Accelerating Revenue Growth through Digital Transformation

Digital transformation opens a whole new world that accelerates revenue growth, reduces costs, and drives innovation while better serving the customer. Digital Transformation should always begin and end with the customer in mind. By harnessing digital tools and data-driven insights, businesses can increase their revenue by expanding their total addressable market. Keep in mind there are several steps to the ideal digital transformation and many of you have started this journey and now need to bring it all together. Let’s review a few terms that are part of the digital journey.

Digitization: the first step in this process occurred when business moved from analog to digital. Converting paper documentation to digital documents utilizing applications like Microsoft Word and Excel. Providing quicker access to data and sharing amongst employees. The digitization conversion was a first step, but it often followed the previous analog processes.

Digitalization is the process of using digitized information to create new process, allowing a company to work more efficiency. Digitalization often utilizes new technologies to provide innovative ways of doing business. Allowing companies to simplify their business improving speed and agility. These gains occurred in many areas, as an example, improved service interaction with customers. The ability to monitor devices remotely, understanding specific errors creating the ability for automated dispatch. Additionally, this ability delivered higher customer satisfaction at a lower cost due to the reduction in manual processes.

Digital Transformation (DX) should always start and end with the customer in mind. DX provides the ability to share customer data across the business while simultaneously providing one view of the customer. The opportunities for innovation multiply providing faster decision making, better customer experience, and new efficiencies that were not previously available. The insights provided by cloud computing, edge devices, RPA, and IoT provide opportunities to better serve customers, but it also removes barriers to market disruption. It allows non-traditional entrants into markets faster with unmatched agility which could not happen a decade ago. Think of Amazon, Netflix, and Uber who changed industries by taking traditional business models, turning them upside down, and winning with better insights largely based on non-traditional thinking provided by DX. The importance of embracing DX is it does not matter how long a company has been dominant but are they leading the charge in disrupting their own industry to maintain their market leadership. If you are not leading the change in the industry, you are at risk of becoming irrelevant.

As mentioned, DX is a catalyst for accelerating revenue with current customers, new customers, and markets. By using digital tools to provide data-driven insights, businesses can keep expanding their revenue horizons while simultaneously enhancing customer relationships. Revenue expansion takes many forms from attracting new customers to deepening relationships with current customers via data driven decision making. Below is a list of several areas that drive accelerated revenue growth:

Digital Marketing: Digital tools break down geographical barriers, allowing businesses to expand into new markets beyond their traditional reach. Online platforms, e-commerce channels, and digital marketing strategies enable companies to target much larger audiences, thereby diversifying their customer base and revenue streams. According to Leighton Broadcasting research, 73% of adults use some form of social media creating an opportunity that needs be accounted for in your transformation plan. Leveraging similar algorithms used by social media companies, B2B companies have a roadmap for additional ways to influence customer revenue. With ongoing data analysis, the potential to construct precise customer personas emerges, creating the opportunity to target specific customers with more refined offerings.

Another advantage of digital marketing is the ability to track performance metrics in real time. This is a critical breakthrough when considering traditional marketing campaigns can be difficult to measure success. Digital marketing allows a company to see exactly how many people are engaging with their content, making purchases, and how often the services are being utilized. This data can be used to optimize campaigns and make data-driven decisions faster, providing more agility to determine which campaigns work best. Accessing comprehensive customer data to identify buying patterns, marketing can craft tailored offerings that resonate by micro-vertical or sequenced buying patterns. In a similar vein, A Boston Consulting Group's article The Rise of the Digital Incumbent underscores that companies employing data-driven marketing strategies can achieve remarkable growth, as much as 2.5 times higher revenue expansion. Potential metrics to track:

Lead to Close Ratio:

Customer Acquisition Cost:

Customer Engagement: With advanced data analytics, businesses gain deeper insights into customer behaviors, preferences, and needs. This empowers businesses to tailor their products and services to meet changing customer demands, resulting in greater customer loyalty. Personalized experiences build trust and encourage repeat business. A study by the Aberdeen group determined that companies with strong omni-channel engagement retain on average 89% of their customers compared to 33% for companies with weak omni-channel strategies. PwC’s Experience is Everything research shows that 73% of customers point to experience as an important factor in their purchasing decisions and 43% of consumers would pay more for greater convenience. Potential metrics to track:

