accenture-interactive-digital-transformation

Accenture Interactive – Point of View SeriesDigital TransformationRe-imagine from the outside-in

Digital TransformationRe-imagine from the outside-inDigital is re-imagining the humanexperience. It is remaking howpeople live, work, play and connect.Everything is being rethought,simplified and improved—eventhings people have taken forgranted throughout their lives.Most companies recognize thatthey cannot turn a blind eye tosuch a powerful force shapinghuman behavior. What workedyesterday to attract, engage andretain customers may be fastbecoming obsolete. So how cancompanies develop a customerrelevantdigital business whenchange is the only constant andbest practices are being redefinedat warp speed?Through the digitallooking-glassBusiness success today requires a customerfocuseddigital transformation. It startswith prioritizing a superior and relevantcustomer experience and aligning theorganization, processes and technologyto power it.Every digital transformation journey will bedifferent and dynamic because captivatingcustomers means constantly and swiftlyadapting to their changing needs.Leading companies are already re-imaginingcustomer experiences with a strong focus ondigital. By giving customers rich experiencesin their own languages, Marriott is reaching$7 billion in annual sales online, 1 while amultichannel commerce solution is enablingNespresso to offer a more personalizedand complete customer experience across41 countries. 2Such efforts to become a customer-relevantdigitally powered business are no longeroptions, they are musts. And for manycompanies, their ability to embrace digitalis quickly becoming a matter of survival.The time to act is now.A view of the market shows just howimportant the customer relevance imperativeis for business success in a digital world:• Brand recognition: For the first timesince Interbrand’s top 100 global brandranking was created in 2000, Coca-Colawas edged out as the number one globalbrand—by Apple and Google claiming thetwo top spots. In fact, four of the topfive global brands are helping to driveor shape the digital ecosystem. 3• Stock performance: Watermark Consultinghas found that companies with a strongfocus on customer experience outperformthe market. Six years of stock performancereveal that these companies have acumulative total return of 43 percentcompared to 14.5 percent for the S&PIndex. Companies without a strong focuson customer experience lag well behindthe market with -33.9 percent return(see Figure 1). 4• Customer loyalty: Forrester researchshows a correlation between customerexperience excellence and revenue gainstied to customer loyalty—be it throughrepeat purchases, lower switching ratesor increased word of mouth. The researchrevealed potential loyalty-related revenueboosts of $3 billion for wireless serviceproviders, $2 billion for airlines and$1 billion for hotels as stand-outsamong the industries analyzed. 51 Accenture, “Marriott International: Web ContentOptimization,” 2012.2Accenture, “Accenture and hybris Team to ImplementMultichannel Commerce Solutions for GlobalEnterprises,” August 5, 2013.3Interbrand, “Best Global Brands 2013,” accessedDecember 3, 2013.4Jon Picoult, Watermark Consulting, “The WatermarkConsulting 2013 Customer Experience ROI Study,”April 2, 2013, accessed February 18, 2014.5Maxi Schmidt-Subramanian, Forrester Research,“The Business Impact of Customer Experience, 2013,”June 10, 2013.

Figure 1: Customer experience leaders outperform the market6-Year Stock Performance of Customer Experience (CxP)Leaders vs. Laggards vs. S&P 500 (2007-2012), © 2013 Watermark Consulting50.0%Cumulative Total Return40.0%30.0%20.0%10.0%0.0%-10.0%CustomerExperienceLeaders43.0%SxP 500Index 14.5%-20.0%-30.0%CxP Laggards-33.9%-40.0%

