5. Benchmarking Your Digital Capabilities and Maturity
Before you embark upon a digital transformation, it’s critical to know where you currently stand on the digital spectrum, including measuring your strengths and weaknesses. The purpose of this chapter is to help you deconstruct digital and then how to measure your capabilities.
The Layers of Digital Capabilities
Digital is multidimensional and constantly expanding, which can make it hard to measure or self assess. Some companies are confused where the term digital begins and ends. Some consider digital just a technology concept. Some consider it just a marketing concept. Some make the mistake of looking exclusively at certain areas of digital (e.g., social media) to provide an entire representation how well they are performing.
To get a true understanding of how well you are doing and where you need to improve, you need to deconstruct digital into its multiple layers and analyze the various categories. By looking at each layer of digital individually (Figure 5.1), then in conjunction with adjoining and deeper layers, it’s easier to understand just how digital can evolve and mature.
Figure 5.1 Layers of digital
We live in a layered world. We get up in the morning and put on underwear, shirts, blouses, ties, jackets, socks, shoes, coats, and so on according to our job, or what we expect to be doing that day. Each article of clothing serves its own purpose, yet also serves another purpose in conjunction with the adjoining layers. Put your underwear on outside your pants and you not only defeat its purpose, you look strange as well. Socks worn outside your shoes, or a blouse over a jacket defeat the purpose of each item as well as its relationship with the adjoining item.
By deconstructing digital into its layers, functions, and category (outerwear, innerwear, comfort, protection, etc.), it’s easy to begin to understand how to interact with the aspects of digital you need for various projects, processes, or strategies.
Also, it’s important to understand what you should be comparing yourself to. The question you should be asking yourself isn’t, “How do I compare to my competitors?”
It should be more along the lines of, “Where am I on the digital maturity scale? Where do I want to be? How does what my company is doing now compare with what we need to be doing to transform?”
Most importantly, you should be evaluating how what you are doing compares to best practices, setting a benchmark in various areas so you’ll have a baseline to work from. You’ll be able to objectively see where you actually need to improve and by how much.
To help digest all the dimensions of digital, we’ve broken them down into seven layers and given primary examples in each layer of what you should be looking at and what best practices you may be comparing your company with. Not every industry uses the same key performance indicator (KPI) or standards. We’ve used the most broadly used digital capabilities to illustrate the exercise of benchmarking. These aren’t intended to be comprehensive layers in all things digital.
Digital Channels
Digital transformation begins with a clear understanding of the channels a company uses to connect with their customers. Different digital channels, whether social media, email, or search, are generally the touchpoints through which brands are most likely to connecting with their customers and where their customers may be connecting with each other (Figure 5.2). Different industries and audiences prefer one channel over another. It’s important to not only know that, but to understand why that’s so.
Figure 5.2 Digital channels
Not all channels are relevant to all businesses. Many businesses will vary the mix of focus and investment in these channels depending on what the performance is, what their customer preferences are, and what is the most cost effective. Examples of digital channels and what to benchmark for include the following:
Example: Organic Search Engine Results
Ranking high for your target keyword phrases in organic search results, the listings on search engine results pages that appear because of their relevance to your search terms, is the golden unicorn of digital marketing. It is typically very important for companies to do well in organic search. The percentage of most websites traffic that comes from this channel makes it clear why as the Figure 5.3 illustrates.
Figure 5.3 Importance of organic search
We tend to prefer websites that perform well organically over those that rely on buying paid search ads as organic search results are designed to be the most direct answer to the user’s query, versus paid search which are just another form of advertising. Whenever Google releases an update to their search ranking algorithm, digital businesses will often panic to react to whatever changes were made that impact their ranking and hence their sales assuming a significant amount of their traffic comes from search (which is the case for most companies). As an example, as of the time of this writing, the most recent change Google released was increasing the importance of your website being “responsive” on your search rank.
There are too many factors that contribute to your search rank to name them all in the context of this book. However, there are core strategies that many companies use today to achieve great success in search, such as publishing relevant content containing the appropriate mix of keyword phrases you wish to be found for in search results; generating links from other high authority domain websites focused on your target keyword phrases to your website (sometimes referred to as link building or backlinking); and ensuring your site has the appropriate site structure and content elements so that a text-based search engine could “read” the website, including the appropriate mix of their target keyword phrases throughout their site, images labeled, videos transcribed, and so forth.
