Imagine a retail transaction before the digital era. A customer walks into a Cleveland Barnes & Noble and purchases a John Grisham novel. It’s a single moment captured in time—one during which we would learn very little about that person. If she paid using cash, we might not even discover her name. Even if she stayed to order a coffee from the in-store Starbucks and start the first chapter of her new book, all we’d find out is that someone in Ohio enjoys legal thrillers.
While some shoppers may long for the simplicity of that simple, incognito transaction, consider how much more information product or service providers might learn today. An online retailer can create a “digital customer”– one that is much more robust than the average shopper in 1998.
By capturing data during every transaction, an online bookseller, for example, finds out the customer’s name, what search engine they came from, other pages they viewed before deciding to purchase, and the book they ultimately chose to buy. When that customer returns, the company can propose other books of interest or related products to meet her needs.
When you have physical customers, the value comes from the transactions they complete. When you have digital customers, that value comes from the data generated during every transaction. Yet it’s not only digital-native companies that can benefit from thinking about their digital customers. If companies can convert their physical customers into digital replicas, the value transfers into the data. A “digital customer” mindset can awaken legacy businesses to new revenue streams, opportunities for partnership, and deeper relationships with their customers.
Coordinating the uncoordinated
A digital company today may learn more about their customers than ever before. BioIntelliSense, a continuous health monitoring and clinical intelligence company founded in 2018, uses sensor-enabled wearables to track patient metrics such as skin temperature, heart rate, breathing, fall detection, and coughing and sneezing. It performs analytics and data services before the patient ever needs to call an ambulance or set foot in a hospital.
The company is a lifesaver, alerting patients to health risks. It’s also a valuable partner to hospitals, saving doctors’ and nurses’ time monitoring. By collecting and analyzing patient health data, the company gets to know patients’ health status and risks, and can recommend courses of action to be shared with the patients and their caregivers, even if they move between facilities.
BioIntelliSense’s operations are an example of “coordinating the uncoordinated,” one of the most successful strategic narratives that digital companies employ. Its “Data-as-a-Service” expands the value from a patient buying a wearable device, which is important but happens once to perhaps a few times, to the value of data that can be tracked over time and shared with partners who are interested in serving the patients’ needs.
The advantage of a digital company is the always-on ability to capture customer data and make it meaningful. For companies outside of digital industries, those that aren’t working directly with AI and automation, we can still apply a similar mindset.
Mohan Subramaniam, IMD Business School Professor of Strategy and Digital Transformation, explained, “If you really want to do something differently … It’s to see how a legacy firm can use its strengths in products and value chains to become vehicles for new kinds of data that drive greater value.”
For example, Kaihan Krippendorff recently delivered a speech to an association of eldercare facilities. Many of their transactions happen without advanced technology. He urged them to consider the many touchpoints that offer an opportunity to build relationships with their members—their food preferences at mealtime or perhaps if they need to schedule a ride to a doctor’s appointment. The coordination of all these previously uncoordinated elements is a chance to provide value through coordination, and collecting the data helps to fill in the details of a digital replica of a physical customer.
So, whether your customers are interacting in a primarily digital or primarily physical environment, a digital customer mindset means always thinking: How can I weave together seemingly unrelated transactions to create a more complete picture of my customers?
Three levels of value
Creating a digital snapshot of your customers can impact your business on three levels. With a digital customer mindset, you will:
- Provide a better experience for customers: The most significant benefit of the digital customer is the knowledge you create through data. You form a stronger relationship with customers by getting to know, better anticipating, and serving their needs.
- Create alternative revenue streams: Enhanced insight into customer preferences not only allows you to build the relationship, it can also stimulate new sources of revenue based on insights gathered, including new services, features, or products you might offer.
- Grow your ecosystem: By capturing additional data during moments with your customers, you become a more valuable partner to other players in your ecosystem, even if this data has little to do with your current core product.
Where to start
In an Outthinkers podcast episode, Professor Subramaniam shared the story of a Boston startup that is taking an alternative approach to streetlights. A typical lightbulb lights the street for the night. The startup decided to apply sound sensors to the bulbs that can detect a gunshot, which will alert cameras to turn on. AI then decides if the incident is serious enough to alert 911 and the police. Besides making neighborhoods safer, the company can also collect data on neighborhood safety, time of dangerous episodes, and more.
Generating value from data is not about physically being there to track every single data point during every transaction (standing out in the street next to the lightbulb), but more about creating a flow of interaction points where data is automatically captured (installing sensors on the lightbulbs that are always monitoring). The standard lightbulbs are your single transactions; where might you install “sensors” to learn a little bit more at every interaction point?
To begin to form your digital customer, take a moment to ignore your business as what you currently make money from. Instead, think of it as a vehicle to create data, and complete the following exercise:
- Think about your typical customer and their journey throughout the day. Where are they close to your product or service?
- List the potential interaction points where they might come in contact with you.
- Brainstorm five ways you could interact and the data you might capture during each interaction.