Customer experience leaders know thatdigital is not about being technology-led.They accept and embrace digital realitiesand think, rethink, and think again abouthow to be relevant to current and futurecustomers—from creating new experiencesand service models to transforming thebusiness. 6 They continually sense andrespond to the ways that digital is turningeverything around them upside down:Customers are empoweredat every turn, all the timeThe digital world we live in has given riseto the non-stop customer. 7 Considerationand engagement are on their terms.These customers have heightenedexpectations for superior and relevantinteractions across all digital andphysical channels at all times. In fact,many customers are willing to sharetheir personal information for superiorcustomer service. 8 Their path to purchase iscomplex and far from linear. Customers areincreasingly looking for opportunities to actas co-producers of content, experiences—even products and services. This demandssynchronicity across the entire value chain.Customers have the ready means tobroadcast their delight and disdain viasocial media. And they are more thanwilling to switch providers when they donot get what they want when they wantit. In fact, Accenture research indicatesthat 66 percent of consumers worldwideswitched companies due to poor customerservice in the past year alone. 9Buying decisions are increasingly tied todigital media. This research also showssignificant growth in consumers’ use andstated influence of digital sources—corporateweb sites, online news and review sites,and product comparison sites—for productinformation. 10 This trajectory suggests thatdigital channels will continue to outpacetraditional channels such as in-store or printadvertising as go-to resources.Savvy marketers understand the significanceof this trend. Accenture research reveals that65 percent of senior marketing executivesagreed that consumer relevancy has thelongest-term impact on marketing strategy.Yet another reason why getting the digitalexperience right is so essential. 11Competitors are not what—or who—they used to beDigital is changing the competitivelandscape. Across industries, traditionalplayers are exploring new identities. Forexample, UK supermarket chain Tesco hasentered the entertainment sector with anon-demand video service, the latest newventure built on knowledge accumulatedfrom its loyalty card. 12 And US retailpowerhouse Wal-Mart is working withan online university to create onlineeducation courses for employees. 13Markets are also witnessing the emergenceof a whole new breed of passionate digitalcompetitors that pride themselves onfollowing their own playbooks, reinventingservices along the way. PayPal challengesage-old boundaries between banking andretail. Tesla has transformed the experienceof purchasing a car. Such blurring ofthe lines between traditional industryboundaries signals new partnerships andecosystems that are poised to competewith the world’s category leaders anddisrupt the competitive landscape.Technology is enabling people—but disrupting businessThere is no doubt that technology hasa significant role in the digital revolution.The volume and pace of technology anddevice innovation is already unprecedented—let alone what tomorrow will bring. And, mostcompanies are struggling to keep pace withthe multitude of new platforms.The importance of technology is not solelya function of technology itself, but ratherwhat it empowers people to do and how italters the human experience. Greater optionsand access mean that media, devices andplatforms continue to be democratized,influencing more people in more ways.For example, the wearable devicesmarket—which literally connects peopleto technology—is estimated to grow from$1.4 billion in 2013 to $19 billion by 2018. 146Accenture, “Growth Strategies for a Digital World,”March 2014.7Accenture, “Serving the Nonstop Customer,”October 2012.8Accenture Interactive, “Survey Results: Today’sShopper Preferences: Channels, Social Media, Privacyand the Personalized Experience,” November 2012.9Accenture, “2013 Global Pulse Research: DigitalCustomer: It’s Time to Play to Win and Stop Playing toLose,” November 2013.10Ibid.11Accenture Interactive, “Turbulence for the CMO:Charting a Path for the Seamless CustomerExperience,” May 2013.12BBC, “Tesco Trials New On-Demand Film and TVService,” February 12, 2013, accessed December 5, 2013.13Stephanie Clifford and Stephanie Rosenbloom, “Wal-Mart to Offer its Workers a College Program,” June 3,2010, accessed December 5, 2013.14Juniper Research, “Press Release: Mobile SmartWearable Devices to be Worth $19 Billion by 2018,Juniper Research Finds,” October 15, 2013, accessedDecember 3, 2013.

