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Digital Transformation: Real or Marketing Jargon?

Digital transformation—it sounds like the latest buzzword cooked up in a marketing lab, doesn’t it? But when you peel back the layers, you realize it’s far more substantive than flashy jargon. Let’s dig in.

A Little History

In my career I’ve been fortunate to grow and change at the pace of technology. In college I used a typewriter and carbon paper to author assignments and punch cards to program mainframes. So, I get the whole digital transformation thing deeply. But hasn’t it been going on since the mid-20th century? Understanding the contemporary version of digital transformation demands a look at history. The transition from analog to digital processes has been happening for decades. From the introduction of computers in the workplace to the rise of the internet, the shifts have been profound and continuous.

Take the Industrial Revolution, for instance. It was a period of tremendous change, with new machinery and technologies altering the way work was done. Similarly, the advent of computers in the mid-20th century marked the beginning of a new era. Businesses began to automate tasks that were previously manual, leading to increased efficiency and productivity.

Digital Transformation Evolution

The term “digital transformation” itself might feel new, but the concept is rooted in these historical shifts. Today, it refers to integrating digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers. This transformation is driven by the rapid advancement of technology and ever-increasing customer expectations.

In the 1990s, the rise of the internet brought about the first wave of contemporary digital transformation. Companies began to create websites, explore e-commerce, and digitize some of their operations. Some of us have scars to show from these early experiments where the website was the only digital part. Orders or inquiries may have been posted to the website but behind the scenes it was “rip and read” where we would rip the paper from the printer and read the internet result then manually execute the rest of the process. The early 2000s saw the rise of social media and smartphones, further pushing businesses to adapt. The current wave of digital transformation goes beyond mere digitization—it’s about rethinking and reimagining how businesses function in a digitally-driven world.

Not Just Marketing Hype

So, is digital transformation just marketing language? The evidence suggests otherwise. True digital transformation involves significant changes to business processes, culture, and customer experiences. It’s not about slapping a digital interface on an old process; it’s about fundamentally rethinking how to use technology to drive growth and efficiency.

Real-World Impact

Consider companies like Netflix and Amazon. Netflix started as a DVD rental service but transformed itself into a streaming giant by embracing digital technologies. Amazon, once an online bookstore, now dominates e-commerce and cloud computing thanks to its relentless focus on innovation and technology.

In manufacturing, digital transformation is manifesting as the Industrial Internet of Things (IIoT), where machines communicate with each other to optimize production, and digital twins allow virtual simulations of supply chain automation. In healthcare, digital transformation means better patient engagement through electronic health records and telemedicine.

Final Thoughts

Digital transformation isn’t just a shiny new term invented by marketers. It’s a continuing evolution that requires businesses to integrate digital technologies at their core. It’s about embracing the future while learning from the past. While the term may be relatively new, the concept is deeply rooted in the historical progression of technological innovation. So next time you hear the phrase, know that it’s more than just a buzzword—it represents today’s challenges and the future of business.

Over the next few weeks, I’ll be sharing tips and tricks to aid in the identification and adoption of digital technologies that drive transformations efforts.

October 23, 2024 Posted by | Uncategorized | , , , , | Leave a comment

TOP 5 MOST IRRELEVANT BUSINESS METRICS

Metrics, metrics, metrics there are so many business metrics in the world today that most of them have little or no relevance. Sometimes I think business gurus stay awake at night concocting a new metric, so they have something new to talk about or sell to clients.

Making decisions based on numbers a.k.a. metrics the numbers need to be relevant, meaningful and actionable. Here are a my Top 5 most irrelevant numbers that businesses collect:

Number 5- Customer Satisfaction (CSAT)Scores: You would think that CSAT scores are the most valuable number any business can collect. They are highly subjective and bias laden. The results of these scores seldom reflect actual customer behavior but more a snapshot perception of a specific interaction with a product or service. Using CSAT or Net Promoter Scores (NPS) alone provides minimal insights into customer behavior or advocacy. Understanding customer needs, perceptions, and behaviors require a combination of hard metrics like customer retention and share of wallet, average order value (AOV), Customer Lifetime Value (CLV) along with softer metrics like CSAT, NPS, Customer Effort Score (CES) and the most valuable piece of data, unstructured feedback like product reviews, complaints and praises. A holistic approach to understanding customer behavior offers far more value than a single CSAT, CES or NPS number.

Number 4-Gross Revenue: Gross revenue is a totally meaningless number. Focusing on gross revenue without considering costs is highly misleading. Top line revenue without taking into account the costs required to achieve that revenue can lead to complete misunderstanding the health of the business. Insights into the business that are actionable financial metrics should include all costs associated with the gross revenue. Getting to the core of understanding business health requires metrics that reflect net values. Examples include net income and net profit margin that reflect both the incoming revenue stream and outgoing costs.

Number 3-Vanity Metrics: Vanity metrics are interesting but often totally irrelevant to business decisions. Vanity metrics include social media followers, page view or app downloads. While they might look impressive or depressing, depending on the numbers, they don’t necessarily connect with business success or profitability. Some would argue these vanity metrics have value for understanding the success of marketing efforts. I would argue that a more valuable and actionable metric is Return on Marketing Investment (ROMI). ROMI requires a bit of work to calculate because it focuses on the profits of incremental sales attributed to marketing activity like social media, page views, promotions and campaigns. It can be calculated uniquely for each marketing or advertising channel providing insights into the value creation of marketing activities in each channel.

