Buzzword or Bust? Why Digital Transformation is Not All it Seems

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Failure to digitally transform, and leverage consumer data to continually improve the customer service experience, is effectively a one-way ticket to disaster; even for established multi-national organizations. And digital transformation doesn’t always mean going from offline to online; using high tech tools to glean insight from consumer data can lead a digital-first brand to open a bricks-and-mortar store.

Warby Parker and Everlane are prime examples of companies who have found digital success trading online, but whom also identified – and responded to – the needs of their audience, by opening physical retail outlets.  These brands consolidate the fact that, while data is at the heart of digital transformation and is the common thread that should drive all business decisions, it can come in many shapes and forms.

Fortunately, brands like these are inspiring many others to actively invest in their biggest asset: data. According to IDC, global spend on digital transformation will hit $1.1 trillion this year and it’s set to keep rising steadily through 2025, reaching a total $100 trillion. And, a recent report from The Relevancy Group indicated that 50% of marketers have already invested in Customer Data Platforms (CDPs) to manage the explosion of data available, with a further 32% looking to invest in the next 12 months.

With the introduction of the GDPR, e-Privacy directive and California Privacy Law, businesses should put consumers back in control of their data, and ensure that they process information to augment customer experience.

With that in mind, let’s take a deep dive into how current digital leaders such as Beachbody, Netflix, and AirBnB have used smart data strategies to get ahead.

Understanding changing consumer habits

Blockbuster is one of the most frequently cited cautionary tales of what happens to brands that don’t modernize. Yet its infamy isn’t just down to the scale of its fall from grace: once worth $4.8 billion, and filing for bankruptcy in 2010. It also broke the golden rule for delivering engaging customer experiences — listening and adapting to consumer needs. While its customers began to call for personalized and flexible services, Blockbuster continued providing generic offline-only rentals. That’s partly why digital video platforms such as Hulu were able to steal its entertainment crown.

By contrast, Beachbody — provider of in-home fitness solutions including the hit workout ‘Insanity’ — is a perfect example of the benefits that come with better understanding and meeting customer expectations. Back in 2014, the company had built a loyal customer base, but it was still heavily reliant on DVDs to distribute its video workouts. Because it kept a close eye on customer behavior and satisfaction, the company was also aware that content consumption habits were changing rapidly and a post-DVD world was just around the corner.

Driven by this insight, Beachbody opted to expand its current offering by creating an online streaming workout experience: Beachbody On Demand. Functioning much like other popular streaming services, and with a similarly diverse range of content, the digital channel fulfilled increasing demand for convenient online workout access. Four years later, Beachbody is a thriving health technology company with over one million paying subscribers.

Giving machines the power to surprise

There’s no doubt that AI-fueled tech offers multiple opportunities for companies to build connections with consumers; be that via automated delivery of targeted ads or chatbots. But it’s important to remember that the performance of any tool depends on the quality of its input. In other words, technology is only as effective as the data that’s powering it.

For motivation to adopt this adage, see Netflix. From relatively humble beginnings in the early 2000s — when Blockbuster passed up its chance to buy the streaming service for $50 million — it has developed into a $165 billion business. And this dramatic evolution can be arguably attributed to smart data usage.

Instead of assessing links between content genres and making obvious recommendations, Netflix delivers unexpected, relevant experiences. By gathering data about customer behavior (what they watch, when, where, how long for) Netflix builds a granular picture of individuals and their interests. This insight then is used in combination with machine learning and intelligent algorithms to provide suggestions for shows and movies customers would not necessarily have selected before, but might enjoy. This is likely the reason eight of ten customers who view Marvel shows on Netflix have not previously engaged with comics. Incidentally, Marvel’s Iron Fist was also the sixth most ‘binged’ watched series on Netflix in 2017.

For consumers this means Netflix’s a portal of discovery that provides a new experience each time they log in. And it is this stickiness that has earned Netflix a worldwide following of 86.7 million subscribers and made it the poster brand for customer-centric digital transformation.

Breaking down traditional boundaries 

The majority of companies know that when data is collected, processed and analyzed quickly and correctly, it can be a passport to improving customer experiences and achieving long-term business success. They also know that much of the information they need — such as first-party data detailing customer activity – is already at their fingertips. The issue, however, is that a high proportion of modern tools still operate in the same way older tech traditionally has: siloed.

Consequently, vital insight into who customers are and what they want is held separately by multiple different systems, which makes it difficult for marketers to obtain a comprehensive view of consumers. And in the age of digital transformation, this is a problem. Consumers now spread their brand interactions across various screens and channels, yet they expect each point of contact to be engaging and relevant. To align with this expectation, marketers must retrace the entire journey of every consumer and accurately calculate which stage they are at in their path to purchase — not an easy task if data is stored in silos.

This makes it essential for marketers to create interconnected systems by taking tips from disruptive brands such as Airbnb. Instead of accumulating disparate physical assets around the globe, the company set up an integrated global network that uses data to help vacationers find the right accommodations, wherever they desire to go. Handling over 15 petabytes of data everyday, the site collates detailed insight into its users – from searching for potential venues to leaving reviews – to build a complete customer view. Its user-friendly and diverse catalogue of travel experiences continues to find favor with individuals in search of their ideal break: now, Airbnb is worth an estimated $38 billion.

By following in its footsteps and implementing progressive technology that can unify and correlate fragmented data, marketers can create one central hub of insight that provides the means for building precise individual profiles, and tracking journeys. So, at any given moment, marketing efforts can be tailored to optimize resonance and relevance on a personal level.

As just a few success stories from the latest wave of digital transformation, Airbnb, Netflix and Beachbody show that digital transformation isn’t just a buzzword. It’s a powerful force that’s reshaping what customers want from experiences, and how companies can meet their shifting requirements. But before opting to replace their existing tech stack, marketers need to pause and appreciate the vital role of data in achieving true engagement. By developing their mastery of insight collation and application, it may be that they can succeed in the new digitized economy, without a new set of shiny tools.

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