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Digital Transformation: What It Means for Modern Banking

Our research finds that financial services are prioritizing innovation, cloud computing and cybersecurity.

Through their digital transformation investments to date, banks have built impressive launch pads for uncommon growth but most have yet to fully take flight. That’s the main takeaway from The 2021 State of Digital Transformation research from Altimeter, a Prophet company.

This post highlights the findings from Altimeter’s research on the banking industry – where it is today, how it compares to other industries and future priorities. Despite the potential to generate stronger returns on their digital investments, banks have typically been ahead of their peers in other sectors. In fact, we expect that banks will be among the first firms that shift the conversation away from digital transformation and toward ongoing digital fitness and digital value propositions.

Digital Transformation in Banking

Banks Prioritize Innovation and Gear Up for Increased Demand for Cybersecurity and Cloud Tech

Banks bring particular strengths to the game of transformation. For instance, banking respondents indicated that their firms have more mature data management practices than firms in other sectors. That’s no surprise, given the industry’s focus during the last decade on building out such capabilities.

Still, there is plenty of room for improvement. Notably, banks have achieved only average maturity in data science, suggesting that they can do more in exploring data and converting it to actionable insights. It seems that banks have figured out the mechanics of capturing, storing and retrieving the data, but are still working out how to best use that data to win.

The insights generated by skilled data scientists will be essential to developing the next generation of digital products, a top priority for banks. Indeed, banking respondents were more likely to cite “innovation and new products/services” as the top goal for digital transformation, compared to other industries. In contrast, transformation investments in other sectors were focused on replacing outdated tech and cutting costs. The implication is that banks have already realized those first-order benefits by digitizing many processes, though they are still pursuing innovation and higher degrees of customer-centricity, a topic we explore in greater detail in our research report Executing on Customer-Centricity.

Banks were also rated as highly mature in customer journey mapping, a foundational capability that sets the stage for innovation in product development. Our research showed that banks are more advanced than their peers when it comes to digital marketing, suggesting banks can successfully execute their go-to-market strategies once-innovative products are ready to launch.

Cybersecurity and cloud platforms were the top areas for future technology investments for the industry. Strong protections against data breaches are essential as banks try to digitize every aspect of their operations and prepare for likely new data privacy regulations. The good news is that cloud migration can help strengthen security, provided banks take a strategic approach and engage the right partners.

Digital Growth and Value Creation Opportunities in Banking

Building on the strong foundations – or launching pads – they’ve built through digitization, banks can take on bigger, bolder and more creative innovations. Yes, digital must be optimized as a channel, both for servicing and marketing, but banks must go further, rethinking the very definition of a product for the digital age.

Tomorrow’s top products will be those that combine multiple components – interest rates and credit access, rewards and discounts, security and protections, tailored experiences, relevant and value-adding content, software and algorithms – in ways that singularly meet the needs of individual consumers. The most successful products will be so frictionless and intuitive as to seem magical.

“Tomorrow’s top products will be those that combine multiple components.”

More holistic offerings keyed to life events and “moments that matter” (e.g., buying a home, saving for college or planning for retirement) will certainly be part of the solution. People will choose banks that can help deliver greater financial security and confidence, not just free checking and cash-back credit cards. No bank has yet executed such a vision at scale, but those firms that succeed at digital transformation (whether they are traditional banks, fintechs or super apps) will have a head start.

Innovation is as much a question of how as it is of what or why. Banks have the technology they need to innovate with new products and services. But actually, developing such offerings requires greater synchronization and internal coordination among different functions and product lines. Banks that simultaneously transform departments and align them to overarching strategies will achieve the digital interdependence necessary to launch an entirely new business and operating models (e.g., ecosystems).

These changes won’t be easy. Breaking down organizational barriers, reworking incentives and compensation structures and re-aligning profit-and-loss accountability are extremely difficult. However, for banks in 2022, these changes are imperative to prepare for the customer-centric future that’s taking shape across banking.

Follow Their Lead: Three Digital Lessons from Banking Winners

Our study’s findings also highlight a few specific practices embraced by banks that are farther along on their transformation journeys. The following actions can help banks prioritize investments and next steps in line with their strategic objectives.

  1. 1. Design transformation programs for innovation and growth. Prioritize new product development and experience enhancements over simple process streamlining, automation and cost reduction.
  2. 2. Formalize innovation programs. Set outcome targets based on structured processes and timelines, use benchmarks and metrics to standardize funding models and clearly define testing protocols.
  3. 3. Explore data for actionable insights. Unify and explore data sources to produce richer customer insights that extend across product lines (e.g., mortgage lending, private banking) for personalized offers and more precise segmentation (e.g., based on lifetime value).

FINAL THOUGHTS

Our study helps define what digital maturity in banking looks like today and how banks can move past transformation into the next era of digitally fit operations, inherently digital products and fully digital business models. During the next phase of their journeys, banks will look to drive much greater personalization and launch experience-led offerings. It’s clear that leading banks are already headed in that direction as they build on the foundational transformation work they’ve done to date.

We’d love to present these findings in more detail and talk with you about your organization’s unique digital transformation challenges and opportunities. Reach out today.

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Altimeter’s 2022 Trends in Digital Transformation

We’re used to social media, cloud computing, mobile and AI. Now we’re poised to prepare for the next big one.

In January 2022, the world will have been two years into a devastating pandemic, and businesses will be coming to terms with the permanence of its impact.

“After the successive eras of disruption that happened with social media, cloud computing, mobile and AI, we’re now poised to prepare for the next big one.”