In addition, there are many tools out there that can help you measure your performance in this area, including Position.ly and Moz.com.
Example: Social Media
Social media has become a major force in the world of digital but in the context of this book, we’re not talking about sharing pictures of what you had for lunch or your vacation. Companies have been using the largest social media networks (Facebook, LinkedIn, Twitter, etc.) to engage with customers, address customer service issues, communicate brand awareness and thought leadership and manage public relations issues, and more. Yet some executives may still scoff off social media as a time waster for millennials; what is lesser known is how much of a factor social media activity and following is in increasing their organic search rankings. According to Search Metric’s 2014 report1 on factors impacting search ranking, social media factors (shares, likes, comments, posts, etc.) account for six of the top ten ranking factors. That’s a major although indirect reason for companies to ensure they are doing what they should be in social media. Most companies focus their efforts on two social networks whose purpose and community context best match their brand.
1 Search Metrics Ranking-Factors 2014 http://www.searchmetrics.com/knowledge-base/ranking-factors/
For example, women’s clothing retailers may focus on Instagram and Pinterest given the visual nature of their business. Alternatively an enterprise software company may focus more on LinkedIn and Twitter as community there is professional and media and more in the professional mindset. Services like IF This Then That (IFTTT.com) and Onlywire.com can help in automating the distribution of social content to other popular social networks. Similar to search, there are dozens of sources of best practices to use when benchmarking your social media channels.
Other digital channels to benchmark dependent on your industry or business include email, video, affiliate networks, syndicated content, online ad networks, and more.
Digital Ecosystem
Your digital ecosystem is your structured presence or “real estate” in digital, including websites, social media profiles and apps on smartphones, tablets, wearables, Smart TVs, car displays, and other emerging technology touchpoints. Figure 5.4 provides an abstract of how many companies structure their web, mobile, and social ecosystems today and where they want to get to in future state.
Examples of categories that companies would benchmark with regards to their ecosystem include:
Example: Mobile App Ecosystem
Some of the most common initial questions people tend to ask when starting to create a mobile strategy are:
• Should we build mobile apps or responsive websites?
• What goes in a mobile app versus the responsive website?
• Should we have more than one mobile app?
• How do we divide features between multiple apps?
• Which mobile operating systems should we support?
There are varying views as to what is best practice in the questions mentioned previously. As far as having more than one app and how to divide features, some brands choose to follow the multiple, single-purpose mobile app ecosystem model where you have an app for each use case. Google is the most prominent demonstration of this strategy. If you look at their apps, there is one app for each of their products, including Gmail, Google Calendar, Google Maps, Google News, Google Docs, Google Wallet, Google Analytics, Google Hangout, and so on. This makes sense as these apps support very different user scenarios. Another approach to structuring a mobile ecosystem is the single multipurpose app.
Starbucks, on the other hand, is an example where one company (in this case quite large) has only one app with all the really critical features in it, including rewards, payment, location finder, news, and more. A third example is the hybrid model, used by the likes of American Express, where there is a combination of a multipurpose app for all the core use cases and one or more single-purpose app for unique use cases that may or may not be replicated in the core application. Some companies using this approach appear to be heading the direction of unbundling their multipurpose app into multiple single-purpose apps.
An example of a poorly implemented mobile ecosystem happened when Hertz launched an app called Hertz 24/7 for their hourly rental cars, separate from their standard daily rental cars in their core app. These seemingly identical apps, however, have failed to educate consumers about their separate functionality. Users are coming to the app for one thing only—to rent a car. Time of car rental is not enough of a determinant to make users switch between applications when the mission of Hertz is singular (to rent cars). Instead, Hertz would be better suited having an option for hourly car rentals within the one umbrella app, similar to how Zipcar users only get charges a flat day rate once they reserve over a certain number of hours in one day. On the other hand, airlines like Delta have done a good job integrating all their use cases into one multipurpose app, largely in part because they understand the customer journey. Booking a flight, checking flight time, and locating your boarding pass are combined in one efficient app. Figure 5.5 has visuals of the possible mobile app frameworks your company can create.
