Has digital transformation failed consumers?

Consumers aren’t reaping the digital benefits

Even before the pandemic, two words seemed to dominate the vocabulary of every executive in corporate America: digital transformation.

It was inescapable. Suddenly, nearly three decades after the advent of the internet and over a decade since the first iPhone was released, companies seemed to finally realize the power of technology. And with artificial intelligence, two equally buzzy words that are now impossible to avoid, companies could finally make use of mountains of consumer data to ensure they would never miss a sale, fumble a customer service call or encounter a blip in the supply chain.

• That, by and large, hasn’t happened: Air travel is abysmal, health care is still stuck with one foot in the past, store shelves are still stocked with an overabundance of items no longer in demand, supply chains are a mess, algorithms are still bad at suggesting things we might like, and customer service largely remains an infuriating experience. We can’t even get accurate credit scores.

So what have billions of dollars in IT investments meant for consumers? It’s a tricky question to answer, as many of the changes to date, apart from a massive proliferation of apps, are likely invisible to the end consumer. And a lot of investments are focused on internal improvements that might cut operational costs but do nothing to improve customer interactions.

With overall customer satisfaction dipping to its lowest level since 2005 and employee productivity levels actually slowing down, it’s clear that aspects of that transformation have been overhyped both by businesses that want to impress customers and vendors eager to upsell companies on new tools to boost annual contract sizes.

• Of course, there are factors outside of a company’s control: the Russian invasion of Ukraine, the pandemic, rising inflation and a chaotic labor market, for example.
• All of those can affect the ability of businesses to collect proper data to use AI to guide inventory management or find the staff needed to run basic operations.
• And as the likes of Amazon and Walmart grow even larger and outpace competitors, it becomes impossible for consumers not to expect the same level of experience at every other business.

But all the promised IT investments were at least supposed to position businesses to better respond to market-altering occurrences. Instead, companies have no idea what consumers want. And it’s paved the way for a new cycle of vendors that are all promising the magic software fix.

• There are myriad reasons why technology fails. It can be a result of bad product design or poor data. But it’s also often due to cultural resistance.
• Both of those hurdles came to a head during the pandemic when data issues undermined the U.S. government’s response and consumers largely declined to adopt new tracking tools that could have boosted prevention efforts.

Still, improving the customer experience requires businesses to actually put investment toward it, not just provide lip service. And for some industries, particularly those with few competitors, it may not be worth it.

• It’s clear this summer has been a hellish travel season. Of the most visible pain points that aren’t a result of an act of nature, lost bags ranks among the worst. Some, like United Airlines, offer bag-tracking through mobile applications. But that’s not yet widespread.
• For example, American Airlines reportedly refused to invest in bag-tracking technology. Probably just a coincidence, but it also ranks as the worst of the big carriers when it comes to tracking luggage. But fear not, AA is working with Microsoft now, and everything will be fixed. At least in theory.

Airlines aren’t alone. Customer service across corporate America, in general, is still awful and might actually be getting worse. (It is worth noting, however, that support workers are also subject to an increasing amount of unjustified abuse from customers, which is ridiculous.)

• Of course, software vendors spent the last decade hawking tools like chatbots that, despite lofty promises, completely failed to handle all the “simple” customer questions.
• The system has failed so terribly that it’s not uncommon for a company customer service line to direct you to the website, only for the website to direct you to the customer service line.
• And it always seems to be just one fix away. Even now, with all the investments to date, vendors like UiPath, which is trying to sell its own automation software, believe that companies “still don’t have visibility into what people are communicating about, and how to understand that and act on it fast.”

It is still early in the journey among most large businesses to become “tech-driven,” which helps explain why results have been lackluster.

• These are very difficult migrations. And companies are simultaneously facing a weakening economy, shattered supply chains and ever-worsening global relations.
• But the never-ending cascade of society-altering events isn’t slowing down. And that means businesses have to learn to adapt faster. If done thoughtfully, tech can play an important role.

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