As our research has shown, COVID-19 accelerated digital transformation at an unprecedented pace as companies scrambled to build better digital experiences and virtual presences, and to update aging software platforms to meet the demands of the new pandemic-era customer. We’re now entering a period where there is an uncharacteristic lull in the digital transformation world. Companies that successfully survived and thrived in the COVID era are pausing to take stock of what’s next. And companies that struggled are in the last laps of catching up. After the successive eras of disruption that happened with social media, cloud computing, mobile and AI, we’re now poised to prepare for the next big one.

Altimeter’s trends this year might not have the definitive prediction for the next big disruption. But we do have a few clues about where things are going, and we’re placing our bets on seven digital trends that we think are harbingers of the next era of digital transformation.

1. Environmentally-Friendly Marketing

We know that consumers today expect the products they buy to be ethically produced in an environmentally-friendly way, by businesses that value diversity and inclusivity.

However, it’s not just the products—today’s consumers also expect the same values from the marketing campaigns that sell to them. A recent survey from Microsoft and Dentsu found that 77% of consumers only want to spend money on brands that practice green and sustainable advertising. A few ways brands can do this include: pivoting digital spend to low/no carbon providers and shortening the journey from the data center to the audience; creating OOH posters with recycled paper; using ‘carbon eating’ paint for murals, or incorporating elements of search spend in platforms offering carbon off-setting.

2. The Data “Have-Nots” Fight Back

It’s true that companies have access to more customer data than ever before. But when you think of actual data that companies own, it’s nothing compared to the companies that ACTUALLY have access to all the customer data in the world. We’re talking about Google, Meta, Apple, Samsung, Netflix, Microsoft. The sheer scale of customer data owned by these companies dwarfs anything that an individual company owns, and as a result, there isn’t a business out there that can hope to reach and analyze its customers without these giant collectors of customer data. And for years, they have made their billions by providing access to that data at increasingly premium rates.

So it’s clear we live in a world of data “haves” and data “have-nots”. And the “have-nots” are thinking of ways to fight back. Companies are investing in building their own digital properties and filling them with their own content to keep customers engaged and generate accessible data. They’re also partnering with other companies to pool their data resources on common customers (think airlines sharing customer data with credit card companies or hotels). This won’t end our reliance on the big data companies anytime soon, but it does give companies a fighting chance when the data access rug gets pulled out from under them—either in the form of greater government regulation, or increasingly cost-prohibitive conditions for access.

3. Taxonomy is Trendy

Speaking of the proliferation of data, most companies don’t know what to do with it. After years of investing in access to all kinds of customer data generated from their own digital platforms, digital devices, customer surveys, advertisement networks and third-party marketplaces, businesses are now spending their resources on sorting into actionable categories. And it’s not just data — companies have had to exponentially scale their production of content to meet the increasing demands of personalized, channel-specific content for a variety of customer segments. This means creating a clear system of categorization for tagging, storage, access and reuse, providing a need for taxonomists to bring order to any marketing function that is serious about running large-scale, personalized digital campaigns.

4. The New “Converged” Go-to-Market Function

A key learning from our most recent report on The State of Digital Transformation was the increasing convergence of marketing, sales and service teams (i.e., our “go-to-market” function). We found that the majority (54%) of companies have shared targets for customer satisfaction and revenue, with half of them even sharing cross-sell and upsell goals across those three functions. Additionally, we found that 80% of companies were now operating off a unified customer journey that plotted digital interactions with the customer spanning across marketing, sales and service touchpoints. All of this points to an increased convergence between these previously separate functions. That means greater sharing of data, more transparency in collaboration, and even unified leadership in some cases. While we expect specialized practices in each of these functions to continue, the trend towards a highly collaborative “uber” team across marketing, sales and service is a compelling one.

5. Formalizing the Future of Work

If you’re a consultant specializing in the future of work, this is your time. COVID-19 has permanently changed the way we work, and in some ways, it has even fundamentally altered the perception of what work is. Any company that doesn’t accept that reality is in denial. In 2022, we can expect to see wholesale changes across industries, including hybrid work, new environments and software for collaboration, different incentive schemes for employees, and a transformation of traveling for work. Things (at least at work) aren’t going back to the way they used to be and companies are realizing that the temporary measures they took must now be formally incorporated.

6. Brands Make Bank with NFTs

It’s entirely possible that cryptocurrencies and NFTs are one giant bubble inflated by finance and VC bros who are facilitating a giant wealth transfer from late adopters to early adopters. Having said that, you can still count on brands to take advantage of the trend, and there’s a big incentive to jump on the bandwagon early. Adidas recently dropped a collection of NFTs, in the form of digital artwork (pictures of…apes?) that netted the sportswear brand $23 million. And digital art is only the start. Nike is experimenting with NFTs for virtual shoes (yep…shoes that exist only in the Meta-verse) and other brands are experimenting with NFTs that link to real experiences, such as a token that provides entry into a community or exclusive club.

7. Prepare for the Meta-Verse

All this commerce in the NFT space is based on a giant bet being made on the creation of the “Meta-verse”. Put simply, the Meta-verse is going to be an interconnected collection of virtual “worlds” where you (or your digital avatar) can work, play, create, transact and socialize. It’s the natural evolution of the things we’re already doing online, but in a far more immersive way (you access it through virtual reality). Furthermore, your identity (and a record of the things you own) will exist on blockchain technology which makes it harder to falsify or be hacked. A few months ago, Facebook publicly pledged to be at the forefront of building the Meta-verse, famously renaming itself “Meta.” And there you have the beginnings of “Web 3.0”.


FINAL THOUGHTS

So what should we lowly Web 2.0 companies do in the meanwhile? It’s important to understand two key truths. First, the “Meta-verse” is an inevitability, although its final form might continually change. And so preparing for it is inescapable, even if that just means thinking about the possibilities. The second truth is that we’re rushing headlong into building Web 3.0, while the problems of Web 2.0 (harassment, hacking, manipulated elections, spreading of falsehoods, etc.) are still very much there, and are likely to carry over to Web 3.0 unless we’re actively trying to fix them. And that means retaining a healthy dose of skepticism and caution when imagining how your brand or business will navigate the Meta-verse.

