Many companies that were content to do ” business as usual” a year and a half ago have had a major incentive to digitally transform the way their business operates. This digital transformation impacted businesses that never thought they would need much or a web presence or technology to engage with consumers. Mom & Pop stores needed to find ways to have people order online and get a delivery. Service providers need to meet with clients and potential clients virtually to sell or even deliver their services. A simple brochureware site on the web was no longer good enough. The consumer demanded this digital transformation. They wanted their goods and services and f they could not go out of the house to get them then by God the businesses had better adapt and find a way for them to research, find, order, and get delivery in a timely manner.
Covid 19 has deeply changed the way companies in all industries and areas conduct business. Most have adopted new technology much faster than they ever have to in the past. These changes are likely to be permanent as well. Technology has always been an important part of business, but the latest technology in e-commerce and online sales, virtual meetings and delivery has become essential. Especially on a B2C level. In order to survive the pandemic, many companies had to quickly adapt to new technology and drive their innovation forward.
Anyone who did not make changes was left behind. This is where digital transformation comes in.
Table of Contents
What is the Digital Transformation Opportunity Due to Covid 19?
What is Digital Transformation?
What About Digital Transformation Services?
Digital Adoption is Accelerating
How Direct to Consumer Business is Affected
Building Customer Engagement and Loyalty
How D2C Can Work Towards Higher Profits
Digital Transformation Consultants
What is Digital Transformation?
Digital transformation refers to the “integration of digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers” according to Enterprisers Project. They also refer to it as a “cultural change”.
What does this mean? Well, for businesses to stay competitive with one another in this environment, they have had to come up with new strategies.
This could include new branding and performance marketing strategies. Each gives the company their own space online, making them stand out more to consumers.
Overall, digital transformation is very important to consider today. As people learn to live with their new normal, they are demanding more digital services. Your brand will be very successful if you can learn to provide these services to them.
What About Digital Transformation Services?
Digital technology can be used to create new or change existing customer experiences to meet the changing demand. There are four major areas in digital transformation. They are
- Technology: Adapting and learning to use technology to its full potential is essential.
- Data: An understanding of how to read analytics and other data is needed to adapt effectively.
- Process: Brands need to understand the best ways to implement their transformation.
- Organization: Teamwork, leadership, and other elements are needed to be organized. Without this element, it can be difficult to tell if a brand’s adjustments are working.
All four of these pieces are part of a greater whole. If a brand can use all of the parts, they will have much better luck as they implement their digital changes. Individuals who understand these concepts are much more likely to be hired by D2C brands as they place their marketing strategies online.
Overall, digital transformation requires the ability and willingness to adapt. Doing so will allow brands to provide their customers with more relevant services, boosting acquisition and retention.
Digital Adoption is Accelerating
Since the pandemic began, a majority of consumers have moved towards online shopping. For businesses to succeed, they needed to offer more online opportunities as a response. This naturally raised the digital adoption process at the same time. If you are working remotely for the first time in your life, this would be a good example.
According to CMS Wire, 74% of companies increased their focus on supporting and improving their digital experiences, as a result of Covid. However, this can be a bit different across various industries.
What to Focus On
As digital adoption speeds up, brands will need to know what to focus on. Digital transformation should be a solution to the needs of the business. That will allow brands to find their main priorities and stick with them as they adjust.
For example, using technology to boost customer service. When a brand focuses on providing a better experience to their customers, they are much more likely to continue returning. Providing better customer service is something both consumers and brands can benefit from.
What Opportunities This Opens
This sudden digital transformation and willingness to adapt to change in business opens up many opportunities. If a business was reluctant to add new technology before, they were not prepared for this sudden change in demand.
The companies that embraced digital change quickly have an edge over the competition now. Which will allow them to recover faster from the effects of the pandemic on their business- there are more opportunities for growth than before.
