What Is Digital Transformation?
If “digital transformation” sounds like a corporate buzzword from 1991, that’s because it is. Digital transformation refers to the integration of digital technology into a business, and it’s been an ongoing effort for decades now.
As technology has evolved, digital transformation has come to mean different things—but it started with moving from paper to spreadsheets and literally “digitizing” physical files.
What Is Digital Transformation?
The definiton of digital transformation is: using digital technology in all parts of a business to change how it works and how it serves customers. It also involves a cultural shift where companies regularly question current methods, try new things, and accept that some attempts may not succeed.
Create a Free Account for Unlimited Access
Sign up for free to access all CX Lead articles, exclusive events, premium resources, our expert newsletter, and more!
Or sign up with Login with GoogleLogin with LinkedIn
Have an account? Login
The concept of digital transformation has evolved over time, though.
In the 1990s, digital transformation often referred to launching a website or converting physical materials to a digital format:
“One sees the continuing digital transformation of an astonishingly wide range of material artifacts… people are saying in effect: Let us take what exists now and restructure or replace it in digital format.” (John Hopkins University, 1997)
By the year 2000, ecommerce and online advertising were the new frontiers of digital transformation:
“There has been a significant increase in online ordering and payment and in online advertising and numbers of links to other firms' corporate websites.” (European Management Journal, 2001)
Needless to say, we’ve come a long way since then.
Need expert help selecting the right tool?
With one-on-one help, we guide you to your top software options. Narrow down your software search & make a confident choice.
Here’s how digital transformation has progressed:
- 1970s: Initial use of computers in the enterprise.
- 1980s: Business becomes increasingly digital. (Spreadsheets!)
- 1990s: The rise of websites and ecommerce—digital transformation reaches consumers.
- 2000s: Online ads, smartphones, apps, and the rise of social media.
- 2010s: The rise of the cloud, marketing automation, and remote work.
- 2020s: Integration of technology like AI, NLP, and machine learning.
Of course, not every business is in the same “decade” of transformation. Some are still working to modernize with ecommerce, apps, and social media. But those businesses need to catch up fast because digital transformation is more urgent than ever.
If you’re stuck in the 2000s—but your competitors are using no-code platforms, APIs, cloud computing, automation, remote employees, and AI—you won’t be efficient enough to compete.
And even more important is this:
Consumers are demanding a customer experience (CX) that takes advantage of the latest technology. They expect relevant, personalized content that can be accessed on any device, at any time.
In this article, we'll explain why digital transformation is pivotal to your brand, how you can use it to improve the customer experience—and why it gives you an edge over your competitors.
Importance of Digital Transformation for Brands
In 2016, I started a business.
To make it official, I got in the car, drove down to my local county’s Register of Deeds office, stood in line, wrote a check, and filed some paperwork. Then, I sent a separate application to the IRS.
Six years later, I started another business.
This time, I never left my computer. A tech company automated the whole process for me.
This is the speed at which technology is changing—and consumer expectations are changing right along with it. Instead of waiting in lines, we expect companies to cut through the paperwork for us. Instead of driving to stores, we expect same-day delivery.
Customer experience is now a primary differentiator for brands. In a 2018 survey of executives, PTC found that 34% of executives felt the biggest advantage of digital transformation was an improved ability to meet customer expectations.
Brands that tailor their experience to the “digital consumer” are the ones that generate loyalty and gain a competitive edge.
Digital-first brands also make more money, with consumers paying up to 16% more for better experiences. Companies that are more mature in their digital transformation journey report 45% higher revenue growth and 43% higher margins, according to Deloitte.
How to Design A Digital Transformation Strategy for CX
Digital transformation isn’t just about creating a branded TikTok account or launching a new app—it’s a holistic effort that gives you a chance to reimagine how your business operates, and how it delivers value to customers.
1. Assess Current Digital Capabilities
Before you can make meaningful changes, you need to understand where your company stands digitally. Start by taking stock of the tools, software, and systems your company already uses.
Look at what works well, what slows things down, and how your team and customers interact with your digital solutions. Conduct internal audits, interview employees, and gather customer feedback to get a clear picture of your current digital strengths and weaknesses.
Use digital assessment frameworks or maturity models to benchmark your organization against industry standards.
Digital experience analytics tools can help you collect the data needed to assess your capabilities accurately.
2. Uncovering Areas for Improvement
Identifying weaknesses in your digital setup helps ensure you’re investing in the right changes. Pinpoint pain points, bottlenecks, or outdated systems that make work harder or frustrate customers.
Talk to employees and customers to understand what’s missing and what could be improved. Start by mapping out customer journeys and internal workflows to see where delays or inefficiencies occur. Employee surveys and customer feedback forms can help highlight common complaints.
