A company that wants to survive and grow in 2022 must be capable of digital transformation and optimization, as well as have the capability to measure digital transformation. This change enables businesses to reduce costs and increase their overall resilience and profitability. The global economic crisis we are witnessing is making it even more critical. So, it’s not a surprise that almost everyone is striving for a digital transformation now.
However, the problem is that not all companies are going about it the right way. It’s estimated that investments in digital transformation will reach over $7 trillion by 2023. But the question is whether your business’s investment is used with utmost efficiency. In order to get an answer, you need to pick the right metrics for your success.
When mapping out your digital transformation journey, choosing the right metrics for monitoring its progress is essential. Evaluating the data will allow you to see where you are successful and understand what to change for better results.
In the context of digital transformation, operational efficiency is a metric that measures how you can reduce costs through improved speed. To make these improvements, businesses can use digital tools. For example, they may consider utilizing predictive and preventative maintenance systems.
These solutions enable you to reduce the number of defects significantly. Therefore, you can reduce costs that equipment failures would otherwise cause (on top of the money you save because of the reduced downtime resulting from the aforementioned failures).
Other ways to improve operational efficiency through digital transformation include using automation or digital services to remove unnecessary workflow steps. Doing this will enable businesses to increase, for example, the speed of order processing. Therefore, the entire workflow will improve, raising the level of customer satisfaction.
To sum it up, monitoring how digital transformation speeds up your business is an excellent way to evaluate its efficiency.
One of the best markers of whether your digital transformation is successful is ROI. Note that it’s critically important to calculate ROI instead of just looking at your total revenue growth.
You should start by comparing your sales rate before and after the transformation. Then, consider various factors that affect this number. Of course, your overall transformation would be one. However, there are also both macro and microeconomic factors affecting business in general. You may want to take constantly changing marketing conditions into account. Also, consider the change in your project costs incurred due to the transformation.
There is a tremendous amount of change involved in a digital transformation of a business. Your ability to avoid disruptions in the workflow during this process is another critical factor that will affect your ROI and results. Effective change management is crucial during digital transformation. So, you must plan for it before you even start the process. This way, you’ll be able to transition smoothly and with minimal issues for the business process.
Customer engagement and satisfaction
Digital transformation can be a highly effective way to increase customer engagement and loyalty. You can use digital marketing metrics such as shares, likes, interactions, and impressions on social media to see how this works.
Note that they should be applied only to certain marketing campaigns. For example, how are your customers responding to the new custom software you created for them during your digital transformation? They might talk about it on social media, but they may also give it a rating in app stores or write about it in forums.
Your task here is to analyze traffic to the app store and see how many people use the software and how they find it. Then, collect all mentions of it and analyze what people think about the solution. That’s how you’ll see whether this aspect of your digital transformation is a success. Analyzing marketing metrics will also help you understand where to focus your actual marketing strategy.
In addition, you can evaluate customer satisfaction and engagement with your digital transformation through surveys. If your primary method of communicating with customers is email, use it to get feedback on the changes you’ve made.
Finally, be sure to measure the customer retention rate before and after your transformation.
Employee productivity and experience
Your employees are your most valuable resource, and digital transformation can bring significant value to them, particularly in training and education. Retaining talent is extremely important, so increased employee engagement should be one of the main metrics for your transformation.
There is a wide variety of options for digitization that can help businesses boost this particular metric, including:
- Training and specialized education
- Onboarding of new employees
- Automating various routine tasks
- Implementing AR solutions
- Robotizing manufacturing lines
Depending on what ways of employee-oriented digital transformation you choose, your KPIs could be:
- Reduction of errors
- Number of automated tasks
- Revenue generation calculated per employee
New value creation
Digital transformation is an essential step in embracing innovation. Today, a business must be innovative and adaptable to adjust to sudden market changes. Moreover, this type of change reduces risks and costs through digitization.
However, it’s crucial to measure the added value digital transformation creates. To do this, look at your revenue changes. But also consider that digital transformation opens room for adding new sources of value. Therefore, your business should use these opportunities. Then, add the revenue coming from them to your metrics.
For example, if your digital transformation involves launching new software products, measure their profits. Or you can look at revenues coming from new digital sources of product distribution.
This metric depends entirely on your business’s digital transformation course and expanse. However, remember that adding new value is a must for this change. It’s not enough to simply reduce your costs or optimize processes. Fundamental digital transformation should help take your business to new heights.
Bottom Line: Digital Transformation as a Means to Success
Digital transformation can bring tremendous value, but only if you plan and implement it effectively. Choosing the right metrics for your future transformation will help you outline the best route for your business. Bear in mind that every company is unique. Therefore, you need to focus on your specific needs and unique selling proposition to develop a strategy that will be cost-efficient and highly profitable in the long term. Tracking and measuring added new value, employee productivity, ROI, customer engagement, and improved operational efficiency will guide you through the digital transformation to guaranteed success.