Example: Websites Ecosystem
It is easy to get caught up in the mobile app frenzy. However, given the time and investment that one must put into app development, many companies are wise to simply invest more in their responsive website apart from a core app. From an ecosystem perspective, companies with multiple business units, product lines, countries, languages, and more struggle with having multiple websites and even more campaign sites, minisites, and landing pages. This is typically a legacy issue stemming from less flexible technology that prevented marketers from quickly launching new content or capabilities to a core website. Rather than wait and miss an opportunity, they simply created a new website.
Obviously from a customer perspective, this can be confusing. From a search perspective, they are missing domain authority by having separate websites. From an operations standpoint, there is tremendous redundancy in platforms and typically disconnected experiences. This can result in your best customers, those who use more than one product, being treated the worst by being forced to go to multiple websites. Many companies looking to achieve best practices are working on integrating their websites under one domain and putting in a navigation system that will allow for different user groups to find what they are looking for easily.
Example: Social Media Profiles
From an ecosystem perspective, it’s recommended that you secure your brand on all social profiles. One challenge companies experience with social profiles is that because it’s so easy to set up a profile, any employee or customer can do it. For example, a company named ABC Corporation may setup its core social media profiles under its main name. But there isn’t much to stop “rogue” employees in a business unit from setting up other profiles specific to their business unit. And depending on the social network, there is little to stop customers or people not affiliated with the company from setting up profiles or groups as well. The result is well-known brands may have many redundant social profiles, which further confuses customers that may be searching for them on a particular social network.
As an example, search on Twitter for a common Fortune 100 company name and see how many profiles come back. There is usually at least one that is verified. There may also be multiple variations. From a customer perspective, it may not be very clear which one you should be looking for. A similar search in Facebook, LinkedIn, and other prominent social networks will give similar results. This doesn’t mean you should remove all the multiple accounts. However, if there is a justification for having multiple profiles, it needs to be made very clear on each profile what its purpose is and how to find the correct profile they are looking for if the one they are currently on isn’t it.
Digital Experience
By experience we are referring to the customer experience. This encompasses the collective of the interactions between your customers and your company. This is most often from online experiences, but the customer experience can include offline experiences as well. Companies that create experiences that are unique from those of their competitors, while also responding effectively and timely to their customers’ wants and needs, are seen as having created successful customer experiences.
Example: Omnichannel Experience
It’s not enough to provide a smooth, effective user experience anymore. Companies with multiple customer channels are being pressured to provide an integrated experience as well. Multichannel services are requiring complex digital changes across both the online customer experience and the internal operational processes. For instance, most major retailers, including Barnes & Noble, Target, Staples, Wal-Mart, and even Lowes, now offer home shopping with the option to receive products by mail or via pickup in your local store. Retailers report customers become upset when customer service representatives in a store can’t access their online order history. Others are peeved when a store can’t tell them the number on their customer loyalty cards, or reorder a new card in order to keep their discounts and coupons. The customer rightfully views every touchpoint as integrated with every other touchpoint in a cohesive organization. You must do the same.
A successful retail omnienvironment is one that will seamlessly meld “the advantages of in-store (brick and mortar) shopping with the information-rich experience of online shopping.” An integrated experience will enhance the company brand and experience the company wants for its customers, no matter what channel they access it through. Making shopping seamless for your customers pays off. According to an RIS News white report on “Omnichannel Readiness,” retailers estimated a 6.5 percent loss of revenue due to the lack of successfully integrating a true omnichannel strategy, while those who do create a true omnichannel experience stand to gain millions.2
2 Skorupa, J. RIS, News Custom Research. (2013). Omnichannel readiness
According to Forrester, ecommerce makes about $200 billion in revenue in the United States and is forecasted to reach $327 billion by 2016.3 ABI research has estimated that by 2015, shoppers worldwide will spend about $119 billion on goods purchased on a mobile phone.4 In the same RIS News report, only 19.2 percent of retailers have successfully adopted an omnichannel solution, 30.8 percent of retailers are changing strategies and catching up. But 50 percent of retailers are behind, and have no plans to change.
