If you’re a marketing leader, what’s your typical reaction when somebody mentions the phrase “digital transformation” or you see another headline in a leading publication on the topic?
Intrigue? Cynicism? Both?
Digital transformation has become an overused buzzword in the marketing space. From mocking $50,000 investments that become glorified PowerPoints on LinkedIn (it happens) to reading why so many companies are unhappy with their current investments … it’s a topic that can spur strong reaction.
Welcome to this no-frills, actually-tested introduction to digital transformation.
Click a link to jump to a section: Stats To Know | Strategy | The Pandemic’s Effect | Realistic Expectations | Examples | Next Steps
Want a new way of thinking about marketing’s impact on the business for your evolution? Our introduction to revenue marketing is a great starting point!
What is digital transformation?
Digital transformation is a business evolution that integrates technology, processes, and people into stronger alignment with the goal of delivering greater value to customers and continue modernizing the company.
Okay, so that’s our definition. If you look at many other companies who provide digital transformation consulting, you’ll find each and every one of them has a slightly different definition.
To wit:
- CIO contends that digital transformation is defined as “a foundational change in how an organization delivers value to its customers and is generally viewed as an aggregation of modern tools and processes leveraged to solve business problems and satisfy customers.”
- Dun and Bradstreet believes that “[d]igital transformation is the process, movement, and technical revolution of digital technology entering all aspects of the business world. Everything we touch turns to data, and how we embrace this reality will determine who succeeds and evolves and who gets left behind and rendered obsolete.”
- Gartner asserts that digital transformation is “can refer to anything from IT modernization (for example, cloud computing), to digital optimization, to the invention of new digital business models.”
There’s many others, but there are really two components to it: new technology, and better customer focus throughout everything the company does.
It’s a simple enough concept, but applying it takes significant investment … and corporate-wide buy-in.
Digital transformation statistics
Chances are, you’re either in the midst of your evolution or have reached a roadblock … and you aren’t alone:
- 70% of companies report that they either have a digital transformation strategy in place or are currently working on one (ZDnet) while 21% of respondents in this Forrester survey said they’re finished with their transformation.
- Fifty-nine percent of 373 IT decision makers say that pressures stemming from the pandemic are accelerating their digital transformation efforts, according to an IDG Research business impact survey conducted in July 2020.
- According to a “McKinsey Digital Quotient survey from April 2019, 93%of executives believe that digital is critical to achieving their strategic goals.”
Stages of Digital Transformation
To evolve into a customer-centric organization with true revenue marketing capabilities, you’ll need to follow these steps:
Executive Sponsorship and Support
Obviously, you won’t be pursuing a true organizational transformative effort without executive approval. However, the level of support varies by company, and we’ve seen a distinct difference for companies who see greater impact:
- Executive interest in and enforcement of new processes, such as more efficient lead management
- Keeping an emphasis on metrics that tie to revenue across all departments
- Enforcing new processes designed for greater efficiency
- Asking the question: “How does this impact the customer?” for everything you do
Key Marketing Metrics and Goals are Revenue-Focused
Before you are able to identify actual marketing impact on revenue and forecast it, changes to the type of metrics you measure are crucial.
Many enterprises measure marketing impact by number of raw leads handed to sales, click throughs, open rates, etc. The problem is these metrics all have zero connection with revenue – they’re all activity-based.
A traditionally “successful” marketing organization could technically generate thousands of leads a year, yet have sales accept none of them because they are not actually qualified (sadly, this is still a challenge, even today!).
- If your company is setting marketing goals and success metrics by lead-to-opportunity and lead-to-booked, you’re on the right track.
- Compensating marketers with bonus structures based on actual sales contributions? You’re ahead of the game.
Related: What is revenue marketing?
Key Business Processes Remapped Around Revenue Strategy
Process and planning drive effective activity. Often, enterprise companies forget this and see progress blocked by outdated or needlessly complex processes.
A new methodology or tool will just make bad processes worse! Here’s an example:
We once worked with a client who spent many months planning an amazing multi-channel campaign. However, they refused to re-map how leads are handed off to sales and then measured (i.e. the full lifecycle of the lead).
After the campaign had run its full course, and had successfully rendered many marketing qualified leads (MQLs) to sales, they realized none were followed up on… and no one could report on “what happened.”
Impact on revenue? Zero that could be seen.
So, what does this mean for you?
Ask yourself the following questions:
- Can we easily and fully identify what happens to a lead when they come into our database, and when sales takes the baton from marketing?
