As small businesses continue to face a seemingly endless barrage of economic challenges, many business leaders are exploring ways to protect their future profitability. The ultimate goal of these efforts is to stabilize lead generation, build the customer base, and increase revenue streams.
To face these challenges, brands should increase their agility and technological savvy. Customer demand is shifting just as rapidly as technology is evolving to meet that demand, and digital transformation strategies are emerging to meet these challenges.
In this article, we lay out the different types of digital transformation and best practices for crafting and executing a digital transformation plan for your business. We also cover how digital transformation can impact internal and external stakeholders, and provide additional insight from experts and business owners weighing in on how digital transformation strategies have impacted their businesses.
What is digital transformation?
Unlike other strategies that focus on a single business process—such as adding new software to your marketing stack or adopting a new payment platform to ease the workload on the accounting department—digital transformation strategies integrate technology across all business functions in order to create a more streamlined and agile workflow.
“Digital transformation (means) using technology to fundamentally change how an organization operates and delivers value to its customers. This can include implementing new digital systems and processes, such as automation and artificial intelligence, to improve efficiency and productivity, as well as leveraging digital channels and platforms to reach and engage customers…The goal of digital transformation is to drive growth, improve customer experience, and gain a competitive advantage in the digital age.” —Joshua Allen, Founder and Owner, Smartlinks SEO Company
Digital transformation strategies have evolved alongside the technologies businesses rely upon and are now designed to create synergy between multiple systems to support the business as a whole rather than individual departments.
“In 2023 companies are coming into version 2.0 of digital transformation. In 1.0, companies were happy just having a website that was a digital business card. But in 2.0, companies now have come to understand that they need to be active on social media and use their websites as a knowledge base to educate their audience.” —Kevin Heimlich, CEO, The Ad Firm
The role of digital transformation in organization-wide change management strategies is to increase your organization’s agility and integrate increased efficiencies into multiple business processes.
“Digital transformation…often involves the implementation of digital technologies such as automation, AI, and cloud computing, as well as the adoption of new business models and processes. The goal of digital transformation is to improve efficiency, drive innovation, and increase competitiveness.” —Sharon Kauffman, Head of marketing, Northdoor plc
Types of digital transformation
Digital transformation strategies are multifaceted and designed to support organization-wide adoption of technology and software solutions that support growth strategies. Below, we break down the five different strategic initiatives that digital transformation experts must account for when building their overall approach to digital transformation.
Cultural transformation
Very few organizations will be able to implement any sort of digital strategy focused on transformation without support and buy-in from internal stakeholders. Cultural transformation leverages employee training and staff education around the benefits of using technology in order to set the groundwork for evolving and improving business processes via other types of digital transformation.
Cultural transformation can be one of the most challenging elements of digital transformation. It requires employees to shift their mindset away from maintaining business as usual toward taking risks and employing a more agile approach with new technological solutions. Accomplishing this requires businesses to promote cross-departmental collaboration and break down data silos so that the entire organization is focused around future innovation and transformation efforts.
Product and service innovation
The modern economy is crowded with products and services, making it nearly impossible for brands to establish a competitive advantage. Digital transformation focused on product innovation creates space around your brand’s products and services where it might be otherwise impossible to do so.
Product innovation can mean creating a new product or service, or putting a new spin on an existing offering. This requires a strong understanding of trends and customer demand in your industry to ensure you’re able to identify the right solutions. This gap-analysis approach allows your business to take advantage of the spaces your competitors have missed, helping to expand your market share and establish your company as an innovator of products and services that feel novel.
Product innovation can be folded into the development of smart devices or integrating the Internet of Things (IoT) into your products and services. Another route is to tie your services and products to a customer-facing analytics dashboard they can use to track and monitor data gathered from the devices.
Process-driven transformation
Whereas some approaches to digital transformation prioritize either the products and services you offer or the customer experience, process-driven transformation initiatives are more concerned with improving the customer experience. Also referred to as operational transformation, specialists accomplish this type of transformation by improving and modifying internal systems and procedures to meet consumer demand.
Using advanced technology and software platforms to automate, optimize, and improve business processes, digital transformation specialists take a long-term approach when focusing their efforts on process-driven transformation. The intent is to streamline and maximize internal efficiencies in order to provide the highest quality of service relative to competitors.
Process-driven transformation efforts help brands to become more agile and responsive to changes in consumer demand or industry innovations. The key to this approach is ensuring that these new high-tech processes still align with the organization’s existing goals and objectives.