3 Indvik, L. (2012, February 27). U.S. online retail sales to reach $327 billion by 2016. Mashable
4 ABI, New York Business Wire. (2010) Shopping by MobileWill Grow to $119 Billion. http://www.businesswire.com/news/home/20100216006723/en/Shopping-Mobile-Grow-119-Billion-2015-ABI#.Vbx5T0UnYqg
Crate & Barrel (C&B) is well known for their omnichannel experience. They know that customers conduct research online, pin items from Pinterest, discuss items on Facebook, and check in on their mobile devices before shopping. So the C&B app saves their shopping cart so they can access their information across multiple devices and browsers. No matter where a C&B customer is in their shopping or checkout process, they don’t have to reenter their billing, buying, or shopping information.
Another popular feature C&B offers is a seamless experience for customers who want to use their wedding and gift registry, allowing shoppers to create and manage their registries from their mobile phone.
Then there are Starbucks customers who have the option of checking and reloading their Starbucks card through their phone, the Starbucks website, or while they’re at the store. Customers can pay for product with either their rewards card or their phone or mobile device. Balances are automatically updated across all channels as well.
Brides shopping for wedding dresses can use the Alfred Angelo “magic mirror” app by PicknTell. The app works with mobile devices which link to a special mirror, which videotapes future brides trying on wedding dresses. The app then forwards the video and photos to selected friends and family in real time, allowing them to share in the wedding dress selection process.5
5 http://www.pickntell.com/web/retailer/
Example: Responsive Website Design
As the first Internet-enabled devices hit the market and before the concept of app stores, digitally savvy companies like Amazon.com all started creating websites separate from their core website. These websites were specially designed to fit smaller screen sizes, as well as the input controls of a mobile device. These sites are typically referred to a company’s mobile website or “m-dot” site. This required companies to maintain at least two redundant websites—redundant content, redundant features, redundant experiences. As mobile browsers, website design, and development have evolved, the concept of responsive design has emerged.
Responsive website design allows companies to create one website with one source of content. It’s now possible to leverage front-end technology like CSS (Cascading Style Sheets) to change not only the content layout, but the content and features being displayed. Because technology “knows what device and screen size is being used by the user, whether it’s a web browser on a desktop computer, a web browser on a tablet, or a web browser on a smartphone, the website responds with the appropriate size screen.”
Additional best practices may include adaptive design which presents an entirely different design, content or feature depending on what device is being used. For example, a feature or content that leverages the specific hardware capabilities of a smartphone such as an accelerometer, a device that measures acceleration, may only show up on the website when the user is on a smartphone. However, it won’t show up on when viewed through a web browser on a desktop.
Example: Website and Application Navigation System
One of the current mainstream trends in navigation design is the hamburger menu, a stack of three bars typically located in the top right, or sometimes top left of a website. Once clicked, these bars open up a menu. This approach is considered a best practice as it can be used consistently on a responsive website whether it’s the smartphone version or the desktop website version. Effective navigation design is about setting up a website to guide readers through it as simply as possible so that they know what content is available, and where to find what they are looking for. This means including things like breadcrumbs, navigation elements, filters, laddering, layered navigation, primary menu, sitemaps, sorting, and personalization.
Like navigation design, site organization arranges content on a website in such a way as to be as user friendly as possible so users can find the information they need. It includes content-to-commerce linking, footer content, site-wide content organization, and on-page content organization.
Digital Features
Example: Customization
Customization allows users to choose how they interact with a website, including setting communication preferences and content preferences. The important focus here should be tools that enable your customers to add their own unique, personalization to their customer experience when using your site.
Example: Account Management
Set up website accounts so users get the most information as simply as possible. Accounts can include alerts and notifications, dashboard, loyalty programs, account settings, order management, password reset, username lookup, payment and shipping preferences, user account registration, and shopping cart.
Example: Customer Service
Everyone knows what good customer service looks like in the brick and mortar world but how does that translate to the online world and what might be your emphasis here? According to our research, the winner is live chat versus email.6
6 http://www.jdpower.com/press-releases/2013-us-wireless-customer-care-full-service-performance-study-volume-2-and-2013-us
Digital Platforms
Next, what platform or platforms have you created where you are seen so others can connect/see/engage with you? How strong is your digital platform? Your goal is to create a powerful platform where other businesses can easily connect their business with yours, build products and services on top of it, and co-create value. Examples of typical platforms that many digital businesses will benchmark include the following.
