The Five Drivers of E-commerce and Digital Transformation for Your Business (Thinks Out Loud Episode 293)
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The Five Drivers of E-commerce and Digital Transformation for Your Business (Thinks Out Loud Episode 293) — Headlines and Shownotes
We’re seeing an enormous shift to digital during the COVID-19 pandemic. But the pandemic is only accelerating that shift. The fact is, we’ve been moving this way for some time. And regardless of what’s most important to your business right now, there are five drivers of e-commerce and digital transformation that will shape your business even once the pandemic is gone — whenever that happens to be.
What are the five drivers of e-commerce and digital transformation for your business? How can you put those drivers to work? And how can you build a plan that sets you up for success now and in the longer term? This episode of Thinks Out Loud takes a look at the five drivers of e-commerce and digital transformation and offers answers to your key questions.
Want to learn more? Here are the show notes for you.:
Relevant Links — The Five Drivers of E-commerce and Digital Transformation for Your Business (Thinks Out Loud Episode 293)
- There is Never a "New Normal" In Digital (Thinks Out Loud Episode 292)
- We Live Online Now (Thinks Out Loud Episode 288)
- How You Can Make Digital Do Your Heavy Lifting in Difficult Times (Thinks Out Loud Episode 283)
- It's All E-commerce
- Thinks Out Loud Episode 13: It's All E-commerce
- We Live Online Now (Thinks Out Loud Episode 288)
- We Live In The Future (Thinks Out Loud Episode 274)
- Stop Outsourcing Your Sales & Marketing to Gatekeepers Like Google (Thinks Out Loud Episode 257)
- Digital Transformation Is About Talent, Not Technology
- What is the future of conferences and public speaking? | Schaefer Marketing Solutions: We Help Businesses grow
- When will B2B events return? 1 yr+ is the answer. – SoloSegment
- COVID-19 doesn't have to ruin your B2B pipeline – Biznology
- When will B2B trade shows and in-person events return? – Biznology
- Coronavirus Is Widening the Corporate Digital Divide
- Two Years of Digital Transformation in Two Months (Thinks Out Loud Episode 287)
- Digital Transformation: A Brief Introduction (Thinks Out Loud Episode 178)
- Why Digital Transformation Matters for Your Business (Thinks Out Loud Episode 179)
Thinks Out Loud is sponsored by SoloSegment: SoloSegment increases large-enterprise, B2B website conversion with easy-to-install software that automatically connects website visitors to the content they need to see to achieve their goals. SoloSegment does this using anonymous data and machine learning ensuring privacy compliance, addressing the many anonymous visitors, and improving the efficiency of marketing teams. Visit SoloSegment.com.
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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:
Technical Details for Thinks Out Loud
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Running time: 25m 06s
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Transcript — The Five Drivers of E-commerce and Digital Transformation for Your Business (Thinks Out Loud Episode 293)
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 episode 293 of the big show, and thank you so much for tuning in. I very, very much appreciate it.
Introduction to the Five Drivers of E-commerce and Digital Transformation
So I was having a discussion the other day with a client about their digital transformation project and we got into pretty lengthy discussion about the similarities and differences between e-commerce, the shift towards e-commerce, and digital transformation efforts more broadly. And to be fair, both e-commerce and digital transformation share the same five key drivers.
There are differences between them and those differences are meaningful. And I want to talk about those a little bit in just a minute or two. But I also want to talk about what connects them and what's driving them in all cases, in both cases.
Economic Challenges Facing Companies
The big reason that both are so important is because of the changes in the way that you need to operate your business and how critical those changes are right now with the number of people struggling with reduced incomes because they've been laid off, and the lack of business, travel and conferences to drive sales. And the decline in customers that result from those realities. You know, there's data from the Congressional Budget Office (CBO) , the United States Congressional Budget Office that expects that U.S. consumers will spend on average about $340 billion less each quarter through the end of 2021 than the Congressional Budget Office was projecting just this past January. The same CBO projections — and I will as ever link to these in the show notes — suggest that businesses will invest about $160 billion less each quarter during that same period. So we're talking, you know, a decline of about a half a trillion dollars per quarter for the next 18 months. That's a huge deal.
So whether your business is selling to consumers directly or to other businesses, whether you're B2C or B2B, there's clearly less opportunity than there used to be. And that means you have to find more effective and much more efficient ways to reach whatever customer demand does exist in your market or markets.
Why Digital Matters Right Now for Your Business
And that's why lots of businesses are putting more emphasis on their digital channels: to generate sales and to generate revenues. That's why we're seeing an explosion of e-commerce efforts. That's why we're seeing, as you know, Microsoft said a couple of months back, "two years of digital transformation in just two months."
