What's the difference between companies that succeed with DX and those that don't?

Dentsu Inc. has launched the "Dentsu Digital Transformation Diagnosis" service. This service scores the digital transformation (DX) challenges of companies and entire businesses, identifies their position within the market and industry, and provides solutions tailored to those challenges.

"Dentsu Digital Transformation Diagnosis"
This diagnostic solution ( release here ) measures DX progress using a deviation score, based on a survey conducted by Dentsu Inc. and defining the customer touchpoint domain as "Marketing DX."

This article, based on findings from a survey conducted prior to the service launch, addresses:

・How far along is DX progress in Japan?
・What are the characteristics of leading DX companies?
・What are the challenges in promoting DX?

and what is essential to achieve results with DX (survey overview provided at the end of the article).

<Table of Contents>
▼What is "Marketing DX" according to Dentsu Inc.?
▼Differences Between Companies Achieving and Not Achieving Results in Marketing DX, as Seen in the Survey
▼Summary: Key Points for Achieving Results with DX

&nbsp;

What is Dentsu Inc.'s Concept of "Marketing DX"?

The term "DX" has become increasingly common in recent years.

Amidst slowing growth in the domestic market, DX has gained attention as a means to drive business transformation and growth. Examples include efficiency gains and results sharing through sales tool implementation, or building proprietary apps to create new customer touchpoints.

Amidst this, the COVID-19 pandemic has heightened focus on DX even further. The pandemic forcibly awakened awareness of avoiding the "three Cs" (closed spaces, crowded places, close-contact settings), leading to the proliferation of contactless payments, the rise of Direct to Consumer (D2C Inc.), and the acceleration of remote work. These shifts have drastically changed marketing rules across various markets and industries. However, the term "DX" itself covers an extremely broad scope. Therefore, this time, we define the area concerning customer touchpoints as "Marketing DX (*1)" and

① Customer Experience Transformation
② System Transformation
③ Talent Transformation
④ Organizational and Operational Transformation

.

*1 Definition of Marketing DX: Activities centered on consumers that leverage digital technology to transform business models, marketing processes, and organizations, thereby establishing competitive advantage. Here, "digital" refers collectively to digital devices, digital technology, digital media, and digital data.

The majority of Japanese companies surveyed (approximately 83%) reported engaging in Marketing DX. However, only about half of all companies stated they were seeing results.

Differences Between Companies Achieving Results and Those Not Achieving Results in Marketing DX, as Seen in the Survey

The first key finding:

Approximately 73% of companies reporting results from marketing DX stated that top management is committed to the initiative. While this might seem obvious, marketing DX is fundamentally a "means for business transformation," making top-level commitment essential.

While some companies may succeed with IT departments leading DX initiatives, generally speaking, the presence or absence of top-level commitment significantly impacts outcomes.

The second characteristic is that approximately 85% of companies reporting successful marketing DX outcomes stated their mission, vision, and values are defined, documented, and deeply ingrained throughout the entire organization.

Amid the COVID-19 pandemic, the fundamental purpose of a company (its reason for existence in society) has garnered renewed attention. But why are mission, vision, and values crucial for achieving results in marketing DX?

Companies failing to achieve results often approach DX as a "company-centric" rather than a "consumer-centric" endeavor, focusing on short-term KPI achievement. In such cases, the means of DX itself becomes the end goal. While they may have pursued initiatives like developing proprietary apps or introducing sales tools to drive further growth and differentiate themselves, the outcome is often merely replicating the same customer experience as competitors. This ultimately accelerates commoditization in the medium to long term.

Having a Mission/Vision/Values—a "foundation for the company"—clarifies what the company provides to consumers. This ensures a consistent experience across all touchpoints, both online and offline. This principle holds true for Marketing DX as well. Ultimately, this approach likely leads to differentiation from competitors and company growth over the medium to long term. We believe these survey results suggest this very point.

The third characteristic is that approximately 87% of those achieving results in Marketing DX reported implementing data-driven customer experience transformation based on customer-centric acquired data.

Both consumers and markets are constantly changing at a dizzying pace.

Simply building systems like customer data management platforms, or merely collecting large volumes of data, is unlikely to yield significant results.

"We introduced tools to streamline sales, but the sales team isn't using them."

"We've acquired customer data, but can't we use it for something?"

"We developed our own app to increase customer touchpoints, but user adoption is low..."

Dentsu Inc. frequently hears these concerns from companies. Systems built around the company itself rather than consumers lack vitality and clear purpose. Data collected merely because "it might be useful for something" cannot be leveraged to enhance the customer experience.

The term "DX" inherently centers on the company, often pushing consumers to the sidelines. If you're a business leader feeling that "DX isn't delivering results," perhaps it's time to step back. Instead of thinking about consumers "as well" as the company, consider what your company's marketing DX should be when you put consumers at the center.

Summary: Key Points for Achieving Results with DX
① DX is ultimately a means for business transformation; top-level commitment is essential for successful Marketing DX.
② Defining and articulating the mission/vision/values for Marketing DX, and ensuring company-wide adoption, is crucial.
③ Centering on consumers and continuously updating the customer experience in a data-driven manner based on acquired data is vital.

These are the characteristics of companies achieving results in Marketing DX, as revealed by our DX survey findings.

Based on these findings, the Dentsu Group has developed diagnostic tools to support and advance Marketing DX. These tools visualize companies' DX challenges ( see release here ). Moving forward, we will continue supporting and realizing our clients' DX from a consumer perspective, based on individually identified challenges.

Next time, we will share feedback from companies that underwent the Marketing DX diagnosis.

Marketing DX Survey 2020 Overview
Survey Sponsor: Dentsu Inc.
Research Agency: Nikkei BP Consulting Inc.
Survey Period: May 18–22, 2020
Survey Participants: Executives, board members,
Division Heads (Department Heads)/Business/Business Planning Department Heads, Department Heads/Assistant Department Heads
Survey Sample: 222 samples (extracted from a total of 810 samples)