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October 03, 2023 - by Devico Team

How digital transformation is driving customer experience

In today's digitally woven landscape, the fusion of two transformative forces – digital transformation and customer experience – has given rise to an era of unprecedented possibilities. Technology transformation, the holistic integration of advanced electronic tools to reinvent operations, finds a natural “partner” in customer experience, the sum of interactions a customer has with a brand. Picture it as a symphony where such tools orchestrate seamless, personalized encounters that leave lasting impressions.

Digital transformation, in its essence, isn't just about adopting technology; it's about embracing a mindset that places customer satisfaction at its core. A recent study by Salesforce underscores this synergy, revealing that 80% of customers believe the experience a company provides is as vital as its products. This profound shift in consumer sentiment emphasizes the need to go beyond transactional interactions and cultivate a genuine emotional connection.

As technology evolves, customer expectations soar in tandem. Businesses stand at a crossroads, compelled to forge customer-centric strategies that resonate in the digital age. Research by PwC illuminates this dynamic landscape, showing that 73% of consumers point to customer experience as a determining factor in their purchasing decisions. Notably, brands that prioritize customer experience outperform their competitors by nearly 80% in revenue growth. Excellent examples illustrating this can be found in abundance in the fintech industry. Neobanks like monobank (Ukraine) and Revolut (British-Lithuanian) illustrate success by transforming the user experience.

The ascent of digital transformation indicates a new frontier where businesses harness technology's prowess to nurture meaningful connections and set a new standard of excellence.

Let’s delve into the intricate interplay between digital transformation and customer experience. As the digital age propels us forward, the path to success lies in embracing not just technology but the art of enchanting customers through every digital touchpoint.

The Role of Digital Transformation in Customer Experience

The seeds of customer experience transformation result in improved business performance and in the loyal customers’ hearts. But how is digital transformation driving customer experience? There are some points to find out.

Integration of Customer Data and Insights: With digital transformation, businesses gain the power to accumulate customer data from various touchpoints. These beliefs are proved by thousands of marketers — they are sure that data-driven marketing boosts customer engagement and loyalty. This integration paves the way for a deep understanding of individual preferences, enabling brands to tailor experiences to each customer's unique needs. For example, taxi apps. Uber gives the possibility to add addresses the user types in more often. In addition, Uber offers personalized discounts depending on the user’s activity.

Personalization and Hyper-Targeted Marketing: Armed with insights, brands can craft personalized experiences that resonate. A Deloitte survey underscores the efficacy of personalization, showing that 36% of customers are interested in personalized products or services. Hyper-targeted marketing, driven by data, ensures that customers encounter offers and messages that align with their interests and desires.

Seamless Omnichannel Experiences: Digitizing customer experience bridges the gap between online and offline realms, forging seamless experiences. A report by Harvard Business Review notes that 73% of consumers use multiple channels during their shopping journey. They are echoed by Deloitte, whose survey found that Generation X and millennials draw information about a particular brand or item from multiple sources. The ability to transition smoothly across channels elevates customer experiences, creating a cohesive narrative that leaves a lasting impression.

Proactive Customer Service and Support: Digital tools empower businesses to anticipate customer needs and resolve issues proactively. A Microsoft survey found that 54% of consumers expect businesses to respond to their inquiries within 24 hours. Leveraging digital customer experience strategies, companies can employ AI-driven chatbots and predictive analytics to offer swift and relevant support. For example, how it was done by the Ukrainian gym network SportLife. When the user visited the section with plans in the app, the sales manager contacted the user by messenger or phone or directly inside the app with a personal offer.

Customizable Products and Services: The era of mass production has evolved into an era of mass customization. A study by Deloitte shows that 36% of buyers expressed interest in personalized products. Digitizing customer experience enables businesses to offer tailor-made goods and services, fostering a sense of ownership and connection among users/buyers.

Digital Transformation Strategies for Customer Experience

The union of computerized tools and enhanced user background with a particular product is a realm of boundless innovation. Firstly, any company should define the so-called big-picture strategy — the most overall vision of the digital transformation. Only then decomposition and goal setting come into play. Here are strategies that seamlessly blend technology and empathy and pave the way for exceptional interactions.

Data-Driven Decision-Making and Analytics. Companies that rely on data-driven decision-making in the top three spots in their industry were 5% more productive and 6% more profitable than their competitors. Empowered by data, businesses can make informed decisions that resonate with buyers' needs. Starbucks employs data analytics to personalize beverage recommendations, contributing to an increase in revenue. Another example is Netflix, which employs advanced analytics to evaluate users viewing data and uncover trends and patterns that might aid in content recommendation, pricing optimization, and subscriber satisfaction.

Implementing AI and Machine Learning for Customer Insights. AI and machine learning unmask hidden patterns in people’s behavior. Amazon's recommendation engine, fueled by AI, drives 35% of its sales. This innovation guides customers toward products aligned with their preferences, enriching their shopping background. Yet, retailers aren't the only ones using AI for improved user interactions. For example, clinics and healthcare organizations, empowered by different LLMs (Large Language Models), also offer services based on previous experiences with the clinic: past surgeries, services, and even tests.

Customer Journey Mapping and Optimization. Understanding the user journey is paramount. By leveraging digital customer experience strategies in mapping touchpoints and interactions, businesses identify pain points and tailor strategies. Travel mastodon Airbnb employs journey mapping to enhance its client interaction scheme, facilitating seamless bookings and travel experiences.

Building Customer Communities and Engagement Platforms. Digital platforms foster communities where customers can engage and interact. Sephora's Beauty Insider community enables customers to share beauty tips and experiences, fostering brand loyalty. Just take a look at the gambling (or for instance, gaming) industry. The community in such areas can lead to a significant increase in sales or at least brand loyalty. For example, famous Ukrainian gaming blogger Misha Lebiga (Leb1ga) managed to fundraise over 8M UAH for the Armed Forces of Ukraine during one Twitch stream. Or the Fortnite’s Travis Scott concert? There are tons of examples.

