Insights Our latest POV on how customer experience drives everything from concept and creative to design and technology The Digital Transformation Opportunity: Turning Products Into Services MQ Staff September 30, 2020 Digital interaction By Jim Bass, Director Customer Experience The term “digital transformation” has become the new popular buzzword of the 21st century. You’ve probably heard it used at your company in the context of new initiatives being launched or strategies your competition is executing to gain an advantage. Everyone Is Engaging Digitally The advent of Smartphones and 4G technology have made it easy for people of all ages to use technology and become proficient at it. Today, we live in a world where young children and retirees, use smartphones and voice recognition technology to entertain themselves, to collaborate, to create and to communicate. We order food and clothes online and we pay bills electronically. We create music, video, and impactful social messaging with powerful handheld computer devices. During the pandemic, school-aged children are participating in virtual school lessons using Zoom, Microsoft Teams and other collaboration tools and software. The future is here. 5G technology will continue to push the technology demand to heights we have only begun to imagine for voice recognition, healthcare, public safety, manufacturing, IoT, etc.. Instant Access To Technology Has Changed Our Expectations As a society, we expect businesses to leverage technology as a way to understand our needs and preferences, and then use that knowledge to develop and improve products and services which fulfill our needs and desires. We want this because it’s more efficient and many times more pleasant. It helps reduce wait times, increases our product and service options, and frees us up to interact and transact during micro-moments or when it’s most convenient for our schedules. What Exactly Is “Digital Transformation”? Wikipedia defines it as “Digital Transformation is the adoption of digital technology to transform services or businesses, through replacing non-digital or manual processes with digital processes or replacing older digital technology with newer digital technology.” This definition really limits the scope of transformation to just replacing manual processes with something automated or paperless. The ROI is a cost savings in the long term, but this restricted definition we’re really missing the boat on some great opportunities to innovate and even disrupt commerce and experience across all industries. Digital Transformation Offers Much More Than Cost Savings Paperless and automated interactions are table stakes in 21st century commerce and interactions. Consumers want more than that – they expect digital experiences which add value, reduce effort and enhance the way they transact and interact with businesses. They also want these digital experiences to be meaningful and enjoyable. Some examples of companies who have made the transition to delivering great digital experiences are Uber, Carvana, Netflix, Casper Mattress, Amazon, Instacart, and so on. Consider the long list of companies who have mobile apps which put information and transaction capabilities at our fingertips. They use alerting and notifications to engage us with suggestions for actions to take and products to purchase based on our preferences and behaviors. Consider, too, the big shift to subscription services. Whether a monthly delivery of clothing and grooming products or a weekly supply of easy-to-prepare meals, almost every product can be turned into a subscription. Businesses Must Add More Value To Meet Consumer Expectations Digital transformation is not just the ability to remove paper or to reduce effort by ordering food, clothes, vacations, appliances and cars on a website or an app. This Business Insider article references a study by RethinkX which says “By 2030, nearly no one in the US may own a personal car. Instead, most Americans would hail self-driving, electric ride-shares to get around.” We will be subscribing to a car service! A few predictions from the study: Private car ownership will drop 80% by 2030 in the US The number of passenger vehicles on American roads will go from 247 million in 2020 to 44 million in 2030 Using electric ride-shares will be four to 10 times cheaper per mile than buying a new car by 2021 (And each family could save up to $5,600 per year, compared to purchasing and maintaining a traditional vehicle) Global oil demand will peak at 100 million barrels per day by 2020, and decrease to 70 million barrels per day by 2030 Savings on transportation costs will result in a boost in annual disposable income for US households totaling $1 trillion by 2030 According to these predictions, this change in the way we approach automobile ownership and usage not only makes it safer for people to drive or ride in cars, it enables consumers to realize a boost in disposable income and it should have a positive impact on our environment by reducing demand on natural resources and reducing air pollution. This shift will create significant value for the consumer. The real question for all businesses to ask themselves is “How can we turn our product into a service that reduces effort, creates significant value for the consumer, and delivers an even better customer experience?”. Usually, this is not an easy question to answer. Savvy businesses will bring in consultants, conduct market studies and get close to the voice of their customers and employees to really understand what the consumers want and need. Business Models Must Change To Adapt To Digital Transformation To be successful, business also need to transform internally. Deploying the transformation also requires the internal operations to change the way they manage the business and the way they look at their operations and financials. For example, the cost of inventory or the way inventory is managed may be different. At first, it may look like additional costs, but it’s probably a shift in costs. Shipping costs may increase, but so will revenue. New staffing may be needed but it doesn’t have to be additive; many times it is a staffing shift or reallocation. New recurring revenue streams need to be managed and secured as subscription services become part of the mix. A Laser Focus On Customer Experience Is Required Continually assessing and focusing on experience will help businesses innovate faster, collaborate efficiently, and will ensure they deliver more value with less effort. Optimizing customer experience will create happier customers and employees, increase retention, and drive revenue. Macquarium Can Help We have a team of digital experience experts and consultants who can help you understand your unique digital transformation opportunity to turn your product into a service. We can even orchestrate your next steps by helping you look at your business differently so you can transform internally. Our experience experts can identify opportunities which will help you deliver awesome digital experiences which drive revenue, experience, retention and satisfaction. To learn more or to contact us, click here. 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