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Revisiting "Digital Transformation is All About Customers" (Thinks Out Loud)

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Digital transformation is all about customers. You can’t put it more plainly than that. Your customers carry the internet in their pockets — and more commonly, in their hands — everywhere they go, every single day. If you want your company to succeed at "digital transformation," however you define it, you have to start with your customers.

That’s why this episode of Thinks Out Loud, "Revisiting ‘Digital Transformation is All About Customers,’" puts its focus where it belongs: On your customers. Yes, digital transformation requires technology. Yes, digital transformation requires data. Yes, digital transformation requires skilled people on your team. But if you don’t start with your customers and how their behaviors have changed, your digital transformation efforts can’t succeed.

In this episode of Thinks Out Loud, we take a look at how your customers’ behaviors have changed and offer some insights into ways you can think about the future of digital transformation, how your business can adapt to changes in the marketplace, and why digital transformation is all about customers.

Here are the show notes for you.

Revisiting Digital Transformation is All About Customers (Thinks Out Loud) Headlines and Show Notes

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Past Insights from Tim Peter Thinks

You might also want to check out these slides I had the pleasure of presenting recently about the key trends shaping marketing in the next year. Here are the slides for your reference:

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Recorded using a Heil PR-40 Dynamic Studio Recording Mic and a Focusrite Scarlett 4i4 (3rd Gen) USB Audio Interface into Logic Pro X for the Mac.

Running time: 24m 59s

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Transcript: Revisiting Digital Transformation is All About Customers

Well hello again, everyone, and welcome back to Thinks Out Loud, your source for all the digital marketing expertise your business needs. My name is Tim Peter. This is episodes 323 of the big show, and thank you as ever for tuning in.

Introduction

I’ve been talking a lot lately about where we’re going and how we’re trying to get there. And let’s be clear, I always will. I also want to take a little bit of a step back and give you some bigger picture about why this is so important to me and why this should be important to you. I do work with all kinds of companies, a lot of hotels, a lot of people in travel, some technology companies, some financial services companies, some manufacturers of heavy equipment and machinery, a little bit of pharma, a little bit of healthcare, a little bit of medical devices, a little bit of retail. Obviously travel and hospitality is about a half in a normal year, though, as we will know, 2020 was not a normal year. But the other half are folks outside that space. And as I look across these companies, I keep seeing the same trends. I keep seeing the same realities play out again and again and again. And obviously they’re not exactly the same. And obviously they don’t happen at exactly the same time. And obviously they don’t happen in exactly the same way. But I am very confident that they do all happen, and that every company to some degree or other is living through the same set of circumstances and has to set themselves up to succeed, given these same set of circumstances.

Digital Transformation is "the New Normal"

Obviously the term that most people use for how they adapt to this changing set of circumstances is digital transformation. So I’m going to talk a bit about digital transformation today. I’m going to talk a bit about why it matters. But I’m going to talk mostly about what drives it because that’s really the key.

And when I’m talking about digital transformation, it’s not the same as digital marketing, and it’s not the same as e-commerce. They are all complementary elements of the same underlying reality. So they share relationships, but they’re not the same. So let’s talk about what’s really happening here. What’s really happening here is that technology shapes customer behaviors. Customers adopt technology, and by adopt, I mean that they come to expect better, faster, more seamless service. They take it into their lives in a way that is meaningful to them. And as customers adopt technology, the market adapts, not to technology, but to what customers do. At its core, digital transformation is all about the customer.

Digital Transformation is Why "Customer Experience is Queen"

That’s one of the reasons why I always say "customer experience is queen," because that’s what’s going on. The technology itself gets invisible over time. I’ve done an episode about Amazon Go and the boring future of technology, because the technology fades into the background. But customer behaviors don’t.

Think about the things that we take for granted today and how long it took, or rather how quickly customers adopted a whole set of technologies. For instance, mobile.

