Propelled by the global pandemic, technologies have become mainstream for businesses and customers. In order to adapt and stay relevant in this digital era, several companies are undergoing digital transformations. The main issue is, while companies spend thousands of dollars on digital transformation, only 30% of these efforts are successful.
In this article, you will learn everything you need to know in order to achieve the results you desire from digital transformation. The very first step to success with your digital initiatives is knowing the right KPIs and metrics. You will discover why data collection and analysis are important to determine if the transformation is on the right path. Let’s discover how you can make your digital transformation efforts successful.
What is digital transformation?
In digital transformation, companies use digital technologies to improve their performance to meet customer and market demands. It also encourages companies to think outside the box about how technology can improve their approach. For example, technological advances can help employees do their work more efficiently, so they can focus on delivering a positive customer experience.
What does digital transformation mean for your business?
The outcome of every digital transformation will be different for each business. The reason for this is that each digital transformation should be focused on the problems that require the most attention. Understanding what needs the most attention will make it easier to decide what technology is needed to solve it.
Here are 3 benefits businesses gain after a successful digital transformation:
- Enhance customer experience through implementing the right technology through multiple touchpoints. According to Fujitsu reports in retail, the key drivers for digital transformation include reduced costs and increase in efficiencies with 69%.
- Digital transformation drives innovation and keeps you ahead of the competition. For example Forresters’ forecast, customer-centric technology drives competitive advantage and a 3-5 percent increase in productivity by connecting the customer experience with the employee experience.
- The right technology increases productivity and reduces labor costs. For example the introduction of the use of digital workplaces and online collaboration support increased productivity by as much as 30 percent.
Embracing digital transformation can help businesses gain an edge over their competitors, while the businesses that refuse to adapt can be left behind.
Start your digital transformation with data collection
Data collection refers to the process of gathering and analyzing data to find answers, research trends, and to evaluate possible outcomes. Before you can leverage the knowledge of the data for your digital transformation, you need to gather it. The seven following methods can be used to collect the necessary data for your digital transformation.
- Transactional Tracking
- Interviews and Focus Groups
- Online Tracking
- Social Media Monitoring
5 key metrics to measure your digital transformation
In case you try to implement changes without measuring key metrics, you won’t know if your efforts actually pay off. Instead, create a plan for how to measure your digital transformation progress before you get started. By choosing the KPIs that align with your team’s goals and needs, you significantly increase the probability of a successful digital transformation.
Here are 5 key metrics of digital transformation to determine if you are one the right path:
1. Active usage metrics
Sustainable technology adoption is one of the keys to successful digital transformation. An excellent KPI to measure success is the active usage of your digital assets. Understanding active usage metrics helps you better understand how users interact with your technology.
For example, if a company has a high abandonment rate, gathering customer feedback to improve and update customer service processes can be a solution.
Use the following metrics in your data analysis:
- Daily active users: The total number of unique customers who engage with your platform or software every day.
- Conversion rates: The percentage of customers to a website that completes a desired goal (a conversion) out of the total number of visitors.
- Abandon rates: The percentage of tasks that potential customers leave incomplete, for example an abandoned cart.
2. Employee productivity
Introducing a new technology or process can highly benefit your business but that isn’t always the case. Digital transformation is not all about technology; it is also about the complementary human input to make the process effective for all parties involved.
Complicated technology can actually make your team less productive. It pays to understand your employee productivity baseline and know the goals you want to achieve in order to set realistic goals and implement suitable strategies for your employees.
To accurately measure productivity, frequently checking in on your employees are essential. Here are some questions to get started :
- What is your task?
- What should your task be?
- What setbacks make your tasks more difficult?
- Which steps should be eliminated?
If you want to extract quantifiable productivity measures, the labor productivity method and the hours worked method can help you determine if your current investment and human resources methods are yielding desirable results.
3. Digital adoption & product performance metrics
Digital adoption is the pace at which a new technology is acquired and used by the public. Digital performance on the other hand is the insight into how employees are engaging with specific tools or platforms.
Adoption and performance metrics can give you insights on how your users and team adjust to the transformation. If the metrics are low, then it could be an indication that your audience doesn’t resonate with your offer. Examples of adoption and performance metrics are conversion rate and adoption rate.
4. Customer experience metrics
A customer-centric strategy is key to creating a positive customer experience and loyal customer base. In fact, 96% of customers believe that customer experience is a key aspect of brand loyalty. Measuring how customers are engaging with and using your platform or product is crucial for long-term success of the strategy.
Use data analysis for the following metrics to support your customer-centric strategy:
- Customer effort score (CES): The metric that measures the amount of effort a customer needs to put in to complete a task, for example surveys.
- Customer satisfaction (CSAT): A customer experience metric that measures how happy a customer is with a product, service, or customer support interaction.
- Net promoter score (NPS): The metric used in customer experience programs to measure the loyalty of customers to a company.
5. Return on digital investments
Last but not least, one of the most popular KPIs for any new digital transformation initiative. The return of investment (ROI) of your digital transformation is in fact knowing your money’s worth after implementing a new technology or process.
Return on digital investments tells you the relationship between money brought in and money taken out in relation to your digital transformation. This would compare how much you spent on new technology, training, new hires, and other expenses related to the new technology or processes, and the amount of revenue you’ve brought in since making the transition.
While this can be a strong indicator of success, it’s most likely that in the first phases of your digital transformation, your ROI will seem small to even negative. By measuring long-term can give you a better idea of how successful the initiative was.
What are the key metrics (KPIs) for digital transformation?
- Active usage metrics
- Employee productivity
- Digital adoption and product performance metrics
- Customer experience metrics
- Return on digital investments
Remember that the success for each digital transformation varies for all businesses. Before starting, it is crucial to know that every digital transformation should be focused on the problem that needs the most attention within your organization. Use data collection- and analysis to build a strong foundation to measure your digital transformation.
If you don’t know where to start, working with a team of knowledgeable digital experts can help craft the right strategy for your business.