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Key Learnings for Companies in China from the 2021 State of Digital Transformation

New ideas matter. Our research shows Chinese firms invest in digital primarily to drive innovation.

Altimeter, a Prophet company, recently launched the latest edition of its flagship report, the 2021 State of Digital Transformation. The report was compiled from the results of a survey of 587 executives from the U.S., Europe and China, across a range of industries, to uncover current digital capabilities, key investments and decisions made to advance transformation in each business.

What can companies in China take away from the findings? In this article, we included key learnings about the state of digital transformation among Chinese companies and compared them with global “high performers” as a way to inform a path forward for the next wave of digital transformation.

An Aggressive Focus on Innovation as the Top Reason for Digital Transformation

Globally, innovation was among the top reasons for investing in digital transformation, alongside core business growth and operating cost reduction. High-performing companies were more likely to cite “core business growth” as their top goal (57%), compared to average performers, who were far more focused on reducing operating costs and updating technology.

Figure 1: What were the top reasons for your company’s investment in digital transformation?

Chinese companies have a more offensive mindset toward digital transformation, as we see an even higher focus on innovation for new products, services or business models (66%) compared to the rest of the world (48%). Moreover, China’s highly competitive and dynamic market landscape has driven companies to put a greater emphasis on competing with newer businesses and products in the market (46% of Chinese companies compared to 33% of companies in other countries).

In contrast, fewer Chinese companies are investing in digital transformation to replace outdated or obsolete technology (18% of Chinese businesses compared to 41%  of other businesses around the world), as they are less likely to have legacy issues when it comes to internal technology.

An Incubated Transformation Approach Versus a Holistic Approach

The great majority of studied companies (68% of businesses in other countries) already orchestrated digital transformation programs as a single coordinated effort that simultaneously spanned many departments or functions.

Figure 2: Which approach best describes how your company implemented (or is currently implementing) its digital transformation program?

Chinese companies approach digital transformation differently. More companies use an “incubated” approach (50% of Chinese companies compared to 15% of companies in other countries) – meaning their digital transformation starts at one department or function at a time and has yet to become an enterprise-wide agenda.

This is not entirely surprising, because when Chinese companies start their digital transformation, they often focus predominantly on consumer-facing touchpoints such as e-commerce and digital marketing. And many of their efforts are working with the ecosystems of tech giants, e.g., Alibaba, Tencent and Baidu. Being able to leverage these established ecosystems is both a benefit and a risk. While it enables companies to jumpstart their digital transformation journey, it also often creates inertia of a broader enterprise-wide transformation.

“Chinese companies have a more offensive mindset toward digital transformation, as we see an even higher focus on innovation for new products, services or business models.”

Learning from global high performers, leaders at Chinese companies need to seize the opportunity of adopting a “holistic” approach to innovate and grow better. It takes bold moves, but the payoff will also be enormous. For instance, Anta Group has undertaken digital transformation across consumer insights, product R&D, logistics and online/offline channel operations, enabling it to outperform Nike for the first time in the recent 11/11 sales season.

Transformations Led by the CEO Are More Successful

In China, more companies consider digital transformation as a top strategic priority by executive leadership (44% of Chinese companies compared to 27% of companies in other countries). Executives also connect digital transformation to higher business strategy objectives to create a strong mandate for the efforts.

However, given the orientation to an “incubated” approach, about half of the Chinese companies (46%) indicate their digital transformation activities are led by CIO/CTOs, and 14% chose CMOs compared to only 3% in companies of other countries. This demonstrates that technology prowess and marketing competencies are viewed as key pillars for digital transformation in China. However, these companies still lack a top-down vision and purpose that drive their digital transformation agenda, which can only be led by the CEO.

Figure 3: Which executive officially owns or sponsors the digital transformation initiative?

Our global data has shown that companies with successful digital transformations were much more likely to have their transformation led by the CEO (34%). The CEO (supported by a forward-thinking board of directors) can devote resources and oversee a holistic transformation, rather than letting functional roles such as a CIO, CTO or a CMO drive it. These executives, while individually empowered, will always be limited to the transformation of their own departments, and not as well equipped to deal with the converged transformations between departments and functions that are increasingly the norm.

Leaning from what global high performers have achieved, Chinese companies need to drive more convergence between sales, marketing and service goals. Although Chinese companies have a much higher focus on digitalizing their businesses through e-commerce, many haven’t integrated sales, marketing and service for their overall online and offline businesses. If CMOs continue to be tasked to drive digital transformation initiatives, we believe that the role of CMO should be broadened.

Emphasis Needed on Both CX (Consumer Experience) and EX (Employee Experience)

When asked about their priorities in digital transformation, companies in China prioritize business model and market value proposition update (42%), customer experience (36%), processes and efficiency (34%), modernizing IT infrastructure (32%) as well as external and ecosystem partnerships (30%). However, they are investing less on improving the employee experience in comparison (20% of Chinese companies compared to 32% of companies of other countries).

Figure 4: Which of the following initiatives did you prioritize first for your digital transformation program?

This gap is widening as COVID-19 created a stronger urgency for companies around the world to accelerate EX improvement., except for  Chinese businesses, which have largely returned to normal since May 2020.

We’ve also found that across the world, high performers were more likely to have invested in improving both CX and EX as priority initiatives, a consistent hallmark of successful companies in our study. It highlights how top performers are using transformation to serve their most important people, rather than simply modernizing for the sake of keeping up. Chinese companies need to catch up.

However, there could be a silver lining, as a reckoning is happening on work culture, as the younger generation in China pays increasing attention to work-life balance, purpose and sense of belonging at work. Leading Chinese companies should start to focus more on EX when investing in digital transformation.


