How Do You Measure The Success Of Digital Transformation?

Choosing the right KPIs can make all the difference


Digitization is disrupting every business and is spreading like wildfire across every sector, whether it's banking, financial services, insurance, retail, or manufacturing. Digital transformation also does not happen overnight. It is a continuous process. That is why it is very difficult to plan too far ahead; technology is evolving so rapidly that your plans will certainly change.

How do you measure return on digital transformation in order to make the timely course correction and improve its success rate? It is even more important that people who will measure the progress know the actual meaning of digital and customer behavior. You will be surprised to know that how many employees/leaders take the customer journey themselves – buying an online policy on their own website, purchasing merchandise, or calling their own customer center to complain.

One of the ways is to break the long-term plan into small doable projects with specific KPIs. These should not last more than six months.

While traditional metrics of revenue, costs, and customer satisfaction should all be measured, companies should move beyond these quarterly revenue and margin guidance as they keep pulling them back to short-term tactical focus. New metrics have to be added to get the right control and visibility of progress.

Some of the new metrics which can be considered are:

Digital proficiency

- Percentage of the marketing spend that is digital

- Brand value in the market

- Reach of the organization in the market

- Digital maturity quotient of the employees including board and senior leaders

- Percentage of revenue through digital channels

- Contribution to digital initiatives from each department, such as purchasing, finance, HR, IT, Sales & Marketing

Customer focus

- Net promoter score

- The rate of new customer acquisition

- Number of customer touch points addressed to improve customer experience positively

- Percentage increase in customer engagement in digital channels

- Reduction in time to market new products to customers

- Change in customer behavior over time across channels

Return on innovation

- Percentage of revenue from new products/services introduced

- Percentage of the profit from new ideas implemented

- Number of innovative ideas reach concept to implementation

- Number of new products or services launched in the market

- Number of new business models adopted for different classes of customers

- Rate of new apps and APIs to offer new products/services inside and outside the company

Always keep these metrics simple and measure the right things, and celebrate even the small successes so employees are motivated.

Digital transformation is a big culture change, so there is plenty of fear which can lead to resistance. Such inertia has to be addressed with clear communication, as to why it is needed to change and what benefits it will bring to each department and employee.

A lack of urgency is the greatest obstacle businesses face when considering the value of digital transformation. Proper planning is important but, more than that, the execution as per the KPIs you select is what take you through.


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