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Why digital optimization is the new digital transformation

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Digital transformation efforts have become a critical investment for companies looking to compete in the digital-first, customer-centric era. For companies who were just beginning to invest in these changes, the pandemic rapidly accelerated the need for digital products — but shifting to digital is a long-term, resource-heavy investment. IDC predicts that companies around the world will spend $6.8 trillion on digital transformation initiatives by 2023. 

The key to a successful digital strategy is understanding what keeps your customers coming back, and then optimizing and personalizing digital experiences based on those insights. Some other key considerations that every company should keep at the forefront of digital transformation projects include what follows.

Digital transformation is more than just digitization 

The general misunderstanding that digital transformation and digitization are one and the same is often the first and most common failure point for organizations. Simply bringing a non-digital product online is not digital transformation. Organizations must ingrain a digital-focus at the core of the business. For instance, a hotel moving their reservation process from over the phone to their website is digitizing their user experience, whereas organizations like Airbnb and HipCamp completely revolutionized the getaway experience. 

While digitization remains an essential part of the digital journey, it’s not the turning point that will help you attract and retain customers. Digital transformation requires organizations to rethink how to deliver value to their customers in a digital-first world and transform their business model, processes, and products to reap the full benefits of their digital technologies.

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Customers will tell you how to keep them — if you’ll listen

Digitization unlocks the ability of businesses to continually engage with customers over time, shifting investment away from one-time purchases to a larger focus on retention and customer lifetime value. Despite this, many companies still focus the majority of their efforts on acquiring new customers, which is important for short-term growth, but long-term, sustainable growth requires lifelong customers and brand advocates. When you gain better insight into how your customers engage with your digital products and experiences, you can dramatically improve offerings to increase retention and, ultimately, revenue.

When developing and launching new products, pay attention to what your customers do when they use them. What parts of your product are they engaging with the most? Do you notice any overlap between customers who engage with certain features and customers who return to use the product a second time? Where are customers getting stuck or abandoning the experience?

Observing customer behavior and answering these kinds of questions will help you optimize your digital product experiences. 

Data’s value lies in access and utilization

Digital transformation must be rooted in cross-functional alignment, particularly when it comes to managing and dispensing data. Traditionally, data science teams have been responsible for collecting, analyzing and reporting on product data. However, they aren’t the only professionals at your company who benefit from access to data. This kind of traditional ownership structure can lead to bottlenecks and decreased productivity for the entire organization. Data provides much more value to the company if all teams not only can access it, but utilize it to experiment with new ideas and innovate new solutions that customers actually want.   

Most companies grow up in a planning-centric environment where a drawn-out process of market testing, proof of concept, and launch prep culminate in an 18-month go-to-market timeline or longer.

In a digital world, the market moves at a much faster pace, and products conceived 18 months ago may not be valuable today. To truly transform digitally, organizations need to be willing to take risks and place bets on engaging users with new digital experiences quickly. Moving away from project planning and fixed end-dates gives your organization greater flexibility to examine what’s working for your users and what’s not. From there, adjustments can be made, rather than spending more than a year on a product launch that might flop. 

As an example, one of the most prominent global burger chains learned from such trial and error first-hand. The team behind the company aimed to capitalize on the increasing popularity of coffee subscriptions and online ordering services. Within just a few months, the company both launched — and subsequently deprecated — a coffee subscription service in their digital application.

By using a product analytics tool, they discovered customers ultimately weren’t using the coffee business to the degree they originally expected, leading the company to quickly shut it down. Despite this decision, the team gained invaluable insights into the customer base and avoided wasting time with a 12-month launch plan that ultimately would have failed. The ability to take risks and experiment with new products empowered this organization to innovate new offerings that more closely align with their customers’ preferences.

To make it in the post-pandemic era, every business needs to undergo digital transformation — but the digital journey does not start and end there. To make digital investments worth the time and effort, businesses must first understand what it means to transform digitally. They should then digitally optimize by cultivating a culture that focuses on understanding the customers to build products that will drive long-term customer loyalty and sustainable growth.

Justin Bauer is the chief product officer at Amplitude.

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