“Digital transformation” has, unfortunately, become a bit of a buzzword. Given its expansive scope, the term can acquire vastly different meanings – or meanings too loose to be grounded. While understandable, this poses a very real danger of deflating the actual value digital transformation in 2023 will hold.
To address this, here we can demystify the term and pinpoint its exact tenets and digital transformation must-haves. More importantly, we can outline just why you cannot do without a digital transformation in 2023.
So, let’s get started.
Defining Digital Transformation
First, let’s briefly go through the definition of the term. Industry juggernauts will phrase it slightly differently, and some will choose to outline different aspects of it. This might be where some of the confusion stems from.
SalesForce defines it as the process of leveraging digital technologies to the benefit of current and toward creating new business processes. This, they argue, by definition, includes the goal of meeting emerging business and market requirements while creating better customer experiences. IBM elaborates, noting that this process is holistic and inherently customer-driven, and customer-first. Digital transformation, they assert, should span across all aspects of business and operations.
Between the two, it should be easy to see what the term means and what it doesn’t. Digital transformation does entail:
- Expansive use of digital technologies
- A digital-first approach to business operations and processes
- A holistic overhaul of traditionally non-digital aspects of a business
It does not, however, inherently include, promote, or benefit from:
- Indiscriminate adoption of digital technologies
- Disruptive implementations of digital technologies into existing workflows or processes
- Seeking digitization for its own sake, without regard for the customer or the market
Rather, digital transformation is the strategic, incremental, purpose-driven, and customer-first adoption of specific, appropriate digital technologies.
The Benefits of Digital Transformation
With definitions in order, we may now briefly outline its benefits. Between the new options it offers and the emerging challenges it helps businesses overcome, the benefits of digital transformation for businesses are a key part of why a digital transformation in 2023 is indeed nigh imperative.
Fine-tuning the sales funnel
First, in no particular order, consider the main challenges of a typical sales funnel:
- Lead conversion. The importance of website visitor tracking likely cannot be overstated, as it directly shapes the customer experience in turn. It allows businesses to turn them into clients by offering a personalized customer journey. Conversely, lacking consolidated insights can significantly hamper the lead conversion process.
- Lead acquisition. Before successfully converting leads, acquiring them can be equally challenging without holistic, omnichannel marketing in place. This is why marketing automation solutions increasingly focus on outreach personalization and retargeting and why Search Engine Optimization (SEO) dominates.
- Customer retention. Retaining customers post-purchase is equal parts necessary and profitable. LinkedIn finds it costs up to 7 times less to retain an existing customer than to acquire a new one. In addition, repeat customers come with higher average order values (AOVs) and often higher-order frequencies. This, in turn, has made Customer Relationship Management (CRM) solutions business staples.
While brief, these alone should help highlight how complex the sales funnel has become. A digital transformation can both refine it through strategic, point-specific applications of relevant technologies and consolidate it.
Improving operations; saving time, and reducing costs
The sales funnel aside; digitization comes with another distinct and established advantage; operation improvements. A digital transformation in 2023 is facing both outward, to the client and their needs, and inward, to existing operations.
Here, simply consider the key benefits of intelligent automation, an integral part of digital transformation:
- Increased productivity. With less time spent on repetitive tasks that don’t require creative oversight, teams are free to focus on more productive endeavors. Depending on the process, automation can even expand profitable operations beyond typical working hours.
- More accurate data. With less room for human error, data becomes more reliable and guides decision-making toward better outcomes. This is particularly valuable as regards marketing but holds universal value for most businesses.
- Reduced costs. With less time wasted and lesser workforce needs, operation costs can also be significantly reduced. Smaller businesses on tighter budgets can very much appreciate this benefit as they achieve sustainable growth.
In combination, these benefits tend to have a very substantive impact on final revenue and returns.
Future-proofing for a digital age
Finally, digital transformation serves as an excellent future-proofing method. As digital transformation trends show, digitization is not a passing fad but a concrete route forward.
To illustrate, consider the following statistics:
- Deloitte quantifies the benefit of digital technologies in accelerating goals related to returns, workforce diversity, and environmental targets at 22%.
- Altimeter finds that 51% of digital transformation endeavors are driven by perceived growth opportunities, echoing the above.
- IMF predicts that digital transformation in 2023 will see the digitization of 65% of the world’s GDP.
- Surveying executives, IDC finds 60% of them agree that the Internet of Things will significantly inform their digital business endeavors and strategies.
- PTC finds that 40% of executives believe digital transformation improves operational efficiency; 36% say it improves time to market; 35% say it helps meet customer expectations.
In combination with the effects of COVID-19, which surveys find have accelerated digital transformation beyond the tipping point, these trends bear noting. It is not simply the strain on supply chains and market vulnerabilities that necessitate digitization, as GMV notes. Rather, it’s the approaching digital age itself that does.
Final words; a digital transformation in 2023 is imperative
To summarize, a digital transformation is a purpose-driven, strategic adoption of digital technologies to enhance one’s business operations. It’s not an endeavor without challenges or mistakes to avoid, but it is evidently beneficial.
Business leaders have taken note as they are in an increasingly digitized world. The modern customer does too, and their changed behaviors and newfound sensibilities require a seamless, digitized experience to cater to. As these circumstances become cemented, embracing digital transformation is indeed future-proofing for this business trajectory.