How Business Ecosystems and Customer Centricity Drive Digital Transformation
Key concepts behind the process of digital transformation
Digital transformation is broader than a digitization process. It consists of a deep shift in operations, processes, competencies, and business models to take full advantage of the changes and opportunities offered by digital technologies and their accelerated impact on society.
Digital Business Ecosystems
The technology research firm Gartner defines a digital business ecosystem as:
“A dynamic network of entities, interacting with each other to create and exchange value for all participants.”
Digital companies such as the FAANG companies — Facebook, Apple, Amazon, Netflix and Google — design roadmaps based not merely on products, but on the information and service needs of people and organizations that are part of their ecosystem.
These companies are willing to surrender some control and centralization in order to survive in rapidly changing markets, responding nimbly to these changes. This new competitive environment was the result of an increase in connectivity, better techniques for information gathering and data analysis, a higher degree of collaboration between strategic partners, and dynamic business models.
The Roles within an Ecosystem
Each member may play one or more roles, and these may vary depending on the type of interaction they have with the different members. For instance, a producer offer value to certain members, but might be a consumer to others.
A digital ecosystem is made up of people, organizations and things (IoT). Each member within the ecosystem has a role: an Ecosystem Orchestrator, a Producer or a Consumer.
Ecosystem Orchestrators: these entities allow for the creation of shared value within the ecosystem community. They enable others to make and sell goods and services through the ecosystem, protecting its integrity. Examples of orchestrators are Amazon, Alibaba and Mercado Libre.
Producers: these entities offer and monetize value in different ecosystems. Examples of producers are Netflix, Spotify, Apple.
Consumers: these entities, whether they are people or companies, extract value from the ecosystem.
Each member may play one or more roles, and these may vary depending on the type of interaction they establish with the different members. For instance, a producer may offer value to certain members, but might be a consumer to others.
Customer Centricity
In the past, when brands felt threatened, they would implement an offensive strategy and steal market share from their competitors. As a consequence, we nowadays tend to repeat those tricks that have become obsolete. It is essential to understand that, in our present culture, the new paradigm is empathy.
However, there is not a single roadmap to establish empathy with the customer. What we do know is that we must shift to focus on seeing what our customer sees, understanding our audience’s experiences intimately, and making decisions considering the effect that they may have on customers.
Data-Driven Operations
The process of transformation to a customer-centric organization requires considerable investment in data resources. Data has the potential to guide us towards something new, something we cannot imagine or see. It allows us to create products and services that have value for customers because we perfectly know their needs.
The use of data has a direct impact on the decision-making process within an organization. This data should not be used as a limited resource but should rather be available to improve the operations in any area within the organization. The problem is that, in most companies, data analysis occurs at the business level based on past events, and decisions are not made in a timely manner.
Personalization of Customer Experience (CX)
We are faced with one-to-one communication with customers, who have high expectations about the way we address them. This requires a deep understanding of what consumers do (behavior) and who they are (interests).
Brands are adopting communication channels with their customers that support the degree of personalization required, such as emails and mobile applications. Meanwhile, billboards, magazines, radio and television are being gradually discarded.
A 360-Degree View of the Customer
The 360-degree view of the customer refers to the ability to collect information describing the customer from all their angles. This holistic view helps to obtain additional information about the customer:
- What were the direct interactions with the customer and through which channels?
- What was the quality of service provided to the customer?
- Is the customer satisfied with the product/service provided?
- What are the customer’s habits? What services does the customer use on a regular basis? When and where?
- Who is the client? What is the client’s position or social role?
The insights we gain on the customer enable us to take the right actions to optimize business operations. Understanding user behaviors and experiences is an important ability, not only because it keeps the brand well informed, but also because it leads to better control over the decisions made.
Customer Journey
To improve the customer’s experience, it is essential for a brand to know the stage of the client in its “customer journey.” For example, if a user is already registered and is a regular customer, whenever they need assistance with a service provided, the conversation should be directed towards providing them with a better experience for those services rather than selling them a different one.
In marketing terms, the Customer Journey plays a crucial role for customer care and the loyalty process, as different areas can address a user through multiple touch points. The Customer Journey allows us to better understand the customer in their relationship with the brand in order to deliver the best possible experience.
Omnichannel Customer Service
As we have seen, customers want a personalized experience. In omnichannel customer service, the choice of when and where a customer wants to interact with a brand, and through which channel, is left to the customer. And while there may be limitations on what is allowed based on commercial policies and legal restrictions, all features should naturally be displayed across all available channels.
Brands need to deliver a consistent and personalized experience across all touch points with the client. The customer experience must be completely seamless through all possible channels, regardless of how the interaction started, which channels it went through and how it ended.
The Role of AI
Experiences that make people feel positive emotions are the subject of study for a number of companies trying to make the most of new technologies such as Machine Learning, Big Data and Internet of Things.
Machine Learning
Machine Learning algorithms use customer data to constantly improve digital services through a learning cycle. By continuously learning from the user’s feedback, the algorithm enhances the user experience by offering a more personalized experience. However, the value of AI lies not so much in its algorithms themselves, but in the quality of the data that feed them.
Big Data
Big Data is just a huge collection of data from numerous sources. This huge amount of information can provide insights on complex customer behaviors through the different touch points in the Customer Journey.
Internet of Things (IoT)
Nowadays, there are billions of IoT devices in the world. Also known as “IoE” (Internet of everything), most of them are everyday devices, such as smartphones, smartwatches and TVs, gathering tons of information about customer behavior and preferences. The analysts explore the large volumes of data generated by these devices to find patterns in the users’ habits and monitor their behaviors.
Conclusion
In this article we have discussed the key concepts behind a digital transformation process. We have seen that, in a world of exponentially disruptive technological and cultural change, our products and services can quickly become obsolete if we are not able to spot the changes in the market on time and act accordingly.
Nowadays, customers expect much more from brands than ever before, and their standards are rising as their choices multiply every day. Therefore, if we want to survive and thrive, we must be able to offer a unique user experience, because we know our customers’ needs perfectly well. In order to do this, we should count on analysts with enough expertise to exploit our data in a creative manner and come up with a realistic picture of who our customers are.
