With the age of industry 4.0 well upon us, and conditions in 2020 expediting the need for traditional industries to consider new modes and methods of business, manufacturing companies are now looking to digitize more than ever. While it can mean good news for efficiency and operational excellence in the long run, implementing such projects can be a very tall order. One reason being, many companies don’t know where to start - or what to prioritize.
Let’s take a look at the different ways manufacturers should think about digitization, and how you can identify what should be done first.
How do you prioritize your digital transformation
When it comes to digitization and the digital transformation of manufacturing businesses, there are areas where you can look to gain quick wins, and other areas that will require long term planning and resource management. But bear in mind that digitization isn’t just a project - it's a strategic decision to secure growth and future success of your business, that may require new business models and most likely a large shift in internal processes.
In many ways, digitization of any kind seeks to eliminate slow manual processes, and improve efficiency and productivity. But from the outset, the implementation of new technology may require onboarding and a change in culture. When deciding to make digitization a priority for your organization, you should consider that internally you may want to first start with ensuring you get buy-in and understanding from your employees and stakeholders. Focus not only on communicating what you should do, but why you are doing it. Then, especially when it comes to your marketing, sales, and customer account teams, that transition becomes much easier.
Where can you look to determine where the current biggest opportunities are?
As previously mentioned, there are likely several approaches to digitization you can take, and there may be small immediate improvements you can make, and other areas where you play a long game. But know that by implementing more tools and digital processes, the future of your business will be significantly more agile.
But how do you face the first hurdle of knowing where to even begin? There are a few areas where you can quickly see the best opportunities:
The customer journey and marketing
Many medium and large companies struggle with identifying, mapping, and having control over the customer journey. The result is that you are missing out on opportunities and leads, the timing is wrong when communicating with prospects, and/or your website, content, and other customer touchpoints aren’t optimized for what potential customers are actually looking for.
There are a few areas to see where you may have a “leaky bucket” issue when it comes to your customer journey and marketing activities:
Start by looking at what your website tells you about the customer journey. Look at Bounce Rate to identify if your site and content is relevant enough. Look at Time Per Session to understand how long visitors are spending on your site. Look at Source performance to understand where your site visitors are coming from, how you can best optimize that journey, and where you can allocate time and resources for doubling down on your best performing sources.
Your company should have a mechanism in place to pre-qualify and qualify leads going to marketing and then to sales. Identify the attributes or properties and activities of your prospects that most likely lead to a sale. Do you know when a lead becomes marketing qualified or when it then moves to being sales qualified? These are important details to have an understanding of your customer journey.
Conversion rates are one of the most important metrics you can follow for customer journey and marketing. Conversion rates can happen on your website - for example the rate of views to submissions on a landing page.
Increasingly, customer support initiatives are becoming more important - and also requiring an omnichannel approach. Customers have various ways of wanting to get in touch with sales support, account managers, or technical support, and your business should consider how available you are to your customers across multiple channels. Aside from this consideration, for identifying where in your customer support program you should digitize more of your processes, there are a few key areas to consider:
Ticket resolution times
What is your method of creating and managing customer support issues? Do you have a proper mechanism set up, and if so, how are your support tickets being delegated and handled? One key metric may be your ticket resolution times. If your organization is taking too long to resolve customer issues, you will risk losing customers. You’ll likely need to address a lack of structure in the process, and consider how you can automate or digitize more of this process.
Net promoter score
The Net Promoter Score, or NPS, is the way by which you can evaluate your customers’ satisfaction with your business and your products. It essentially scores the likeliness your customers would be to recommend you to another person. Ensuring that you are collecting this data in a digital format is important, because it is data that should be compared against KPIs in both your marketing and sales, product, and revenue operations to get a total picture of your value and customer satisfaction.
The main purpose of your manufacturing business is likely to supply quality products that bring in revenue. But with some mid to large size businesses, you can still be lacking in the data that tells you how to best optimize your revenue, and shore up the internal processes to run your business most efficiently. When we think about digitizing revenue operations, and how you can prioritize your efforts, these are the areas to look at:
Cost to acquire a customer
The cost to acquire a customer, or CAC, is a really important metric for understanding profitability. It’s a fairly straightforward concept - the CAC must be lower than the value of the sale. How much lower, determines your profit margin. But some manufacturers aren’t digitizing how these numbers are calculated, and it can leave you with problems in your revenue analysis and forecasting.
Customer lifetime value
The amount spent by a customer across their entire lifecycle with your business is called the customer lifetime value, or CLV. It’s important to understand CLV for a few different reasons - one being that if you have a high CAC, you may still be highly profitable, as long as your CLV is also high. In order to truly understand these metrics though, there is much you need to digitize in regards to how you are tracking purchases and ordering, your customer information, and your average length of customer - and product - life cycles.
Similarly to CLV, and even NPS, retention rate is important for understanding how much you can expect your customer to spend over their life cycle, how much you should allocate in resources to customer support and ensuring satisfaction that leads to retention, and how much you can increase your profitability by securing loyalty rather than spending more time and manpower to new sales. By improving your customer retention rate, you can increase CLV and reduce CAC, which increases profitability. If you don’t have the right digital processes in place in terms of retention, you may be leaving money on the table, or even worse, losing it to competitors.
By looking at your revenue operations, you can find plenty of indicators of where you may be wise to invest in digitizing your business. The important thing here is to remember that not all projects can be executed at once. Look to where you can make quick win improvements that can incrementally better your overall performance over time.
Think about how different parts of your internal organization are actually crucial to work together, such as marketing and sales and customer support, as a facilitator of what enables your revenue operations. In a modern digital business, no activity or department exists in a vacuum, and the future success of your business will require you to digitize more, and analyze performance constantly.