FINAL THOUGHTS

Based on our findings, we recommend that companies should invest in the following areas, regardless of their levels of maturity in order to thrive in the next phase of digital transformation:

  • Transform with clarity: Transformation for the sake of transformation doesn’t work. What we found instead, was that transformation with clarity is much more likely to succeed. Given the competitive market landscape, Chinese companies have focused much on speed. It is time to begin with the destination in mind, and focus instead on driving profitable growth with a forward-thinking transformation roadmap in place.
  • Prioritize both EX and CX: Chinese companies focus much more on market-facing digital initiatives and consumer centricity. However, learning from global high performers, there is a consistent theme of investing in both CX and EX to power better growth. This trend has only been accelerated by COVID-19.
  • Drive convergence and reframe CMO role: Digital transformation is far beyond technology, digital marketing and e-commerce. Chinese companies should drive stronger convergence across customer-facing functions such as sales, marketing and services, as well as supporting mechanisms such as product R&D and logistics. When the CMO is charged to lead the digital transformation agenda, their role should be reframed and needs to have a strong transformation mandate from the CEO.

Want to learn more about how to unlock uncommon growth for the next wave of digital transformation? Contact us today.

WEBCAST

Webinar Replay: The 2021 State of Digital Transformation (Asia Edition)

Some firms just want to become more digital at what they do. Others want to transform their entire business.

57 min

Omar Akhtar, Senior Analyst and Research Director at Altimeter, Chan Suh, Chief Growth Officer at Prophet, and Jacqueline Alexis Thng, Partner and ASEAN Lead at Prophet, present key takeaways from Altimeter, a Prophet company’s flagship report, The State of Digital Transformation – which surveyed nearly 600 executives from the U.S., Europe and China.

Our expert speakers discuss key trends in transformation, as well as how companies in China approach digital transformation differently compared to other countries, providing important insights for businesses in Asia.

If you’d like to learn more about Prophet’s approach to digital transformation, get in touch today.

WEBCAST

Webinar Replay: The 2021 State of Digital Transformation

Average companies start transformations to “catch up.” The most successful firms? They want innovation.

56 min

Omar Akhtar, Senior Analyst and Research Director at Altimeter, and Chan Suh, Chief Growth Officer at Prophet, present the biggest takeaways from Altimeter, a Prophet company’s flagship report, The State of Digital Transformation – which surveyed nearly 600 executives from the U.S., Europe and China. They discuss key trends in transformation, including where leading companies are expanding their digital capabilities, what investments they are making and common roadblocks they encounter along the way.

If you’d like to learn more about Prophet’s approach to digital transformation, get in touch today.

REPORT

The 2021 State of Digital Transformation

Companies with successful transformations prioritize data management, innovation and customer experience.

In this year’s State of Digital Transformation report, our goal is to identify the key differences between the businesses who succeeded at digital transformation, and those who were still struggling. We surveyed 587 executives from the US, Europe and China, across a range of industries to highlight not only their current digital capabilities but the key investments and choices they made that got them to where they are. By separating the responses of high performers and average performers, we identified the key characteristics of companies that successfully met their transformation goals.

This report serves as a benchmark for what digital maturity looks like in 2021 and charts a path forward for businesses that are looking to thrive in the next wave of digital transformation initiatives.

Key findings include:

  • Growth and innovation were the top transformation goals for top performers, while average performers cited modernization and efficiency as their top goals.
  • The majority of companies used a holistic, or coordinated simultaneous transformation approach to transform the organization, rather than transforming departments in isolation, or sequentially.
  • COVID-19 reduced budgets and resources for transformation, but it did not slow transformation programs. In fact for high performers, it accelerated transformation efforts.
  • Companies with successful transformations were much more likely to prioritize data management, innovation, customer experience and employee experience initiatives, compared to average companies.
  • Transformations led by the CEO are more successful than those led by other positions
  • Digitally mature companies are looking to invest in leveraging data, optimizing customer and employee experiences, and building external partnerships and networks to prepare for the next phase of transformation.

Download the full report below to learn more.

Download The 2021 State of Digital Transformation

*Fill in all required fields

Thank you for your interest in Altimeter’s research!

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Four Traits of Top-Performing B2B Digital Sellers

Understand the mindset and strategies of the most successful brands. Hint: Teamwork makes all the difference.

In our 2020 State of Digital Selling global research report, we found that top-performing digital sellers have four traits in common: Teamwork, they excel at cross-functional alignment around both strategy and operations; Strategy, from long-term strategy to short-term plans, these sellers align across functions to deliver results; Mindset, Companies that embrace a shift in culture and skillsets earn a competitive advantage; and Customer Focus, top B2B digital sellers use data and cross-functional teaming to deliver what the customer needs. Use our infographic, 4 Traits of Top-Performing B2B Digital Sellers to start conversations in your organization to transform sales.

The Traits of Top Performers

Teamwork

Sounds easy, but the reality is many sales and marketing organizations don’t work well together. Our 2020 State of Digital Selling research found that only 31% of sales reps view marketing as essential to their success. There are also digital cultural barriers: marketing uses analytics and automation at a much higher rate than sales, who focus more on direct relationships with prospects and customers. As digitization of both the sales/marketing funnels and customer experiences increases, handoffs between the two teams become more problematic.

In our research, we found two key gaps between average performers and the top 10% of performers: collaborative customer insight sharing and planning long-term digital strategy. 67% of top performers strongly agree that their marketing, sales, and service teams work well together to provide sellers with real-time data intelligence on prospect activity (vs. only 36% among average performers). As prospects move through the funnel, these teams excel at real-time sharing of new insights, sharing a more complete picture of the customer.  This could be as simple as marketing informing sales that a key account clicked on an ad to target sales’ best next move, to as complicated as knowing a prospect downloaded a white paper, how far they read and which topics they spent the most time reading.

