Making the case for Digital Transformation

April 24, 2018Jake DiMare

While traditional retail continues to suffer in North America, the outlook for digital is strong, revenue is expected to keep climbing, and many organizations are investing in digital around the path to purchase. Budgets for digital commerce continue to rise and seven-figure projects are not entirely uncommon. As a result, organizations that are contemplating change are more likely than ever to require a formal business case to secure approval to proceed with a digital commerce transformation roadmap.
At a high-level, a business case is a pretty simple deliverable to generate. Subtract the known costs from the expected benefits associated with an investment over time, calculate for the net present value of money, and if the result is at least one dollar more than zero, the investment is sound. That said, the due diligence around how one arrives at the expected benefits is likely to be carefully scrutinized.

Thus, when preparing a cost/benefit analysis, it is necessary to ask repeatedly: How will this undertaking impact profitability, by increasing revenue, or decreasing cost? After years of helping clients traverse these daunting questions, I’ve got a few suggestions to share.

Decrease the cost of operations by cleaning up technical debt

Technical debt is a blanket term for the frustrating net result of years of maintaining an existing, on-premise digital infrastructure. Over time many short-term fixes are applied for reasons that made perfect sense at the moment but have baffled the team ever since. As the years go by problems continue to grow; more quick-fixes are applied, entangling systems and making it more difficult and costly to keep things running at even a minimally viable level of acceptability.

While all this technical debt causes plenty of individual headaches and lost productivity, it also has a very tangible impact on the organization’s ability to support a modern, connected, and cohesive customer experience. It also introduces friction to the process of maintaining the platform, reducing efficiency and increasing the cost of otherwise simple operations. Frankly, you can forget about trying anything new, when it’s necessary to call in the I.T. department to move one comma in a product description.

Replacing an outdated platform not only eliminates all the technical debt that’s dragging the team down, but it also frees them up to try new things more quickly and efficiently than ever before. Suddenly, experimenting with A/B tested promotions, personalized search, and automated lead nurturing will soar to the top of the priority list, providing lift across the metrics that create value for your customers and your organization.

Increase revenue by improving the online customer experience

An eCommerce replatform project is an ideal time to reconsider the digital customer experience. First, because you will be ‘under the hood,’ as we say in the US, it will be quite efficient to design and implement new templates. Besides, this gives the business team something to do while the engineers spin up the underlying infrastructure.

Second, and perhaps more importantly, it is necessary to make changes to the experience if you’re planning to take advantage of many of the best new features and functionality available in the latest platforms.

By now, most digital pros know the most popular statistics about customer experience:

  • “Customer Experience will overtake price and product as the key brand differentiator by the year 2020.” – Walker
  • “70% of buying experiences are based on how the customer feels they are being treated.” – McKinsey
  • “72% of businesses say that improving the customer experience is their top priority.” – Forrester

While inspiring on their own, these factoids don’t say much regarding the hard benefits your organization can expect from making changes to the experience. More specifically, they don’t address the ways an organization can and will increase revenue.

For use in a business case, focus on the impact to revenue in a few, key areas. For instance, improvements to the digital customer experience can include leveraging the latest in practical applications of artificial intelligence to make personalized product recommendations to millions of customers shopping in real time. Automated personalization drove very lucrative, tangible results during the 2017 holiday shopping season and can be rolled-out far more efficiently than earlier, segment and persona-driven scenarios.

The other areas to focus on include increased average order value, conversion rate, and customer lifetime value. Simply put, if your current digital commerce experience is challenging to navigate, throws errors, and misses the opportunity to upsell and cross-sell, then improvements in these areas will naturally provide lift with revenue and conversion. If the current experience is bad enough, existing customers may try out your competitors. Nobody wants that (except your competitors).

Losing a customer is so much more damaging than the short-term loss of an individual sale. Naturally, when considered over the long term, the cost of switching must include friction on the average lifetime value of all customers in addition to all the lost opportunities to sell to that customer in the future. On the flip side, a customer who finds purchasing with you smooth or delightful will buy more, more frequently, and be more likely to recommend you to a friend.

For bonus points, try analyzing the impact an improving net promoter score has had on revenue for your organization in the past.

Wrapping it up with digital commerce transformation

While traditional retail suffers and the outlook for online sales continues to rise, budgets for digital are increasing. As a result, it’s not uncommon for a digital commerce overhaul to cost millions and include milestones on a roadmap that takes months or years to complete, depending on how deep it goes.

The good news is there is a growing body of data that shows beyond a shadow of a doubt that a dollar invested in digital will show a positive return on investment that far exceeds the performance of the same invested in traditional, brick and mortar operations. With that knowledge in mind, the only question left is: How soon can we get started?

This post was originally written by Jake DiMare and published on the blog at 

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