The digital transformation is currently considered the biggest challenge for companies of all industries. According to a current study by Price Waterhouse Coopers, 4 of 5 top managers view the move to digital as decisive for future business models. Gartner predicts that by 2020, approximately 75% of all companies will have digitalised, but only 30% will be successful. Marketing, in particular, is facing a radical paradigm shift. The classic campaign from a company perspective is giving way to a more customer-centric experience. 90% of marketing experts see the individual user experience as essential according to an e-consultancy study on behalf of IBM. Digital direct marketing is taking the lead in this transformation.
An essential driver of the digital transformation is disruption within the competition. Increasingly, new market players are pushing into an ever more saturated markets. This is due, in part, to globalisation where international companies – often without a physical presence – are pushing into local markets. On the other hand, technological progress, especially digitalisation, has significantly lowered market entry barriers, enabled new business models and enhanced value chains. Large e-commerce companies compete online against numerous small and medium scale, highly specialised companies and even private individuals, who use auction and trade platforms for their sales. Disruptive digital platforms such as Uber or AirBnB are questioning entire business models. Branded companies focus on direct sales and their own customer retention tools and therefore skip parts of the “traditional” value chain. In this increasingly complex, dynamic world, the competition is becoming stiffer. Companies find it more difficult to differentiate themselves. Enabling customer-centred access to markets is becoming essential, given that digitalisation creates a transparent market. Customers can research and compare offers more quickly. Furthermore, there are new decision-making options between different (international) providers. The barriers to change are low. The customer can reach a new provider with a suitable offer or with an attractive look & feel with a single click.
Best-in-class is Becoming the Benchmark
Market transparency has another consequence. Customers know the best-in-class approaches of different providers. This means demands on all other companies are also increasing. Customers do not expect anything less than a best-in-class experience in service and communication, at all times and everywhere. At the same time, marketing departments are facing the task of optimising their measures from an economic point of view, especially in lowering costs and justifying investments. Marketing must be able to prove its viability clearly.
Paradigm Shift Necessary
Of all factors driving this change, the customer is the most essential. Current studies by IBM and econsultancy illustrate that most companies (according to the study 90%) have generally understood that the customer and his individual customer experience need to be at the core of marketing. Nevertheless, 80% of customers today do not feel as if they were personally regarded as individuals in marketing. This shows that there is still a gap between demand and reality, i.e. in the practical implementation of customer-centred marketing and service experiences.
The continuous changes in the market, particularly relating to customer expectations are putting companies under pressure to achieve a quick time-to-market with their measures to improve the customer experience. Marketing has a pioneering role here, as it is easier to achieve positive results quickly through marketing than through e.g., the adaptation of service processes. Marketing, particularly digital marketing, is becoming the essential driver and pioneer in the digital transformation. In digital marketing, essential factors of the expected user experience such as speed, individuality and accuracy of fit, as well as personal value, can be realised more easily and more quickly. The desired customer-centred marketing and service experience at the forefront is pushing forward the background abilities needed for this, such as data availability, process automation and analytical intelligence.
Conclusion
The digital transformation is led by a radical customer focus in marketing. Customer demand for of a best-in-class experience and personal appreciation can only be achieved in marketing in the context of an increasingly fierce competition. Marketing is becoming the driving force to push forward the factors necessary for customer-focussed user experiences, such as data availability, process automation and analytical intelligence. The high time-to-market pressures in this transformation will be accelerated by a market, where market entry barriers are lowered through digitalisation, new business models become possible and changes in value chains. The transformation will also be accelerated by the growing pressure on companies for profitability; by increasing demands of customers who are used to be mobile, always on, linked, social, prepared to switch and increasingly used to best-in-class user experiences.
Sources
ARD & ZDF: ARD/ZDF Online Study
Gartner: Predicts 2015: Digital Business Will Drive a Big Change Revolution
Price Waterhouse Coopers: 6th Annual Digital Survey