't meet is not a winning strategy. However, by approaching your online experience with the same eye for emotional engagement and with a comprehensive strategic approach to evoke emotions that serve your customers' unmet needs, you can improve your success and get the results your customers (and your senior managers) expect.
Colin is Founder & CEO of Beyond Philosophy LLC who help organizations grow by improving their Customer Experience and identifying hidden unmet needs. As a result, the Financial Times selected Beyond Philosophy LLC, as one of the best management consultancies for the last two years.
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