Augmented Reality (AR) and Virtual Reality (VR) Applications. AR and VR offer immersive experiences that bring products to life. IKEA's AR app lets customers visualize furniture in their homes before purchase, making the shopping journey interactive and engaging. Or the WOG gas station chain, which for celebrating the New Year developed a VR game where users could win a gift from Santa Claus.

Voice-Enabled Technologies and Chatbots for Personalized Interactions. Voice assistants and chatbots create personalized interactions. Domino's voice-activated pizza ordering, powered by AI, exemplifies how technology can simplify and enhance the customer experience. Domino’s customers may now order through at least 15 platforms, including Amazon Echo, Ford Sync, Samsung TV, Apple Watch, and via emoji. Adding a chatbot enhances that opportunity by allowing clients to place an order without leaving an app in which they already spend a significant amount of time, removing friction. This is especially true given Facebook's recent announcement that native payments will be added to Messenger, potentially eliminating the need for users to create a profile on a separate app or website. Nike's mobile app, on the other hand, gives a plethora of customer-centric possibilities. Personalized product recommendations, special member access to limited-edition products, and virtual shoe fittings via its augmented reality technology, Nike Fit, are among them. Nike Training Club, the brand's digital fitness app, motivates clients with individualized routines and professional assistance. Nike has remained linked to their clients because of these digital developments.

Measuring the Impact of Digital Transformation on Customer Experience

Quantifying the influence of technology transformation on buyer experience is crucial. This requires meticulous measurement and analysis.

Identifying Key Performance Indicators (KPIs) for Customer Experience. Key Performance Indicators serve as barometers of client satisfaction and loyalty. According to a study by Zendesk, companies that prioritize client experience see 1.8 times higher annual growth in retention rates. KPIs such as Net Promoter Score (NPS), Customer Satisfaction (CSAT), and Customer Effort Score (CES) offer insight into prospect sentiment and loyalty.

Customer Feedback and Sentiment Analysis. Platforms such as Trustpilot or Clutch (if we are talking about the IT industry) are gaining ground and setting the pace now. Because they provide maybe the most valuable thing for evaluating the purchase — testimonials. Analyzing buyer feedback and presumption gauges perceptions, enabling targeted improvements. Hilton Hotels, Plaza Hotel, Ritz, and even many modern hostels leverage sentiment analysis to identify guest preferences and enhance stays. An AI-driven sentiment analysis platform helped T-Mobile discover consumer pain points and swiftly address them, leading to a 20% improvement in CSAT.

Tracking Customer Retention and Loyalty Metrics. Client loyalty is a prized gem in the business crown. A study by Harvard Business Review found that increasing consumer retention rates by 5% can lead to a 25% to 95% increase in profits. Apple's enviable same rate of 90% is a testament to how outstanding buyer experiences foster lasting relationships.

Linking Customer Experience Improvements to Business Outcomes. Connecting buyer interplay enhancements to tangible business outcomes solidifies the value of transformation. For example, a Forrester study found that a 1-point increase in CX Index scores can result in a $180 million revenue increase for an auto manufacturer. Naturally, we cannot claim the accuracy of such studies. However, in practice, improving user satisfaction always pays off.

The Future of Customer Experience in the Digital Era

In the ever-evolving realm of customer experience, the future unfolds with promises and prospects, casting businesses as pioneers in a landscape shaped by technology and human connection.

Continuous Evolution of Customer Expectations. The digital era is an incubator of shifting client expectations. Rapidly advancing technologies recalibrate what shoppers perceive as exceptional. Deloitte's research, already mentioned in this material, indicates that 60% of consumers believe companies need to offer innovative technologies to win their business. This dynamic ushers in a new paradigm where businesses must stay attuned to the evolving pulse of consumer desires.

Leveraging Emerging Technologies for Customer Delight. As technology leaps ahead, businesses have a toolkit of emerging marvels to amplify user delight. Augmented Reality (AR) and Virtual Reality (VR) revolutionize product visualization, and AI-driven personal shopping assistants like North Face's "Expert Personal Shopper" guide customers to ideal product choices. Or DressX’s digital avatars that help customers to try on outfits remotely before purchasing. These technologies, once confined to science fiction, are now enhancing real-world experiences.

Balancing Automation with Human Touchpoints. While automation streamlines processes, the human touch remains indispensable. Customers seek authentic connections that transcend algorithms. Apple's "Today at Apple" sessions provide personalized learning experiences, merging technology with human expertise. A well-orchestrated symphony of automation and human interaction is the hallmark of a balanced customer experience.

The Potential of Blockchain and Decentralized Customer Data. Blockchain technology holds the promise of secure, decentralized customer data management. Through self-sovereign identities, customers wield control over their personal information. This transition enhances trust and transparency. Microsoft's Decentralized Identity (DID) initiative is paving the way for a future where customers own their data.

Conclusion

In this digital age, the synergy between digital transformation and customer experience propels businesses toward unparalleled growth. The impact of customer-centric strategies is undeniable, cultivating not just transactions but relationships that resonate.

As you stand at the crossroads of technological prowess and human connection, remember that customer-centricity remains the compass guiding your journey. It's more than just a business strategy; it's a commitment to creating experiences that leave a lasting imprint on hearts and minds. This way, you turn your business into lovemark.

Embrace the power of customer experience transformation for a competitive edge in this customer-driven marketplace. At Devico, we invite you to continue exploring transformative insights that fuel your journey toward customer-centric excellence. Our blog about innovations and industry trends is at your disposal. As well as our services ;)

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