The disruption caused by the COVID-19 pandemic has meant that 2020 is a year unlike any other, with unprecedented business challenges and change affecting every industry. Before the pandemic, many organizations were either just starting out with digital transformation or hadn’t yet begun. Now, companies are scrambling to adapt to this new normal, if they want to stay afloat.
None of this is unexpected. Back in 2018, a McKinsey survey found that only eight percent of companies believed their business model would be economically viable in the face of digital disruption. (1) While the need was predicted for years, many companies initially resisted digital transformation or only focused on transformation that was narrow in scope.
With the need for change finally here, the time has come for companies to widen the scope of digital transformation, across all departments enterprise-wide. Process changes are necessary for companies to survive. Some have weathered the storm well, relying on forward-thinking strategies that set up digital efforts before market conditions forced change. Others accelerated the programs they had in place (but hadn’t prioritized) before the pandemic. For these companies — and others still in the early stages of digital transformation — they must reprioritize their transformation efforts if they’re expected to keep up with the competition.
The Pandemic Accelerated the Need for Digital Transformation
March and April 2020 were reactionary times, as governments ordered lockdowns, governors issued stay-at-home orders and whole industries needed an immediate pivot to digital business and remote working. The pace of change has been quick over the past few years but it moved at a dizzying speed over two short months.
While their initial actions were reactionary, companies are now positioned to take a more strategic view toward how their businesses will change in the next year. As a result, companies must examine both their business models and how they interact with customers. Digital transformation needs to happen now and at scale. This requires a mindset shift that recognizes the benefits of digital transformation and the willingness to see it through all across the enterprise.
Thankfully, evidence suggests that embracing the uncertainty and adapting to this pace of change yields positive results. According to recent research, companies that adapt to current market conditions can experience up to a five percent return on equity, up to 30 percent cost savings and up to a ten percent increase in customer satisfaction over their peers. (2)
Consumer Habits Have Changed Dramatically
Amidst the hardships impacting nearly all companies, opportunities have arisen as well. Companies that prioritize unified customer data and data-driven decisions will be best positioned to weather the pandemic and emerge with not only more loyal customers, but also an expanded customer base.
Companies need to know what their customers are doing and how their purchasing differs from even a few short months ago. When countries first went into lockdowns or forced business closures, most in-person spending decreased as customers switched to online shopping and delivery. This trend continues, with more people shopping online now than ever before. (3)
However, the current landscape of continued economic regulations and jobs uncertainty means that consumer spending remains skittish. Consumers are watching what they spend and are often purchasing less expensive products over things that would cost more. (4) This sudden shift in spending patterns may force marketers to rethink their strategies as the way customers buy things has undergone a massive shift in a short period of time.
Being able to recognize and adapt to these new realities puts unified customer data at the center of digital transformation. There might never be a return to the way things were done before. In this environment, companies should examine their customer’s new habits and focus on meeting customers where they are, not where companies think they’ll return to “once this is all over.”
To say the COVID-19 pandemic threw businesses for a loop is an understatement. On the one hand, many companies weren’t prepared for the sudden, rapid shift to an entirely remote workforce. On the other hand, for some, the pandemic simply accelerated processes and procedures that were either already in place or planned. Scope of digital transformation has widened and what might have been limited to a single department is now happening enterprise wide. The need for customer insights based on unified, real-time data has never been greater.
If anything has come out of the last few months, it's that organizations now have made the case for extreme digital disruption. Shifting almost all work processes to online/remote? Check. Implementing digital processes for smoother workflow? Check. Gathering real-time intelligence on customer spending habits? Check. Organizations that aren’t there yet need to examine their digital strategies and make that change.
Learn how Treasure Data can unlock the latest customer insights at treasuredata.com.
- Bughin, J., Catlin, T., Hirt, M. and Willmott, P. (2018). “Why digital strategies fail.” McKinsey Quarterly
- Oliver Wyman (2020). Digital Transformation in the Age of COVID-19. Webinar
- Treasure Data (2020). “Survey: COVID-19 & The Future of Commerce — How a Global Pandemic Changed the Way We Shop”
- McKinsey & Company (2020). Consumer sentiment and behavior continue to reflect the uncertainty of the COVID-19 crisis. McKinsey