  • By about 2000, 2003, there were about a billion mobile users in the world.
  • By 2005, there were a billion internet users.
  • Probably around the same time, there were about a billion email users.
  • Search is a little more complicated. Google search reached a billion users somewhere around 2010, though it’s pretty likely that search overall probably reached a billion users sometime not long after the internet had a billion users.
  • Social reached a billion users probably no later than 2010 also. Though specific social networks reached a billion users a little bit later. Facebook, for instance, reached that number in 2012.
  • Smartphones, not coincidentally, reached a billion users in about 2012
  • And YouTube reached a billion users in 2013. Again, much like the relationship between Facebook and social, internet video probably hit 1 billion users a few years before YouTube did, but obviously YouTube has taken the lead as the dominant player in online video.

Now, of course, some companies and some industries were on top of these technologies well, before they hit a billion users. I would argue that by the time these technologies reached a billion users, it’s not early adopters. it’s pretty mainstream.

What Technologies Will Drive the Next Set of Customer Changes?

The real trick, if you could manage it, is to figure out which ones will go to one billion users well before they get there and just enjoy the rocket ride along the way. There are a bunch of technologies that seem to be on the same trajectory. Things like augmented reality, virtual reality, voice, artificial intelligence, which to be fair, I’m using AI here as a catch all for machine learning, natural language processing, all the other techniques that are going on to make computer programming, to make computer software development, more responsive to customer needs, and of course faster, cheaper, better.

Those techniques, undoubtedly already have surpassed serving more than one billion users. They’re under the hood of many of the technologies, many of the tools that you use today. An increasing number of tools every single day. So I would say that’s probably got a reach a well over a billion users today. But the point is that augmented reality, virtual reality, voice, and then artificial intelligence probably are the next set of quote unquote "billion dollar adoptees." And of course there’s all kinds of enabling technologies that either never reached those numbers or much more commonly do so so quietly that we don’t notice them. I’m thinking things like transistors and integrated circuits and capacitive touch sensors and all the other sensors used in smart phones. Maybe quantum computing. They’re not adopted, though, by consumers, until products package them up in some consumer friendly way.

Differences Between B2C and B2B

Now, one other point here, I keep saying the word consumers. You might be listening to this. Many of my clients are B2B companies, and you’re saying, "Well, I don’t care about consumers. I care about businesses." Well sure, but who are you selling to in the business? You’re selling to a person. You’re selling to a person who has experiences all day, every day as a consumer, and it is shaping their behaviors too. Usually, not always, but usually a little bit behind when quote unquote "consumer adoption" happens or the consumer adoption of the marketplace happens. But they’re still exhibiting changed behaviors. That’s what I mean by adoption. Once consumers start behaving differently, it’s pretty safe to say they’ve adopted the technology. They’ve adopted this into their lives in a meaningful and useful way. And once they adopt, you must adapt. Companies must adapt their products, their services, their channels, their marketing to address those customer demands.

The Relationship Between Digital Marketing, E-commerce and Digital Transformation

That’s why digital marketing and e-commerce and things like that are related to this, because they are responses to a changed customer behavior. They are responses to the way customers now say, "How do I find the things that I’m looking for that solve for my needs? How do I buy the products and the services that will help me meet my needs?" So they’re very much of a piece to one another. They’re very much connected to one another. Digital, digital technologies, the internet, smartphones, mobile, search, social, email, video, et cetera. They are both the driver and the enabler of the adoption and the adaptation. One of the challenges that you have, and I did a podcast episode about this a couple of years ago, is that as companies adapt, as these technologies come into the marketplace, they become easier for your competitors to adopt too. Digital makes it easier for everyone to compete, which then makes it harder for everyone to compete, because there are more players, there are fewer barriers to entry, there are lower walls, shallower moats, and you have to be able to adapt to that increased competitive threat too.

Digital Transformation is Business Transformation

But it’s more about, are you responding to the needs of the customers? This is what digital transformation really is. You’ve probably heard me say digital transformation is business transformation. If you were starting your company today, knowing how customers behave today, knowing what tools and services exist to enable you to support your customers today, would you do the things that you do right now to serve those needs? Of course not. You would do many activities differently. You would take many actions differently. You would think about your products and your services and your marketing and your channels differently, because the world is different. So digital transformation is the process of asking the questions of, "If I were starting my company right now, knowing how the world is right now, what would my company look like? What would I do to make sure I was doing what was best for the needs of my customer?" Because again, digital transformation is all about the customer. It’s not the technology that matters. It’s the behaviors.