Top sales performers collaborate closely with marketing on long-term technology roadmaps that lay the foundation for shared digital transformation of both internal enablement technology, as well as customer experience. Among top performers, 76% collaborate to put in place a technology roadmap for how digital tools and data will integrate over time, compared to only 38% of average performers.

Strategy

A turning point in strategy collaboration started in 2007 with the introduction of Account-Based Marketing (ABM) and Account-Based Sales (ABS).  Our research has found that B2B sellers who follow these strategies outperform their peers. Sixty-three percent of top performers use well-coordinated teams and unique sales planning with marketing, which persists through ongoing teamwork throughout the funnel (vs 43% of average performers).  We also found 47% of top performers focus on industry vertical, vs. only 27% among average performers.

ABM/ABS is a great starting point, but in this year’s research we’re seeing a trend towards more frequent planning, to the point of “always on” dynamic plans.

Mindset

Companies that embrace a shift in culture and skill sets earn a competitive advantage. A key shift in mindset is needed around trusting data and analytics that form the foundation of sales automation. Sales teams need to develop trust in sales automation and the data that fuels it.

In our research, 63% of top performers strongly agree that sellers embrace the adoption of sales enablement tools, are certified as part of training, and managers are held accountable for tool adoption, vs. only 33% of average performers. Fifty-five percent of top sellers use of tools, AI and data analytics consistently identify best next moves that move forward prospects to conversion (vs. 32% of average performers). There’s a clear gap in mindset among top performers vs. the average.

Customer Focus

Top sales organizations prioritized customer satisfaction above metrics such as sales quota achievement and recognize the link between customer satisfaction and quota. Recognizing and addressing the diversity of buying committees typical in B2B needs is a key success factor, as well as customizing sales approaches by industry vertical. Today’s B2B buyers expect sellers to understand their industry to the point that they become a trusted partner in their own success.

Top performers focus on existing customers over acquisition. For B2B sellers, that means understanding their customer’s industry as a trusted advisor, and that they remain in close contact with both marketing and especially service to guide their sales plan by using those teams’ data insights.  Our research data found this area represents the largest gap between top performers and the average: 73% of top performers say their sales process is defined around the customer journey and informed by rich data analytics (vs. 39% among the average); and 75% of top performers (vs 55% index) said improving customer satisfaction was their top priority.

What You Can Do

For these 4 areas that separate the top 10% of performers vs. the average, consider these tips (and learn more in-depth strategies in our 2020 State of Digital Selling research report):

Teamwork

  • Use Slack or another enterprise social network to better connect team members among sales, marketing and customer success. Use hashtags to share customer success stories; surprising data analytics; and connect to your CRM to share key account information.
  • Create shared digital dashboards with key metrics for each team to illuminate handoffs between teams that need attention and to better understand where your partner teams are focused.

Strategy

  • Form a joint sales and marketing digital transformation working group and steering committee to share baseline capabilities, objectives and to plan a shared digital transformation vision.
  • Ensure alignment between sales and marketing on industry vertical targets, buyer segments and customer journey(s).

Mindset

  • Create a “digital sales champion” program to recognize sellers that have successfully made the digital selling shift. Embed these champions in teams as advocates for digital, especially by sharing specific sales results tied to it.
  • Find opportunities for joint digital skills classes among sales and marketing staff to both build relationships and offer mindset shift guidance. Marketing has gone through this transition, and personal stories of success will help sales teams get ready.

Customer Focus

  • Benchmark your data, that is, assess whether you have the right customer and prospect data to understand and deliver to customers what they need.
  • Make shared customer success metrics (such as Net Promotor Scores) part of compensation incentives among marketing, sales and service. Have customer satisfaction lead sales team objectives.

Please feel free to share our infographic with your colleagues to start conversations that can improve your digital transformation of sales.

More Digital Selling Resources

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How the Digital Transformation of Sales Could Go Too Far

There are real and costly risks to an overly digitized sales process.

There have been hidden human costs in our drive towards efficiency and productivity using technology. As we approach the post-pandemic period, when businesses will decide which practices to continue and which to wind down, I foresee a rush to digitally transform B2B sales too quickly as harmful to human connections that build trust and long-lasting relationships.

The Cost of Efficiency

When I managed social media at a big bank in the early days of this technology disruption, I needed to understand and exploit its value for financial services. While looking back at the history of technology disruptions in banking, I found a pattern of automation in which to gain efficiencies the industry slowly chipped away at personal connections with their customers. Starting with telebanking, we at least had someone to talk to from home without driving to a branch, automation grew less personal.  ATMs gave customers quick access to basic banking functions, such as making a deposit or cash withdrawal. This culminated in smartphone apps, where many banking functions were accessible from the phone in our pocket.  Each step separated customers further from banks, slowly eroding personal relationships.  Luckily, as a “people-powered” digital platform, social media could address the trust gap.

It’s incredible how wide the gap between customers and businesses has grown.  Here’s an example, as told in Wells Fargo’s blog. After the 1906 San Francisco Great Earthquake and Fire, most of Wells Fargo’s ledgers were in a vault that survived the quake and fires but couldn’t be opened for weeks without exploding. To help the devastated city recover, the bank’s tellers relied on memory and personal relationships to get their customers the cash they needed to survive, let alone start to rebuild. These tellers knew their customers well and were able to disperse money based on their recollections of customer balances and creditworthiness. After recording these transactions in school children’s composition books, they found that these transactions were squared within a few dollars after the bank ledgers were finally retrieved weeks later.

