Evolution of Digital Commerce Challenged by Technology Barriers

Businesses and customers are ready for a new generation of digital commerce technology, but implementing it is challenged by significant barriers in two basic categories: technology commoditization and the lack of an IT and business framework for delivering great customer experiences.  Regarding the first, for some companies making large IT purchases, the way an enterprise employs CAPEX and OPEX accounting practices to categorize spending on technology may be a deal-breaker when coupled with the time and resources needed to implement and maintain a product. But these subjects are increasingly relegated to the 55-minute mark of conference calls that weigh the pros and cons of available technology. Because while few organizations make a platform purchase based solely on the cheapest price, astute IT buyers now discuss and invest in analytical, data-driven tools for sales, marketing and service, deployed across Web and mobile environments, that help produce differentiated customer experiences and strengthen personalized, real-time digital commerce offerings. That leads to the second key consideration: Improving the customer experience is the top driver for almost three-quarters (74%) of organizations participating in our next-generation customer engagement benchmark research.

While differences exist in prices and delivery models among leading digital commerce providers, nearly all of them present themselves and their products in the same way. They claim that establishing a digital commerce presence is easy. Mix some customer data and match it with a little product information, some marketing and static digital assets, and online and mobile digital commerce storefronts begin to take shape. To a certain extent, that’s true. Possessing good customer data, some intelligence about buying patterns, knowledge of consumers’ preferred channels of interaction and the ability to analyze habitual behavior can facilitate quick creation and launch of a digital commerce environment. But it seems as if almost any digital commerce vendor can do what the next one can do. And it’s not just the content of their positioning statements that’s concerning but also the technology as well. Cookie-cutter tools are not likely to enable creation of a distinctive experience that lasts over time, and commoditized digital commerce products need a host of additional components to be able to deliver exceptional customer experiences.

We advise organizations to take stock of their Web-based and mobile sales, marketing and customer service technology infrastructure, map their digital commerce business practices and budget for additional components required to produce consistently superior customer experiences. Start by creating a plan to make it easy for your customers to do business with you, no matter how they interact over any digital channel. This applies to both B2C and B2B environments. The first step in that process is to understand the context of every digital customer interaction. But while that may sound simple enough for today’s enterprise, what follows in the digital commerce planning process has taken on a new sense of urgency and economic importance.

How an organization enables, supports and analyzes a customer’s economic activity, financial contributions and purchase patterns is critical. To compete effectively today you must monitor the economic health of every customer relationship and take corrective action when necessary. Further, examine whether your billing and payment systems are appropriately supporting your most loyal customers – those who engage in repetitive transactions, including subscriptions. They would be best served by billing and payment systems built on subscription-based and recurring revenue models that are designed to meet the ongoing commercial needs of consumers, regardless of their preferred channels of interaction. Look for dedicated technology suited to support in-depth billing and payment structures that thrive in digital commerce environments. They may not be easy to find; as my colleague Mark Smith has pointed out in discussing NetSuite  and Salesforce, the largest providers of subscription software as a service (SaaS) don’t effectively manage billing, payment or recurring revenue processes. Billing and payment for digital commerce is an aspect of the customer experience essential to managing and monetizing relationships over time. Our benchmark research on recurring revenue finds that flexible invoicing, efficiency and accuracy are the most commonly cited benefits of dedicated billing systems.

Keep in mind that the goal of digital commerce is for businesses and consumers to purchase products and services, not just click through a website. To succeed an organization must offer engaging presentations of products and services. This often is not the forte of digital commerce software providers, but addressing it is pivotal to supporting the effectiveness of digital commerce initiatives. In presenting multiple products to customers on the Web and on mobile devices it is necessary to give them access to consistent, accurate information about every product, regardless of the source or supplier. To strengthen their offerings in this area, some commerce vendors partner with product information management (PIM) providers. Our analysis of the role and effectiveness of PIM providers in supporting digital commerce in our 2015 Value Index on Product Information Management found many of them advancing to embed these capabilities; look for the latest evaluations of vendors in the upcoming 2016 Value Index.

An organization’s goal should be to go beyond ordinary commoditized digital commerce tools. Successful digital commerce requires presenting customers with multiple products and services, aligned with the context of every interaction, through every digital channel, in a way that will be seen as both unintrusive and valuable. This leads to strong engagement that can result in purchases of products and services.

In a digital commerce environment the customer experience, all the way through completing a transaction, must be seamless and designed to maintain and indeed strengthen relationships over time. This new generation of digital commerce technologies is radically different from earlier ones, and through well-architected infrastructures these tools can differentiate one’s brand and enable effective competition. This is what Mark Smith means by supercharging sales and commerce.

The internal back-and-forth between IT and business units in evaluating products based on price and platform and the allocation of future resources has become ancillary to what the real conversation should be: about the value created by providing a great customer experience. Managing digital customer experiences over time to maintain relationships and grow new ones is possible only by going beyond outdated technology systems. This focus is at the core of my analyst agenda and upcoming research. Please follow me as I offer guidance to organizations seeking to uncover the business benefits of evaluating and implementing the next generation of digital commerce.

Regards,
Tony Compton
Vice President and Research Director, Sales and Marketing

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