Shattering the status quoBusiness models that historically made manycompanies successful are becoming thebane of their existence. Former strengthslike size, structure and culture are fastbecoming liabilities as established companiesstruggle for agility in the digital world.Once the gold standard for information,Encyclopedia Britannica announced an endto printed editions in 2012 after 244 years.In 2010, U.S. Internet ad revenue surpassednewspaper ad revenue 305 years after thefirst newspaper ad appeared. 15Many companies are falling behind nimblenew entrants that are setting—evenleapfrogging—the pace of change, and areinherently structured to reap the benefitsof digital success.The good news is that all is not lost. Thereare significant opportunities for companiesthat embrace digital realities and use themto drive customer relevancy.For most companies, digital transformationwill require reorientation around an“outside-in” lens to deliver enduringcustomer relevance at scale. Companiesshould first consider the visible part oftheir business—everything that customersexperience directly. With a clear pictureof the customer journey, companies canthen align the parts of the business thatcustomers do not see—internal operationsand technology infrastructure—becausethese elements make or break thecustomer experience (see Figure 2).1 Delight your customersCompanies must understand customers todesign delightful omnichannel experiencesand services. Customer systems shouldbe relevant, simple and elegant. This isjust what digital pioneer Amazon hasalways prided itself on. Amazon winswith customers because it makes it easyfor them to get exactly what they wanthassle free, while continually raising thebar on the customer experience. 162 Re-orient your businessCompanies must tune brand managementand the operating model towardcustomer-centricity and agility whileinfusing analytics into the core culture.Business systems should be effective,efficient and deliver return on investment.BMW recognized this need to align itsinternal business operations around itscustomers, implementing an eKanbansystem digital solution together with LearCorp., a car seat supplier, to streamlinethe supply chain. 17 Performance should bemonitored and measured, with changesmade as necessary.3 Flex your platformOptimizing the marketing, content andcommerce technology infrastructure—and turning on a dime as needed—powers customer experiences andbusiness operations. Technology systemsshould be robust, scalable and capableof being deployed quickly. A leadingglobal consumer goods company isextending its digital transformation withthe creation of a comprehensive digitaldashboard architecture. This flexibletechnology solution will store data frommultiple digital sources and provide astrategic business intelligence platformfor analysis, insights and measurementof global digital marketing initiatives.Making a complete digital transformationmeans aligning and executing these threeelements together, even if maturity amongthem varies. This could mean acceleratingthe effectiveness and efficiency of thecurrent business, driving growth. Or it can bedifferentiating the business by launching newproducts or services that delight customers.The ultimate reward is breakthrough businessperformance. This is just what Swedishmobile operator 3 did when it launchedthe My3 app. Guided by customer insight,the company transformed the monthly billfrom an annoyance to a powerful customerengagement tool. The innovative smartphoneapp gives users access to the informationthey want while reducing customer servicesupport calls. 1815Mary Meeker, KPCB, “Kleiner Perkins Caufield ByersInternet Trends 2012,” May 30, 2012, accessedDecember 3, 2013.16J.J. McCorvey, “AmazonFresh is Jeff Bezos’ Last MileQuest for Total Retail Domination,” August 5, 2013,accessed December 3, 2013.17Rüdiger Stern and Matthias Ziegler, Accenture,“Outlook Point of View: Are You Ready for the DigitalValue Chain?” August 2013.18Fjord, “Making Bills Fun: Creating a Service toDemystify the Phone Bill,” accessed December 3, 2013.

Figure 2: Enduring customer relevance at scaleEnduring customer relevance requires three key elements:DELIGHT YOURCUSTOMERSRE-ORIENTYOUR BUSINESSUnderstand your customer todesign delightful omnichannelexperiences and servicesRelevant, Elegant, SimpleFLEX YOURPLATFORMTransform the businessand operating models towardcustomer-centricity and agilitywhile infusing innovation andanalytics into the core culture.Effective, Agile,Delivers ROIPower the businessand customer experiencesby optimizing the marketing,content, and commerce technologyand operations–scaled asneeded to perform.Robust, Scalable,Deployed Fast