- Do we have the customer journey really mapped out into pre- and post-sales stages, to continue investing in customers after we convert them?
- Could we forecast, based on an increase in a marketing metric (such as “organic traffic to a key early-awareness-stage blog”), its revenue impact from known conversion / revenue rates?
If you answered “no” to any of these questions, you’ve identified a key weakness in your company’s ability to fully embrace its digital transformation.
Adapt Technology Platforms
Let’s get real here – in most enterprises, technology platforms are a source of pain. Often, the’re owned by departments completely removed from the business unit they support (insert the always-fun IT/Marketing clash here).
A vital mark of transformation is mapping your tech around your customer expectations and goals, and how to execute on them throughout your organization. This could be global assignment rules and reporting changes in the CRM, an expanded global instance of the marketing automation platform, or RM-optimized websites. If your organization has overcome this hurdle, you should pop the bubbly.
Hiring Around Revenue Marketing
Adding permanent team resources (like a VP of Revenue Marketing, Chief Revenue Office, Content Developers, Strategic Campaign Managers, Marketing Automation Power Users, etc.) to execute and measure your growing marketing efforts signifies an organizational commitment.
So, if you’ve aligned your headcount around key revenue numbers and the skills and functions needed to execute them, you can be sure a lasting digital transformation is taking place.
Related: Build a Revenue Marketing Center of Excellence
Increased Marketing Budget
Follow the money, right?
The percentage of budget allocated to specific departments and initiatives in the Enterprise directly reflects an organization’s commitment to that area. If your organization is increasing or reallocating marketing and sales dollars around revenue-focused (some could even say revenue marketing) initiatives, you are on your way to a successful transformation into a Revenue Marketing Center of Excellence.
If your sales VP is going to bat for marketing budget increases, then congratulations – you’re really in a good spot.
Adoption of Marketing “Speak”
Juicy words spread in any work environment. But if you find marketing employees hanging around the water cooler talking about “customer-led buying processes” or “MQL-to-Closed/Won conversion rates” or see sales sending thank you emails to the marketing team … your culture is shifting in a positive way!
So … let’s talk about COVID
The fear, the uncertainty, and the ever-changing landscape have been a huge challenge to navigate for everyone – at both a personal and a business level. However, I’m a firm believer that in the midst of great adversity also comes great opportunity for creativity, innovation, and change.
While I predict 2020 will go in the history books as one of the most taxing ever in the history of modern marketing, I believe there will also be a strong counter-story: How this crisis created one of the most opportunistic times for modern marketing.
Here’s how:
Scroll down to continue reading, or learn even more from our own Colby Renton and Majda Anwar in this webinar:
Your Response to the Crisis
I think in terms of models, and for our space in particular, evolutionary or maturity models. I’m seeing a four-stage pattern for how marketing has responded to the Covid-19 crisis. The four stages are: React, Recognize, Reimagine, and Reactivate.
As you read, consider where you are and where you would like to be. This is both a mental state of mind and the actions you’re taking.
React
In March 2020, I was working in Boston on-site with a client for a 30-day period. This client had their entire corporate marketing team at one location (which is a bit unusual), and in order to get things done quickly, it made sense to work on-site with this team. They were experiencing significant shifts in the business and as a result, marketing was transforming from a cost center to a revenue center.
About two weeks into my stay, I show up to the office one morning and it’s like someone has kicked a bed of fire ants. People were scurrying all over the place with extreme urgency. The normally calm and very collected receptionist was holding two phones at once while she was yelling down the hall at a group of people. She informed us that they were closing all of their offices (around the globe) immediately and it was time for me to go back to Atlanta.
The company was in a reactionary mode to the pandemic. The marketing team was in a reactionary mode to the announcement. That announcement made by their CEO caused this entire organization and my team to go into pure react mode. The react mode is a stimulus mode where you aren’t thinking clearly and the first responses are emotional, unstructured, and a bit out of control.
In this mode, questions abound. What is this? Why are we doing it? How long will it last? What does this mean for my job? What does this mean for my pay? What does this mean for our deliverables? What does this mean for marketing? How will I work from home? What do I do with the kids?
This is a natural initial response and I think everyone has experienced some flavor of this kind of reaction. Now that we’ve all had a few months to work and respond to the crisis, things have begun to settle down and we have moved into the next response stage – Recognize.
Recognize
After initially reacting to an event, there is a period of recognition of the full situation and the impact of the situation. With a bit more breathing room and analysis, it is time to recognize the full impact of the crisis on employees, customers, and the business.
And, it’s time to be empathetic.