Number 2-Customer Count: Focusing on the gross number of customers doesn’t tell you much about your business. It doesn’t reflect the value of those customers, their behaviors, retention or loyalty. There is no insight with this metric, it’s just a number. Insights leading to action comes form hard metrics that reflect the value of your customer base through understanding segmentation of that customer base, retention of customers, customer lifetime value (CLV) or in B2B scenarios average revenue per account (ARPA). In today’s business world customers move and shake like an 8.0 earthquake. Rely on the data beneath the customer count to make decisions that create value for the business and the customer.

Number 1 – Employee Hours Worked: Not many businesses use this metric but for those that still see value in knowing how many hours employees put on a timecard it’s time to wake up. Simply tracking hours worked doesn’t account for productivity, competency or efficiency. Unless your business relies on timesheets for billing customers to generate revenue hours worked is the top irrelevant metric in history. Focus on output and results to truly measure employee performance. Revenue per employee provides a read on the entire workforce. The more revenue per employee, the more productive is and the more likely its efficiently using resources.

Metrics drive insights that drive action. Use that valuable real estate on an executive dashboard for meaningful metrics that provide a snapshot of business health.

July 24, 2024 Posted by | Uncategorized | , , , , | Leave a comment

Branding…Does it really matter?

If your brand requires an explanation, it’s not a brand, it’s just a fictitious name. 

I submit that because of marketing oversaturation in every field of endeavor, unique branding has become irrelevant. I contend that the sheer volume of companies and branded products has diluted the impact of individual brands. Established brands are living off decades of saturation while new introductions get lost in the background.

Let’s consider the available data:

Number of Companies: As of 2021, there were approximately 333.34 million companies worldwide. This represents a significant increase from previous years, indicating a crowded marketplace where countless companies vie for attention. Although this number is enormous it doesn’t represent the single shingle service providers that proliferate every day so I’m adding a few more for mom and the kids, let’s call it 500 million for fun.

Branded Products and Services: While exact numbers are elusive, the proliferation of brands is evident. For instance, Nestlé alone boasts over 2,000 brands, and there are numerous examples of successful brands with numbers in their names, indicating a trend in branding strategies. Think about that for a second. One consumer company holds 2000 brands, pshaw you say, I’m not a consumer business I’m a B2B business.  OK then, let’s do some quick math on that; say 50% of the 500 million or so going concerns are B2B and have just a single brand. Oops, that’s in the neighborhood of 200 million unique, or so everyone thinks, brands.

The impact of this saturation is reflected in consumer behavior and marketing effectiveness:

Consumer Trust: Over-targeting and ad saturation have been shown to damage consumer trust in brands, with 54% of UK consumers objecting to being targeted based on past online activity.

Ad Fatigue: The phenomenon of ad fatigue sets in when a target audience is bombarded with ads from the same brand, leading to decreased engagement.

Brand Relevance: Despite the challenges, 44% of consumers enjoy ads that are directly relevant, suggesting that unique branding can still resonate when executed properly.

While the data indicates a crowded marketplace with a vast number of companies and products, the relevance of unique branding is not entirely negated. Instead, the challenge lies in cutting through the noise and connecting with consumers in meaningful ways. Unique branding, when aligned with buyer interests and executed with precision, can still hold significant value and relevance.

A brand stands as the silent ambassador of a company, embodying its values, ethos, and identity. encapsulates the quintessence of what a brand should represent—a seamless connection between the product and the buyer that requires no intermediary.

Think about your own businesses branding for a moment. Does it meet the criteria as a brand? Probably not. Most branding these days is around some whimsical made-up set of letters and symbols that mean nothing to anyone other than the folks that created it.

A brand is much more than a name or a logo:

  • It represents the emotional and psychological relationship a company has with its customers. Strong brands evoke a visceral response,
  • It generates a feeling of familiarity and trust that resonates with the buyer on a subconscious level.
  • An effective brand transcends the need for explanation because its essence is already known and felt. This immediate recognition is the hallmark of a successful brand.

The necessity for a brand to be self-explanatory also lies in the fast-paced world we live in. Consumers are bombarded with countless choices and messages every day. In such a saturated market, the ability of a brand to stand out without requiring a detailed backstory or rationale is crucial. A brand that needs to be explained is at a disadvantage, as it fails to make an instant connection with potential customers.

A brand that is self-evident is more likely to foster loyalty. When consumers understand what a brand stands for, they can align their personal values with the brand’s image. This alignment creates a strong emotional bond that is far more enduring than any rational explanation could provide. It is this bond that turns first-time buyers into lifelong customers.

Remember to consider the role of simplicity in branding. A brand that is too complex or abstract may struggle to communicate its message clearly. Simplicity in design and messaging allows a brand to be direct and powerful. A simple, yet strong brand cuts through the noise and delivers a clear message that is easy to remember and recognize.

Growing up my family would visit a butcher shop called “Meatland” no doubt there about the branding. Simple, elegant, and clear as a bell. You didn’t visit “Meatland” if you needed a tomato.

May 14, 2024 Posted by | Uncategorized | , , , , | Leave a comment