Customer-driven transformation
Digital transformation experts can take a number of approaches to restructure and reposition their brand for success. When taking a customer-driven approach, transformation experts forgo the organization’s immediate sales and revenue goals to instead put customer experience, needs, and expectations at the center of the change initiative.
In placing the customer’s needs front and center, you’re reassuring your customer base that you’re more concerned with solving their problems and improving their quality of life than you are with increasing your own sales. Your team instead will be focused on improving (rather than monetizing) the customer experience, fostering long-term relationships, and gathering data to support those efforts.
A customer-focused transformation effort is designed to ensure every department is unified by relevant technology, such as chatbots, machine learning platforms, and other customer-centric tools, all designed to improve customer service and allow data to flow between teams in the pursuit of unified business goals.
Business model-driven innovations and transformation
Innovation is often accomplished not through the expansion of the products and services a business offers its customers, but instead by expanding the channels through which consumers can purchase those goods or services. This can have the dual benefit of helping the business reach a wider array of customers.
Digital transformation experts have been extremely busy over the past several years executing business model-driven transformations. With quarantine measures and work-from-home mandates fundamentally shifting consumer activities to online channels, businesses were forced to leverage new technology and software solutions to add revenue channels and online customer engagement methods.
Digital transformation that is focused on evolving the business model can be extremely disruptive. There is a steep learning curve across departments in order to adapt to the software platforms required to operate an effective eCommerce initiative.
How can your business develop an effective transformation plan?
Crafting an effective digital marketing plan requires an extensive, multi-departmental approach. At the start of the process, though, it’s vital to align your digital transformation strategy with your overall business strategy.
“An effective digital transformation plan starts with a strategic vision of the business’ goals. Digital transformation should not be a siloed task undertaken strictly by technology (IT) staff. Nor should it be a top-down management directive. Instead, senior business leaders should engage technology leaders and work together towards a holistic vision.” —Sijia Wang, Managing Partner, SiFr Consulting
Once aligned with both the corporate vision and the needs of customers, it’s necessary to create a roadmap of how to best impact the business through the implementation of various technologies. The roadmap should not be overly complex, and the transformation should be built around several measurable initiatives.
“Digital transformation needs to be considered strategically first, then organized tactically, (and) executed in a disciplined manner over time with a firm digital foundation that allows for expansion. The strategies and tactics need to put the customer’s needs first and meet the business objective of the vendor/partner company.” —George Szymkiewicz, Principal Consultant, Websavvy Consulting
Once mapped out, you should also prepare your staff for a shift in the culture focused on innovation and change. This should be accomplished through employee training and education. This will make it easier to track progress and make adjustments to the strategy as the transformation process works to evolve the business.
“An effective digital transformation plan begins with defining clear business objectives and conducting a thorough assessment of the current state of the organization. A detailed roadmap should be developed outlining the initiatives, resources required, and expected outcomes. Change management is also crucial to ensure a successful digital transformation, including communicating the plan to employees, providing training and support, and getting buy-in from key stakeholders.” —Blake Nolan, Founder and Chief Operating Officer, Storm Brain
The ultimate outcome should be a synergy between departments accomplished through the implemented technologies, and the ability to assess how the changes have impacted the organization’s bottom line profitability. With an understanding of how digital transformation has played out, through gathering feedback from stakeholders, you can then refine and adjust your approach.
“It starts with a 360-degree assessment of current strengths and weaknesses and a set of goals to take the business forward. Leadership should…determine the best paths forward based on history, competencies, position in the market, and ability to invest in growth. This plan for digital transformation should be treated as an investment, and you should expect an ROI from your website and other digital marketing assets based on this plan. Use outside experts to guide your journey, as using an agency gives your staff access to a whole team of experts that you and your team can benefit from.” —MJ Owen, Director Marketing, Asset Digital Communications
How does digital transformation impact stakeholders?
Digital transformation doesn’t take place in a vacuum. If properly executed, a digital transformation will not only change how your organization operates and functions, but also how you interact with your customers. Below, we break down the impact of digital transformation on both sets of stakeholders.
Why is digital transformation essential for business growth?
Digital transformation is a strategy for helping your business grow in ways that your current infrastructure cannot support. Growth goals are achieved through the various technologies implemented, providing leadership with more actionable data and insight into lead generation and conversion efforts.