This is Hard
First, recognize this is hard for everyone – employees, customers, and your business. This is not business as usual. Your employees are worried and are having to work with a lot of unknowns and having to adopt new work habits. This is hard stuff. During this period, it is important for leadership to be highly communicative, transparent, and team-oriented.
Next, recognize this is also hard for your customers. The way they want to do business may now not exist. Recognizing their struggles and how they need to re-orient their business will help you realign to their evolving needs.
Finally, it is not only marketing that is struggling. Recognize that every part of your business is experiencing a tsunami of change. Your ability to communicate across functions has never been more important.
The Earth Just Shifted Beneath Your Feet
Another form of recognition is that marketing is forever changing and things will not go back to the way they were before. What you once thought was critical or was the only way to do something, has shifted. Often, this results in surprising benefits.
I was recently talking to a marketing executive about how they shifted their annual face-to-face customer conference to a virtual conference. Their annual conference had been historically important to closing business. The switch to virtual produced numerous benefits:
- First, registration increased by almost fourfold. This resulted in a large base of prospects and customers for closing business and for nurture streams.
- Second, having a virtual conference produced an online asset for many others to visit for information about their industry. This became a long-term acquisition and nurture asset.
- Finally, the company saved a LOT of money that went back into marketing for other digital initiatives.
Your Glass is Half Full
I’ve heard many examples of how marketing has become the hero in the company during this pandemic. Take the example above about the company switching from a live to a virtual conference. Because of marketing’s ability and readiness to step up, they were able to “save” the pipeline and work with sales to digitally engage prospects and customers in new and thoughtful ways.
Marketing has a unique opportunity to grow and stretch… and be a hero!
In a recent study from The CMO Survey, 62.3% of participants reported the marketing function increased in importance during the pandemic. Brand building and customer retention through digital, mobile, and social strategies were key to the heightened role.
Reimagine
With this recognition, some trial by fire, and “new normal” metrics, it is time to re-imagine what marketing can do and what marketing can be. Consider these new market metrics and how they affect what you can do:
- Internet usage has grown by 50-70% and screen time is at an all-time high (Forbes, 2020)
- 83.8% of marketers report their customers are placing a higher value on digital experiences (The CMO Survey, 2020)
- 87% of marketers report they are 100% working remotely (News Cred Insights, 2020)
- Face-to-face selling has dropped dramatically and revenues are down 17% on average of 17% (The CMO Survey, 2020)
- 79% of businesses report an increase in digital transformation budgets (Twillio, 2020)
With a set of “new normal” baseline metrics and data, marketing can set a new direction, create new models, re-engineer outdated processes, and create a new identity as a business driver.
Reactivate
After re-imagining, marketing can re-activate in a new form. One that is tied to the business, drives critical business results, and is the hero of the day. In this execution stage, you need agility, speedy results, and constant mini-experimentation. You may find yourself doing more smaller initiatives to find out what works in the new world. It is not the time for grand, long-term plans. It is a time to find new ways to connect with customers, retain customers, engage prospects, and share critical findings from these interactions.
The Re-Imagine and Re-Activate stages are accelerated, because in this crisis, many of the traditional inhibitors to change are gone. In Twillo’s report on the impact of Covid-19 on digital engagement, participants listed the following top barriers are now broken down:
- 37% of respondents said getting executive approval
- 37% said lack of clear strategy
- 35% said reluctance to replace software
- 34% said insufficient budget
- 34% said lack of time
I always like to know where I am so I can best plot my go-forward course of action. As you consider the Crisis Response Model, really think about where you and where you would like to be.
Now, let’s outline how to plot your course forward.
Crafting Your Opportunity from the Crisis
The CMO’s three biggest challenges – digital transformation, customer centricity, and revenue – can now be viewed in a new light. All three challenges have exponentially increased in importance and criticality to the business, which presents unique and game-changing opportunities for marketing.
The Unique Opportunity in Digital Transformation
I wrote this in 2018:
Let’s be clear. Digital transformation is now a strategic imperative, not a nice to have. While 87% of companies view digital transformation as a way to create competitive advantage, 27% of senior executives call it “a matter of survival.” Even with this level of importance to the future of the business, executives estimate they are only 25% complete in their digital transformation.
Digital transformation is at the top of every CEO list for Christmas.