What Trends Drive Customer Behavior?

And we have to think about what are the behaviors that matter for the next five to 10 to 15 years? And some of these are pretty obvious. You know these, you’ve heard me talk about them, oh, I don’t know many, many times over the last however many years I’ve had this show and over the last 15 or 20 years that I’ve had my blog.

Internet, Everywhere

We’re talking about things like internet everywhere, which shouldn’t be a surprise at this time. We live in a world of constant connectivity. That’s not going to change.

Radical Transparency

We know about radical transparency, your customers know everything. We can know a lot about them. Yes, privacy concerns are getting big, and I think that’s going to be a big thing. That’s another one where we’re seeing customers adopt an attitude about privacy. The information asymmetry that we’ve enjoyed for years, where we knew more about our products and services and prices and contract terms and the like than our customers did, that information advantage is moving away from businesses and towards customers.

When we talk about big data, we’re really talking about an outcome of radical transparency of all of the data we can collect. But you need ways to put that data together in a realistic, meaningful, useful way for your company and for your customer experiences. That’s where AI comes in. AI is another enormous trend. Though, I’m going to roll that into another one in just a second.

The Changing of the Guard

Another huge change of course, is the changing of the guard, the aging of Boomers and Gen X and the rise of Millennials and Gen Z, and the fact that those audiences, those customers have grown up with these technologies, so their behaviors are different because they’ve come to these as a clean slate. They don’t think about them as technology. They become invisible, the technologies. They just think about them the way somebody my age or older thinks about a light switch or thinks about a TV. It’s not technology. It’s just a thing that exists.

It’s All E-commerce Leads to Disruption and Disintermediation

Now because of these other elements, we are getting into a world where it’s all e-commerce, where people expect fast, quick, simple service at a click. That also enables, and I was talking about this a moment ago, where digital makes it easy for everybody, which makes it harder for everybody. We enter a world of disruption and disintermediation. Your competitors aren’t necessarily who you think they are. When we talk about you being turned into a hidden intermediary, or we talk about changes in the environment where suddenly you’re saying, "How am I competing with Google?" Well that wouldn’t have happened 20 years ago because there was nobody who could enter the market in an oblique way, in a sideways door to say, "I can serve the customer in a completely different way." And think about things like Uber Eats or DoorDash and the rise of cloud kitchens if you’re a restaurant. Think about Airbnb if you are a hotel. Think about Service Advisor or TripAdvisor or Yelp if you’re a retailer or you’re a plumber. That suddenly opens the door to lots of other people that you didn’t even know existed.

Augmented Experiences

And of course I’ve mentioned a moment ago, artificial intelligence. Well I think we’re entering a world of "augmented experiences." And I would include voice and augmented reality and virtual reality and AI together as ways that new experiences are being invented on the fly that work for customers based on their understanding of the way the world works. Things that are seamless, that they don’t even have to think about. That’s where I expect we’re going to see lots of innovation and are seeing lots of innovation currently, but we’re going to see over the next 10 years, and when I talk about the future, that’s the stuff I’m paying attention to, because that’s where we’re going to see big changes in the way customers interact because of new tech adoption that is happening right now.

Markets Adapt: How Can You Do That Too?

So I said customers adopt and markets adapt. So how can you adapt? Well first, most importantly, you have to embrace adaptation. You have to embrace the fact that we live in a world of digital transformation. You have to embrace the fact that the business you are in or have been in for the last 5, 10, 15, 20 years may not be the business you’re going to be in for the next 5 or 10 years. We’re coming out of a year of pandemic. Things aren’t going to go back. As I’ve said before, they can only go forward. You need to recognize that we live in a changed world. And more importantly, that we always will.

What Won’t Change?

The world of 2025 or 2030 or 2035 isn’t going to look exactly like the world of 2021. Yes, we know about the famous Jeff Bezos quote that there are behaviors and desires that won’t change. Yes, we know about the famous Bill Gates quote that "we always overestimate changes that will occur in the next two years and underestimate changes that will occur in the next 10."

