Strategies to Accelerate Digital Transformation in Consumer Goods CompaniesDigital Product Passport ·
Accelerating digital transformation is more than embracing new technologies. It requires a multifaceted strategy for growth, success, and survival. Here are three research finding from McKinsey & Company you should keep in mind before we begin this article. Digital transformation can potentially help your CG company:
Release new products 50% quicker
Cut down the cost of new products my two-third
Double your ROI on new products
The digital era signifies a fundamental shift in the way businesses operate. Consumer Goods (CG) companies should emphasize agility, innovation, and resilience. Such companies have to respond more swiftly to market volatility than other industries. That is one reason why digital transformation is non-negotiable.
Its benefits include streamlined workflows, increased profitability, automation, data-driven insights, agility, and strategic data protection. Moreover, digital transformation fosters collaboration and upskills teams. That is crucial for thriving in the modern competitive landscape.
This article highlights CG companies’ challenges while striving for a complete digital makeover. Additionally, you will learn about practical strategies to accelerate your digital transformation and find out how Layerise can help you achieve it.
Digital transformation: an explanation
Digital transformation in the consumer goods sector refers to the strategic integration of digital technologies into manufacturing, supply chains, and sales. This includes adopting technologies like AI, VR, IoT, and blockchain. The goal is to enhance business processes such as inventory management, manufacturing efficiency, customer engagement, and product customization.
Investment in data strategies, tools, and product data can lead to benefits like increased visibility, faster launches, and cost reduction. All that drives progress in business operations and growth. It is a profound change that affects systems, processes, workflows, and culture at all levels. Digital transformation is pivotal for consumer goods companies to maintain competitiveness and adapt to shifting consumer preferences.
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Why consumer good companies fail at digital transformation
Consumer goods companies are embracing several trends to navigate digital transformation. Key trends include
Direct-to-consumer technology for agility and engagement
The metaverse for campaigns
QR codes for authentication
Robotics for inventory optimization
AI’s increasing share in retail
Embracing cloud technology
Role of blockchain and NFTs
Yet, a study by Boston Consulting Group found that nearly 70% of such projects fail even though everyone in the company is aligned. Below is an elaboration on three main reasons such companies may fail in their digital transformation efforts.
Lack of vision
A misalignment between the transformative actions and business objectives is a significant cause of failure. Many CG companies struggle to align their transformation strategies across the company because they do not have well-defined goals. That leads to underfunded and misunderstood transformations.
The absence of clear goals is a company-wide problem requiring a company-wide solution. The lack of CEO support is another primary reason why transformation projects may fail. The support of top executives is vital to set the tone for transformation and operational changes.
An unclear vision causes strategic inconsistency and mismatched structure. That further complicates the transformation process and leads to failure. Approximately 41% of companies begin digital transformation without thoroughly understanding their customers.
Insufficient technical groundwork serves as a clear indication that the digital transformation project will fail. This also includes inappropriate technology selection. Some leaders choose products solely based on reputation without aligning them with the actual problem or goals of the company. Accelerated timelines can cause companies to skip crucial steps, leading to technology inadequacies.
Failing to hire or retain individuals who understand digital transformation pitfalls and market insights can exacerbate technology gaps. Hence a lack of suitable talent is another reason for failed digital transformation in CG companies.
Poor planning and internal resistance to change can lead to devastating losses for CG companies. You must ensure cultural alignment and reduce internal resistance to new technology for successful transitions. According to a Fujitsu report, 76% of retailers believe digital transformation is challenging. That psychological barrier created opposition to change and half-baked efforts of digital transformation.
Underestimation of costs and overestimation of benefits are common errors in CG companies. That causes terrible results, even when the leadership is aligned. Hence, you should avoid mistakes in estimating the costs and benefits to prevent project failure.
In summary, consumer goods companies can falter in digital transformation due to an unclear vision, technology misalignment, and improper execution. These aspects are deeply interconnected. It emphasizes the need for a holistic approach that incorporates clear goals, appropriate technology, and meticulous execution.
