Topic - How to Measure the ROI of a Digital
Strategy
Define what Digital means
Business Case for Digital Tools
Understand Order of Effects
Variables That Matter
How Do You Build an ROI Formula
Sources
This paper on “How to
measure the ROI of a digital strategy”
This topic is of particular relevance
to me because it the focus of area that Deloitte Digital, within Deloitte
Consulting, that I am trying to enter when I return to Deloitte next year.
Define what Digital means
In the first section I am going to focus on defining what
some of the terms within “Digital” mean. So far my list includes:
- Digital
- Mobile
- Web
- Social
- Digital Content
- Digital ERP
- Digital Strategy
Do you have any other words or terms you think I should add
to that list?
Business Case for Digital Tools
After I defined what the key terms are for Digital I will
develop a business case for using a Digital Tool Kit. People today are
constantly “connected” and if a company wants to sell they must embrace and leverage
this fact.
I will highlight a few industries i.e. retail, insurance,
financial, governments, technology companies, transportation agencies
etc… The goal will be to show how Digital Tools can help these industries;
with a focus on what metrics they used to prove success.
The section will contain the following:
•
Current business state of digital tools and
technologies
•
Proposed uses outside current uses
•
Options analysis of how to implement the tools
•
Outlook for future of Digital tools
Understand Order of Effects
After the reader understands the key digital terms and why
digital tools are important and can increase sales I will walk them through the
order of effects for a digital tool.
Every tool we develop and use will not lead immediately to a
sale, but a sale might a few steps down the line. This is important to realize
when evaluating a tool. The buying experience is like a funnel. It the
buying experience more like the traditional?
Or more like this?
Variables That Matter
Understanding the importance of variables and how they can and
will be different is the next step. Depending on the type of company the goals
of their Digital Strategy are different and the variables that are important
change from company to company.
Some of the questions I am going to try to answer are: When does
a variable matter how much do they really matter? Do the industries have
different variables? Can variables change over the life of the project?
I will focus on to a certain list of industries I feel that can
be greatly affected by a Digital Strategy.
Some of the measures I will initially look at are: retail
environment, product mix and context.
How Do You Build an ROI Formula
After understanding the key terms within Digital, examining the
business case for using a digital tool set, understanding the order of how a
user make a purchase with a digital tool set and understanding what the variables
are and how they change for industries I will hopefully be able to develop a
certain formula of sorts for the ROI of a digital tool set
implementation.
I will walk through what it takes to gather the drivers of ROI
and examine what it takes to gather the information (experiments and data
sources), understand all the information that you are gathering and then how to
draw conclusions from that information and how it drives ROI (the
holy grail).
Some measures that I think could be the drivers for ROI:
•
Get the customer to buy larger purchases
•
Get the customer to buy more often
•
Get the customer to buy new and higher value
products
•
Get the customer to share/recommend more often
What virtual tools help drive sales or increase customer
satisfaction?
- Map of the store?
- Inventory information?
- Virtual dressing rooms?
- Social component to share with friends?
Sources
I am planning on reaching out to a few of my Deloitte
contacts within Digital to see the current metrics they use but it might be
proprietary. In that case I will use industry standards and move forward from
there. Another source I though of is
reaching out to people who have spoke at conferences about Digital and how to
get an ROI I am not sure this will be successful but if it is it could be very
enlightening to hear directly from industry thought leaders have to say. It is
important to also look at the opposite side of ROI and think why people in the
industry do not like to use ROI.
Hi Jenny - Since we discussed this in my office, I don't have a lot more to add. I can't think of any other terms that are critical to include, at this point, but will let you know if think of or come across anything that might be helpful. I really like the idea for this topic and think the one area of concern might be that the scope is quite large. But, let's see how it goes as you build an outline - we can always recalibrate from there. Also, you said that you plan to focus on industries that can be greatly affected, but do you have a sense of what those might be yet? You mention retail environment in the variables and I think we discussed retail in my office, so is that the sector you are most considering and/or are there others? Sorry that I cannot remember exactly. And definitely do not feel tied to the "order of effects" term if you find something else that works well - it's just the only term I keep using, for lack of a better one. I might have liked to see you explore the funnel area just a little more here. This will be interesting and, I hope, very helpful to your career!
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