No journey looksthe sameA customer-focused digital transformationis a unique journey for every business.It is one that often includes unexpecteddetours that allow for continual refinement.A number of factors, such as the extent ofindustry disruption and market maturity,will influence how the journey proceeds.While a tremendous opportunity, digitaltransformation is never a quick fix.Accenture experience reveals that thereare five building blocks to enabling digitaltransformation (see Figure 3). The digitalbusiness must be hyper focused oncustomers. With data management at thecore and fueled by expert analytics, insightand content management, a digital businessprovides fully integrated services forseamless, 360-degree customer experiences.Organizational and cultural changes and theright operating model must underpin thesebuilding blocks, and are often the mostchallenging elements to tackle.With so much at stake, getting started canbe overwhelming. But there are specificactions that companies can focus ontoday to jumpstart a meaningful digitaltransformation—keeping the customerexperience front and center at every turn:Mindset: Broaden the definitionof digitalMany companies have blinders on whenit comes to their definition of digital.A campaign-driven, technology-ledperspective confines digital to a singlepart of the organization, and is muchtoo narrow for lasting business success.Instead, companies must infuse digitalinto every aspect of the business, creatingan enterprise-wide digital ecosystem thatincludes people, processes and technologies.One of the United Kingdom’s leading retailersis bringing this understanding to its digitaltransformation. The company launcheda five-year transformation program toreinvent itself as a digital retail leader.This program goes well beyond marketingto include improved business intelligencecapabilities, a multichannel platform,cost-efficient supply chain and a newcommercial operating model.Connection: Discover howin love customers really areCompetitor benchmarking does not alwaysprovide the right insights for guiding aneffective digital transformation. Becausecompanies have such varying degrees ofdigital maturity, benchmarking can quicklybecome an exercise in comparing apples tooranges that nets few actionable insights.Such approaches also miss a key metricfor the customer-focused digital business.Namely, how do customers feel aboutthe company? Do they view the customerexperience as being relevant enough?Will the quality of interactions keepthem coming back?As part of their digital transformation,companies can augment traditionalbenchmarking practices, pursuing new waysto get a pulse on true customer satisfaction.This includes measuring rational andemotional appeal. APCO Worldwide’s 100Most Loved Companies index is one exampleof this kind of tool, as rankings reflect anemotional linkage rooted in understandingcustomers’ feelings about brands. 19Figure 3:Building blocks of a digital businessCustomer Journey BlueprintIntegratedServices (to allowpersonalization ofcustomer dialogue)Analytics &IntelligenceDataManagementContentManagementOmnichannelExperience(online, offlinemobile)An ecosystem that addresses organization structure, culture and partners

Leadership: Build momentumfrom the topDigital transformation must start at the topof the organization and permeate through it—the entire C-suite must be committedand work in a highly collaborative mannertoward shared goals. There is no prescriptiveapproach as the CEO, CIO, CMO, or ideallya combination of C-level executives, couldlead the transformation depending on acompany’s circumstances. Some companiesare looking to the leadership of an emergingC-level role here such as the chief experienceofficer (CXO). Gartner reports that 19 percentof business leaders expect to see a chiefdigital officer by 2014 and 17 percent expectto see a chief data officer. 20Burberry’s evolution from a quintessentiallyBritish brand to a recognized global digitalgroundbreaker reveals the power of C-leveldigital champions. Former CEO AngelaAhrendts—who was recently hired by Appleto oversee its retail and online stores—is largely credited with spearheading thecompany’s much-heralded transformation. 21Education: Teach the powerof digitalIn many organizations, digital expertiseis held by a select few. Moving forward,it is imperative that digital knowledgegoes beyond isolated pockets to becomeembedded throughout the organization.Recognizing the need for consistent digitaltraining, Unilever set up a Media Lab inIndia—adding to a similar hub in Shanghai—to share leading digital practices andemerging approaches and tools. 22 Nestlé’sDigital Acceleration Teams bring marketingmanagers together from different regionsfor an intense eight-month digital trainingprogram. Participants emerge as digitalchampions, ready to engage with customersin new ways. 23 Such programs can bestructured to reflect digital maturity atin-market levels.Teamwork: Encourage digitalaccountabilityAn essential part of digital transformationis to make structural changes that enablecollaboration, not just in name only, butin practice. Companies can set digital keyperformance indicators for personnel inall areas of the organization—and rewardhigh performers with incentives.Entrepreneurship: Committo never being satisfiedTruly owning the mantle of the digitalbusiness means always being willing tothink and work like the best of them.Throughout the digital transformation,companies should ask themselves, “Whatwould Apple or Google do in this situation?”This entrepreneurial spirit can leadcompanies to exciting opportunities toinnovate outside of their comfort zone—where the magic happens. This is whatTurkey’s Garanti Bank did when it creatediGaranti, a mobile-only banking servicethat allows customers to create their owncustomized banking service. 24 Nike, withinnovation part of its DNA, created Nike+,which uses a pedometer placed in theshoe to engage customers around theirindividual athletic performance—openingthe door to the increasingly popular“quantified self” market. 25Planning: Invest beyond thehere and nowDigital gains are not necessarily immediate.Companies must be patient, pursuing digitaltransformation as part of a lasting visionfor change, making long-term investmentsrather than focusing only on point solutionsthat promise an immediate payoff. Planningand creating a customer journey blueprintare essential to coordinate efforts aroundall three elements of the customer-relevantdigital business.Nespresso is doing this today. The companyis beginning a longer-term transformationprogram to delight customers and align thebusiness around it. The initiative includesa single, streamlined, interactive platformdesigned to create more consistent andseamless customer experiences underpinnedby agile and flexible business processes thatsupport local market needs. 2619APCO Worldwide, “Disney, Yahoo!, Google Top Listof 100 Most Loved Companies,” October 10, 2013,December 3, 2013.20Gartner, “CEO and Senior Executive Survey 2013: AsUncertainty Recedes, the Digital Future Emerges,” 2013.21Sheena McKenzie, “Angela Ahrendts: The Burberry CEOWho Reinvented a Heritage Brand for the Digital Age,”October 15, 2013, accessed December 3, 2013.22Sagar Malviya & Amit Bapna, “Hindustan Unilever setsup digital media lab in Mumbai to train managers,”July 26, 2013, accessed March 5, 2014.23YouTube, “Nestlé Digital Acceleration Team,” accessedDecember 3, 2013.24The Paypers, “Garanti Launches Socially-IntegratedMobile Banking Service,” August 28, 2013, accessedDecember 3, 2013.25Mark Parker, “Nike 2011 Shareholder Letter,” July 13,2011, accessed December 3, 2013.26Accenture, “Accenture and hybris Team to ImplementMultichannel Commerce Solutions for GlobalEnterprises,” August, 5, 2013.