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Three strategies to accelerate digital transformation in CG companies
Now that you know why your digital transformative plans might fail, let us look at ways you can avoid them and accelerate your transformation:
Focus on data
Focusing on data means more than just accumulating numbers. You must convert raw data to information that clarifies customers’ voices, your progress, cost reductions, and ROI.
As a consumer goods company, you must embrace strategies that leverage data and analytics. That will allow you to respond to market shifts swiftly. Data architecture that supports agile teams enhances collaboration. Likewise, a strategic incremental approach to data yields success by building upon various use cases.
Use data to engage customers for insights, build customer-focused solutions, and align business with customer needs. That can ensure higher quality products and increased accessibility. For example, if your data shows that most of your customers visit our online store via a mobile device, then use that information to create a mobile-friendly website. To take it a step further, create a robust mobile app and give your customers a reason to return to your store.
The objective of focusing on data for your digital transformation is to tailor models, business processes, and production to customer data and drive consumer-focused outcomes. Online retailers can significantly benefit from real-time data monitoring and analysis. When you constantly analyze customer browsing, search, and purchase patterns, you can monitor product demand and inventory levels in real-time and adjust restocking strategies.
Another use case of a data-focused approach is adjusting product prices dynamically based on factors such as competitor prices, demand fluctuations, and inventory levels. That enables you to optimize revenue while remaining competitive in a fast-changing market.
Select the right third-party digital solutions
Choosing the right third-party digital solutions is an essential aspect of digital transformation. Implementing exemplary tech architecture for swift transformative tech delivery and flexible IT infrastructure keeps you competitive. Microservices aid in quick adaptation to evolving business needs. Partnering with third-party solutions can help your CG company adopt agile methods. That can also present opportunities to iterate development aligned with strategy.
For example, Layerise is a third-party digital solution that helps CG companies create incredibly personalized and effective forms for capturing data. You can then analyze this data with AI and recommend improvements to your leadership. Its integration with Google Analytics can help you sort and make sense of the customer data outside these forms. Layerise also has multiple features for superior customer support and customer experience.
You must decide on your CG company’s goals for digital transformation. Then look for tools that offer you the most solutions, for your needs, under one metaphorical roof. Try to avoid using a bunch of different third-party solutions for data, customer experience, and business processes. Navigating multiple tools is a big headache, which leads to unorganized data that is practically useless.
You need leadership, talent, partnerships, and an agile mindset for the successful execution of digital strategies. By choosing the right solutions, like Layerise, your business can streamline its transformation process, aligning it seamlessly with the company’s core values and objectives.
Prioritize customer experience
Customer experience lies at the heart of digital transformation in the consumer goods industry. Digital leaders set high customer expectations for quick, personalized, and intuitive interactions. This holds for each step of the customer journey, from discovery to post-purchase engagement.
Embracing consumer-focused strategies and agile methods, businesses can tailor their offerings, ensuring alignment with customer desires. The key is creating a vision to align with future customer needs. Fostering a culture of continuous improvement that resonates with customers is also vital.
Implementing customer-centric approaches, tech-driven growth, and direct customer interaction speeds transformation. That is because such systems allow you to understand audience needs and build solutions that satisfy those needs. Prioritizing customers and embracing agility can enhance flexibility, customer proximity, and sustainable growth.
For example, modern-day customers interact with businesses across various channels and devices. Hence, creating a uniform omnichannel presence can help your brand undergo successful digital transformation. Similarly, your CG business can enhance customers’ shopping experience by providing personalized product recommendations based on their preferences, browsing history, and previous purchases. You can leverage data analytics and AI algorithms to offer such guidance.
