The Best Way to Measure Digital Transformation Efficiency
Measuring digital transformation efficiency isn’t easy. It’s also not as exciting as launching a digital product or platform. But it’s vital for success and ROI.
Knowing what metrics to use and how to track them can keep your digital transformation moving in the right direction. It gives you the feedback you need to deliver real business results.
In this guide, we’ll explore five key areas of digital transformation efficiency and the KPIs you need to measure.
These are the metrics to focus on to make sure your transformation delivers business value.
Five Ways to Measure Digital Transformation Efficiency
You need to know what you want to achieve and what to measure. This is the foundation of every successful digital transformation. It’s how you cut down on wasted resources and time.
Keeping a close eye on the following five key business areas will show how your digital transformation progresses and generates results.
1. Marketing Department Digital Transformation
The marketing department is on the frontline of digital transformation. It’s where you can get quick wins and measurable progress early in your transformation journey.
Access to internal and third-party data can make campaigns more impactful and effective. You can tailor messaging to reach specific audience segments at the right time and on the right channel.
The best way to measure the impact of digital transformation on marketing is to take a micro and macro approach.
A micro approach helps you to measure the success of your initiatives on each channel. Depending on the marketing channel, you can use impressions, likes, click-through rates, traffic, and more.
These metrics provide a granular view of your performance.
But you also need to see the big picture. A macro approach is about measuring market share.
Market share helps you see how you are competing overall. It shows you how your section of the market compares to your competitors.
How you measure market share will depend on your organization.
For e-commerce, you can estimate your market share based on revenue. For B2B, it can be more challenging. Traffic and share of voice can help you measure your company’s performance and your competitors to evaluate the market.
Using Scoretize, you can measure market share through your dashboard
2. Sales Digital Transformation
People are more willing to try new brands than ever before.
That means customer loyalty is at an all-time low, but it also means there’s a big opportunity to capture more sales.
During the pandemic, 36% of consumers tried a new brand, with 76% of those intending to continue using the new product as part of their routine.
Digital channels are a lucrative way to capitalize on this trend. But you need to be able to measure how well you are converting people into customers.
The most obvious KPIs to track for sales digital transformation are e-commerce conversions. By keeping a close watch on your e-commerce conversion rate, you can see what works and what needs improvement in the sales funnel and checkout process.
You can also measure customer acquisition costs and customer lifetime value.
With data accessible across departments, it’s much easier to compare these KPIs and see if your digital sales transformation is working.
You can also measure the performance of specific e-commerce sales tactics. For example, if you are developing a product recommendation engine as part of your sales digital transformation, you can track the sales generated by the algorithm.
This can be a great way to capitalize on up-selling and cross-selling opportunities. You can use search history, demographics, and past purchases to improve the e-commerce experience for your customers with relevant promotions.
3. Customer Engagement and Customer Satisfaction
Customer experience is a key differentiator in the marketplace. When products can be produced and sold at similar price points, customer experience is the deciding factor in a purchasing decision.
That’s why customer experience is integral to digital transformation. Over 75% of executives state that improving customer experience is a high or critical priority.
In Adobe’s 2020 Digital Trends report, leaders in customer experience were over 3x more likely to exceed their top business goals.
Customer experience and digital transformation go hand in hand. So you need to have customer experience KPIs that you can track and measure the success of your digital initiatives.
The right metrics will depend on your transformation projects and goals. For example, if you launch a new digital product, you can measure usage patterns and user engagement.
For more overarching customer experience metrics, you can use both qualitative and quantitative research. You can use Net Promote Scores, Customer Satisfaction Indexes, and your digital analytics to monitor bounce rate and other metrics.
It’s also important to measure the perception of your brand and products. Using social listening and sentiment analysis, you can see what people say about your brand, products, and competitors.
This can help you identify areas for improvement and track the impact of your customer experience initiatives.
4. Technology Stack Efficiency
Spending on digital transformation technology probably already takes up a significant chunk of your budget.
By 2024, global spending on digital transformation tools and technology is set to reach $2.39 trillion:
Making efficient use of your technology stack is often the difference when it comes to success or failure. It’s important to measure how your teams use existing technology and how new processes and tools affect productivity and efficiency.
The most definitive KPI for tracking technology stack efficiency is workplace productivity.
How has new technology investment impacted the volume and quality of output that your teams can deliver relative to time?
You can calculate the number of processes that run on a new technology or software and see how it has affected team outputs.
This will show you the return on the investment of the technology and reveal insights into the level of adoption.
If you discover that the new tool hasn’t made as big an impact as expected, you can narrow in on the bottlenecks or usability issues that need to be improved.
You may find opportunities for increased automation or that a lack of training holds back technology adoption.
Technology alone isn’t a solution. However, you see increased performance and productivity when you combine the right tools with the right people and culture.
5. ROI of Digital Investment
There’s no escaping the fact that your digital investment will be judged on ROI. You need to measure ROI throughout every step of your corporate digital transformation journey.
Most companies are failing to track this essential metric. In 2021, only 27% of companies are able to track digital transformation ROI.
So how can you track digital transformation ROI and maximize returns?
The first step is to determine the business goals you are trying to achieve. You can create new value and meet your goals by adding new digital products and processes or increasing efficiency.
Next, you need to define the digital investment. This includes new technologies and services but should also cover employee time, consulting, marketing, etc.
You then need to determine your KPIs. These metrics will depend on the type of investment. For a marketing investment, this could include traffic, impressions, engagement, and more, depending on the channel.
Setting out these initial metrics provides a benchmark and ongoing data so that you can measure success.
With an established timeframe, you can then start calculating the impact and ROI of your digital investments.
It’s important to view digital transformation as a company-wide initiative and see the big picture. Each digital investment contributes towards achieving your business goals.
For example, investment in your data infrastructure to establish a digital ecosystem will impact the entire enterprise. Teams will be able to leverage the same data sets for multiple use cases.
Tracking Digital Transformation Efficiency with Scoretize
In the exciting early stages of digital transformation, it’s easy to overlook how you will measure performance.
But by taking time to establish KPIs and metrics, you can keep your digital transformation project on track. It provides feedback so you can optimize and pivot when you need to.
With Scoretize, you can track your digital market share, transformation KPIs, and effectiveness from a single intuitive dashboard. You can monitor the metrics that matter and easily share data with the people who need to know.
It helps you make data-driven decisions on resource allocation, teams, and talent to maximize corporate digital transformation ROI.
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