Example: Analytics
Digital is more measurable than most channels. The analytics solutions out there give any marketer or digital business owner the ability to really drive business decisions based on facts and not assumptions. Historically larger organizations have used the likes of Omniture and WebTrends which offer very robust capabilities; however, we’re finding more and more that organizations are relying on Google Analytics. Whatever analytics solution you choose, what’s important is to have an analytics platform implemented and your team actively using it to analyze digital business performance, including the success of campaigns, transformation initiatives, and site enhancements.
More sophisticated analytics teams are also stacking additional platforms like Kissmetrics, Mixpanel, Segment.io, and Flurry Analytics to get a deeper understanding into A/B testing, segmentation, customer journeys, and conversion. With all these different analytical tools, you may also want to incorporate a dashboard tool to provide summary visual dashboards for your executive team and any key stakeholders that don’t have time to sift through the details. Examples of current dashboarding tools include Domo, Tableau, and Qlikview.
Analytics isn’t just for marketers and business managers. Data savvy user experience experts are incorporating analytics tools like CrazyEgg to better visualize their customers’ behavior on their website pages using features such as heat-maps. Leveraging these tools and iterating revisions based on the results helps companies more quickly incorporate real customer feedback into their digital experience as opposed to the elongated processes of focus groups and wireframe testing before launch. It’s also possible that what people are saying they would do isn’t what they will actually do.
Example: Multivariate Testing
Websites and mobile apps are made of combinations of changeable elements. Multivariate testing changes two or more of those elements, creating various versions of the elements which are then tested to determine the best or most optimized version. Many tools exist to help digital businesses do this, including Optimizely, Adobe Target, Unbounce, and GetResponse.
Example: Personalization Engine
Oracle studies show 81 percent of people are willing to spend more time and money with a merchant when their shopping experience is more personalized.7 With people becoming more and more digitally adept, the need to constantly recreate your customer experience is a necessity. Implementing a personalization engine is a critical platform to optimize your online business. This technology creates a unique experience for each customer on each visit. It tailors the site as the customer shops, customizes communications to the customer, and increases revenue with recommendations. The focus here should be on collaboration/preference targeting, demographic targeting, device-based targeting, location IP/GEO targeting, on-site behavioral targeting, profile-based targeting, retargeting campaign management, rule management tools, rules/expression-based targeting, and segment management tools.
7 http://www.oracle.com/us/corporate/press/1883120
Benchmark Your Capabilities
A company could have all the right platforms and still not use them well. This is where benchmarking comes in. Benchmarking will help set a standard by which you can measure the right elements of your transformation efforts. Digital benchmarks will provide points of reference to tell you where you stand with your own digital transformation in relation to other companies’ transformation initiatives, company goals, or industry standards. Benchmarks also offer the baseline by which you can judge your performance, set goals or use to make strategic decisions, or create business models from. Benchmarks tell you how well, or how poorly, you’re performing so you can make needed adjustments. Think of a benchmark report as a dashboard on a car—telling you what the status of your vehicle is. How good are your current resources (oil and gas gauges), your temperature (hot/cold), and what kind of mileage are you getting, and what speed are you moving at?
Anchor to a Digital Maturity Scale
Where exactly you’ll want to go through depends on where you currently are. There are several stages on the road to full digital maturity, the ideal status of any company wanting to lead in its field (Figure 5.6).
Figure 5.6 Digital maturity scale
Primitive Digital Maturity
Companies like these are missing very basic digital components like social media presence and mobile websites, making them irrelevant, if not invisible, to most of today’s consumers. This stage exemplifies a complete absence of digital maturity.
Reactive Digital Maturity
Meeting the bare minimum of customer expectation regarding digital earns you the status of “interactive” or “reactive.” You could have an ecommerce platform, for instance, but it might be one that is difficult to use or unfriendly with mobile. Interactive companies display some digital maturity, but it’s still deficient. This is a normal stage for many companies. They aren’t aware there’s a name for what they’re seeing their competitors do digitally. A competitor’s digital success is often their wake-up call and what prompts them to react. They either continue to react, playing catch-up, like Blockbuster reacted to Netflix’s renting movie DVDs and streaming movies. Or, they stop and commit to a digital transformation.