“Digital transformation is essential for business growth as it enables increased efficiency, improved customer experience, greater innovation, better data-driven decision making, increased competitiveness, and cost savings. By implementing digital technologies, businesses can automate processes, gather data and insights, explore new business models and adapt to changing market trends, all of which can drive revenue growth and market expansion.” —Aaron Rose, Cofounder and CEO, Contractor Gorilla
Because technology has become almost inseparable from standard business operations, it follows that you have to keep your current technology stack at the cutting edge across all business processes in order to remain competitive.
“Digital transformation goes beyond what customers or clients can see on your website, ads, or social media. It speaks to the efficiency of your operational processes, the quality of your services, and the professionalism and knowledge of your team. If you’re not actively working to transform your business’s digital presence, your competition will soon surpass you. It’s this simple: if you adapt, you grow, but if you don’t strive for continual improvement, growth is impossible.” —Marissa Massey, Head of SEO and Content, Creekmore Marketing
In addition to maintaining an essential edge over the competition, digital transformation instills a degree of efficiency and automation into operations that allows your team to capitalize on current trends without losing ground by needing to invest in time-consuming, repetitive tasks.
“Digital transformation reduces time wasted and increases performance across departments. It allows automation, targeted sales and messaging, provides more insights for optimization and sustainable growth, and offers increased data security for critical business information and assets. Digital transformation is so much more than making a new website, throwing a few keywords into your copy and blogs, or blindly blasting your customers with marketing emails.” —Xiao Faria daCunha, Founder, Westerlund, Co
How does a business’ digital transformation impact its customers?
As outlined above, the various types of digital transformation tasks involved in a well-rounded strategy are often built around enhancing and improving customer interactions with your internal team.
“There are two customers: your internal team, and your external customers. You must build and design for both. Ideally, you’re making your internal team’s work easier, more productive, more valuable. With digital transformation, your external customers get quicker feedback, better features and services, and less friction when working with internal teams.” —Jonathan Cardella, Founder and Chairman, Ventive
Customer needs rapidly evolve with economic trends, and over the last several years, digital transformation has become a powerful tool for improving the customer experience.
“Business digital transformation has proven to be crucial to the customer experience as more and more businesses are making improvements to their online presence. From a customer’s perception, digital innovation and the adoption of available technological advancements simply means better service to ever-changing client needs.” —Neil Fedillaga, SEO Department Manager, Brandlume.com
A major component of improving the customer experience is expanding the number of customers your team can field and creating channels for better engaging with customer buying behaviors.
“Small businesses can leverage digital technologies such as automation, big data analytics, and the cloud to streamline their operations and reduce costs. Digital transformation can enable small businesses to better understand and engage with their customers through the use of social media, customer relationship management software, and eCommerce platforms. By digitizing their operations and processes, small businesses can gain a competitive edge in their industry and better meet the needs of their customers.” —Michael Murphy, CEO, IT GOAT
Digital transformation experts agree: it’s time to embrace tech innovation
The economy is a wild landscape where business owners are on the constant hunt for any competitive advantage. Digital transformation opens the door for SMBs to meet larger competitors head on.
“Digital transformation means the playing field is level now. Gone are the days of traditional media marketing where only the biggest businesses with the deepest pockets get all the customers. If you take advantage, you can use it to grow your business and dominate your local market with digital marketing.” —Chris Rossi, Digital Marketing Consultant, Click Sluice
In addition to providing access to advanced business process tactics, digital transformation allows business owners to access increased efficiencies and removes obstacles that might otherwise be difficult to work around.
“(If) time is your most valuable commodity, every business needs to…do a deep-dive audit of all its business rules, processes, and procedures. They are likely to identify more than a few bottlenecks or friction points that could be remedied by implementing emerging technology. I feel that a business’s willingness to adopt and implement emerging technologies will be a defining factor in the organization’s ability to identify and convert customers as well as improve overall customer retention.” —Renard Ragsdale, Founder, Ragsdale Design Group (RDG)
Most importantly, as you explore options for improving your team’s digital marketing strategies, it’s important to remember that digital transformation isn’t a magic bullet that provides a solution for all of your problems.
“Be aware of digital trends and current solutions. You don’t need to use them all, but you should know your options and how they can potentially impact your organization and its success.” —Mark Wexler, Owner, Whirlwind eCommerce
Embrace digital transformation in 2023 and beyond
As we explored in this article, digital transformation takes time and effort, and there isn’t a step-by-step plan for digital transformation that can be applied to all businesses. It requires the right technology, the right mindset, and the right strategy.
That’s why it’s so important that you fully explore how to best put digital transformation to work for your brand in order to ensure your ability to remain competitive in 2023. Check out our list of top digital marketing agencies in your area, based on verified reviews, to get started.