Use customer feedback tools like heatmaps (for websites), surveys, and workflow automation tests to identify key areas that need enhancement.
3. Setting Clear Objectives and Goals
Without clear goals, digital transformation efforts can become disorganized and ineffective. Decide what success looks like for your digital transformation. Whether it’s improving customer experience, streamlining operations, or increasing revenue, set measurable goals to track progress.
Start by aligning digital transformation objectives with overall business strategy, ensuring that leadership is on board with the direction. Use the SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goal-setting framework to define and refine your objectives.
Digital project management software like Asana or Trello can help keep your team focused on achieving these goals.
4. Developing a Roadmap for Implementation + Framework
A structured plan ensures digital transformation happens smoothly without overwhelming your team. Create a step-by-step plan that outlines what changes need to happen, who is responsible, and when each step should be completed.
Prioritize quick wins and break big tasks into smaller, manageable phases. Start by setting short-, mid-, and long-term milestones so your team can track progress without getting discouraged. Assign clear roles and responsibilities to avoid confusion and ensure accountability.
Digital transformation frameworks to choose from:
- Agile: A flexible, iterative approach that focuses on continuous improvements, rapid feedback, and adapting to changes throughout the digital transformation process. Best suited for industries: Technology, software development, finance, and retail.
- Lean: A methodology that aims to eliminate waste, optimize resources, and streamline operations by focusing on efficiency and delivering maximum value with minimal effort. Best suited for industries: Manufacturing, healthcare, logistics, and automotive.
- Six Sigma: A data-driven framework that focuses on improving processes, reducing defects, and enhancing quality through rigorous analysis and structured problem-solving. Best suited for industries: Manufacturing, healthcare, finance, and supply chain management.
- DevOps: A collaborative approach that integrates software development and IT operations to speed up deployment, improve system reliability, and enhance automation in digital transformation. Best suited for industries: Technology, cloud computing, telecommunications, and finance.
- Design Thinking: A human-centered framework that emphasizes creativity, user research, and iterative problem-solving to develop innovative digital solutions tailored to customer needs. Best suited for industries: UX/UI design, marketing, product development, and consumer goods.
- Waterfall: A structured, sequential framework where each phase (planning, execution, testing, deployment) is completed before moving to the next, best suited for projects with well-defined requirements. Best suited for industries: Construction, government, healthcare, and large-scale enterprise projects.
- TOGAF (The Open Group Architecture Framework): A strategic framework for designing and implementing enterprise-wide digital transformation, focusing on aligning IT with business goals. Best suited for industries: Enterprise IT, banking, insurance, and telecommunications.
- Bimodal IT: A hybrid approach that balances stability and innovation by running two parallel IT modes—one focused on reliability and the other on speed and agility. Best suited for industries: Large enterprises, government, and financial services.
5. Monitoring and Evaluating Progress
Ongoing evaluation helps ensure your digital transformation efforts lead to real, lasting improvements. Regularly check if your digital upgrades are making a difference. Use data, employee feedback, and customer responses to measure results and make adjustments as needed.
Implement performance-tracking dashboards to visualize key metrics and set up regular check-ins with leadership to discuss progress. Start by defining the KPIs (Key Performance Indicators) that align with your goals, such as customer satisfaction scores, employee productivity rates, or revenue growth.
Customer data tools like Google Data Studio, Tableau, or Power BI can help track and analyze performance data in real-time.
Digital Transformation Success: An Industry Example
Starbucks started as a fully-analog regional coffee chain in 1971. Over the years, the company grew astronomically and modernized along the way. By 2017, Starbucks had rolled out a fully integrated digital transformation strategy built around improving the customer experience and improving customer loyalty, including:
- An app-based rewards system
- Mobile ordering and payment
- A customer strategy is driven by data insights
- AI-driven personalization of product offerings and discounts
Companies that implement a transformative digital business strategy, like Starbucks, create more engaged customers—and engaged customers buy 90% more frequently, spend 300% more than non-engaged customers, and are five times more likely to be exclusively loyal to your brand, according to a study by Rosetta.
Despite all the benefits of digital transformation, plenty of businesses simply aren’t prioritizing it. Many spent the 2010s in a state of digital denial—a 2016 Progress study found that 47% of businesses “know [digital transformation] is important, but haven’t started yet.”
Benefits of Digital Transformation In Improving CX
Customers want personalization, speed, and convenience—and if your brand isn’t offering that, they’ll switch to a brand that does. That's why it’s so crucial to manage your business’s digital transformation projects in ways that improve the customer experience.
Here’s how digital transformation can improve CX:
1. Add Value to Your Product
In the 2000s, Netflix was a popular DVD-by-mail service. You created a queue on their website, and they sent you the movies you requested. After you watched each movie, you mailed it back.