When the financial crisis hit in 2008, many banks that were already established in social media had built trust and better weathered the brand damage that other institutions suffered throughout the industry. They’d built social capital with their customers, which was much needed in the aftermath of the crisis.  While financial services have modernized and scaled through efficiencies that have harmed human connection, the financial services blogs rebuilt trust through stories employees told of how they’d helped their customers succeed and reduced the fear that was palpable then by recounting how the bank had helped their customers survive previous economic catastrophes, thus swinging the pendulum back a bit towards trusted relationships.

As we rush towards the digital transformation of sales, let’s not let the pendulum swing too far. Consider the shift post-pandemic in manufacturing from “just in time” to “just in case” supply chains and our collective desire to emerge from isolation with live events and shopping. We’re wired and ready to connect.

The Right Use of Sales Technology

Sales and customer success teams maintain relationships that can only be built and preserved by people over time. This is particularly true when buying expensive enterprise business products or services.

While conducting research for this year’s upcoming digital selling report, I’ve found a number of approaches that dial back automation in favor of genuine relationship-building.

For example, video meetings exploded during the pandemic as a way to continue face time with customers and prospects while in shut-down.  As more sales reps used video calls, we then saw growth in personalized videos sent via email.  As a consumer, this change was palpable and impactful.  Getting less, “Hi Ed, I thought you might like…” in an annoying automated email, I instead started receiving videos clearly meant for me. In one case, I received a personalized insurance briefing based on a request I’d made, which used my own and my husband’s name, presenting insurance plans that might be best for us and ending with a simple call to action (which I took, I’m now a customer of this broker).

Personalized video messages are a great example of how tech can be used not only to scale but also to build trust in essential long-term relationships.

Maintaining Relationships Post-Pandemic

Sales and customer success team managers know which of their team members have relationships that have grown the bottom line.  These reps need to be supported by digital, but not necessarily by building deep digital skills. A salesperson is much better at reading a customer’s body language, gestures, and so on than any AI I know of.  A data analyst is better at connecting data points to draw valuable insights than most sales reps. We need both of these skills, and that won’t change with the digital transformation of sales in front of us.

“Personalized video messages are a great example of how tech can be used not only to scale but also to build trust in essential long-term relationships.”

To scale and meet the demands of digitally savvy customers, many brands I’ve spoken to have told me that their return on investment in customer experience is diminishing—perhaps a sign that consumers are on to overly automated engagement.  In response, they’re investing in more personable tactics.


FINAL THOUGHTS

B2B businesses I’ve interviewed have built a virtuous circle by leveraging their customers’ digital reach to advocate for them once a trusted relationship is established.  One company I spoke to told me how during shut down, when most communication went digital, they discovered that they didn’t have the permissions needed to reach out on some digital platforms, like email. So, they built customer advisory boards to listen to feedback and build better products, which in turn were amplified by those customers in digital, such as sharing company content with colleagues. Valuable human connections with customers can build a businesses’ reach in digital.

The best digital transformation of selling strategy is one that invests in the digital domain but focuses on bettering the human domain. Tricky, but as the pandemic has demonstrated a realistic and achievable goal.

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Four Traits of Top-Performing B2B Digital Sellers

Understand the mindset and strategies of the most successful brands. Hint: Teamwork makes all the difference.

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Should Brands Still Be Thinking About Clubhouse?

If there’s one thing we’ve learned, it’s that every company doesn’t need to be on every channel.

If the kids had TikTok to get them through the pandemic, the adults (or at least the business elite) had Clubhouse. The much-lauded digital audio chat platform was the hit of the summer last year, and many regarded it as the first of a new wave of social media innovation. Companies scrambled to figure out their “Clubhouse strategy,” while competitors like Facebook and Twitter fast-tracked their clone offerings. For a while, all anyone could talk about was how Clubhouse was the future of audio.

This summer, not so much.

Clubhouses’ monthly downloads are in a steep decline, going from 9.6 million in February to only 900,000 in April. At first glance, this looks pretty ominous for Clubhouse. It would imply that it’s quickly reaching the point where everyone who would want to download it will soon have already downloaded it. However, that might not be such a bad thing. By focusing on monetizing a core, loyal audience, Clubhouse can build a very sustainable business, while continuing to test and innovate with new features. Furthermore, the fact that Twitter and Facebook jumped in so quickly to compete validates the opportunity in this space. The value being provided by audio-chat platforms is clear, and so it’s my view that reports of Clubhouse’s demise have been greatly exaggerated.

“By focusing on monetizing a core, loyal audience, Clubhouse can build a very sustainable business.”

That isn’t to say there aren’t problems. Twitter and Facebook may have validated Clubhouse’s value proposition, but that also makes them giant predators waiting to either acquire or kill the competition. And unlike Clubhouse, they won’t be in a giant rush to monetize the audiences.

So if you’re a business that feels like Clubhouse is a technology you need to be leveraging, what do you do? Well first of all, why?

If there’s one thing we’ve learned from 20-odd years of social media, it’s that every company doesn’t need to be on every channel. In fact, successful companies have smartly chosen the channels and platforms that most closely align with their brand identity, business needs and most importantly, audience presence. It’s a model perfected by individual creators or influencers, who’ve chosen to become famous on a single channel, whether it’s YouTube, TikTok, Medium or Instagram. 

Following that strategy really narrows down the list of businesses that could leverage a platform like Clubhouse. If we think about it purely in terms of content strategy, it is companies that benefit from regular conversations and feedback with a dedicated community of users and enthusiasts for their goods and services. Think of companies like REI, who’ve created an entire content stream based on contributions from outdoor enthusiasts.


FINAL THOUGHTS

Depending on your product and engagement strategy, having a bunch of audio conversations can be a fantastic way to build credibility with certain communities, while also promoting positive brand sentiment. And if you fit that bill, this is an opportune time to wade into the social audio territory. But beyond that, I would wait and see, but stay in my lane.

