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Abstract

Blockbuster. The failure of Blockbuster was not a technology failure. It was a failure to put the customer first in its business model. You see, Blockbuster made most of its money from charging its customers late fees. So it was not going to risk that massive customer base by offering customers a subscription service, where the customer paid a monthly fee and would never, ever pay any late fees.</p><p id="175d">The rest of the story is easy, Netflix made everything easy for the customer, it may video rentals easier via a subscription model. Customers browsed videos online, and selected which movie they wanted to watch, it got sent out to their homes by mail, once returned, customers could simply order another movie with no extra costs and no late fees. Their users loved it, and told others — the power of networks kicked in and Blockbusters fate was sealed even before video streaming became mainstreamed.</p><h2 id="6ec3">Get a taxi</h2><p id="5e29">In the same way, the traditional taxi system has not been disrupted by technology. The fact is that it is easier and a much more enjoyable and shared experience to book a taxi with the disrupter company than the incumbent. Think about any other area of disruption including Fin tech, the experience of the vendor and the purchaser is much more enjoyable than with the incumbent.</p><h1 id="bf9a">Digital Transformation and customer experience</h1><p id="3001">Having worked with small to medium sized (SMEs) businesses, I can say that the term ‘digital transformation’ is one of the most misunderstood. For some, it meant selling online, or building a more visible and credible online process, or delivering some of its services online. But none of that is correct. To answer the question, what is digital transformation? we have to ask a different question.</p><h2 id="8d32">What is User Experience</h2><p id="75d0">If I asked you to describe Customer Experience in one word, how would you answer?</p><p id="352a">Service? Smile? Efficiency? You may go on to say ‘being treated nicely,’ ‘knowledgeable sales staff,’ But if we asked Millennials the same question, they would wrap up their answers in one word — <b>digital.</b></p><ul><li>on demand</li><li>accessible 24/7</li><li>accessible anywhere (where they are)</li><li>collaborative — where customers are key influencers</li><li>quick</li></ul><p id="610f">In summary, customers are telling us, ‘I want your business to work the way I want it to! I want to it fulfil my need when and how I want it. I also want to be passionate about your business, so I can share it with all my friends. In a nutshell, this is the central benefit of digital transformation. The technology and change in business processes are factors that are used to facilitate this.</p><p id="35ff">It should come as no surprise that are lives are

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mostly digital. Our life experience is now mostly digital. We do not need statistics to tell us that people now spend an incredible number of hours on their mobile phones daily. People have twice more interactions with a brand on mobile than anywhere else, TV, in-store etc (Google 2017). Our playtime is now digital, Social interactions are digital, research is digital, communication is digital, shopping is digital, relationships are digital, and Covid-19 with its subsequent lockdown has cemented this.</p><h2 id="db95">Our experience is digital</h2><p id="b8a1">Our experience of life is so digital, that it seems we take time out of the digital world to enjoy a real world experience, rather than the other way round. If you do not believe this, track your activities over the next five days. How you communicate with family and friends. How you consume entertainment. How you search for items to shop. How you get information. Put your ideas across. Now look at your results, how much of your life was enabled by digital means?</p><p id="bd8c">So if your customers have such an intensely digital lifestyle already, how does your business match up? This is the question you have to ask of your business. Start with the obvious questions. Can you imagine a business without an email address or phone number? Neither can I. We even expect small businesses to have an internet presence. If not a website, them at least a Facebook page or instagram profile.</p><p id="3aa7"><b>Delighting your customers</b> is the secret ingredient of succeeding today. Everything else is secondary, including the technology. To remain relevant, SMEs should dedicate their time to developing a strategy which encompasses understanding your customers and changing the way you think about them.</p><h2 id="d946">Three things to understand about your customers</h2><ul><li>How their customers use their products or services,</li><li>The pain points of customers, and</li><li>The related unmet needs of customers.</li></ul><h2 id="3905">Three ways to think about your customers</h2><ul><li><b>Customers are not just purchasers or end users, but influencers and shapers of your business </b>— invite your customers to be part of your success, your processes or your changes.</li><li><b>Customers do not just come as a single purchaser, but as a connected network — </b>be a source of content, and become part of their digital conversations, empower your customers</li><li><b>Customers have high expectations</b> — they want you present, faster, always on, everywhere and anticipating their needs. Get closer to them</li></ul><p id="459e"><i>This article was first published in my regular column, Essentials for Entrepreneurs, with <a href="https://www.keepthefaith.co.uk/">Keep The Faith </a>magazine. I have made slight amendments.</i></p></article></body>

Hey Entrepreneurs. It’s Not ‘Know Thyself’ Instead ‘Know Thy Customers’

Digital Transformation puts the customer at the centre of successful businesses

I am a fan of the film trilogy, The Matrix, and one of my favourite scenes is the one in which Neo visits the Oracle and sees a sign in Latin above the door ‘temet nosce’. The Oracle translates this as ‘know thyself.’ The term is not original to the Matrix, it is an Ancient Greek aphorism that has been used over the ages by philosophers. (wikipedia)

“The phrase had staying power in my life and has been a key motivation in my journey of self actualisation. It is a journey that most entrepreneurs go through, buying personal development books, reading and practising success principles, mindfulness, meditation and reflections, self-help books, podcasts, Ted Talks and a host of other resources to help them become the best version of self they could ever be. This is good. The entrepreneurial mindset is a key factor for business success, however, it is not the most important.

