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Goodbye Digital Transformation, Hello Digital Business


Illustration of the universe
Image: Yukai Du; CC BY-NC-ND 4.0
Almost every enterprise has undertaken digital transformation projects in the past couple of years to improve the customer experience. Their primary focus has been automation, and this prioritization has led to narrow process scopes. As the COVID-19 shelter-in-place orders forced companies of all sizes to operate remotely, almost without warning, everybody has started to do things we didn't know or think were possible.
An evolving style of digital business has emerged that combines digital technologies and communications-enabled interactions in a way not seen prior to the pandemic. Consumers, confined to their homes, are embracing the change — and, as we go back to a more normal world, all signs are pointing to growing use. Businesses can no longer afford to just digitize some of their processes. They must become digital across the board. A "new" digital is emerging in which communications and contact centers are more important.
Digital disruption vs. digital transformation
Before we explore how digital usage is evolving, we want to look at how businesses have been implementing digitization. It has been a tale of two models.
On one hand, digital startups have disrupted industries with their digital-first and, often, digital-only approaches. This digital strategy has worked by being laser-focused on small segments of larger markets. For example, in the fitness market, Peloton started with an indoor exercise bike service. In finance, Avant went after the personal loan business, while in healthcare, Livongo Health focused on people with chronic conditions. These startups built their businesses on better, faster, and cheaper experiences. While a Peloton experience hinges on live video classes with peers and coaches, most new digital entrants rely on self-service with human involvement limited to customer success.
On the other hand, incumbents, often in reaction to the threat of new entrants, have been adopting digital technologies to streamline their operations hindered by technology silos and organizational complexity. Projects typically have focused on a specific process across a few departments. Enterprises have favored customer-facing processes, improving the experience through simplification and faster, more seamless resolutions. A perfect example comes from Saxo Bank, which has cut the new customer onboarding process to one hour.
However, the vast majority of projects had to show a financial return on investment and did so by leveraging automation to cut costs. All in all, digitization and automation have been developing in tandem, hinting at a touchless world, but then COVID-19 blew up.
Digital in a time of COVID-19
The shelter-in-place mandates, which have affected billions of people in the U.S. alone, has created alternative ways of doing business. Telehealth has become the default for patients to meet with their doctors. Classes flipped almost overnight to videoconferencing. Retail developed contactless delivery models in a matter of a few weeks. A remote-everything world has emerged. Its use of digital technologies is different from the remote-sometimes world of early 2020. It is simpler, more pragmatic, and leverages people at many steps along the way. We see it in call centers that have been experiencing a 30% volume increase. Agents have less scripted conversations. It allows them not just to deal with exceptional situations but address a broader set of use cases. Companies have turned to social networks and good-old SMS to share the availability of these options in a more contextual manner. Adoption of digital technologies has gotten easier.
A new digital?
As we exit this phase of the pandemic response, early signs suggest that the digital behaviors we just acquired are here to stay. Telehealth will continue to play a large role, even after we can all move freely, with no restrictions. Infatuation for doing business digitally is happening across all industries and all demographics. Older generations of people who were lagging in digital usage have gotten comfortable with it. As McKinsey recently observed, age is no longer a factor in digital banking preferences.
Not just customer service
It is interesting to note that increased digital usage applies not only to customer service but also to sales. The 2008 downturn triggered the rise of B2B inside sales. It drove the emergence of new software categories such as sales engagement or conversation intelligence, providing sales departments similar capabilities as their contact center peers. The pandemic is similarly acting as a catalyst. It is fueling an acceleration of digital selling, now becoming a core part of field sales. It is also driving adoption in the B2C space. What we still call telesales or telemarketing is poised for rapid modernization.
The term “customer journey” has been overused. It has been claimed by digital projects that really only addressed a sub-element, such as customer onboarding or appointment scheduling. The term micro-journey is better suited to describe what has be done digitally.
Today’s solutions are expanding beyond these micro-journeys and spanning over traditional department boundaries. Banks, for example, are challenged to reconnect to their customers after a lengthy period of branch closures. They need to engage consumers and small businesses often in hardship. Smart collections entails not just trying to get paid but assisting customers to navigate the maze of governments' subsidies and loan programs. They provide the opportunity to help consumers refinance their debt. It's no longer just collections but collections, service, and sales combined.
The new digital is getting more human-centered; only people can handle the many unpredictable situations that have cropped up during this pandemic. Digitization in the past would have sought end-to-end automation with humans brought in only to handle exceptions and escalations. A more pragmatic approach is coming forth. It consists of applying digital technologies to simple process segments and leveraging people in a hybrid approach to bridge them all together and remove friction. We witness it with customer service agents and sales associates getting more empowered to deal with complex inquiries and situations. Collaborative support is also starting to replace traditional tiered models.
The pandemic is accelerating the shift toward digital and expanding its scope beyond point processes and departments. It is also shaping a different model that combines automation and humans and leverages communications and customer interaction technologies.
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