Of course, Netflix today is the poster child of successful digital transformation, having pioneered on-demand streaming service technology.
But the key takeaway here is that Netflix designed its digital transformation efforts around pain points the customer had:
- No more waiting for DVDs in the mail.
- No more trudging to the mailbox to return movies.
- No more limitations on how many movies you could rent.
- No more brainstorming about what to watch next.
Follow Netflix’s lead. Make your product indispensable to customers by asking yourself what pain points you can relieve through your digital transformation initiatives.
2. Understand Unspoken Customer Needs
Listening to customers is the foundation of CX:
- 1-on-1 interviews
- Customer surveys
- NPS, CSAT, and other benchmarks
Digital transformation opens the door to a whole new source of information about what your customers need. You no longer have to rely solely on what customers tell you.
Now, you can watch what they show you.
Digital experience (DX) platforms give you a more granular level of insight into customer needs, beyond what customers tell you in surveys and interviews. With tools like heatmaps, session replays, and A/B testing, you’ll get a wealth of data on customer behavior, allowing you to optimize your product and customer journey to meet their needs.
By analyzing user behavior like scroll time and session duration, you can identify areas where customers are dropping off, and optimize those sections to keep them engaged. This kind of data-driven optimization is the key to providing a great user experience that keeps your customers coming back for more.
3. Reimagine the Customer Journey
The customer journey used to be simpler:
Customers might hear about your product via word of mouth, go to the store to look at it in person, compare a few options, and then buy one.
Today, the customer journey is vastly different—and customers have more options than ever before. For many products, the customer journey takes place primarily on a digital landscape.
Reimagining the customer journey through digital transformation means:
- Being omnichannel—showing up everywhere your customers are.
- Creating compelling, useful content that wins customers over time.
- Personalizing each customer’s experience, from marketing to onboarding.
- Using digital experience tools to monitor and optimize your service delivery.
- Using data analytics to improve the customer experience over time.
4. Personalize
Personalization is one of the biggest opportunities available in digital transformation.
91% of consumers are more likely to shop with brands that provide personalized communication and recommendations. And nearly half of the consumers have left a business’s website because it wasn’t well-curated to their needs.
As more brands create hyper-relevant content and experiences, the brands that don’t are falling behind.
Here’s what personalization often looks like:
- Targeted advertising
- Personalized marketing automation workflows
- Recommendations based on customer behavior
- Conversational AI-driven customer service
- Custom loyalty programs
5. Be Wherever Your Customers Are
Whether your customers are on Twitter or TikTok, you need to be there.
Attention has never been more fragmented. One way digital transformation can make life more convenient for your customers is to be present 24/7 on the platforms they spend time on.
Take Airbnb, for example.
Every part of their service happens through their mobile app. They have a phone number and a support email, but many users prefer to get support via their in-app messaging or through various social media channels.
Make sure you’re taking advantage of the latest technology, like chatbots and conversational AI, to help you scale your customer communications across platforms.
Digital Transformation: Challenges and Cultural Change
Digital transformation is change—and change is hard. If you’re working on digital transformation in your organization, you’re up against a big obstacle: Inertia.
Change is difficult. Many companies—especially those with legacy systems—are set in their ways. 46% of CIOs say organizational culture is their biggest barrier to digital transformation.
But digitally transforming your business operations—and your customer experience—is non-negotiable if you want to thrive in the coming years. With the maturing of artificial intelligence and other disruptive new technologies, digital adaptation is your key to surviving an uncertain future.
Common challenges of digital transformation include:
- Resistance to Change – Employees and leadership may struggle to adopt new technologies and workflows.
- Lack of Clear Strategy – Without a well-defined plan, digital transformation efforts can become disorganized and ineffective.
- Legacy Systems and Integration Issues – Outdated technology and siloed systems can slow down or complicate digital upgrades.
- Budget and Resource Constraints – Digital transformation requires significant investment in tools, training, and talent.
- Data Security and Compliance Risks – Implementing new technologies can introduce vulnerabilities and regulatory challenges.
Here are three easy ways to navigate digital transformation challenges and concerns:
Assign Digital Transformation Leadership and Roles
Having clear leadership and designated roles ensures digital transformation stays focused, organized, and aligned with business goals. A strong leadership team helps drive change, gain executive buy-in, and keep employees engaged throughout the process.
Assigning specific roles also prevents confusion and ensures accountability, allowing each person to contribute based on their expertise. By having a structured team, companies can manage resistance, track progress, and adjust strategies as needed.
Key Leadership and Roles in Digital Transformation:
- Chief Digital Officer (CDO) – Oversees digital strategy and transformation initiatives.
- Chief Information Officer (CIO) – Manages IT infrastructure, data security, and system integration.