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The importance of customer data in the context of digital transformation
The importance of customer data in the context of digital transformation can be broadly categorized into the following key aspects:
1. Enhanced understanding and personalization
Customers’ personal, behavioral, engagement and attitudinal data allows CG companies to design targeted marketing strategies through segmentation. Data facilitates differentiation and intelligent decision-making. You can foster trust and engagement through personalization. According to McKinsey & Company, fast-growing companies gain 40% more revenue from personalization than slow-growing businesses. Such efforts can enhance initial purchases and retention, increasing the lifetime value of each customer.
2. Boosting customer experience and engagement
Data-driven insights inform customer-centric strategies, which improves customer experience. You can leverage customer data to foster community engagement and loyalty. For example, Translink, a public transport provider, used efficient data analysis to reduce report preparation time by 95%. Expedited report generation sped up the data’s implementation to the company’s processes and drove efficiencies much quicker, increasing overall customer experience.
3. Profitability and competitive edge
Nearly 85% of organizations observe increased market share and 23% higher revenue growth through agility and integration. Moreover, agility and integration put you in a better position to manage market shifts. Customer databases enhance campaigns and boost profitability. Collecting and analyzing customer data aids in anticipating trends and optimizing products for a competitive edge.
4. Security and privacy measures
Customer data can improve security and privacy measures in consumer goods (CG) companies. That’s possible by enabling proactive risk mitigation, better compliance with regulations, and enhancing overall data protection. Privacy measures strengthen customer relations. Upholding data privacy is characterized as a critical success factor of digital transformation.
Monitoring customer behavior using data analytics can help identify abnormal patterns or deviations that might indicate fraudulent activities. Additionally, utilizing customer data for multi-factor authentication and identity verification can strengthen access controls.
5. Innovation and continuous improvement
Analyzing customer data provides valuable insights into consumer behavior, preferences, and purchasing patterns. This information helps CG companies tailor their products and services to match customer needs. That leads to innovative offerings that resonate with the target audience. Hence, customer data encourages innovation and efficient cross-functional collaboration.
Streamlined data processes aid agility and performance. By understanding individual preferences and behaviors, CG companies can develop unique solutions that cater to diverse customer segments. Similarly, you can create new features or products that address specific pain points by analyzing customer feedback and usage data.
6. Community creation and retention
Analyzing customer data allows CG companies to identify their customers’ shared interests, behaviors, and preferences. Such data-driven insight helps segment the customer base and tailor community initiatives to different groups. Customer data can help you identify brand advocates you can incentivize to create and share content. Encouraging customers to share their experiences, reviews, and user-generated content creates a sense of belonging within the community.
Companies can create strong emotional connections with customers by using data to create personalized experiences and show genuine interest in their customers’ needs. That increases customer retention.
Digital transformation is about collecting data and understanding and utilizing it effectively. Once analyzed, it can help you streamline operations and innovation with personalized marketing. Overall, customer data is a foundational aspect of digital transformation that fuels growth, enhances relationships, and positions businesses for success in a highly competitive landscape.
How Layerise can help your business to accelerate digital transformation
According to a study, only 11% of executives believe their current business models will be viable after 2023. Therefore, to thrive in this dynamic landscape, you must utilize tools and strategies that facilitate digital transformation. Layerise emerges as a significant ally in this process.
You have read above how Layerise streamlines data collection and analysis. It also helps businesses in using that data to create personalized strategies. This ensures that customers feel understood and valued.
Modern businesses must integrate various data sources to gain a unified view of their customers. You can integrate Layerise with multiple platforms and accelerate your digital transformation. For example, it can take your customers’ ratings of your products and integrate them with other public review websites. That creates a unified view of customer feedback.
Layerise can assist businesses in bridging collaboration gaps, ensuring seamless communication and workflow between departments. That solves one of the primary reasons for failure in digital transformation. Since this platform is easy to use, it solves the challenges of resistance to change and the complexity of the technology stack.
While the journey to digital transformation might seem daunting, it becomes a manageable endeavor with the right tools and strategies. Sign up for Layerise today or explore its features to learn more about why you should.
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