Customer Transformation vs. Digital Transformation

Customer Transformation vs. Digital Transformation

The ubiquitous term “digital transformation” frequently resonates within corporate circles, yet a wide gap exists in understanding what it truly encompasses. As we delve into this topic, we must not overlook a closely related yet less discussed concept – “Customer Transformation.” This article aims to unpack these complex terminologies, draw a clear distinction between them, and illustrate how a shift in perspective from purely digital to customer-centric can steer businesses toward meaningful evolution and growth.

The Shift in Digital Transformation

Gregory Vial, from the Department of Information Technology, HEC Montreal, provides an academic definition of the term as “a process that aims to improve an entity by triggering significant changes to its properties through combinations of information, computing, communication, and connectivity technologies.” While it spotlights technology, it bypasses the core element – the customer.

Technology drives transformation, but we risk overshadowing the end purpose if we focus exclusively on technological changes. It’s one thing to embrace technology; it’s quite another to articulate its value to the company’s transformation journey and, more importantly, to the customer. Many executives laud the efficiency and value generation that digitalization brings to their organization. Yet, they often overlook how these changes affect their customers, the stakeholders at the heart of all business endeavors.

Bill Schmarzo, CTO of Dell EMC Services, offers a more encompassing definition of digital transformation. He suggests it is “the application of digital capabilities to processes, products, and assets to improve efficiency, enhance customer value, manage risk, and uncover new monetization opportunities.” His focus on customer value presents a crucial perspective, bridging the gap between the company’s internal changes and the customer’s experiences.

Digital Transformation Theory

The original concept of digital transformation, championed by leaders like Saul Berman, VP and Partner of IBM Global Business Services, had a solid focus on the customer. Businesses were urged to align their digital transformation strategies with fast-changing customer requirements, enhancing customer interaction and collaboration. The continuous evolution of customers’ needs fueled by their exposure to new technologies drove the transformation. Unfortunately, this customer-centric approach to digital transformation has waned over time, overshadowed by the buzz around digital services and cloud technologies.

The Digital Transformation Buzz

This customer focus has been largely lost in our current discussions of digital transformation. We can credit this loss to more than seven years of countless energetic pitches for digital services and cloud technologies by savvy sales and marketing teams. These pitches have included tantalizing statements such as the following (all from actual marketing messages): 

  • “Embrace the future of business with cloud-powered digital transformation.” 
  • “We can help you unlock the full potential of your business with data-driven digital transformation.” 
  • “Digital transformation happens with an agile content management system built for speed and scale.” 
  • “Your organization can use IoT tools to accelerate digital transformation.” 
  • “Invest in artificial intelligence, and see your business reach digital transformation success.” 

The problem is that these sales statements don’t embrace customers; they focus on digital ideals with a salesy disconnect from the original meaning.

Customer Transformation

This brings us to the concept of ‘customer transformation.’ It’s a term I coined to emphasize the evolution of a company’s interactions with its customers to meet their needs and aspirations better. In the face of constant change in the marketplace, customer transformation acknowledges that customer needs and expectations are far from static. It encourages businesses to modify their products, services, and organizational structures to improve customer satisfaction, foster loyalty, and enhance the customer journey.

Within the ambit of extensive digitalization, customer and digital transformation share common ground. Both involve integrating technology into all business areas to benefit processes and people. However, focusing on customer transformation helps prevent losing sight of the human element amid rapid technological advancement. It acts as a guiding star that realigns the business’s initiatives with the primary source of its value – the customers.

FactorsDigital TransformationCustomer Transformation
Primary FocusTechnology and process changeEvolving customer needs and expectations
PerspectiveInside-out (Starts with internal technology)Outside-in (Starts with customer requirements)
Initiation PointDesired technology changes within the companyCustomer aspirations regarding interfacing with the company
PurposeEfficiency, risk management, new revenue streamsEnhanced customer satisfaction, loyalty, lifetime value. and new revenue
Result on BusinessImproved internal processes, products, and servicesAltered products, services, engagement strategies and potentially, organizational structure
Ultimate AimEnhancement of the company’s digital capabilitiesEnsuring a more efficient and fulfilling customer alignment and value
Impact on Value PropositionOften focused on the company’s improvementDirectly tied to improving the customer’s perception of the company’s value
RiskMay overlook customer needs due to tech-centric focusAlways aligned with evolving customer needs and market trends

Customer Transformation Comparison

The starting points of digital and customer transformations can help illuminate their differences. Digital transformation usually initiates from desired technology changes within a company. In contrast, customer transformation begins by considering the customers’ aspirations for technological engagement. The former is an inside-out perspective, with digitization within the company taking precedence over customers’ perception of its value. On the other hand, customer transformation adopts an outside-in view, empathizing with customers and prioritizing their perspectives.

The term “customer transformation” does not imply changing your customers. It underscores the dynamic nature of customer needs and expectations in an evolving digital marketplace. Businesses can only provide value to customers by evolving their technologies, products, services, and experiences to keep up with these changes. In essence, customer transformation implies parallel transformations – a recognition of the continually transforming customer, informing the continuous transformation of the business itself.

Transform for a Purpose

In the face of the accelerating pace of technological change, it becomes crucial for organizations to pivot from a mere tech-focused transformation to one where the customer is the central driver. While technology facilitates evolution, the customer defines its purpose and direction.

By prioritizing the customer’s perspective, organizations can shape their transformation in sync with their customers’ evolving needs and aspirations. This customer-centric approach ensures the transformation retains relevance in an ever-digitizing world, fortifying the organization’s value proposition.

With an understanding of these concepts, businesses can be equipped to navigate the waves of change, charting their course with a compass calibrated toward the customer. If you’re ready to commit to a customer-focused journey, to transform not merely for the sake of technology but for a higher purpose—the customer—then I invite you to delve deeper into this concept with my book, “Customer Transformation.” It’s time to embark on a transformation that makes a difference—putting your customers at the heart of your strategy.

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