Here are some more opportunities that the digital transformation provides:
- Streamlining: Technology can be used to make all operations more efficient. This removes some manual processes and makes the work faster, while less time is wasted on other tasks. All of the focus is now on earning more revenue.
- Remote Work: Before the pandemic, only 30% of U.S. employees worked from home. Remote work opens new opportunities for employees. Businesses can also now hire out of state without the employee needing to move. This gives them access to skilled workers who would never have considered working with them in the past.
- More Commerce Options: More consumers are moving online- even those who did not want to in the past. This has allowed grocery delivery and other similar services to thrive. Businesses need to learn to work with physical and digital integration to succeed. For instance, many people are interested in contactless delivery and curbside pickup as well.
- Hybrid Approach: Businesses that combine an in-person and remote approach now will be set for success in the future. Many organizations have moved meetings online to stay in contact with employees. Some may return to only physical interactions later, but there are plenty of opportunities to offer further hybrid approaches.
- Saving Money: There is the potential to save a lot of money with digital transformation. Employees can be much more efficient when given digital tools. Plus, technology can allow you to cut back on some other costs. Automation would be one of the best investments for businesses.
Overall, the main digital transformation opportunity is growth. All forms of business have the chance to learn, grow, and adapt to new systems. There is likely to be no return to normal, as Covid 19 has deeply impacted the way businesses run.
Ambitious companies will likely focus on using advanced technology and analytics to reach all of their potential customers- giving them a step up over their competition. Many executives are taking note of what change has occurred. Technology is recognized for its importance in business now since it can offer plenty of unique strategies.
Consumer’s New Digital Habits
For D2C businesses, it is important that you realize consumers are making new digital habits. These changes are here to last too. People have moved their entire lives online- work, communication with friends and family, and entertainment are all accessed digitally now.
You will want to consider what this means for you. How can you reach the consumers today?
Search results show that people are looking for try-on services, online classes, food delivery, customer service live chats, and virtual gyms more often. So, one of the best ways to reach these consumers would be to offer more online content.
D2C businesses could move customer support online, offer online classes, or other digital services. The more you put your business on the internet, the more success you will find.
Overall, the new digital habits people are forming are not likely to suddenly disappear. You will want to adjust according to where you can. If your business is not active online yet, it would help you greatly to start there.
How Direct to Consumer Business is Affected
Before the pandemic started it seemed as though D2C brands were struggling to make a profit. However, with the massive shift to online shopping, D2C is now in more demand than before. For example, the online pet supply store, Chewy, saw massive leaps in sales. During their first quarter, Chewy’s online sales grew 46%.
Still, Covid made it easier to make a sale online, but you want to be sure you are engaging the customers. That way, they continue to stick around. As more consumers become comfortable making their purchases online, D2C companies are receiving the financial relief they need.
However, to do this, the brand had to push a lot of online advertising.
Rising Advertising Costs
The cost to reach customers online has grown as well. Since all of the consumers are online now, there is a lot of competition with advertising. Many businesses are spending more on advertising and online campaigns now.
However, if a brand is not advertising online, they are much less likely to reach their target audience now. Even small brands should have some online presence, with free social media accounts being one possibility.
Chewy spent about $106 million on their advertising. After the pandemic lessens, the competition intensity is also likely to go down.
Now more than ever, future conversions are important. If your business is spending a lot of money to run campaigns and ads, you will want to be sure you keep returning customers around.
Building Customer Engagement and Loyalty
At the end of the quarter, Chewy announced that their active customers had grown 33%. D2C brands are drawing in more customers, but it is important that they keep them back. You want your brand’s growth to still be there after the pandemic is over.
Often, D2C brands are selling physical goods, rather than consumable goods. You will want to broaden your horizons to keep the customer coming back, especially if the items you sell are usually a one-time purchase. Offering more related products can help.
D2C brands can also try offering more services. Continuing with Chewy as an example, the company saw a large amount of growth from their Autoship program. 48% more customers participated and made 68% of the total net sales that quarter.