I know a marketing director from a Fortune 500 company who told me recently that they're spending as much money on their website and on their digital experience this summer as they spent all of last year. Because they need to. A small business owner who I know just hired a full time digital marketer for his team for the first time in this company's history, because they need to be more effective at driving revenues online if they're going to be around, you know, six months from now, 12 months from now.
So I'll get into the distinctions between digital transformation and e-commerce in just a second. But it's important that you realize they share the same five drivers in both cases.
The Five Drivers Explained
First and most importantly, they are driven by customer centricity. If digital has created one massive change more than any other, it is that the customer is in the driver's seat today in a way that they never were 30 years ago, 40 years ago. It is all about the customer. Everything you do must be all about the customer. You have to be fast. You have to let people accomplish what they want to accomplish and get back to the rest of their lives. Because if you don't, their ability to check out a competitor of yours is literally and figuratively one click away, right? One tap on the screen away. So customer centricity matters most of all. And companies that understand, these are the ones who are doing well. They're the ones who are saying, "We must listen to our customer. We must learn from our customer. And we must support our customer at every stage of their journey if we're going to survive, thrive and succeed in the long run."
The second big driver, and this is one I've talked about a lot — I actually referred to it as Trend Zero — is that "mobile is not a trend." This is really about the continuum of connectivity that customers now have available to them, you know, from mobile phones and tablets and smartwatches to sensors that are embedded in the devices that we interact with and carry with us and ride around in all day every day, whether it's, you know, fitness, trackers or cars or TVs, or other less visible tech. That simple reality of constant connectivity and carrying the internet in our pockets, wherever we go, or on our wrists, wherever we go or in our cars, wherever we go is a massive, massive change that makes a digital focus for your company necessary. And that's especially true of customers who've grown up with mobile and grown up with digital all around them, millennials — or as I call them adults under 40. They take this for granted because it's literally the way the world has worked all of their lives.
After mobile, the third driver is the rise of radical transparency. It is a simple fact that customers can find the information they want about your products and services or your competitors' products and services everywhere. All the time, whenever they want wherever they want. It has created a reality — and I've said this many times on the show — where your customers know more about your products and services and prices and features and benefits than most of your employees do — because it matters more to them. This radical transparency cuts in the opposite direction too, because we now have more data about customers than at any other time in history. We know more about their behaviors and their preferences and their actions. Then any marketer in history ever could have known, 50 years ago, a hundred years ago. And this has created complete insight into what our customers want and need just as they get complete insight into what we offer to fill those needs.
Data-Driven Decision Making
The fourth key driver is data driven decision making. If we are collecting all this data and not using it to actually make better decisions, we're wasting one of the most valuable resources we have available to us as marketers and as business professionals overall. It's a huge, huge difference because again, the data exists and the tools exist to interpret that data in an effective way in a useful way. I talked about this on the show a couple of weeks ago about the number of marketers who do not use data in their decision making, or do not always use data in their decision making and why that's such a huge mistake. You know, 10 years ago, I used to order food from a local brew pub and would always want to talk to this one bartender who knew me really well and knew what I liked to order and would ask the right questions because they'd always get the order right. But I had to talk to that one person to be sure I'd get what I wanted. Today, you know, when I call this local restaurant near to me and get takeout, they know who I am, the moment that they answer the phone, because they recognize the phone number in their system. You know, it's screen pops on their POS and says, "This is Tim and we know what he's ordered in the past." And they get my order right every single time. They're using the data to make decisions about how to serve the customer.
Using Data to Enable Business Process Automation
What I just described is really the fifth driver to a certain degree, which is using that data to enable automation. When we think about AI and machine learning and big data and all the other buzz words that go around a lot they're really about letting machines do the heavy lifting on your data to make decisions that can be automated. We're not outsourcing thinking. We're not outsourcing asking the critical questions that drive our businesses. But we are outsourcing answering those questions. You know, I call this show Thinks Out Loud, and I think of you all as "Big Thinkers." And the fact of the matter is you think big thoughts, you think smart questions. And, you know, as recently as six months ago or a year ago or two years ago, to get the answers to those questions could require incredibly, incredibly heavy lifting from your team and from the people who worked for your company. And frequently today because of more intelligent systems, you can essentially get the answer to your question at the press of a button. And obviously when you scale up to really good sized data sets and data science and the like you can get deeper, richer answers to those questions because you're automating the process of getting the answer.
