The advent of digital technology and rapid-fire innovation of new digital products has disrupted business on a global scale. Digital technology has figuratively waved goodbye to the ‘old world’, cannibalising existing business models on one hand while shaping new and exciting opportunities on the other.
One of the most significant side effects of this digital uprising is that virtually every company in the world is now – to a greater or lesser extent – a technology company.
In the past, technology was traditionally controlled by an organisation’s IT department and confined to manage basic operational tasks. Today, digital is growing exponentially and intersects every aspect of business from new product development, marketing and customer service to accounting, finances and delivery.
According to a 2016 report by the Australian Computer Society (ACS), the growth of Australia’s digital economy will be fuelled by waves of technological developments with cloud computing, social media, and mobile devices having the greatest impact in new industries, sectors and occupations.
Markets which have already been significantly disrupted by digital applications include the hotel and accommodation industries which have been overthrown by the advent of Air B&B, just as advances in mobile technology enabled Uber to usurp the taxi industry.
The next major wave of disruption will be driven by “new emerging technologies that have potential for commercial applications such as 3D printing in manufacturing, drones in the construction industry and driverless vehicles on mining sites”, the ACS report projects.
The contribution of digital technologies to the Australian economy is forecast to grow from $79 billion in 2014 to $139 billion in 2020, and the vast majority of this growth (97 percent) is expected to take place in sectors outside of the traditional information, media and telecommunications industry.
“Right now all companies should be looking at digital disruption to identify what technology is coming that could potentially affect their industry, and what capabilities they will need to build and nurture to reshape their business in the face of constant innovation,” says Australasian digital strategist Miranda Bond, who has decades of experience working in digital strategy and implementation.
Bond says that today’s business leaders must be skilled in the art of leading through change and one way to ensure success is to invest in digital strategy.
Why do companies need a digital strategy?
A digital strategy looks at a business from a holistic perspective. It starts by identifying core business objectives and how digital can help to achieve them.
The strategy then considers what is working and what is not, how the business is currently integrated with digital, and what operational efficiencies can be improved through its use – whether it is the adoption of a new technology or a social media channel.
Digital strategy creates a framework for organisations to improve results and operational efficiencies, while developing a clearer understanding of return on investment (ROI) from its implementation. However, the components of a successful strategy will vary between large corporations, government organisations and start-ups.
Mike Zeederberg, managing director of Zuni – a boutique digital agency based in Sydney – says most organisations will develop their digital capability and asset base from the ground up.
“Often starting with a website, elements are often ‘bolted on’ as needed, particularly when someone within the business is enthusiastic about a particular channel,” he says.
“This generally results in a highly fragmented use of digital where different teams internally own different elements. For example, marketing will control the website while corporate communications manage social media, and an external agency buys ads and paid search. The result is an inconsistent, uncoordinated digital footprint which is confusing to customers, highly inefficient and resource-intensive.”
This is a common pitfall for many large organisations, and a key reason why digital strategy has become as much about managing the conflicting interests of an organisation’s different departments, as it has about building a positive relationship with customers.
Miranda Bond couldn’t agree more. She says large organisations need to approach a digital strategy in an integrated, overarching way to better serve customers.
“It’s about looking at digital from the customer’s perspective, so this means being customer-driven as opposed to being channel-driven.”
Another aspect of digital strategy that’s critically important for organisations to understand is that digital is always on. Large organisations often have a very campaign-driven approach and they haven’t quite grasped that digital often thrives outside of the Monday to Friday, 9am to 5pm tradition. This can cause many businesses to become reactive instead of proactive and it’s usually a result of a flaw in the digital strategy.
For smaller companies and start-ups having an effective digital strategy can be a major competitive advantage over larger organisations, simply by being more proactive. Bond also works as Entrepreneur in Residence at iAccelerate – one of Australia’s leading business accelerators and has worked with numerous start-ups and companies rapidly scaling.
“Smaller businesses don’t have the luxury to make costly mistakes so it’s important for them to invest in a robust digital strategy from the outset,” Bond says.
“They need to be working harder and smarter making sure all digital integrations, systems and channels are working in harmony. It’s crucial for smaller companies and start-ups not to waste time in a social media channel that is not relevant for their customers.”
Components of a digital strategy
According to Zeederberg, the digital strategy development process involves working with all areas of a business to understand requirements, key drivers and the role that digital is required to play in building engagement between a brand and its target audiences.
This needs to encompass all aspects of the business from product development and marketing, through to customer services, corporate communications and human resources.
“Understanding how various audiences use the web to engage with a brand is a key aspect of strategy development, and this is developed through conducting research, reviewing existing insights, and analysing how current digital assets are used,” he says.
“This leads to the creation of customer journeys and provides a detailed understanding of what digital channels are used and when – and how content can be used to target each audience.
“These insights provide a platform for the development of the strategy by linking core business objectives with an implementation plan that can be immediately actioned. If an organisation’s digital infrastructure is optimised to provide the customer what they need, when they need it and on the right channel then everything becomes much more effective.”
Market and competitor research is an important part of digital strategy. It provides two key outcomes: the first is benchmarking and inspiration, while the second is to uncover opportunities for organisations to take market share from competitors.
“The ability to scan your surrounding environment and sense what’s relevant to your organisation is essential, challenging and increasingly multifaceted,” recently wrote Katherine Milesi – a senior partner of Deloitte Digital in Sydney and a leader of the firm’s Diversity and Inclusion Program.
“Companies that are more effective at environmental scanning will be better prepared and faster to respond to important industry changes.”
An effective digital strategy will provide a logical framework for the development, ongoing management and measurement of all digital activity and communication to ensure cohesive delivery to the market.
Results of implementing a digital strategy
Brianne West, owner and founder of global e-commerce solid beauty bar business Ethique, invested in a comprehensive digital strategy in early 2015.
“We realised that our content was too product-centric and our metrics concentrated directly on sales rather than focusing on our customers and what information they needed at each phase of the purchase cycle and in each social media channel,” West says.
Ethique’s website conversions were underperforming and its newsletter open and click through rates were lacking. The company’s goal was to become more customer-centric and improve financial performance along the way.
By working relevant, customer-focused content into its social media activity, Ethique doubled its Facebook fans within 12 months. As an example, Ethique increased its Facebook fans by five percent within a two-day period simply by integrating video into its content strategy.
Improvements to content also drastically increased engagement with the company’s fortnightly email newsletter. The June 2016 newsletter attracted a 44.49 percent email open rate (against an industry average of 16.35 percent), with a 17.69 percent click-through rate.
“By analysing our social media data we developed a better understanding of what content our customers wanted and we used these insights to optimise our content calendar,” says West.
“All the effort we put into applying a customer-centric approach to our content has definitely paid off and the overall efficiency and effectiveness of our communications have improved.”
Another key recommendation in Ethique’s digital strategy was to rework the company’s website and implement various tactics such as an abandoned cart recovery programme.
The new Ethique website currently boasts an impressive 7.6 percent e-commerce conversion rate and the company’s new abandoned cart recovery programme has saved 17.9 percent of abandoned carts to significantly improve revenues. West is delighted her business invested in a digital strategy.
One of the fundamental components in the implementation of a digital strategy is the development of a content strategy and content plan. This should be informed by customer ‘personas’ or groupings with content playing a key role in moving customers through the digital sales funnel.
The next article in our series focuses on the development of customer personas, customer journeys and the development and execution of a content plan.
Mike Zeederberg is the instructor for the ADMA IQ Digital Marketing Strategy Course – a two day intensive workshop taking professionals through the process of developing an overarching digital strategy.