Microsoft’s digital transformation overhaul, in response to disruption by companies like Amazon and Apple, moved the company into a more forward-focused cloud-based business. This resulted in a whopping 258% stock price growth over 5 years. Over the period from 2014 to 2019, revenue increased from $93.5bn to $122bn.
Similarly, Nike’s ongoing digital transformation programme to reinvent its brand and supply chain and move into the e-commerce space has resulted in a 69% stock price growth in just 2 years. Its stock price was $52 at the beginning of 2017 – it’s now up to nearly $88. Revenue increased from $33.5bn to $39.1bn in that same time period.
Among the benefits that come with transforming digitally and becoming digitally mature are reduced business costs, improved customer experience, increased agility, and reduced time to market.
Combined, these benefits can play a massive role in growing a company’s profits. In order to understand how it’s worth reminding ourselves what a digitally mature company looks like.
While there are a number of competing definitions for digital maturity, there are a few characteristics that the most mature companies have in common.
They will, for example, have a well-established transformation roadmap that effectively fends off disruption and evolves as needed. They also use digital technologies to run their business and have the ability to drive continuous change across the company.
Additionally, these companies realise that achieving digital maturity is an ongoing process rather than an end-point to be reached.
A part of that ongoing process means organisations using their available data as effectively as possible.
For the organisations that get it right, the rewards are plentiful. According to research published by Entrepreneur in 2019, businesses that effectively use big data saw a profit increase of 8 – 10% and a 10% reduction in overall operating costs.
Getting to that point, however, is easier said than done. According to research from Gartner, as many as 80% of marketers will abandon their personalisation efforts in the next five years. It attributes this to a lack of real return on investment and the challenge of managing customer data.
In order to overcome those data-based challenges, it’s vital that the entire organisation buy into digital transformation as a mindset. In doing so, it will reap the benefits of a data-based analytical approach.
One of the biggest advantages of this kind of analytical, data-driven approach is that it allows companies to give their customers a hyper-personal experience.
And in a world where it’s increasingly difficult to differentiate on price and quality, customer experience (CX) can make all the difference. In fact, research from Gartner shows that more than 81% of companies are competing mostly or completely on the basis of CX.
Here too, the opportunities for increased profits are big. According to research from PWC, 49% of buyers have made impulse purchases after receiving a more personalised experience. Similarly, 66% of customers say they’ll pay more for a great experience, and experience-driven businesses see almost 2x higher year-on-year growth in customer retention, repeat purchase rates and customer lifetime value than other businesses.
Nike’s success is largely attributed to improving its connection with customers through membership opportunities, stronger digital marketing and powerful data analytics.
Nike started selling directly to customers and partnered with Amazon for an updated e-commerce strategy. This end-to-end focus on consumer touchpoints and data better allowed Nike to connect with customers more personally and recommend the right products.
The company also opened concept stores and improved its online and mobile app experience, and has since ended its relationship with Amazon to gain even more direct control over their CX.
Given that the interactions people have with companies now largely take place on digital devices and platforms, it’s clear that transforming digitally is vital to providing good CX.
A few simple changes can result in a massively improved digital customer experience, bringing with it significant profit growth. That makes taking the journey towards digital maturity a no-brainer.
Digital transformation doesn’t only boost revenue growth, it also impacts employee productivity. A recent survey by Zensar shows that a lack of proper technology tools can hinder productivity and lower morale.
53% of the surveyed employees said they would be more empowered to better manage workflow if they were provided with the needed tools. 76% also added that having the digital tools they need at work makes them more productive and more than half, 53%, said it makes them more successful.
Utilising digital technology to change traditional ways of working also results in lower business operating costs, as teams can work remotely and collaborate online. This also generates more employment opportunities which is critical for economic growth, especially in South Africa.
These are just a few examples of how taking the leap into digital transformation and embarking on the journey towards digital maturity can be vital for profit growth.
They are not, however, the only ones. If an organisation embraces digital transformation in its entirety, then everything it does will feed into improved efficiencies, better customer experience and reduced time to market.
This requires assessing the company’s digital maturity across all five main areas of the business: Leadership, customer experience, technology, operations and culture. All of these feed into one another and, ultimately, result in increased profits.
Companies can then work with a consultancy to improve their digital maturity and get recommendations on how to address the problem areas to start their digital transformation journey.