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Three Shifts in Content Strategy To Win Over Chinese Consumers

Our research finds that it’s time for companies to use content to build brands, not just increase transactions.

Content strategy has become increasingly important for brands to stay competitive in the ever-changing China market. As consumer expectations for relevant, branded content continue to climb, companies must regularly adapt internally to deliver on these needs.

In a recent report The 2021 State of Digital Content by Altimeter, a Prophet company, we surveyed 484 executives across the US, Europe (UK, Germany, Spain) and China, to understand how companies are shifting their strategies when it comes to content. Our study showed that Chinese companies, in particular, are taking a more proactive approach to winning with content.  73% percent of respondents indicated they’re focused on increasing output volume and scaling internal capabilities for better content production and processes.

Learn key insights and takeaways from the report, including how companies in China are redefining their approach to content strategy:

1. Beyond the Transaction: Building Brand Through Content

When it comes to measuring success, tangible revenue and lead generation are still important to marketers as an outcome of a successful content strategy. In China, 52% of companies mentioned transactional goals (e.g., lead generation, revenue increase, customer support) as the primary purpose of their content strategy. However, the shift towards a more brand-driven approach is increasingly apparent, with an almost equal number of companies (48%) responding with branding goals (e.g., brand awareness & sentiment, thought leadership) as the main driver.

Q: What is the primary goal for your content strategy?

Further driving the shift from short-term transactional goals to long-term brand building is the focus on engagement as a key metric of content performance. In our research, 49% of Chinese companies point to engagement metrics as the primary way to measure the success and effectiveness of a piece of content.

“The focus on engagement as a key metric of content performance.”

In China, e-commerce platforms, such as Alibaba’s Taobao, are recognizing the role that content plays as a vehicle for customer engagement. Taobao is rapidly building out the necessary tools to support both sellers and key opinion leaders (KOLs) in managing sales, content and customer/ fan engagement. In an interview with SCMP, Yu Feng, Alibaba’s vice-president who oversees Taobao’s content e-commerce noted: “We [are dedicated to] driving unique value propositions for long-term engagement and business opportunities for the ecosystem.”

2. Scaling Up: Delivering Data-Driven Personalization

When asked about content strategy priorities for the next 12 months, using data to create better, more personalized content tops the list for Chinese companies.

Q: Which of the following initiatives are your top priorities in the next 12 months?

And they are quickly scaling up their internal capabilities to meet these goals. As many as 68% of companies surveyed are already using centralized data systems (e.g., CRM) to help create customer segment-specific content rather than relying on disconnected data sources (versus 42% in the rest of the world).

Q: What sources of data do you use to create personalized/customized content?

To define these customer segments, 36% are leveraging AI-powered analysis of demographic, behavioral and psychographic data (versus 15% in the rest of the world). This data-driven customer segmentation allows brands to effectively create relevant, customized content for their consumers and adapt to changing trends based on continual data collection and analysis.

Q: How are you creating segments for customizing/personalizing content?

So-Young (新氧), a leading digital player in the booming medical cosmetology industry, shows how Chinese companies are building deep data capabilities to help power their content strategy. The app, which went public in 2019, acts as a platform for users to discover, evaluate and book plastic surgery and other medical cosmetic procedures online. It begins with an AI-powered “facial diagnosis,” the results of which lead to the user to recommended expert articles, blogger videos and reviews from other users. Based on the user’s in-app and purchasing behavior, the content is further refined and tailored, increasing customer engagement across the entire journey.

3. Breaking it Down: Leveraging Modular Content Management

Due to the hierarchical management style of most Chinese companies, coupled with their being in the earlier stages of content strategy development, content management is typically a centralized function.

79% of Chinese companies report managing content strategy within a single department or dedicated team that acts as the content owner across the organization (versus 60% in the rest of the world). To ensure quality and consistency across all elements of the brand, 74% utilize a central design system that includes visual and editorial guidelines (versus 52% in the rest of the world).

Q: Who is primarily responsible for your digital content strategy?

Nonetheless, this centralization and hierarchical model can hinder the speed at which content gets created. 59% of Chinese companies still share every piece of content with legal and compliance teams for approval.

Modular content management, however, is becoming more valued, as it allows brands to deliver content quickly across different channels and to different audiences. 30% of companies have adopted modular approval systems to break content into smaller pieces, increasing both efficiency and flexibility.

Q: How would you describe your current content approval process for compliance?

This modular content management is critical as the proliferation of Chinese content platforms is at an all-time high, with brands needing to manage various content mediums (e.g., imagery, video, live stream, user-generated) across a growing number of social media and e-commerce touchpoints. A centralized but agile management system is critical to balancing consistency, relevance and speed across content platforms.


FINAL THOUGHTS

Many Chinese brands are well aware of the critical role content plays in their overall business strategy. To compete effectively and win with content, we’re seeing companies in China double down in three key areas:

First, they are making the shift from treating content as a short-term lead and revenue generator to investing in content as a means to longer-term brand building. This means tracking how customers are engaging with content, beyond just conversion metrics.

Next, businesses in China realize that a one-size-fits-all approach to content is no longer sufficient. To meet growing customer demands for relevant content, they are building internal capabilities that can leverage digital data to create personalized content for their varying customer segments.

Lastly, to ensure that there is a cohesive content strategy across the business, Chinese companies are centralizing content management as a function. However, they are also developing agile processes such as modular content management in order to respond swiftly to fast-changing market trends and evolving consumer needs.

Download the full report for more details about the 2021 State of Digital Content.

Want to learn how to develop a winning content strategy? Get in touch today.

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Your Digital Maturity Is the Best Way to Evaluate Technology Vendors

Our research shows that it’s time for a maturity-based approach to technology development and selection.

One of the biggest challenges for organizations pursuing digital transformation is parsing through the myriad of digital solutions available. For example, I’ve been diving into the world of customer data platforms (CDPs) for the past few weeks and it’s a dizzying array of jargon and solutions. 

