Determining the ROI of Digital Transformation

For transformation leaders, the ability to identify the return on investment (ROI) of digital transformation can be very challenging. 69% of leaders who participated in a survey believe that measuring the return on digital transformation is difficult because customer interactions cannot be quantified using traditional means. Digital transformation cannot be measured using a single metric. Businesses need to evaluate their businesses as a whole and recognize the improvements in customer experience, business processes, and workflow. It is important to have a portfolio approach when measuring ROI on digital transformation to help you understand the effectiveness of your digital transformation efforts.

Worldwide spending on the technologies and services that enable the digital transformation (DX) of business practices, products, and organizations is forecast to reach $2.3 trillion in 2023, according to a new update to the International Data Corporation (IDC) Worldwide Semiannual Digital Transformation Spending Guide.

Digital Transformation Metrics

Businesses are attempting a more compelling and disruptive way of approaching digital transformation. A combination of all of the following metrics can help gauge the transformation:

  • Increase in sales
  • Increase in new customers, customer retention and customer satisfaction
  • Process quality improvement
  • Product quality improvement
  • Enhanced engineering productivity and design

One of the biggest success stories is that of Netflix. The company started off as a DVD distributor and made its way to become the top digital on-demand content rental service in the world. Netflix focused on offering the three most important things that drive digital transformation – customer experience, digital capability, returns on innovation.

1. Customer Experience

Digital transformation has the potential to impact all aspects of a business, but customer experience is where it has the biggest influence. With all of the advances in digital transformation that we have seen, customer experience takes top priority for businesses that are successful via digital platforms.

With these platforms allowing customers the ability to interact directly with brands, it is important to assess the benefits of using new technology to improve customer experience. Keep an eye out on technological innovations that are becoming the driving forces at improving customer experience and try to implement the best digital marketing strategies to improve customer experience.

Automation is one of the most important digital innovations with 84% customers stating the importance of computer-based apps for communicating with brands. The value of your digital transformation efforts for your customers matters more than the short-term revenues. Brand value can also be affected by organizational efforts that directly affect customers. For example, good data security practices can incite trust in your customers if you maintain a clean record of preserving and keeping your customer’s personal data safe.

2. Digital Capability

There are seven important capabilities that drive digital transformation according to a report by Deloitte. Some of the important ones include intelligent workflows, business model adaptability, and unified customer experience. It is also essential to have a business ecosystem that relies on partnering with external businesses to offer the best in technology and leverage their talent and resources to drive digital transformation.

Intelligent workflows allow you to maximize the capabilities of both your technology and your human resources. Businesses need to build an environment that allows the best business outcomes using intelligent workflows. A unified customer experience should focus on delivering the most efficient services and deliver products and services seamlessly. With digital transformation reshaping businesses constantly, it is important to allocate revenues used by your business to improve the digital capabilities of your business. You should be able to adapt your business model to the latest technological innovations and tweak revenue streams catering to digital innovation.

3. Returns on Innovation

Digital innovation strategies matter more than the investment size when measuring digital transformation. At the basic level, innovation is determined by a product or service that offers something new. This could be a brand-new digital product or an existing product that introduces a digital approach to make the customer experience easier.
Incremental investments are more likely to lead to diminishing returns. Instead, you should focus on investing big into innovation and keep up with the latest technology trends to succeed as a business in the digital world.

Measuring the ROI of Digital Transformation

Key Factors that Affect ROI for Digital Transformation

The ROI of digital transformation is easy to measure if you have a well-established product. If you are breaking into a new market with an innovative product, you have to focus on identifying customer satisfaction trends and positive changes to your product or service quality. For established businesses, the ROI of digital transformation is usually static. But when new technology is introduced in an organization, the possibility of digital growth is high.

For new products, marketing timing is very critical, which can lead to long-term and elastic ROI. It is important to get a head start over your competitors when pushing out an innovative product or service. The best way to identify the ROI for your digital innovation efforts is to focus on your market value, your total revenue, and year-over-year growth figures for your digital transformation road-map.

1. Exploring The Needs of Customers

As a digitally-driven business, you need to focus on creating compelling digital experiences for your customers and strive towards exceeding their expectations. This can be achieved via social media interactions or collecting customer data based on their interactions with your business.

2. Digital Innovation Investment

Businesses need to work on digitizing business processes that can make customer experiences more engaging and also improve the workflow. Implementing new digital systems and tools is a must to promote a digital culture at the workplace.

3. Data-Informed Decisions

Customer data is one of the best sources of information to help you decide on your next digital transformation strategies. Past purchasing behavior, customer reviews and feedback, and sales figures are the best metrics to form decisions that are data-informed.

4. Track Performance

You need to constantly prototype, test and promote a digital culture that is tracked. All of your digital transformation efforts need to translate to better sales, revenue, and customer satisfaction. The speed at which you adopt new technology for your business affects your effectiveness at digital transformation.


If you are considering investing in digital transformation, it is important to understand the context of your business. For established companies, you want to focus on marketing your company’s products and services to cement your place in the target market. If you want to invest in digital transformation on a micro level, you need to focus on marketing your business and showing your audience what you have to offer. Finding the appropriate use of your investment should be driven by the latest digital trends in business.

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Arshpreet Kaur

About the Author

Designation: Lead Business Analyst
Forte: Resource Management and In-depth, data-driven competition analysis
Likes: Agile workplaces
Dislikes: Slackers and Slow workers
Claim to Fame: Increased team Productivity with Agile methods
Biggest Tech Blunder: I am a perfectionist, so nothing
Wannabe: Neuralink user so I can be more productive

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