This worked out very well for Chewy, since their customers buy items like pet food and cat litter- purchases that you make often enough to set up a subscription service. D2C brands can innovate similar services that benefit them.
Chewy also offers services that it knows its customers want. For instance, their vet pharmacy services were in high demand. People were visiting the veterinarian’s office less often but still needed those services accessible from home.
This particular D2C was able to succeed due to their willingness to adapt and come up with more services for their customers. Any D2C should try to also participate in a digital transformation like this.
How D2C Can Work Towards Higher Profits
Most D2C brands have put a hold on opening physical stores and instead are focusing on making online sales. One of the best ways to do this is to drive organic conversions through search engines. Implementing more SEO strategies can accomplish this.
Customer acquisition in the long term means brands should focus on building trust and transparency online. Many D2C brands are putting more thought and effort into their online customer service, brand identity, and websites overall. Customers will continue shopping with brands they feel offer the best experiences.
If you own a D2C and want to work towards higher profits, you should also focus on offering customers better experiences. Some sites are offering virtual showrooms, digital tours, and more online. Innovation and creative solutions are key when practicing digital transformation.
Digital Transformation Consultants
D2C businesses can benefit from digital transformation consultants, especially if they need help enhancing their brand performance online. Consultants are specialists who will analyze a brand’s infrastructure.
When they find gaps in their services, they set strategies to make them stronger. A consultant will focus on increasing a brand’s long-term and short-term goals. During Covid, adapting to the new ways consumers are shopping is essential. If your brand is struggling, it would benefit you greatly to seek outside assistance.
These individuals have a deep understanding of technology and the best ways for a business to utilize it. They can help you achieve a company’s fullest potential.
Conclusion
External factors can always have a dramatic impact on businesses, the current situation is no different. It’s the ability to be flexible and see the opportunities these monumental shakeups have that make the difference.
Many companies were forced to adapt to a new business environment and learn how to deliver their goods or services virtually or through new delivery funnels.
Of course, the consumer was forced to follow along as well. The digital transformation definitely extended well beyond its previous footprint. How many consumers were forced to invest in home offices and even home school environments? Many people who only occasionally had their food delivered now found that it was a weekly, if not daily occurrence.
Businesses rapidly followed this digital transformation by sheer necessity, either building out eCommerce sites or using other distribution new distribution channels.
Personally, I find the shift to telemedicine to be the most interesting. I never would have really thought about a zoom call with my Doctor to discuss health questions or to get prescriptions but now I can’t see bothering to go to the doctor’s office unless I need tests of something more “hands-on”. My guess is that soon enough someone will figure out a way to have tests securely delivered to me at home or arrange for a traveling nurse to visit and perform any necessary tests.
The digital transformation caused by these events seems to suggest that we will have many more options and channels to get the goods and services that we rely on.
About the Author
For over 25 years, Jay Sung has been a passionate leader in driving sustainable growth through direct-to-consumer, e-commerce, and customer acquisition strategies. Mr. Sung oversees corporate branding and growth initiatives utilizing a continuously evolving toolkit of digital marketing strategies and technologies to drive innovative direct marketing programs for portfolio companies – from startups to Fortune 500 organizations.
Previously, Mr. Sung served as the Chief Marketing Officer for Guthy-Renker, a $1.3 billion industry leader in the direct-to-consumer health and beauty market. He is best known for developing consumer acquisition and marketing strategies for leading brands such as Meaningful Beauty® with Cindy Crawford, Wen® Haircare by Chaz Dean, IT Cosmetics™, and many others. In addition, he served as the CEO of such well-known brands as The Proactiv Company and Lot18.
Mr. Sung lives in Los Angeles, enjoying all Southern California has to offer. You’ll frequently find him reading the latest business journal, cooking, or practicing the piano to relax. Mr. Sung earned his Bachelor of Science degree in economics with a double concentration in marketing and accounting from the Wharton School at the University of Pennsylvania.