One approach is to reference the technology evaluations from analyst firms like Gartner’s Magic Quadrant and Forrester’s Wave — but those are already several years old. There are also several peer-based evaluation and review sites like Capterra, Gartner’s PeerInsights, Trust Radius, which can be filtered by reviews from by company size, industry, and region in some cases. 

But I think they all miss one major factor when it comes to selecting technology — digital maturity. Our research at Altimeter found that digital maturity drove substantial differences in not only the strategic objectives and initiatives of digital transformation but also in technology priorities. And yet, the element of digital maturity rarely factors into the selection process or shows up in the marketing of these solutions. 

“Digital maturity drove substantial differences in not only the strategic objectives and initiatives of digital transformation but also in technology priorities.”

What’s missing is a maturity-based approach to technology development and selection. Organizations can be better prepared to discuss their needs by understanding their digital maturity and knowing how they will evolve their technology stacks over time. And vendors could clear out much of the confusion in the marketplace by making clear not just how they help organizations but where and when they best do this throughout the transformation journey. 

In this post, I’ll review how digital maturity impacts digital transformation and provide specific recommendations for both organizations and technology vendors. 

Digital Maturity’s Impact on Digital Transformation Strategy

Let’s take a deeper dive into how digital maturity impacts technology selection. In our State of Digital Transformation 2020 report, we identified five stages of digital maturity relevant to digital transformation (see Figure 1). Most organizations are at Stage 3, focused on the digital transformation specific departments and hoping to move to Stage 4 where they start to knit and integrate across department silos.  

Figure 1: The Five Stages of Digital Transformation Maturity

We also found that the top initiatives differed substantially depending on maturity levels. For example, organizations in Stage 4 prioritize modernizing IT at substantially higher levels (55%) than other organizations because of their focus on updating legacy platforms for better integration across the enterprise (see Figure 2). 

In contrast, Stage 1 and Stage 2 organizations prioritize operational ability (41% and 32% respectively), especially around updating policies and processes. And organizations at Stage 5 of digital maturity indicate that accelerating innovation (39%) and integrating customer touchpoints (39%) are among their top initiatives because they’ve already done the heavy lifting of digitizing and integrating their operations. 

Figure 2: The Top Five Digital Transformation Initiatives by Digital Maturity Stage

Given that digital transformation initiatives differ by digital maturity, the technology priorities also vary significantly depending on maturity. More advanced in their usage of and reliance upon data, Stage 5 organizations are more likely to focus their investments on technologies that support cohesive, data-enabled initiatives — such as machine learning/artificial intelligence, cybersecurity, and 5G to (see Figure 3). But differentiation based on AI/ML or conversational technologies will matter less to organizations in earlier stages of maturity as they are still getting their data backends in order.

Figure 3: The Top Technology Investment Priorities for 2020 by Maturity Stage

What It Means

If you’re an organization going through digital transformation: 

  • Assess your digital maturity. Know where you are starting and very importantly, align across your department and organization on where you are. To get started, take Altimeter’s Digital Maturity Assessment and benchmark it against the other 628 companies we surveyed. 
  • Audit your strategy and roadmap. Once you know the stage of your digital maturity, examine your digital transformation strategy, especially the focus and sequencing of initiatives. How long will you need to wait for more departments to reach a critical level of digital maturity before moving forward with integration plans? Where are you missing critical capabilities? And timing is everything. Layout how major initiatives unfold over the next 18-36 months by quarters to ensure that everyone understands the roadmap. 
  • Begin conversations with vendors differently. Instead of asking what they do, explain your roadmap so that they understand where you are today and where you are heading. Favor vendors who understand how to support your initiatives as your maturity and needs change. If the vendor doesn’t acknowledge or address your digital maturity stage, then walk away and quickly. Statements like “We serve every stage!” or “We can evolve with you!” reveal that they haven’t done the heavy lifting of truly understanding how you will evolve. Instead,  
  • Resist the urge to buy technology ahead of when you are ready to use it. It’s tempting to invest in the “best” technology platforms, especially when they offer features like real-time personalization or AI-driven predictive analytics. But if your organization lacks the expertise and procedures to use these amazing features, you’ll be paying for wasted capabilities. Worst case, the platform is so complicated that few people end up using it. The alternative is to use a less sophisticated platform but one that is right-sized for your needs for the next 6-18 months. While platform vendors will raise the specter of switching and integration costs in the future, trade off the opportunity costs of slower and lower adoption rates.

For technology vendors, there are three ways to better address the evolving digital transformation needs of organizations: 

  • Focus solutions on specific stages of their transformation journey. Resist the urge to say that your solution serves everyone and instead demonstrate you understand the priorities and needs at each stage of the journey. Instead of pitching AI and personalization features to Stage 1 and Stage 2 organizations, explain how dashboards deliver relevant KPIs to key executives. 
  • Highlight which stage you serve best. While it’s tempting to want to serve every company at every stage, you know where your sweet spot is. Put a big, bright spotlight on how you understand and address the needs of organizations at that maturity stage — and then explain why you can also support them going on to the next stage. 
  • Partner with vendors whose strengths complement yours. Knowing that you don’t serve all stages well will free you to find and partner with vendors who complement your offerings. Go beyond having APIs to craft deep integrations in marketing, sales, and service to develop go-to-market strategies. Make it easy to upgrade the technology stack and conversely, partner with someone who specializes in support organizations earlier in their transformation journey. 

FINAL THOUGHTS

Taking digital maturity into account in your digital transformation strategy is crucial to your success. If you’d like to learn more about how Altimeter and Prophet can support you in assessing your digital maturity, updating your digital transformation strategy, or creating a technology roadmap, please connect with us.

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