Progressive Digital Maturity
A progressive company is well on its way to digital maturity, but it’s still lagging behind some of the top companies in its space. These companies typically use a mobile-first approach, rely heavily on cloud technologies, and quickly remove any reported bugs or bottlenecks. This stage involves committing to a digital transformation. That includes, developing a strategic plan by accumulating and assessing the data and information you already have about your customers. It means studying the market and then developing the best strategy to achieve your goals for your company. This involves incorporating digital, considering your “mobile-first” approach and implementing changes that will ultimately propel your organization into a true digital transformation. Your products or services may remain the same, but the changes in how they’re sold become significant.
Immersive Digital Maturity
At this stage, a company can be said to have reached digital maturity, keeping more at-pace with the digital landscape than almost all of its competitors. Immersive businesses have begun to integrate physical and digital to create omnichannel experiences for their customers and use digital tools to personalize those experiences as much as possible.
Transformative Digital Maturity
Beyond digital maturity, these companies are the leaders and innovators in their field for their mastery of tech. Processes are often fully automated, and the lines between human and technology have been blurred completely. Companies like these might be implementing technology like virtual reality or driverless vehicles to augment their services.
Everyone wants to be transformative in their sector, a company that permanently and completely changes how their business is done. But reaching that kind of mastery takes time, investment, and plenty of risk. Before you can lead the shift in how businesses everywhere work, you have to make sure your own company does what it’s supposed to in the most efficient way possible. This stage is the end result of the innovation of your business. At this point, you understand and have implemented technology that allows your organization to interact with your customer base in ways you never could have before the transformation. When done properly, digital transformation enables your organization to stay relevant and competitive year after year.
Benchmark Best Practices, Not Just Competitors
Look beyond how the leading companies in your industry do digital. Don’t get trapped into just following your competitors or your industry. Break out. Instead, focus on your own unique experiences and resources that include your channels, features, ecosystem, platform, processes, and people. Think about what you could combine to make up your unique value mix of offerings. Decide what’s most important to you.
As a recent Harvard Business article points, the best ideas for your industry won’t always come from your industry. In fact, “Bringing in ideas from analogous fields turns out to be a potential source of radical innovation.”8
8 https://hbr.org/2014/11/sometimes-the-best-ideas-come-from-outside-your-industry
If you are looking for radical innovation—and who isn’t, then start looking at innovations outside rather than inside your marketplace.” The authors further share that, counter intuitively, the more distant the sources you tap for help in innovating are from your industry the more novel their ideas. It’s in the novelty of their ideas that the better ideas are created. Why? According to the authors, successful results come from “people who aren’t constrained by the assumed limitations and mental schemas of your own professional world.”9 So when you are looking for new opportunities, consider taking the adage one of our colleagues often shares with her clients, “A billion dollar business was born when chocolate collided with peanut butter.” Where can you look outside of your own backyard to find a billion-dollar collision of opportunity?
9 Ibid.
Another way to gain innovative insight is to look for experts in digital transformation with whom you can share your industry expertise and, in turn, receive their digital expertise. This complement of skills should also go a long way to helping you see things that might not have been self-evident during their own industry reviews. This comes from the concept “you don’t know what you don’t know.” Second, you’re the business. Pair your organization with the right digital marketing masters that’s where the magic happens.
Focus on Capabilities You Need to Win in
There are hundreds if not thousands of digital capabilities that could be analyzed. However, not all capabilities are relevant to your company. For example, banks would need to excel in different capabilities versus a healthcare company versus a retailer. So look at the elements that matter to your industry.
Repeat the Benchmark Regularly
Your benchmark will change anytime you change any of your digital capabilities or when what is considered a best practices is taken to the next level. If you haven’t changed anything over time, your benchmark will inevitably get worse. To keep up with the changing world of digital, you may want to consider regular benchmarks (at minimum annually and perhaps even quarterly).
Action Steps
• Identify the digital capabilities that are critical to your business within all the layers of digital.
• Identify best practices for those capabilities.
• Identify your digital competitors and companies you’d like to emulate in digital.
• Compare your capabilities to best practices and competitors and score yourself relative to the digital maturity scale.
• Figure out where you need to be on the digital maturity scale at the capability level.