Digital transformation is now a prerequisite for sustaining any business. Be it bringing product launches to life digitally, implementing user friendly payment methods, acquiring customers through social media, or maintaining your brand, the key is often doing it right digitally.
We have a number of success stories that prove digital transformation has helped organisations climb up the ladder of growth. Let’s consider one of the biggest retail giant of coffee: Starbucks. Transforming all their operations into digital, with building a customer friendly app and digitized payment gateways, Starbucks juiced out their sales with an increment of 17% in revenue, improving their share price by $65 in just 4 years. They ensured the delivery of the Starbucks experience through a single tap making it easy for customers to ask more from a simple coffee.
Especially int he context of such a success story, it is worth asking: Can we really measure the return on the investment of digital innovation?
Even though this is by and large a subjective issue, a few steps for measurement of ROI can be as follows:
Know your numbers: Knowing your financials and statistics initially will generate a base of comparison at the seed stage. Prior to implementing the digital systems, details on the cash flows, profits or losses and strategic business plan should be well known of.
Know your investment: Costs involved in such a transformation are usually huge. Being critically careful on your investment and its quality is essential to develop a know-how of the situation. Analysis of the return at this stage is essential. The aspects to consider here are:
- The approximate time to witness changes
- The proximate revenue your project will generate
Know your RONI (Return on Non-Investing): It is elementary to analyze your RONI before you practically shoot up your project. Keeping an eye on competition, the risk involved in not opting for digital innovation is huge in today’s world. On the flip side, the traditional image of the brand should not be hampered. Creating a balance between the two – is a constant endeavor.
Know your PRP : PRP implementation ensures to keep your innovation on the path to be followed.
- P deals with knowing your potential to grow with the digital innovation
- R keep a check on the reality of actual numbers your innovation is generates
- P develops a plan of action to be taken in time of contingencies
Know your division of measure: Measuring you final ROI can be qualitative and qualitative. Keeping a check on both ensures you have the right ROI calculated.
Quantitative deals with financial numbers like positive or negative changes in cash flows, profits, depreciation, operating expenses, etc.Qualitative standards helps you know retention of your customers, brand loyalty, change in customer acquisition and awareness of your brand.
There is no perfect measure of judging you ROI on digital innovation, but there sure is a way. The world is now running on the power and enigma of science. It’s time to get going.