Don't confuse digital transformation with customer experience

This post was originally published by our friends at CMS Wire and is shared with their permission.

If you’re reading this article, you’re probably familiar with two popular industry buzzwords that are often mentioned in the same breath: digital transformation and customer experience.

Digital transformation is the application of digital technologies like mobile, data analytics, and smart embedded devices to reinvent customer relationships and business processes. Worldwide spending on digital transformation related technologies and services is expected to approach a whopping $2 trillion by 2022, according to IDC.

Customer experience, or CX, is how companies go to market and engage people with not just a product but an emotional connection over the entire course of the relationship, with the goal of motivating and delighting people rather than frustrating and disappointing them. What you may not realize, however, is that while these two terms are interrelated in some ways, one doesn’t necessarily beget the other.

Digital transformation does not equal customer loyalty

Many organizations seem to think that if they invest enough in their digital transformations—presto!—customer loyalty and dollars will follow. But they’re missing a key point: digital transformations shouldn’t be just about the digital.

When we use the term “digital” today, the reality is the necessary changes encompass much more than simply a process of redesigning IT architectures and business operations. Rather, companies must rethink everything that touches the customer journey—design, research, product management, marketing, support, you name it—and create experiences that likely go beyond a product’s original purpose.

Buying a cup of coffee, for example, is no longer just about the coffee. It’s about the cup, the layout of the store, the length of the line, the availability and quality of food items, the friendliness of the barista, and the ability to order ahead and pay with an app.

And then there’s what happens behind the counter: how the shop streamlines its ordering process, the systems it uses to process customer orders, and how its website and app are designed, managed, and improved. These all play a part in how the store is able to recognize and relate to customers’ motivations, needs, desires, behaviors and intent, and keep up with their ever-changing needs and demands.

Put another way, human insight—the collection of approaches for gaining valuable new understanding of customers, resulting from listening and observing with empathy—is transforming digital transformation. Only through human insight can companies connect the dots between what customers think, feel, say and do.

When used to make business decisions, human insight can become the core driver of compelling customer experiences.

Digital transformation isn’t the driver, it’s the vehicle.

The critical piece in the customer experience puzzle

The tendency of some companies to conflate digital transformation and customer experience perhaps is one reason that, despite all the excitement about and investment in digital transformations, so many struggle with digital transformation success. According to research by McKinsey, 70% of digital transformations fail to reach their goals, including how long it takes and what it involves.

Meanwhile, Forrester research shows CX leaders outperform CX laggards on both stock price growth and total returns, proving there are huge benefits to a holistic strategy that seamlessly connects a brand with customers at every touchpoint and behind the scenes.

The upshot: human insight, not digital transformation, is the most important piece in the customer experience endeavor. Digital transformation plays a vital role as a wingman.

The most important trend when it comes to customer experience isn’t digital transformation but customers themselves. Technologies, and how we interact with them, will change, but it’s a timeless truth that to stay relevant to customers, companies must keep their fingers on the pulse of consumers’ constantly evolving needs and expectations and build those insights into their offerings.