Why Digital Strategy
The evolution in the digital space has made it become one of the most important channels for any kind of business. At the same time shows the importance of a digital strategy. Newer technologies are emerging every day. Making it easier to communicate and connect. As well as help create platforms for business innovation and growth. For instance, companies like Uber and Netflix. There are both digital disruptors in their industry. Netflix was able to capture a huge market in the entertainment industry in a very short period. Due to their novel digital business model. Similarly, Uber was able to re-define the car-hailing business. Thanks to their digital strategy.
Most companies are now aware that the digital era is here to stay. However, only a few know how to tap into its many possibilities to transform how they do business. Even the companies that understand the significance of the digital era, are still stuck in their old ways. Finding it difficult in identifying the right digital initiative for the company. This is where digital strategy comes in. A well-articulated and implemented digital strategy would help chart the course for a company to be part of the digital age.
Tesla, for example, could easily handle defects in the Tesla Model S vehicles by transmitting a software update to affected vehicles. which is more efficient and cheaper compared to having to call back those vehicles. Like Toyota did in back 2013 when over a million of its vehicles due to defects.
What is Digital Strategy
A digital strategy can be defined as leveraging the use of technology to transform an organization’s business process and chart a direction for the organization digitally. As is the case with business strategy – the parent of digital strategy – a digital strategy can be formulated and implemented through different approaches. Formulation often includes the process of finding the organization’s vision and goals. As well as opportunities, and related activities.
In other to maximize the benefit of digital initiatives to an organization. This can range from enterprise focus which considers the broader opportunities and risk. Digital strategy can include customer intelligence, collaboration, new product/ market exploration, and sales & services optimization. As well as enterprise technology architecture & processes, innovation & governance. Also, customer focus effort such as website, mobile commerce, social, site engine optimization, and advertising.
4 steps of Digital Strategy
A digital strategy, when created and applied the right way. It will light up the direction for your company to take in other to become part of the digital age. A digital strategy consists of four phases.
Set a vision
The first step is to establish a clear digital vision for the company. The vision clearly states where the company wants to be and how the digital platform is going to help in achieving that. It should reveal what the company will like to accomplish digitally within a certain time frame. Naturally, a gap will appear. You now know where to go. But, not how to get there.
Stop and think
Take a look at your business internally. For instance, are your process working as you want them to? Is your business functioning at its optimum? And look externally, what are the needs and expectation of your customer and business partners. Lastly, look at the development within you and other industries. What are the current trends? With that inspiration in mind. Then, you move on to the business case.
To make a well-informed decision about your digital investments based on data. Not based on assumptions or need ideas. There is a need for some number crunching. Which will reveal the correlation between new digital initiatives and their potential value to the company. In other words, what will give the most for less? By doing the math, your company will start to focus on digital possibilities as true business development instead of online marketing. Yours is only applying initiatives that stand a chance of making an impact.
Financially or brand-wise. The company needs to think holistically. Even though it requires more work in research and analysis. The outcome will be worth it in the end. A digital concept that takes both internal and external factors into account will provide the most values. Now is time to act.
Based on the knowledge of budget and opportunities. The initiative must be prioritized. And that is simple. But the easiest and smallest projects at the top. For each project, your organization will be better at executing digitally. Digital strategies are not about investing a huge amount in the company’s online media budget. It is an inseparable part of the company’s core fundamentals. Not just moving your company forward, but making it truly part of the digital era.
Digital Strategy vs IT Strategy
A digital strategy is an offspring of the organization’s business strategy. It employs the use of digital technology to integrate information. As well as communications, and the organization’s business process. So, it is not using technology to support a business. It is, however, embedded in the business. Not having a business strategy on one side. IT strategy on the other side, and then linking the two together. The digital strategy shows how all technology is being used to enable the business and help to achieve the business’ vision.
On the other hand, IT strategy focuses on how to improve the organization’s IT infrastructure to meet the business need. Not necessarily, altering the business process to be digital. In an IT strategy, the main focus is on what kind of technology the organization need to invest in. Based on the current direction of the company. For example, a company that notices that their new digital strategy requires warehousing and analyzing. Huge amount of data that they can’t process. They can decide to invest in building a robust IT infrastructure. Alternatively, they can decide to rent a cloud space to be able to process those data.
Digital Strategy versus Business Model
A digital business model defines how to explore business opportunities through the digital channel. Take, for instance, Amazon sells books. To be able to sell the digital book better, they produce kindle pads to aid in selling books on their digital platform. So, their aim is not to make more money on selling kindle pads. Rather it is to increase the number of kindle users to increase their book sales. Let’s take a look at some of the common digital business models.
In this model, businesses offer their service at a cost. Many companies that used to offer their software product for a one-time fee. Are now switching to a subscription price business model. Where users pay to use the product for a specific period. A good example is companies such as Adobe, which have now made their software tools subscription-based.
This model flourish since the advent of the digital era. Where the basics service of the business is offered and additional service comes at a cost. The free service spread virally to establish the brand and spread it. Thus, attracting new users. That’s how services like Canva and Evernote quickly became profitable. Even with the few percent of paying users.
