Content Marketing

Digital transformation: business reengineering in the age of ZMOT

Customers have changed the way they buy goods and services. According to the Social Trends Report 2013 (Bazaarvoice), before ever entering a store, 62% of Millennial shoppers already know what they want to buy through prior online research. Eighty-four percent of them say consumer-written content on brand sites influences what they buy.

The huge challenge for marketers is called “ZMOT” (“zero moment of truth”) and it nowadays makes difference between failure and success. In the good old days of brick and mortar a sales rep – or good retail marketing – would lead the customer to the “first moment of truth” (FMOT) , when he or she bought the good or the service. This moment was followed by the “second moment of truth” (SMOT) when they went home and reflected on the wisdom of their buying decision. FMOT secured short term sales. SMOT, if positive, created word-of-mouth, and drove new acquisitions in the sales funnel.

ZMOT is what happens when consumers browse on line for goods and services they might be interested in, read reviews written by other consumers, and decide whether to buy or not – well before they actually enter a store (whether bricks-and-mortar or on-line)

This cataclysmic change in consumer behavior calls for the “digital transformation” of many businesses. Digital transformation does not simply imply automating business processes. It means enabling major business improvements across a spectrum that begins with enhancing customer experience, to streamlining operations, to creating new business models (See “Starbucks Case Study” below). Ultimately this spectrum defines the map for the journey that every business will have to take to re-invent itself in the digital space and time.

But how should businesses go about digitally transforming themselves? At Feline Quanta we implement a business integration model approach to digital transformation. We therefore look at four dimensions of business re-invention.

Business Integration Model

Business Integration Model

1. Strategy: Companies need to envision themselves in the age of digital and plan a detailed map of the journey they need to take. They must assess their core competencies, look at the competition, as well as to enabling – or disruptive – technologies that affect their operations and current business model. They key to any business transformation is of course leadership. Sometimes it helps to introduce a “Chief Innovation Officer” (or VP) who will own the process of digital transformation.

2. Technology: How can social, mobile, embedded devices and a host of other disruptive technologies be integrated in order to drive the journey of digital transformation? How can ideas from agile methodology and lean startups be leveraged to develop new solutions and iterative models with the built-in ability to respond to changing consumers’ behaviors? How can data be used to effectively shape new relationships with consumers and other stakeholders?

3. Processes: How can business processes be re-designed and re-engineered in order to implement enhanced consumer experiences, or a complete re-invention of the business model? How can re-engineered processes be benchmarked and managed using applicable KPIs? How will digital transformation processes align with other IT systems in the company(e.g. ERP)?

4. People: What are the new sets of skills that are needed to drive the digital transformation of the business? How can these skills be obtained? How do training and hiring must change and adapt?

As businesses across the board become increasingly aware about the opportunities that digital transformation can confer (and the risks of not transforming), a Business Integration Model approach offers itself as a tested and well-structured method for success.

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Case Study: Starbucks

One company that has succeeded in digital transformation is Starbucks. In 2009, after dismal performance cut the company’s stock price in half, Starbucks looked to digital to help re-engage with customers. It created a vice president of digital ventures, hiring Adam Brotman to fill the post. His first move was to offer free Wi-Fi in Starbucks stores, along with a digital landing page with a variety of digital media choices, including free content from publications like The Economist . Starbucks was doing something innovative around how we were connecting with customers.  In collaboration with Curt Garner, Starbucks’ chief information officer, Brotman restructured their teams so that they collaborate from the very start of projects. Last year, they cut 10 seconds from every card or mobile phone transaction, reducing time-in-line by 900,000 hours.

Starbucks is adding mobile payment processing to its stores, and is processing 3 million mobile payments per week. Soon, customers will order directly from their mobile phones. Using social media, mobile and other technologies to change customer relationships, operations and the business model has helped Starbucks re-engage with customers and boosted overall performance. Its stock price has also bounced back up from roughly $8 in 2009 to nearly $73 in July 2013.

(Source: “Embracing digital technology” research report 2013, MIT Sloan Management Review.)