- Chief Technology Officer (CTO) – Focuses on emerging technologies, innovation, and tech stack improvements.
- Digital Transformation Manager – Leads digital projects, aligns teams, and ensures smooth execution.
- Data Analyst/Scientist – Analyzes data, measures success, and provides insights for informed decision-making.
- Change Management Specialist – Helps employees adapt to new technologies and processes.
- IT and Software Engineers – Implement and maintain digital tools and systems.
Measure ROI and Success of Digital Transformation Initiatives
Tracking ROI and performance helps determine whether digital transformation efforts are delivering real value. Without clear metrics, companies risk investing in new technology without knowing if it's improving efficiency, customer experience, or profitability.
Measuring success ensures that strategies remain aligned with business goals, helping leaders make data-driven decisions and optimize their approach. Regular performance reviews also provide insight into areas needing improvement, allowing businesses to adjust their transformation roadmap.
Metrics and KPIs for Digital Transformation Success:
- Customer Satisfaction (CSAT, NPS) – Measures how customers perceive digital improvements.
- Employee Productivity – Tracks efficiency gains from automation and new tools.
- Operational Cost Savings – Assesses reductions in manual work, redundancies, and system inefficiencies.
- Revenue Growth – Analyzes how digital initiatives impact sales, conversions, and customer retention.
- Adoption Rate of New Technology – Measures how well employees and customers embrace digital changes.
- IT System Uptime and Performance – Ensures new technology runs smoothly and reliably.
- Process Efficiency Metrics – Tracks time saved on tasks like onboarding, customer support, or reporting.
Leverage Digital Experience Platforms
Digital Experience Platforms (DXPs) help address common digital transformation challenges by unifying customer data, streamlining content management, and enabling seamless omnichannel experiences. DXPs integrate various digital tools to create a cohesive and personalized experience across websites, apps, and other channels.
A major challenge in digital transformation is adapting to changing customer expectations and market trends. DXPs use AI-driven personalization, analytics, and automation to deliver relevant content and experiences, keeping businesses agile and customer-focused.
10 Best Digital Experience Platforms (DXPs)
Here are my DXP recommendations:
Digital Transformation Trends for 2025
As businesses continue to embrace digital transformation, customer experience (CX) remains a top priority. In 2025, emerging technologies will reshape how companies engage with customers, streamline operations, and personalize interactions.
Here are the key digital transformation trends to watch:
1. AI-Powered Customer Experience (CX):
Artificial intelligence is revolutionizing CX by enabling hyper-personalized interactions, predictive analytics, and real-time customer support. AI-driven chatbots, sentiment analysis, and voice assistants are becoming more intuitive, reducing friction and enhancing customer satisfaction. Businesses that integrate AI into their CX strategies will gain a competitive edge by delivering seamless, data-driven experiences.
2. Autonomous CX with Generative AI:
Beyond traditional AI, generative AI is making CX more dynamic by generating personalized responses, automating content creation, and crafting customized recommendations. In 2025, expect AI to autonomously handle more complex customer interactions, reducing reliance on human agents while improving response accuracy and efficiency.
3. Digital Twin Technology for Customer Journeys:
Companies are starting to use digital twins—virtual models of customer behavior—to simulate and refine interactions before they happen. By analyzing past data and predicting future behaviors, businesses can proactively address customer needs, optimize product recommendations, and reduce friction in the buying journey.
4. Hyperautomation in Customer Service:
Hyperautomation, the combination of AI, robotic process automation (RPA), and machine learning, is streamlining customer service operations. From automated ticket routing to AI-assisted self-service portals, businesses are reducing response times, minimizing errors, and improving overall customer satisfaction.
5. Immersive CX with Spatial Computing:
Augmented reality (AR) and virtual reality (VR) are making CX more immersive, offering customers interactive shopping experiences, virtual product trials, and enhanced support through digital overlays. With the rise of Apple’s Vision Pro and advancements in metaverse applications, expect more brands to adopt spatial computing for an enhanced digital experience.
Stay Competitive with Digital Transformation
You never know what the world is going to throw at you, so you should start planning your digital transformation strategy now. COVID-19 proved how quickly businesses had to adapt, with remote work, online services, and digital customer interactions becoming essential overnight.
Companies that had already embraced digital tools thrived, while others scrambled to catch up. Investing in a strong digital foundation now ensures your business stays agile, competitive, and ready for whatever comes next.
Curious to learn more about adapting your customer experience to the digital age? Don’t miss the chance to subscribe to our newsletter and get our latest CX tips.
Need expert help selecting the right Digital Shelf Analytics Software?
If you’re struggling to choose the right software, let us help you. Just share your needs in the form below and you’ll get free access to our dedicated software advisors who match and connect you with the best vendors for your needs.