So those are the big drivers, regardless of whether we're talking e-commerce or whether we're talking digital transformation, it's the same five drivers:
- Customer centricity
- Radical transparency
- Data driven decision making, and
- Using that data to enable automation.
Difference Between E-commerce and Digital Transformation
Now I started at the beginning by saying how e-commerce and digital transformation are different. So where do they differ and why is this difference important? Well, when we talk about e-commerce, you're really talking about how do you improve the customer experience through your sales channels, through your online sales channels. You're really thinking only about one or maybe a handful of touch points for the consumer and mostly during the purchasing process. Whereas digital transformation is really about re-envisioning your business from the ground up.
You know, e-commerce doesn't necessarily drive changes in, for instance, your HR policy. By contrast, digital transformation really cuts across the people, your processes, your platforms, and your products. It's not just a technical thing. It's not just a one channel thing. It's using digital to improve all the areas of your business and addressing all of the financial and legal and cultural and human aspects associated with those.
Now, why does this distinction matter? Because it's important that you recognize whether you're transforming sales and marketing or whether you're transforming your business as a whole.
Definition of Digital Transformation
I'm generally fond of saying that companies like Google and Facebook and Amazon and Netflix and Uber and Airbnb and all their other digitally native brethren don't have a digital transformation problem because they all came into being at the same time that digital became a way of life for companies and customers alike they are, as I just said a moment ago, digitally native. And most legacy companies — actually by definition — legacy companies are not. And so digital transformation is the process of envisioning and enabling what your company would look like if you were just starting business today, if you were the proverbial couple of folks in a garage. What would your company look like if you were starting from the ground up right now?
And that's really the difference that we're talking about. Now to be totally fair. I'm guilty of, of conflating the two terms myself. Episode 13 of this humble, this very podcast from Oh God, seven and a half years ago (!) was called "It's All. E-commerce," which has long been my mantra for explaining the fundamental shifts that digital has caused over the last 20 years or so. Because when customers are interacting with all kinds of elements of your business, using whatever tool is available to them, whatever digital tool is available to them, your facilitating a deeper, richer customer experience that meets their needs when and where they are. Which leads to more loyalty, which leads to more sales, which is why it's kind of all e-commerce right.
And certainly when we talk about, you know, offline sales, we know today that they're heavily digitally influenced. So "it's all e-commerce." And let's be really fair, many digital transformation efforts have started within companies because of e-commerce experiences exposing holes in your system or in your processes or in your overall customer experience. And that means you have to improve back office stuff or fulfillment or supply chain or products or HR, or the people processes that support those so that you can actually fulfill on what your customers want.
Why You Must Respond to the Five Drivers of Digital Transformation and E-commerce
Of course, at this point, it's fair to ask. Why do you need to respond to these drivers, to these five drivers, whether it's e-commerce or whether it's digital transformation, why is it important you respond?
And the simple answer is because your customers expect you to. As I said a few minutes ago, your competition is simply one click away or one screen tap away. The reason the big guys are winning or a big reason the big guys are winning — and by the big guys, I mean the Apples and Googles and Facebooks and Amazons and Microsofts and Netflix's and Uber's and Airbnb's and the like — are winning is because they understand these trends and have adapted to them, or have built themselves from the ground up to do well. They're investing heavily and they've set themselves up to reap the rewards. Now I've talked about it all the different ways they do that in the past. And I will link to them all in the show notes. But the most important thing for you to take away is that you can do the same thing.
Those of you who have listened to the show or read the blog regularly over the years, probably you're thinking, well, you're probably going to say "Content is King. Customer Experience is Queen. And Data is the Crown Jewels." And, yes, those are incredibly important. They come later though. They're a set of guiding principles you can use to respond to those five drivers. You know, they're kind of key to your response to the five drivers.
How to Respond to the Five Drivers of Digital Transformation and E-commerce
But I think for many people and really the crux of the conversation I was having with a client the other day is how do you get started? Yes, we know content is king. Yeah, we know customer experience is queen and yeah, we know data is the crown jewels, but where do you begin? And like any good strategic initiative, there's really a very simple process for how you deal with this.
Define Your Objectives
First, you have to define your objectives. Whether you're talking a commerce or whether you're talking digital transformation, what are you trying to accomplish? What does success look like for your business? Are you trying to simply survive or you trying to thrive? And let me be abundantly clear. Given the current state of the economy that I talked about at the beginning of this episode, there is nothing wrong with simply surviving right now. As my friend Mark Schaefer says, if you don't get to the other side by definition, you cannot thrive.