If you asked a founder or entrepreneur, the key to successful sales, I expect they would give one or more of the following answers:

Hard work and persistence/confidence
Know your nice and area of expertise
Know your product or service

The answers above are all correct, but in the digital age, the most important successful sales strategy is: ‘know your customer’. This essay addresses the central role that ‘knowing your customers’ plays in Digital Transformation. It highlights an example of a brand that strategised profits over value elements, then goes on focus on customer experience before proposing a way forward for businesses to think about their customers.

The entrepreneurial mindset is a key factor for business success, however, it is not the most important.

Looking behind digital disruption

In the past few years, we have seen some of the biggest brands on the planet disappear. Remember ‘Blockbuster’ this high street brand was disrupted by Netflix, but how did this happen? Didn’t Blockbuster have access to the technology ‘Netflix’ had? It did. In fact Hastings founder of Netflix had a meeting with Blockbusters CEO is discuss how the technology would work with Blockbuster. The failure of Blockbuster was not a technology failure. It was a failure to put the customer first in its business model. You see, Blockbuster made most of its money from charging its customers late fees. So it was not going to risk that massive customer base by offering customers a subscription service, where the customer paid a monthly fee and would never, ever pay any late fees.

The rest of the story is easy, Netflix made everything easy for the customer, it may video rentals easier via a subscription model. Customers browsed videos online, and selected which movie they wanted to watch, it got sent out to their homes by mail, once returned, customers could simply order another movie with no extra costs and no late fees. Their users loved it, and told others — the power of networks kicked in and Blockbusters fate was sealed even before video streaming became mainstreamed.

Get a taxi

In the same way, the traditional taxi system has not been disrupted by technology. The fact is that it is easier and a much more enjoyable and shared experience to book a taxi with the disrupter company than the incumbent. Think about any other area of disruption including Fin tech, the experience of the vendor and the purchaser is much more enjoyable than with the incumbent.

Digital Transformation and customer experience

Having worked with small to medium sized (SMEs) businesses, I can say that the term ‘digital transformation’ is one of the most misunderstood. For some, it meant selling online, or building a more visible and credible online process, or delivering some of its services online. But none of that is correct. To answer the question, what is digital transformation? we have to ask a different question.

What is User Experience

If I asked you to describe Customer Experience in one word, how would you answer?

Service? Smile? Efficiency? You may go on to say ‘being treated nicely,’ ‘knowledgeable sales staff,’ But if we asked Millennials the same question, they would wrap up their answers in one word — digital.

on demand
accessible 24/7
accessible anywhere (where they are)
collaborative — where customers are key influencers
quick

In summary, customers are telling us, ‘I want your business to work the way I want it to! I want to it fulfil my need when and how I want it. I also want to be passionate about your business, so I can share it with all my friends. In a nutshell, this is the central benefit of digital transformation. The technology and change in business processes are factors that are used to facilitate this.

It should come as no surprise that are lives are mostly digital. Our life experience is now mostly digital. We do not need statistics to tell us that people now spend an incredible number of hours on their mobile phones daily. People have twice more interactions with a brand on mobile than anywhere else, TV, in-store etc (Google 2017). Our playtime is now digital, Social interactions are digital, research is digital, communication is digital, shopping is digital, relationships are digital, and Covid-19 with its subsequent lockdown has cemented this.

Our experience is digital

Our experience of life is so digital, that it seems we take time out of the digital world to enjoy a real world experience, rather than the other way round. If you do not believe this, track your activities over the next five days. How you communicate with family and friends. How you consume entertainment. How you search for items to shop. How you get information. Put your ideas across. Now look at your results, how much of your life was enabled by digital means?

So if your customers have such an intensely digital lifestyle already, how does your business match up? This is the question you have to ask of your business. Start with the obvious questions. Can you imagine a business without an email address or phone number? Neither can I. We even expect small businesses to have an internet presence. If not a website, them at least a Facebook page or instagram profile.

Delighting your customers is the secret ingredient of succeeding today. Everything else is secondary, including the technology. To remain relevant, SMEs should dedicate their time to developing a strategy which encompasses understanding your customers and changing the way you think about them.

Three things to understand about your customers

How their customers use their products or services,
The pain points of customers, and
The related unmet needs of customers.

Three ways to think about your customers

Customers are not just purchasers or end users, but influencers and shapers of your business — invite your customers to be part of your success, your processes or your changes.
Customers do not just come as a single purchaser, but as a connected network — be a source of content, and become part of their digital conversations, empower your customers
Customers have high expectations — they want you present, faster, always on, everywhere and anticipating their needs. Get closer to them

This article was first published in my regular column, Essentials for Entrepreneurs, with Keep The Faith magazine. I have made slight amendments.