Digital inflection points: From toy gun to silver bullet and beyond

My colleague Georgy Strakhov and I have been talking a lot about digital technology. Or, more specifically, the phases of adoption of digital technology by people, and our clients. One way of defining technology is to say that it’s something you need to consciously learn how to use. While for us the touchscreen is still a technology, it’s definitely not a technology for kids: for them it’s been around forever and it’s only natural to touch a screen and expect that something is going to happen. They are puzzled—and disappointed—when nothing happens after they touch the “normal” screen of our laptops.

This is true for people, and this is also true for businesses. Our theory is that there are three key stages of adopting digital technologies. At each stage, we—and our clients—need to ask three questions: Why do I need it? What do I expect from it? How do I measure it?

Stage 1: Toy gun

When companies discovered the Internet as something potentially interesting for interacting with customers, it naturally fell under “innovation”, something that was cool—but not business critical—to have. The inflection point here was about the change from viewing, say, a company website, as something that is not worth thinking about, to seeing it as something new to explore, and therefore worth a bit of investment. Like a toy gun.

Back to the three questions. Why do I need it? Well, like the first to have the new toy gun, because it’s cool. What do I expect from it? Again like the toy gun, to be perceived as cool (or innovative). How do I measure it? Usually companies don’t think too much about it at this stage. If your website wins the coolest website award in the category—it is the best thing that can happen.

Stage 2: Shotgun and sniper rifle

When the critical mass of customers starts using digital on a daily basis (as well as a critical mass of competitors starts using it as a way to drive marketing efforts) the second inflection point occurs. All of a sudden, digital technology is not just a toy, but a tool that you can use to do specific things for the benefit of your business. Most often it happens around two areas: media and data. When the time customers spend online—compared with other media—reaches a certain point, companies start trying to use digital as a media channel in their mix. When people leave their contact details in the database, companies start trying to use these contacts to create more sales via eDM and SMS.

Why do I need it? Now things have changed a bit. I now need it because it will help me drive reach and efficiency in my media mix (“It’s a nice shotgun to complement my TV-bombarding”) as well as use the data I have to cross-sell and upsell (“with this sniper rifle I can maximize my hit-rate”). What do I expect it to do? Basically, to give a better return on my media investment, and within eCommerce businesses, more sales. How do I measure it? KPIs for digital technologies at this stage include metrics to compare them to other “weapons” in the mix: cost per contact, cost per engagement, cost per lead, and cost per action. More technologically advanced businesses can even track it down to cost per transaction or cost per sale, but this rarely happens in categories other than eCommerce. The good thing about this stage is that for the first time digital starts to prove itself with numbers.

Stage 3: Silver bullet

After a certain period of using digital as “one or several weapons in the marketing mix” and as their customers start to expect more and more interactions to happen online, companies begin to realize that the value digital technologies can bring them extends beyond “shooting at customers better”: You can do customer service, foster social loyalty, gain insights from customers, alter behavior patterns and reinvent your products. This is the third inflection point. A lot of companies are going through it right now. And while the old strategic framework of shotgun and sniper rifle has dissolved, the new one is not yet clear.

Why do I need it? Now the picture is almost schizophrenic. On one hand it’s perceived as a “silver bullet” for the rest of my business. On the other there is no clear framework or understanding of how to use it separate from the rest of my business. However, fundamentally, at this stage, one can say that they need it because it’s the air they breathe, the oxygen that infuses life into the business. What do I expect it to do? At the “silver bullet” stage, a lot of companies expect it to do everything. While technologically and conceptually, digital technologies really can help to do almost everything, practically at this stage it’s very difficult to define what the role of digital in the organization is and what the key expectations around it should be.

How do I measure it? Similar to the expectations, measurement is very difficult at this stage. With all the stakeholders involved and dozens of digital projects run at the same time across various departments, defining a simple framework for measuring the effect of digital on the company’s performance is problematic. And as a result companies tend to fall back to the metrics of the “shotgun and sniper rifle” stage: cost per contact, lead and action.

So, now what?

We've seen digital evolve from being a toy gun to the hope that it is now a silver bullet. Underlying this evolution and powering it, there is a bigger thing happening: People do not perceive many of the digital technologies as “technologies” anymore. We’ve learnt how to use them. We live them and breathe them. And we expect companies to do the same.

But being caught in the “shotgun and sniper rifle” framework of seeing and measuring digital, companies find it hard to live up to the expectations of the “silver bullet” stage.

The key to measuring digital may lie in adopting the customer’s attitude to it: It’s just the way the world works. So maybe we should stop separating digital and trying to manage and measure it in a “stand-alone” way, but instead create “always on” with live updated customer satisfaction indexes that guide us as KPIs for all our efforts, not just digital. Perhaps we could call this the final frontier?