The possibilities and needs for influencing customer experience have until recently been often neglected aspects of the operations of many companies. Most of the time, it was about the standard principle of supply and demand with little marketing, as well as the accessibility and friendliness of employees. With digital transformation, this relationship is fundamentally changing.

The term digital transformation can be subject to incorrect interpretation and awkward explanation, as there is no single definition that can fully explain its scope, characteristics, and function. First of all, many believe that by digitizing a segment of their business, they have also implemented digital transformation, but digitization is only one aspect of this comprehensive process. Another reason for this is that the process of digital transformation is tailored to the specific needs of each organization, so in most cases, it cannot simply be duplicated and applied to another organization.

Essential Difference

Therefore, in order to better understand the topic, it is necessary to immediately delineate the concepts of digitization and digital transformation. Digitization means replacing existing analog business solutions with digital ones in order to introduce a digital way of doing business, while digital transformation (English: digital transformation – DX) is a fundamental change in the way an organization operates using digital technologies, aimed at improving performance and adapting more quickly to increasingly frequent and larger changes in the business and social environment.

In short, digital transformation is much more than the digitization of individual business processes within an organization. Its strength lies in changing the traditional way of doing business using digital technologies and in applying new business models arising from the transformation process. Furthermore, digital transformation is a living and continuous process that must involve all relevant stakeholders in order for the set goals and expected benefits to be fully realized. Increased efficiency, better customer experience, and optimized analytics are just some of the results of digital transformation that lead to the ultimate goal – better company performance and faster adaptation in an ever-changing environment.

Most companies do not enter the digital transformation process with the idea of innovating their own business model. Fear of change, the need to take responsibility for such a significant adjustment of operations, and the demanding assessment of implementation costs, along with the ever-present uncertainty of possible outcomes, are sufficient reasons for ‘reduced appetites’ for such ventures. As shown by the results of the latest HDI research, companies are aware that changing the business model can be one of the goals, or rather a result of successfully implemented digital transformation, but among the achieved effects, ‘traditional’ digitization of business processes is again highlighted.

The importance of establishing an appropriate business model is already indicated by its definition, according to which a business model ‘encompasses all activities that describe how a company behaves in the market.’ Specifically, the business model is the company’s plan on how it will use resources, how it will structure relationships with suppliers, how it will deal with competition and interact with customers, and ultimately, how it will create value to be sustainable and profitable. Every entity that does something has a business model, even if they may not always be aware of it. Companies know how they provide their products and services and, consequently, how they generate revenue, but often do not fully understand the reasons for their success, nor the reasons for occasional failures.

What to Consider

When implementing the digital transformation process, it is necessary to conduct an in-depth analysis of the company’s operations, which is an excellent starting point for potentially innovating the business model. Taking into account the collected data, it is necessary to conduct an analysis of the company’s ecosystem, critically examining the current business model to identify its key weaknesses that may lead to undesirable challenges in the future. In doing so, it is necessary to consider modern technologies, future trends, market direction, user behavior patterns, competitor activities, and all other relevant external factors that affect or could affect operations.

Next, it is necessary to turn towards desires and plans and generate multiple ideas for different business models, from which only the best are selected for further development. To achieve maximum results in the ideation phase, it is recommended to think outside the dominant industry logic and to think within the framework of business models, but not specific technologies and products.

The selected ideas must then be shaped into a unique coherent business model that meets the internal requirements of the company, but is also in line with the external environment, taking into account the need for a satisfactory description of all four dimensions, or the questions that need to be answered when formulating a business model (who?, what?, how? and why?).

The final phase of shaping the business model relates to implementation, or the realization of plans, which is also the most challenging step in innovating the business model. This particularly relates to negotiations with new partners, creating new sales channels, investing in marketing activities, i.e., raising awareness of the new business model, etc.

Broader than a Website

Customer experience and awareness of the possibilities and needs for influencing it have until recently been often neglected aspects of the operations of most companies. Traditional sales of products and services were based on the standard principle of supply and demand, along with necessary marketing activities and the accessibility and friendliness of employees. Customer experience itself is defined as the perception that a user gains before, during, and after using a product or service.

Although today, in many situations and articles on this topic, the user experience when using websites is almost exclusively mentioned, it actually encompasses many other aspects in the business chain such as visiting a sales point, methods of ordering and paying for products, contact with employees, and resolving complaints and claims.

Given the increasingly pronounced digital character of business, customer experience is rightly largely related to the touchpoints customers have with the virtual face of the company, and it is therefore clear why it represents a ‘new’ aspect that must certainly be considered in implementing digital transformation. In order to enhance customer experience, it is most important to understand the user, i.e., to put oneself in their shoes and view their potential contact with our business from all angles. A very good overview of all such current (and potential) contact points is provided by the analytical side of digital transformation, which analyzes all aspects and processes within a business model, allowing for a focus on improving those that can bring the most benefits.

In the world of digital tools, customer experience has become a differentiating factor that can significantly impact the future of a company’s operations. Thus, managing customer experience is a new challenge for companies, which must strive to apply best practices for understanding customer requirements, as well as for monitoring and subsequently improving customer experience.

More Improvements, Less Investment

The most concrete indicator of the state of digital transformation in Croatia is the Croatian Digital Index (HDI) research, which analyzes the readiness of the Croatian economy for the challenges posed by the exceptionally rapid growth and development of new digital technologies, which significantly change established ways of doing business. The results of the 2021 research showed that more and more companies realize that digital transformation is no longer an advantage but a necessity for successful operations. Key results achieved through the implementation of digital transformation include the digitization of business processes, efficiency, or lower costs achieved through the optimization of business processes, and the use of new technologies and market trends.

In recent years, the ongoing coronavirus crisis has shown that rapid adaptation and agility are of exceptional strategic importance for companies, with the most pronounced need for digital solutions being in the area of communication and the functioning of internal processes. To respond to these challenges, half of the companies surveyed in the HDI research increased their use of digital solutions that they had previously applied in their daily operations, while a third of companies also introduced new digital tools. Following the changes implemented, nearly two-thirds of respondents reported experiencing positive impacts from such accelerated digitization.

From the above, it can be concluded that companies, despite a certain initial dose of inertia, can successfully implement the necessary adjustments, especially when they realize that their survival may be jeopardized due to a lack of response. It can also be expected that some companies, encouraged by these positive experiences, will continue to invest in this area to achieve new, potentially even greater effects in the future.