Focusing on Customers Will Always Win

What we have to also do is not ignore that customer adoption of technologies that make their lives easier and better is one of the things that won’t change. Faster, cheaper, better is a constant. That 10 years from now to expect the customers will expect the same experiences that they have today is probably going to get you in big trouble. And another thing that won’t change is "winning by understanding what your customer wants."

Content is King, Customer Experience is Queen, and Data is the Crown Jewels

Other ways you can adapt are to recognize, as I’ve talked about many times, and I’ll link to these in the show notes, I’m not going to spend a lot of time on them now, but this idea that content is king, customer experience is queen, and data is the crown jewels. Putting those facts to use, putting that framework to use in a way that helps you adapt to the needs of your customers is what that’s all about.

The Speed of Digital Drives the Need for "Agile"

We need to recognize that agile matters. You’ve heard me say this before, that practice doesn’t make perfect, but perfect practice makes perfect. It’s about getting faster and more resilient and more responsive to the needs of your customers, and doing it in a way that is very comfortable for your business. Marc Benioff likes to say that speed is the new currency of business. The only way you can get fast is if you know how to do what you’re doing regularly. That’s really what being agile is all about. You want to slow the game down for yourself because we know it’s faster. You need to take a step back, focus on the bigger picture, and improve your agility so that you can move quickly while you’re looking at the game quote unquote "slowly" while you’re thinking about it in bigger picture terms.

Brands Matter More Than Ever

And then the last thing that you want to think about is what does your brand represent to your customers? What do you offer that’s truly differentiated? Why do your customers care about what you do? How can you help them succeed at their goals? Because when you truly adapt, you’re focused on the needs of the customer and using digital to enable that experience. You’re not building your business around technology, you’re building it around the customer.

Revisiting Digital Transformation is All About the Customer: Conclusion

Digital transformation is all about the customer. And if we try to think about things that won’t change, I’m pretty confident that’s something that won’t change either. So remember, digital transformation is all about the customer. Customers adopt and markets adapt. You can adapt too. I know you can. I can’t wait to see what you do.

Show Closing and Credits

Now looking at the clock on the wall, we are out of time for this week. I want to thank you once again for listening. I genuinely appreciate the fact that you tune in again and again and again. I want to remind you that you can find the show notes for today’s episode, and there’s going to be a fair number of them, as well as an archive of all past episodes by going to timpeter.com/podcast. Again, that’s timpeter.com/podcast. Just look for episode 323. While you’re there, please don’t forget that you can click on the subscribe link in any of the episodes that you see to get Thinks Out Loud delivered to your favorite podcatcher every single week.

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Thinks Out Loud on Social Media

You can also find Thinks Out Loud on Facebook by going to facebook.com/timpeterassociates. You can find us on LinkedIn by going to linkedin.com/timpeterassociates. You can find me on Twitter using the Twitter handle @PCPeter. And of course you can email me by sending an email to podcast@timpeter.com. Again, that’s podcast@timpeter.com.

Sponsor Message: SoloSegment

Just as I do every week. I’d like to thank our sponsor. Thinks Out Loud is brought to you by SoloSegment. SoloSegment uses machine learning, natural language processing, and a whole bunch of very cool AI technology to help understand customer behavior and personalize the experience the customers have on large enterprise B2B websites. SoloSegment does this using anonymous behavioral data to connect website visitors to the content that matters to them, and helps customers accomplish their goals to drive conversions for your business. They do all of this while protecting customer privacy. You can learn more about SoloSegment and all of the fantastic work that they’re doing by going to solosegment.com. Again, that’s solosegment.com.

Show Closing and Credits

With that said, I want to say once again how much I appreciate you tuning in every week. It means a ton to me. I would not do this show without you. It’s just the best thing in the world that I get to have a chance to talk with you every couple of days or every week or so, and the fact that you tune in means so much to me. I think if I’ve learned anything over the past year, it’s how important the people around me are. And candidly, you are a big part of those people. So thank you so much. With that said, I hope you have a wonderful rest of the week, I hope you have a great weekend, and I will look forward to speaking with you here on Thinks Out Loud next time. Until then, please, be well, be safe and as ever, take care everybody.

Tim Peter is the founder and president of Tim Peter & Associates. You can learn more about our company's strategy and digital marketing consulting services here or about Tim here.

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