VP of product management at Tata Communications. Helping transform companies and launch version zero products.
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I recently attended an industry roundtable during which several brand business leaders discussed what they were building to offer their customers a digital experience as well as the types of challenges and requirements they had. This discussion illuminated a fact that digital transformation is no longer the domain of IT or engineers. In fact, brands large and small have taken ownership of this important capability and led digital transformations from within the business rather than treating them as a technology or process issue.
The brand leaders came from a broad range of businesses, from consumer packaged goods (CPGs) to luxury brands. Their job titles ranged from the head of digital transformation and the head of marketing to customer experience leader. They all said they had to reach customers directly through digital means and that knowing their customers was critical. They were also building data science capabilities within their organization to assess their data and ask and answer questions instead of outsourcing it like a one-off "reporting" project.
Many of us regular consumers buy CPGs and even some luxury goods from online marketplaces like Amazon, Lazada and Shopee (for those of us in the Asia Pacific). We may think that brands are happily leveraging these popular go-to-market channels to sell their soap, shoes, jerky and more. In fact, all brands (not just the luxury ones that have brand equity to protect) are trying to build a digital direct-to-consumer relationship, which often includes selling directly to consumers on their own websites. You may ask why brands would want to incur such costs and operational complexity. Why would they wade into a digital space that was not familiar to them?
Apparently, while increasing "capillarity" using online marketplaces can expand a brand's sales channel and revenue, it has proved to be a double-edged sword. When sold through online marketplaces, brands do not have access to customer preference data and are pushed to discount to increase sales volume. These forces commoditize their brands and drive down their profit margin. Brands need a direct relationship with their customers to understand what they really care about and sell them the premium experience and products that generate better profit.
Now, regular consumers may start to understand why a soap brand is trying to reach them via a mobile app and digital campaigns in addition to its standard store and e-commerce channels.
As technology and infrastructure vendors, we should also understand why enterprise customers' business leaders are starting to use terms like "composable commerce," modular, APIs and headless platforms. These terminologies are no longer the domain of IT people.
A CRM system should be more than just a static database of customer contacts. The CRM should ingest the multichannel interactions that businesses are having with consumers. The offer engine or e-commerce website should be integrated in real time with the wealth of data that the business has about its customers. That means systems that support inventory, marketing, sales and customer service all have to integrate with systems handling other business domains. This is the digital transformation that brands need.
Only by appreciating why businesses are executing digital transformation can we understand how to provide the right type of products and services to enable them. We cannot put a square peg (legacy technology product) in a round hole (today's business need) and hope to deliver value.
In a follow-up article, I will discuss the type of technologies and IT architecture needed to enable the digital transformation we discussed here. Meanwhile, what is your perspective on brands investing in digital transformation?
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