When an organization takes on digital transformation, it can be difficult to determine which KPIs warrant attention. Depending on the larger strategic goals of the DX project, not all metrics are created equal.
With enterprise business software, organizations can monitor virtually everything that they can think of, but for the sake of efficiency, it's important to prioritize a few KPIs that leadership should track closely to keep an accurate read on progress at a glance. For the individual teams involved in DX, it's also vitally important to understand which metrics will ultimately determine the success or failure of their implementation efforts. Using this information, team leaders can make budget allocations, project timelines, or hiring decisions in support of larger organizational goals.
So whether external or internal, top line or bottom, by communicating which KPIs are the best markers for tracking DX, leadership can help keep employee focus in the right place.
Adoption and efficiency
One way to track the success of DX processes is to look at adoption rates across the organization, taking into consideration the number of employees that are using the software, and how many of the available features they are using.
When tracking adoption rates, it's definitely worth understanding the breakdown of usage statistics by team or department; if it's only Sales that's embracing the new technology, what does that mean about the data being used by Support or Marketing? It might point to a greater need for DX evangelists to drive implementation, or additional informative sessions to bolster user confidence.
In addition to tracking software usage, team leaders can generate ongoing reports focusing on employee efficiency, which are useful for establishing if they are leveraging the tools to maximum effect. For instance, if everyone has implemented the new technology, but none of their workflows have changed, a training team can be deployed to create more targeted content to educate users on the benefits the software provides.
Often, the goal of DX is to free up employee time for more strategic work; but how does one measure the amount of strategic or high-level thinking someone else is doing? One highly informative metric to monitor is the amount of time saved (or lost) as a result of new software. While it's natural to expect an initial learning curve, some sense of time savings can be inferred by looking at the number (and kind) of tasks being automated, or at the speed that support requests are resolved.
Another insightful KPI for tracking efficiency is the percentage of time employees spend on proactive vs reactive work; if there's a noticeable jump in outbound calls following the deployment of email auto-responders, it's clear that there's been significant time savings brought on by new automation.
One of the key benefits of digital transformation is the speed of innovation it enables. And though it may seem counter-intuitive, innovation is a very measurable (and very useful) KPI. It's entirely possible to track the time to market for new products or services, through inter-departmental collaborations enabled by DX.
If innovation is the goal, it can be measured by following the number of new offerings each team is producing, and the revenue generated as a result. Sometimes it can be useful to look at the deployment of new business methods, models and strategies, or the ability of the organization to participate in new markets. Any of these metrics can give good signals about the progress of a DX initiative.
Revenue and financial metrics
Measuring revenue generated per employee is essential for tracking the success of DX. Technology updates can significantly lower maintenance costs; for example, if a company maintains on-premise systems and transitions to the cloud, they're likely to see a big difference in how (and where) IT spends its time and money.
Another insightful KPI to follow post-digital transformation is the amount of marketing expenditure going into new digital channels, as well as the percentage of company revenue coming in from those efforts. Ideally, there will be a lot of growth in this area as new channels and media are further developed.
Of course, some signs of good DX might be immediately apparent in terms of revenue. Nevertheless, it's still valuable to pinpoint the exact factors causing the changes. After implementation, customer acquisition rates will likely see an increase, while costs of acquisition decrease. Depending on the specific DX priority, org leadership will want to watch those metrics, as well as how retention rates may have changed. When churn declines as a result of DX, there will likely be more growth in customer lifetime value.
Aside from financial metrics about CLV and CAC, it can be incredibly informative to examine any changes in user behavior post-DX. Delving into user engagement at different points in the journey can show exactly when and why users drop off at different stages. It can also be helpful to look at how effective new digital touchpoints are at driving traffic and producing conversions.
For the view from 30,000 feet, it is possible to see how much the overall customer experience has improved by measuring KPIs around ease of use (customer effort score) or customer health. And while they may not be new, surveys measuring CSAT (customer satisfaction) or NPS (net promoter score) can help leadership understand how well they're doing at meeting customer needs.
Measuring what matters
While this list is far from exhaustive—depending on organizational goals, specific KPIs will become more or less relevant—it should provide good coverage for anyone invested in a more thorough DX deployment. One thing every org should keep in mind during the DX process is the importance of KPIs in communication. Digital transformations are often quite complex, and with many moving parts it can be a struggle to know what's worth paying attention to. It's imperative that employees know where the strategic priorities lie so that they can align their own.
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