Now, take what I said and now multiply that by a factor of 10x as a result of the pandemic! Twillio surveyed business leaders in order to gauge the impact of Covid-19 on digital engagement and transformation. They said “Covid-19 was the digital accelerant of the decade” and the numbers supported this proposition:
- 97% of the respondents said Covid-19 had sped up digital transformation efforts (68% said by a great deal)
- Companies said Covid-19 has accelerated their digital communication strategy by six years
- 92% said transforming digital communication is extremely or very critical to address Covid-19 business challenges (46% said it is extremely critical)
Along with this shift comes more budget and more focus on all things digital.
- 79% indicated Covid-19 increased the budget for digital transformation (Twillio, 2020)
- The CMO Survey reported an increase of 10% in digital marketing budgets
The impact: 92% of marketers report expanding digital channels with a corollary increase in spend for mobile (70% growth) and social (74% growth).
With fewer inhibitors to change and a massive market shift, companies are highly motivated to digitally transform. This is a key initiative that marketing should be front and center on given their focus on customers and revenue. This is a unique opportunity for marketing.
The Unique Opportunity in Customer Centricity
I wrote this in 2017 (it was re-published on MarTech Today in Q1 2018):
CEOs are waking up to the reality that we live and work in the customer-engagement economy and the customer is in control. This has forced a pivot away from being product centric and to being customer- centric.
Customer experience is the new competitive battleground and by 2020, will overtake price and product as the brand differentiator. Plus, customer experience pays big. Who wouldn’t want to see a 42% improvement in customer retention, 33% improvement in customer satisfaction and 32% improvement in cross-selling and up-selling (Genysis, 2017)?
Now, take what I said and multiply this by 10x as well!
What has become blazingly clear from the pandemic is new customer behaviors require new business models – now. Customers are online more than ever and expect optimal customer experiences, no matter who they are dealing with. The CMO Survey (2020) reported that 83.8% of marketers said their customers are placing more importance on digital interactions.
This is the new normal.
Sales people have been somewhat disintermediated from customers and marketing is picking up the slack by creating digital relationships. Consider these supporting stats:
- 60.8% of marketers report shifting resources to build better customer interfaces (The CMO Survey, 2020)
- More marketers are focusing on customer retention (32.6%) than on net new customer acquisition (14%) (The CMO Survey, 2020)
- 95% are looking for new ways to engage customers (Twillio, 2020)
- 53% of marketers are adding new channels (Twillio, 2020)
- Spending on customer experience activities has risen 10% since February 2020 (The CMO Survey, 2020)
I’ve often heard the adage – “he who owns the customer calls the shots.” Sales loves to say this.
But they need to be careful of what they say. In this new environment, marketing is poised to be the de facto expert on the customer in the new normal. Through increased engagement and the ability to track, analyze and report on customer insights, marketing has a unique opportunity to help the business thrive during this challenging time.
Related: How to become more customer-centric in your company
The Unique Opportunity in Revenue
There have been a few times in recent history when market changes caused a great deal of disruption in the sales process. The first was the rise of the internet. As basic as this sounds, before we were an internet-focused world, the customer had to lean on sales as the ultimate conduit of information.
Now that we’re in a swipe-left world and the customer is 80% through their buying journey before speaking to sales, sales had to change. This is when marketing and marketing automation also emerged to address the new relationship gap.
(Related: Implement a better lead management process)
A second massive change has hit the sales organization – little to no face-to-face interactions. In addition, increased internet usage and screen time has set up an environment where sales success is lagging. One large company I know even reduced sales quotas because the reality was so different from the original revenue plan.
Multiple studies indicate that marketing is spending more time on building a brand that connects with customers and on other customer retention activities, even at the expense of net new acquisition.
The CMO Survey (2020) reported the top five marketing objectives during the pandemic: Acquiring new customers (14%) was number 4 and ROI (3.6%) was number 5.
I think this is a mistake.
While buying cycles have slowed and more customers are looking for a deal, the opportunity to use digital strategies to plump up the pipeline, I believe, still exists and is an incredible opportunity for marketing. Regardless of what you do as an organization, nothing matters more at the end of the day than the ability to generate revenue for the company.
Given the focus on digital transformation and customer centricity, marketers need to keep their eye on the bottom-line number as they find new and exciting ways to drive revenue.
Think like a sales organization. Track and report like a sales organization. Act like a sales organization.
This is your unique opportunity.
Focus On Capabilities, Not Skills
I’m going to turn things over to Kevin Joyce, our VP and Principal, Growth Markets and Value Engineering, for this.
A CMO embarking on the digital transformation of their marketing department recently asked me to prioritize what skills they needed for their fast-growing company. The question reminded me of the time I asked my friend Dan Wolff, some 35 years ago, where exactly on a mogul (front, back, sides or top) I should be skiing in order to master the skill of mogul skiing.
