It was a sobering moment during a focus group conducted among digital-savvy bank customers. During the first part of the conversation, customers described the new convenience that the digital tool provided them, from personalized experiences to transaction conveniences and the fact that they hardly needed to step into a branch.
“Now, with full utilization of the digital tools, how would you rank the value delivered to you by the bank?” I asked.
The average was 5 out of 10. A 40% drop from their ranking of a high-touch experience involving bankers.
The executives in the room were stunned. Customers just ranked their over $300 million investment in digital transformation as inferior to the old experience.
“I am now serving myself, and therefore, I don’t see what value the bank brings,” explained one of the focus group participants.
As companies are rushing to deploy a plethora of digital tools, from artificial intelligence to personalized experiences to predictive analytics, all served on self-service platforms such as apps. But there is a major blind spot they all ignore. Their efforts, often driven by scare tactics of biased pundits, are predicated on several assumptions.
Assumption 1 – Digital transformation is what customers want
Assumption 2 – Digital transformation is what ALL customers want
Assumption 3 – Digital transformation is better than the current experience
Assumption 4 – Digital transformation will replace existing experiences
Assumption 5 – Digital transformation will increase value to customers
Although all of these assumptions are flawed, the last one is the most critical one. While there is no doubt that digital experiences enhance the overall customer experience and provides more cost-effective ways to service customers, it does not equate to profitable experiences. In fact, our research on behalf of a major retailer demonstrated that online-only customers are far less loyal and far more price sensitive. Combine that with the higher return level (on average 33% of online purchases vs. 9% of physical retail purchases) and you can see a very unprofitable picture emerging. On the contrary, customers who fused the online experience with the retail experience demonstrated a stronger fidelity to the brand and purchased more. Similar results were evident in a study we conducted on behalf of a major newspaper. Digital-only subscribers were far less loyal than those who combined home delivery with a digital subscription.
It is time to think about digital transformation in the context of value creation and test the different options not only based on increasing (not always profitable) sales or reducing costs, but rather on evaluating and shaping the digital transformation in the context of increasing customer value. Simply reducing customer efforts and transaction times, while important, are often perceived as a hygiene factor and do not correlate with greater profitability.
One of the key benefits provided by digital transformation is time. Customers are saving time conducting rudimentary tasks, and employees are gaining time as traditional processes are automated. Here lies the opportunity to turn time into meaningful experiences. Digital addresses the essence of time spent on tasks, and it will reduce many of the tasks we hate doing. The question is: what will they do with their newly-found time? This is where the future of value is time as meaningful/purposeful interactions. As employees’ time frees up, there are opportunities to upskill them to create new value for customers through personal human interactions, contextualizing experiences, learning more about them, and addressing unusual situations and needs.
The eternal rule of profit never changes—the profit belongs to those who serve me. If I serve myself, I keep the profit and pay very little. Companies must find the formula to add value in the digital transformation era. Otherwise, they risk delivering the most advanced digital platforms while eroding their profits and financial sustainability.
Read more: 4 Strategic Questions To Ask Before Launching Your Digital Transformation
Chief Executive Group exists to improve the performance of U.S. CEOs, senior executives and public-company directors, helping you grow your companies, build your communities and strengthen society. Learn more at chiefexecutivegroup.com.
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1:00 - 5:00 pm
Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process
Executives expressed frustration with their current strategic planning process. Issues include:
Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns. They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning. Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process. This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented. If you are ready for a Strategic Planning tune-up, select this workshop in your registration form. The additional fee of $695 will be added to your total.
2:00 - 5:00 pm
Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations.
Limited space available.
10:30 - 5:00 pm
General’s Retreat at Hermitage Golf Course
Sponsored by UBS
General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.
The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.