You also need to be thinking about the longterm to what are your longterm objectives? Where do you want to be in 10 years time? Do you want to be in three years time? What is success over an extended period, look like in addition to what does success look like for the next six months? How do you ensure you're still in business? So first again, you have to define your objectives.
Assess Your Current State
The second is you have to do an honest assessment of where you are right now. You know, start with where are you so good that customers would be foolish to choose your competitors? And then ask, where are your people and your products and your processes and your platforms lacking. You know, where are you weak enough that customers would be foolish not to choose your competitors? If you can't do that honest assessment — if you don't do that honest assessment — you won't be able to understand the gap between what those objectives are and where you are at the moment.
Identify Obstacles Preventing Your Digital Success
And then once you understand those two things, take a good look at what's preventing you from moving forward. Just like the second one, you need to be really honest with yourself. And in that honesty, be aware that, you know, time and money aren't really true limitations. I've done work with six current members of the Fortune 100 in my career, half of whom are in the Fortune 50. And I can tell you that none of these massive organizations ever once said to me, "Oh no, we have all the budget and all the time and all the people we could possibly need to accomplish everything we want to do." Everyone has that problem. Look first at the things that truly stop you. Are your competitors winning the war for talent? Do you lack skills in certain key areas? Have you under invested in new technologies or capabilities? Be clear on what's actually hurting you, what's actually preventing you from reaching your objectives so that you can actually develop a plan that will get you ahead.
Define Your Plan to Close the Gap
And then once you've defined those objectives, once you've assessed where you are, once you've taken a good look at what's stopping you from moving forward, that's when you can put together the successful plan. You can say, "What are the things that get in the way of where we are? And what will help us close the gap between where we are and where we want to be?"
Start with your priorities. What can you do in the next 90 days to fix what's hurting you, what's most important to your business and to go back to one of our drivers, what's most important to your customers?
Summary — The Five Drivers of E-commerce and Digital Transformation for Your Business
So as you think about digital transformation, as you think about e-commerce for your business, you know, recognize that there are these five key drivers customer centricity, mobile, the rise of radical transparency, data-driven decision making and using data to enable automation. Take a good long look at where you're trying to get to where you are today, what prevents you from getting from where you are to where you want to be, and putting together the plan to close that gap. And whether your objectives are to get through the next three to six months or whether it gets through the next three to six years or whether to get through the next three to six decades, e-commerce and digital transformation together are going to help you get there. And they're going to help you get there as long as you do the work to address the reality of those key drivers and create the kind of business that your customers expect. And more importantly given the kind of challenges that people are facing right now, to create the kind of company that your customers need.
Conclusion — The Five Drivers of E-commerce and Digital Transformation for Your Business
Now, looking at the clock on the wall, we are out of time for this week. And before I tell you all the things you need to know about how you can find Thinks Out Loud and subscribe to Thinks Out Loud and all the stuff we talk about week after week, I do want to let you know that I won't have an episode for you next week. It is the July 4th holiday weekend here in America on next Friday. It's a short week. I suspect lots of folks in lots of places will not be listening to podcasts much. So we're going to go on sabbatical for a week. I will be back the first full week in July.
But with that, I do want to remind you that you can find the show notes for today's episode and as well as an archive of all our past episodes by going to TimPeter.com/podcast. Again, that's TimPeter.com/podcast. Just look for episode 293. While you're there, you can click on the subscribe link in any of the episodes you find there to have Thinks Out Loud delivered to your favorite podcatcher every single week. You can also find Thinks Out Loud on Apple Podcasts, Google Podcasts, Stitcher Radio, Overcast, again, whatever your favorite pod catcher happens to be, you should be able to find us there. Just do a search for Tim Peter Thinks, Tim Peter Thinks Out Loud, or Thinks Out Loud. We should show up for any of those.
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As ever, I'd like to thank our sponsor. Thinks Out Loud is brought to you by SoloSegment, SoloSegment increases large enterprise B2B website conversion with easy to install software as a service that automatically connects website visitors to the content they need to achieve their goals. So those segment does this using anonymous data and machine learning to ensure privacy compliance, address the needs of your anonymous visitors and improve the efficiency of your marketing team. You can learn more by going to SoloSegment.com. Again, that is SoloSegment.com.
With that I want to say, thanks so much for tuning in. I really appreciate you listening. I know I say this a lot, but I would not do this show if you weren't listening. I enjoy getting a chance to speak with you every week. And I really appreciate that you take the time to listen.
So with that said, I hope you have a wonderful rest of the week. I hope you have a great weekend and I'm looking forward to speaking with here on Thinks Out Loud next time. Until then, please, especially in these trying times, be well, be safe and as ever, take care everybody.