His answer was simple. “You’re asking the wrong question.”
There are hundreds of skills a marketing department could need, from copywriting for blogs, video editing, podcasting, data analysis, budget management and public relations all the way to campaign design. The answer would not have been apposite.
The real question is, “What marketing capabilities do we need to acquire in order to be effective?”
“A capability is a unique bundling of skills, knowledge, and resources that facilitate the execution of business processes, and are what ultimately contribute to sustainable competitive advantage and superior performance.” (Day, 1994).
By considering capabilities instead of unique skills we can think about the problem in terms of 10 or 20 capabilities we must acquire instead of 200 skills.
Related: Build a modern marketing team structure for revenue success
The Technology Capabilities You Need for Digital Transformation
For the sake of brevity, let’s narrow the list of capabilities down to those related to technology, and ignore strategy, reporting and analytics, customer, content, people and process related capabilities.
Here are five core technology capabilities marketing will benefit from acquiring:
- Technology awareness is a marketing capability that identifies current and emerging technology that will help marketing achieve its objectives. It involves defining clear organizational needs, matching potential technology, educating team members as to potential benefits and formalizing a role to own this process.
- Revenue Marketing Architecture is the capability that defines the collection of software components that are combined into a service-oriented reference architecture that support marketing in achieving its objectives. It includes the proper integration and optimization of the components, enterprise process and workflow, and overall system governance.
- Planning, Selection and Implementation is the capability that defines the process for planning, selecting and implementing a Revenue Marketing Architecture. It includes conducting a proper evaluation and needs analysis, developing use cases and measuring performance.
- Vendor Management is the capability that maximizes vendor relationships and enables organizations to control costs, optimize technology, increase performance, drive service excellence and mitigate risks.
- Technology Adoption is the capability that ensures the adoption or acceptance of a Revenue Marketing Architecture that drives business results. It includes communication, strategic planning, senior leadership commitment, project management, training and education and business process re-engineering.
Some might debate if these particular capabilities should live in marketing operations or in IT, and there’s no simple answer to this. For large organizations, where IT is focused on large initiatives, security, governance, data architecture at a corporate level, then it behooves marketing and sales to acquire their own technology capabilities. Keeping it close to marketing will enable the team to fully understand the business requirements and move with the agility that marketing requires.
It doesn’t obviate the need to work with IT on the integrations into other corporate systems and in adherence to defined standards for data, security, vendor selection, licensing terms etc.
Delivering on each of these capabilities requires certain skills, knowledge and experience. It may require multiple people just to deliver on a single capability and in other cases a single individual may bring two or more capabilities. The key is to focus on capability acquisition, and not simply hire people because they have desired skills. Contemplating digital transformation at the capability level also facilitates discussions around what to in-source versus what to out-source.
5 Steps to Acquire the Technical Capabilities
Steps to digital transformation by technology capability acquisition:
- Examine what you want to accomplish in becoming more proficient at digital marketing.
- Document the capabilities that this will take in technology, content creation, demand generation and reporting at a minimum.
- Consider if you can educate existing staff to help them provide these capabilities.
- If time or focus is of the essence, determine which capabilities can be outsourced temporarily or even permanently.
- Write the job descriptions and goals for the individuals in terms of the outcomes that will be delivered once the capability is in place. Look for people who have delivered these capabilities and outcomes before.
On a final note, I did learn to mogul ski. . He shared that the secret was to be able to ski anywhere and everywhere on a mogul. That skill enabled me to make each turn when it was due, regardless of where I was on a mogul.
And isn’t that what agile marketing is all about? Making rapid turns when they are due, because you have an effective capability to execute regardless of the environment!
Conclusion
So, I’ve given you a lot to think about! Take action by understanding how you are responding to the pandemic. Then, plot your course forward with the three unique opportunities, and become the hero in the story.
I do want to acknowledge the pain and suffering our country is experiencing, and this blog isn’t about profiting from the pandemic. Not at all.
Rather, the pandemic has forever changed so many things about us personally and how we think about and run a business. In this change, marketing has the opportunity to play a role that affects people and business. Marketers are resilient, creative, and passionate and I look forward to all the stories of innovation, struggle, and success as we continue to transform marketing.
Now, I invite you to continue moving forward:
- Connect with me on LinkedIn or send me a question – I’ll be happy to answer!
- Dive deeper into some transformation failures with this white paper or view other related resources
- Accelerate your customer engagement with our customer experience and digital transformation consulting services