CSAT Score:

Churn Rate:

Sales Optimization: Digital transformation optimizes the sales process by leveraging data insights to identify high-potential leads and prioritize sales efforts. By analyzing customer behaviors and purchase patterns, businesses can tailor their strategies, making these strategies more effective, improving customers propensity to buy. This leads to shorter sales cycles, higher conversion rates, and ultimately, increased revenue. This efficiency frees up companies to optimize their sales structure to maximize varying customer revenue streams. McKinsey’s Global Institute found that data-driven organizations are 23 times more likely to acquire customers, six times as likely to retain customers, and 19 times as likely to be profitable as a result. Potential metrics to measure:

Lead to Sale Conversion Rate:

Net Monthly Revenue Retention:

Adoption & Revenue Expansion:

Digital tools streamline customer onboarding and adoption processes, ensuring swift value realization for both companies and customers. Through personalized recommendations, businesses enhance customer experiences, encouraging them to explore additional offerings and expand their spending. The LAER model (Land, Adopt, Expand, Renewal) developed by Technology Services Industry Associate (TSIA) provides a lifetime customer engagement model to grow and retain revenue. This framework affords a company to create different focused teams to maximize all sources of customer revenue. For instance, leverage high-cost field sales associates to focus strictly on net new business while using lower cost teams to focus on the remaining stages of a customer’s revenue lifecycle. An example of a specific team is a dedicated Customer Success organization which may be assigned the responsibility for contract renewals. When LAER is executed properly, this shift moves specific customer revenue stages from higher-paid resources to dedicated and specialized lower-cost teams, resulting in higher rates of success. Once implemented this structure will increase revenue per customer, customer satisfaction, and customer retention. Successful DX is more than achieving monthly KPIs you must make sure the company is meeting the original desired customer outcome.

Potential metrics to measure:

Total Revenue Recurring Growth Rate (new and existing customers):

Product Adoption Rate:

Customer retention & loyalty:

Effective use of digital tools enables continuous customer engagement after the initial sale. Businesses can implement automated communications, customer self-service options, and personalized assistance, making it easier for customers to do business. This approach fosters customer loyalty and reduces churn, leading to sustained revenue streams. Many DX company’s utilize subscription-based services to maximize long term consistent revenue. This shifts the risk of unpredictable capital purchases to predictable recurring revenue streams. Supporting research on the magnitude of DX on customer loyalty can be found in Zuora’s the Subscription Economy Index which found subscription based companies in the past 11 years have grown 3.7x faster than the companies in the S&P 500. The CAGR for these companies was 17%, compared to 4.6% for the S&P 500 over the same period. An article by McKinsey's The Value of Getting Personalization Right – Wrong-is Multiplying, emphasizes that companies that are adeptly leveraging digital tools for customer insights and personalization can realize substantial growth, potentially up to, 15% revenue increase. Potential metrics to measure:

Customer Retention Rate:

Customer Lifetime Value:

DX is a cultural shift and reimaging of all your company processes & ways of doing business. Understanding the capabilities of your current technology and how it can be adapted to enhance efficiencies is essential for maximizing the benefits of both existing and potential new technologies. As mentioned earlier all Digital Transformations start and end with the customer. You need to meet the customer on their platform of choice whether that be mobile, website, or social media.

Successful digital transformation (DX) originates with the executive team. Employees desire assurance of their leaders' commitment. A dedicated company must offer three fundamental elements to guide the organization on the path to success:

Credibility of commitment

Employees want to know you mean what you say.

Clarity

What does this change mean for “me” and the company?

Communication

As the cliché goes with change you need to communicate, communicate, and communicate.

Once these items are consistently demonstrated and reinforced by leadership, it will become easier for employees to embrace the new business reality, enabling the necessary new culture for sustained success.