Putting it all into perspectiveWho arethe futurecustomers?Is the businessdelightingcustomers—anywhere andevery time?Who are thefuture competitorsand partners?What willthe businessbecome?Digital transformation is not for thefaint-hearted. It pushes companies totake stock of who they are—and what theycould become. That alone is hard work.But amid the inescapable realities of newcustomers, new competitors, new partners,and new technologies, success cannot beleft to serendipity.The business imperative for all is toachieve enduring customer relevance atscale through a customer-focused digitaltransformation. Whether companiesperceive digital as a threat, a challengeor an opportunity, those that ignore itdo so at their own peril.Moving forward, companies will need topursue digital transformation in order tosurvive, let alone be market leaders. It isoften complex and requires thoughtfulinvestment. Yet the vision must be tocontinually renew the strategy, culture,operating model and infrastructure toflex the business on an ongoing basis.Because anticipating customers’ needs andexceeding their expectations is essential ina customer-relevant digital world.

To learn more about customer-focuseddigital transformation, contact:Baiju Shahbaiju.shah@accenture.comAnatoly Roytmananatoly.roytman@accenture.comPatricio De Matteispatricio.de.matteis@accenture.comAbout Accenture InteractiveAccenture Interactive helps the world’s leading brands delight their customers andachieve superior marketing performance across the full multichannel customerexperience. As part of Accenture Digital, Accenture Interactive works with over23,000 Accenture professionals dedicated to serving marketing and digital clientsto offer integrated, industrialized and industry-driven digital transformation andmarketing services. Follow @AccentureSocial or visit accenture.com/interactive.About AccentureAccenture is a global management consulting, technology services andoutsourcing company, with approximately 281,000 people serving clients inmore than 120 countries. Combining unparalleled experience, comprehensivecapabilities across all industries and business functions, and extensive researchon the world’s most successful companies, Accenture collaborates with clients tohelp them become high-performance businesses and governments. The companygenerated net revenues of US$28.6 billion for the fiscal year ended Aug. 31, 2013.Its home page is www.accenture.comCopyright © 2014 AccentureAll rights reserved.Accenture, its logo, andHigh Performance Deliveredare trademarks of Accenture.This document makes descriptive reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of suchtrademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademarks.Information regarding third-party products, services and organizations was obtained from publicly available sources, and Accenture cannot confirm the accuracyor reliability of such sources or information. Its inclusion does not imply an endorsement by or of any third party.The views and opinions in this article should not be viewed as professional advice with respect to your business.