Want data? Here are stats, case studies and cautionary tales that should get customers moving on transformation efforts.

April 4, 2018

7 Min Read
Digital Transformation


Julie Dzubay

By Julie Dzubay, VP of Sales Operations, WTG, and Editorial Adviser

To go digital or not is no longer a choice. A societal revolution that was set in motion over two decades ago by affordable broadband internet access as well as smaller and smarter computing devices has now brought us to a tipping point where things are moving so quickly that, as a business, if you’re not at least moving with the pace of your industry, you’re going to get run over and probably never recover.

In other words, customers need to change before they are forced to, or it might be too late. 

That’s the kind of big, bold, dire message that partners have trouble delivering. So I’ve collected some stats from our recent summit that should convince even the most skeptical customer.

From McKinsey & Company:

  • Less than 30 percent of business processes are currently digital.

  • Seven out of eight companies have failed in digital-transformation processes.

  • Only 32 percent are making solid progress integrating digital marketing along with their traditional marketing strategies.

  • Only 6 percent are fully digital in their marketing and communications strategies.

  • Companies ignoring digital transformation are likely to have revenues fall by 12 percent.

  • Companies embracing digital transformation are likely to have revenues grow by 16 percent.

That’s an average 28 percent swing in revenue between those that are proactive about transitioning their businesses and those that are not. If we look at a traditional brick-and-mortar company that has $40 million per year in sales, that 28 percent swing would amount to over $11 million in lost revenue!

Some case studies and cautionary tales:

  • Audi decided they needed to keep pace with consumers by creating Audi City, which provides a deep brand experience for visitors that allows them virtually explore the entire Audi range, even in city-center stores without enough room for showrooms. Volvo is also making big moves. After being written off as boxy and boring, last year the company stunned the auto world when it announced that come 2019, every new Volvo model will be powered by an electric motor, at least in part.

  • GE has gone digital by embracing IoT – the next big channel moneymaker – and putting a huge number of sensors on the different pieces of machinery it produces, with the intent to capture vast quantities of data. From there, GE crunches the numbers and gathers rich insights into marketing, manufacturing and consumer habits. 

  • After a period of expansion from 1970 to 1991, LEGO suffered a steady decline right up until 2004, according to the World Economic Forum. By then, the company was close to bankruptcy. Its digital transformation focused on nurturing new revenue sources by creating movies, games and mobile interactions.

  • Starbucks knew they couldn’t become a leading chain on their coffee alone. The company’s main innovation is its Mobile Order and Pay app, which it continues to expand and improve. This is fundamentally a customer-first strategy, as it addresses the basic wants of the consumer: convenience, line avoidance and the personal touch. Coupled with an extensive loyalty program, the app gives Starbucks the perfect venue to up-sell and market to consumers.

  • Proctor & Gamble didn’t know how to change from within. Its strength was realizing this and, along with internal innovations, looking outside the company to find the innovation leaders knew they needed to stay alive. The company then set a goal of acquiring at least 50 percent of future innovations from outside the company, either from contracting or buying smaller companies that were leading in key areas.

Many companies that were leading their industries just 10 years ago failed either to change or …

… to buy their way to digital success, and are now alive only in our memories and MBA courses. Blockbuster didn’t see digital coming and, unfortunately, media evolved so fast, its competitors that were born in the digital media space were too far ahead by the time it attempted to transition. Circuit City had the same problem. With Amazon eliminating in the margin of error in the brick-and-mortar world, companies like Walmart and Best Buy had better digital strategies. Likewise, Borders Books didn’t realize that books alone were no longer enough to keep consumers returning to the store. Amazon saved readers time and money, and the high overhead of a physical storefront ended up being Borders’ demise.

Companies that did attempt a digital transformation or were born in the digital age are not immune to failure. Changing consumer habits can also cause customers to give the competitor a try. Organizations can’t always rely on consistency with product and service to stay afloat. Remember, Tower Records was atop the music and media world throughout the ’80s and ’90s, but couldn’t get people to buy when they launched an online store in 1995. Radio Shack saw the threat and built an online presence, but it wasn’t compelling enough to compete with Amazon, Fry’s and niche companies like ThinkGeek.com.

Mobile leader Blackberry was way out of tune with changing consumer habits and desires. Recent new hardware launches have been underwhelming, to be kind. Pets.com started out strongly but never really figured out how to make money in the digital space, and etoys.com couldn’t figure out the distribution aspect, despite having a large jump in the online toy industry in 1999.

But Where’s the Money?

OK, so you’ve convinced customers they need to do something. By now, most C-level execs aren’t necessarily opposed to the evolution of their company into the digital space. But they often do have a hard time figuring out how to make money in digital. Here’s one quick stat: In the U.S., 12 percent of all payments are being made on digital devices. In China, 71 percent of all digital purchases are made on a digital device.

The more digital the world becomes, the more rapidly habits like mobile payments spread and the more agile organizations need to become. Habits change so quickly that once a business thinks it has sales figured out, it needs to shift to meet the demand of a new group of consumers. Laptops were once heralded as the cutting-edge mobile office. Now, laptops are dying and …

… mobile is exploding. Tablets were the hot new thing just 5 years ago. Now they’re declining. Other devices, although a tiny segment, are now the fastest growing means to browse the web. In this case I am talking wearables, smart devices, streaming media boxes and digital assistants like Google Home, Amazon Alexa and Apple’s Siri.

Good branding can help, but it has to be backed up by solid strategy. Maybe the best service you can render is getting your own digital act together, then helping customers understand the current generation: We’re now in the era of the first true digital natives. Adults that grew up in a digital world, in households where they used the internet before they could walk. These consumers – and channel colleagues – know and expect digital and are driving these changes.

One thing is for certain — change. Becoming and remaining agile is critical for organizations that want to stay relevant in the digital era, yet so many of the businesses our partners work with have no formal plans for digital transformation right now. A year from now could be too late.

Julie Dzubay is vice president of sales operations for WTG. Her responsibilities include managing WTG’s sales organization and strategically driving partner and supplier relationships. Previously, Dzubay worked with Electric Lightwave/Integra Telecom as director, channel sales operations and development. She was also senior director of customer retention as well as director of product and market development at Eschelon Telecom. She’s also a member of the 2018-2019 Channel Partners Editorial Advisory Board.

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