The 5 Biggest Digital Transformation Challenges (And How to Overcome Each One)

The world has gone digital, and there’s no going back. Almost everyone has a smartphone these days, and they use them every day to help make decisions, find brands to buy from or learn more about a product.

While this may all sound like great changes, it presents some unique challenges for businesses. And without a path forward, some of those companies may not make it through the next few years. Businesses are often slow to change, and many of the evolutions that come quickly through our digital world don’t come easily or cheaply.

So in this article, I want to share some of the biggest challenges that you face due to our ever-evolving digital world and provide a path forward for each. But first, let’s look at what digital transformation is and how it could impact your business.

If you’re of the infographic persuasion, skip to the end of the blog article. 

What is Digital Transformation?

Digital transformation is the idea that modern technologies can drastically change the way we approach traditional issues. It affects every level of business and often dictates how you choose to progress through the issues you face. It’s affected every level of the modern enterprise and will continue to have a ripple effect through the decades to come. But with all of the changes, it’s becoming difficult to tell which challenges truly present opportunities for growth.

Many of the transformations also require you to take on quite a bit of risk, so the situation is often doubly frustrating. With that in mind, I want to identify and address the top five challenges faced by every business that’s looking to adopt a digital transformation strategy.

Let’s start with the customer experience.

Challenge #1: The Changing Customer Experience

We live in an experience economy. More than ever, customers value how they experience brands above all else. That extends to both online and offline stores, as well as social media or other potential touchpoints along the way. And by 2020, most businesses believe that customer service will be the key way that they differentiate themselves from their competitors.

The downside of this is that is doesn’t leave brands much time to adapt. And to make matters worse, a bad experience is often a silent killer. Most of the people who leave due to a bad experience will vanish without complaining, leaving you clueless.

The key to change is to work on building a customer experience from the bottom up. Your goal should be to focus on customer journeys. If you optimize the touchpoints along this journey instead of merely trying to win sales, then you’ll stand a better chance at keeping customers around longer. This provides the opportunity to improve sales and retention, which means stable growth in the years to come.

It’s also important to consider what we call the “art of the customer experience.” This requires you to take a look at your current presence, and find ways to assess the level of enjoyment of each customer’s experience.

Once you understand your customers and have found out what they need, you work to build a business that puts the customer at the center of everything. And when you’ve achieved that, you’ll have survived this digital transformation and built a foundation for a better business.

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Challenge #2: Employee Pushback

People are one of the pillars of your business. You can’t accomplish your goals without the support of the entire organization, or at least most of them. And while employees are often the reason for a change in organizations, they can at times be a huge drawback.

The overriding concern for most companies considering a digital push is employee adoption and how it will impact the company’s culture and organizational structure. Many of your “old guard” of employees may feel that their job is threatened by these changes, which isn’t going to be good for morale or productivity.

Plus, there’s a significant skill gap when it comes to completing the type of change that most businesses need. The skillful individuals are already occupied with other essential tasks, and can’t be spared to fuel digital growth or train others.

The solution here is somewhat out of the box, but effective nonetheless. If you want to craft a company culture that minimizes employee pushback and focuses on being agile, you need to build a customer-centric culture.

Zappos, the popular shoe company, is a great example of this. When they first started, they knew they were entering a saturated industry. There are hundreds of businesses that sell shoes, so how could they do it better? They decided to differentiate themselves in three primary arenas:

– Customer service
– Employee training & development
– Culture

And it made all the difference in the world. It led to years of success and customer loyalty and helped fuel an $850 million acquisition by Amazon. Without putting their customer first, they never would have been able to change direction as needed and provide what their customers both needed and wanted.

Challenge #3: Omnichannel Adaptation

These days, customers jump from channel to channel when making a purchase. They’ll look on your website, search from mobile devices, or even stop by your store only to buy online later. This is what we call an omnichannel shopper, and they’re infiltrating every business and industry around the world. It’s a trend that’s unlikely to stop soon.

If you’ve traditionally relied on in-person sales, you may believe that you’re exempt from this type of shopper. But without a strong digital presence, you risk leading 57% of your potential customers away from your brand.

So the solution here is twofold. You need to work to provide multiple sales channels while simultaneously building your support into a one-stop-shop that enables fluid customer service from all touchpoints.

That means expanding your business by selling on marketplaces, your website, and through other digital means. And it also means that you need to establish a wide variety of channels for support, and then adopt a customer engagement system that caters to omnichannel selling.

Without this type of adaption, you risk losing a huge portion of customers. While adopting the omnichannel approach isn’t necessarily easy, it’s worth the investment and effort.

Challenge #4: Failing or Poor Analytics

53% of modern companies are dissatisfied with their analytics abilities. That may seem unreasonably high to some, but in the face of today’s digital transformations, it makes sense. There’s more data to collect than ever, and failing to measure the right ones could end in disaster. Older analytics systems might not be up to the task.

And with how much businesses need to change, your evolution over time can make a once useful system start to feel like a burden. When that happens, it leads to a poor ability to personalize and communicate to your customers’ needs.

And as we’ve already seen, this affects your customer experience and your ability to turn a profit in the future.

The solution to this issue is to implement AI technologies to help improve data collection and personalization efforts. A recent study echoed this idea, sharing that 61% of marketing leaders believe AI is going to help the “hyper-personalization” of content.

AI and chatbots are already changing the way businesses crunch data and personalize conversations with customers, and it’s only a matter of time before this practice is widespread.

It’s still worth treading carefully into AI, but you need to start looking sooner rather than later. Better analytics means better decision making, and the value of that can’t be understated.

Challenge #5: Lagging, Legacy Business Models

Your business relies on a product and principles that have allowed it to survive to the present. But sometimes, that legacy can be more of a burden than an asset.

A great example of this comes from the end of the last century. Kodak invented the digital camera years before it became known to the public. But instead of acting on the opportunity, they decided to sit on the invention because it threatened the legacy film industry.

The opposite happened for Bell Atlantic. They saw that landlines were dying, and decided to lead the charge in the transition to mobile phones. You know them as Verizon.

Getting out from under your legacy system at the right time is essential to building yourself up in our digital world. And most marketers feel that legacy systems are already hamstringing customer experience efforts.

To add to that, a recent study shared that most SaaS businesses are ready to change their CRM. It’s a problem, and it points to the solution. You need to update your legacy systems, product, or service.

There’s no one-size-fits-all solution to this issue. It’s going to require innovation, a willingness to accept the risk, and a lot of hard work. Don’t let the story of your business end with a failure to change.

Conclusion

There’s no going back. The digital world will always be changing and evolving, and it’s up to you to change with it. Start by focusing on building a customer experience that establishes your brand as a trustworthy solution to the problem you’re fixing.

And instead of faltering under employee pushback, build a customer-centric culture that allows you to pivot based on what your customers tell you. Work toward omnichannel adoption as well. Spreading your brand across every channel allows you to sell more and craft next-level customer support.

Ditch the old analytics, at least once you can. AI is leading the charge toward the future. And finally, look past your legacy and start building for the future generations.

Don’t let the challenges your business faces in our digital world become insurmountable roadblocks. Instead, face them head on and find innovative solutions to your problems that fuel success for years to come.