This is a digital business model that offers its service for free for everyone. Companies like this give freely to the customer to take better from suppliers. Sometimes, they serve as an intermediary between the customer and the supplier. They own the platform where the customers are present. Therefore, the supplier needs their platform to connect with their market.
Companies such as Google, Facebook, Twitter, Booking, etc. operate this kind of business model. For example, Facebook generates profits from advertising. Allowing businesses to serve ads to billions of monthly users on their platform. Making use of the enormous data they have on their platform. Allows businesses to target their ads based on different demographics. Another profound example, Google offers Android OS for free to mobile device companies. Thereby making it the most popular mobile phone OS. As a result, Google was able to enter the mobile telecommunication market.
Digital strategy vs Digital marketing strategy
Digital marketing strategy focus on using the internet to market the company’s deliverables across the internet. It covers things like getting attention, customer engagement, capture, nurture conversion, and measurement. So, a digital marketing strategy talks about how you integrate your social media plan, SEO, PPC. As well as, content marketing strategy, and affiliate marketing, and such.
On the other hand, digital strategy is not just a marketing method or creating a sales funnel to monitor sales conversion. It is part of the business strategy. Therefore, requires important questions to be answered by the senior managers. Such as defining the company value proposition. In an online world that is heavily populated with competition than the offline equivalent. Success on the web is definitely not from performing better tactics than that of the competitors. It comes from knowing the strategic opportunities open to the business. Then, preparing the entire business to hit mile markers that confirm progress to an eventual destination.
This entire process can be created, visualize, and manage using direction software. When this approach is taking. Everyone in the business gets to understand the company’s online strategy. Then conceive themselves how they are important to online growth. They don’t have to be digital marketers to be part of the success of the digital business. Although, digital marketing strategy is still a very important part of a digital strategy. Only now, the digital marketer can focus the company’s resources more accurately to achieving the metrics that are in context with the overall digital business strategy. Allowing senior managers to get involved.
In conclusion, the digital business strategy precedes the digital marketing plan. Without it, most business becomes tactic heavy. Responsive to new technologies instead of business needs and leveraging competitive advantages.
Five steps to implementing a digital strategy
The first step to implementing a digital strategy is to have a clearly defined audience. As simple as it may seem for some businesses, it could be a little bit difficult for others. At this stage we want to know our target audience backed with data. For a company that has been taking important data over the years. They can consult those data to get a better picture. However, if the data is not sufficient. There are a number of online data tools that can help you to figure that out.
We are not after looking for how we are performing on search engines. That’s the job of the SEO expert. What we are looking for here is data. The ratio of conversion we are having on our digital? What is the size of the addressable market?
- Google Trends
The google trends tool helps you understand trends in search queries over a certain period. The chart helps you see the growth or decline of a search term over a certain period and location. Using these tools would help you understand what your audiences are talking about. New breakout terms in your fields. So, you can better understand your audience.
- Keyword Tools
At this stage, you can use any keyword planner tool of your choice. For me though, I use Google Keyword. From the keyword planner tool, you can understand the volume of users searching for your product in a particular location. So, you can understand your audience better based on their search terms and volume of search. This helps you understand the size of your market in a certain region and help you plan accordingly.
- Google Analytics Tool
If you have an existing channel like a website, and you already have Google analytics on your website. To collect data. Then, you can better understand customer behavior on your websites such as acquisition channel, behavior, and conversion.
2. Unique Value Proposition
If you depend on spending money on ads alone. You may end up running into problems. Especially if you are competing with bigger brands. This is because ads are sold based on auctions. It may get to a point when your Cost per Acquisition (CPA) is very high, and you are not making profits from your conversion. At this point, you need to focus on creating an innovative and unique value proposition that is data-driven and customize for your audience. From data gathering, you can have insight on innovations to can add to your business model. This is, however, a continuous process. Use data to create a unique proposition, and then tweak your business model.
3. Available channels
At this point you need to write out the channels you will use to deliver the message. Understand the kind of message suitable for each channel. So, your strategies should be how to deliver custom messages across those different channels. That’s where an omnichannel approach becomes very important. Where you have a central content-hub that can deliver to multiple channels in different formats. Whether it’s an owned platform or bought platform. Your channel should have a measurable parameter that you can analyze. Then adjust till you get it right.
To measure and analyze still goes back to the simple basics. If you measure the wrong things you get the wrong result from your data. Even sometimes you may be tempted to apply old business model KPIs and ROIs in the digital space. Then, end up measuring the wrong metrics. At this point, you need to find the right tool that can analyze the data for you in real-time. So, fundamental we say, measure data in real-time. But before that, you need to make up what is it that you want to measure.
Implementation can be done gradually or completely at once. Depending on what you want to achieve. A digital strategy is part of your business strategy and will need a good effective digital business model to be successful.
In conclusion, to be able to digitize your business, you need a digital strategy. A well-defined digital strategy should be in sync with your company vision and unique value proposition to be able to get the best out of it.