Enhance Your Digital Commerce Strategy: Key Steps
- Adaptable roadmap essential. Building, borrowing, or buying capabilities key for dynamic digital commerce strategy.
- Investment priority shifts. CMOs focus on enhancing digital commerce capabilities, crucial for revenue growth.
- Holistic strategy needed. Successful digital commerce requires integrating people, processes and technology
In recent years, the success of digital commerce in generating revenue has prompted greater expectations for returns and investments. According to Gartner research, 90% of CMOs say that increasing investments in additional capabilities to support digital commerce is a priority for the next 18 months. These investments are vital for supporting revenue growth and digital commerce success. Let’s take a look at digital commerce strategy.
Many organizations prioritize technology investments but fail to address broader capability gaps in terms of processes and people. To identify and prioritize where investment is needed most, digital marketing leaders should work to develop a roadmap that addresses holistic capability gaps (people, processes and technology) in order to support future ecommerce growth.
Related Article: Customer-Centric Marketing Strategy: A Leader’s Inside Look
Digital Commerce Strategy Step 1: Conduct Operational Capability Gap Analysis
The operational capabilities required to enable digital commerce vary by route-to-market (RTM). This depends on whether the organization leverages a direct RTM, (e.g., selling via owned sales channels), an indirect RTM (e.g., selling through third-party sales channel partners), or a hybrid RTM which is a combination of the two.
Digital commerce operates in isolation in many organizations, but digital marketing leaders need to change this by taking a more holistic approach. Digital commerce strategy must be integrated into the governance and operations of each function involved regardless of the RTM leveraged.
Let’s look at advertising as an example. When thinking about the capabilities that should be considered foundational for advertising, the approach for organizations with an indirect RTM should be different from that of a direct RTM model. For an organization with an indirect RTM, it’s important to focus on the people, processes, and technology to support advertising through channel partners’ retail media networks. However, an organization whose digital commerce relies on direct RTM should invest in capabilities to support performance marketing for direct channels, such as media buying and SEO optimization.
Marketing leaders should think about the foundational capabilities required across a range of disciplines, including selling, experience, data and analytics, logistics and customer service in order to identify the people, process and technology capabilities required for their specific RTM approach.
Assess and document the current status of the people skills, processes and technology for each relevant RTM capability. Identify where there is no gap (green), a partial gap (amber), or a complete gap (red) for each relevant RTM capability, e.g., retail media networks, digital shelf execution for indirect RTM.
Related Article: 3 Steps to Integrate Digital Commerce Operations Into the Marketing Machine
Digital Commerce Strategy Step 2: Develop a ‘Build, Borrow, Buy’ Roadmap to Address Gaps
It takes time to build digital commerce operational capabilities. Given the fast pace of change in digital commerce, this presents a challenge. Marketing leaders should create a clear roadmap that establishes the path from short- to long-term development of capabilities. This approach requires identification and prioritization of the biggest gaps that must be addressed first, ensuring that initially selected gaps will have the greatest impact on operational and commercial growth.
Start by identifying “must-address” capability gaps (high customer experience and growth impact), then “should-address” (high impact on either the customer experience or growth), and finally “could-address” (low impact on customer experience and growth).
Then determine the most appropriate way to address prioritized gaps. Instead of defaulting to in-house establishment or evolution of capabilities, determine the best course of action based on the situation:
- Build in-house, which takes time but has no reliance on external support. If the gap is an “always on” capability that the organization needs long-term, and requires greater investment across people, processes and technologies, building can ensure maximum ownership and knowledge in the long term.
- Borrow from an outsourced partner by leveraging resources to rapidly address capability gaps but only for a period of time. Doing so will enable you to determine whether this should be performed in-house or whether it should always be outsourced to a partner. If the gap is related to an emerging capability, or an area where more expertise is needed to address it, borrowing can speed up the the process of addressing these gaps, but it can be more costly. Borrowing provides flexibility, but leaders should ensure a clear exit path to decide whether to build or buy in the longer term.
- Buy, relying on a partner as a service to operate as an extension of the organization where this isn’t considered to be a core competency. If the gap is not considered to be an ‘always on’ core capability, or it’s an emerging capability where outside perspective is required, buying can provide both speed and flexibility to address gaps. However, it is costly and comes at the detriment of control and knowledge in the longer term.
These trade-offs can then be considered when determining the optimal approach to address the capability gap based on the strategic digital commerce objectives. The decision for each capability is driven by the strategic need for whether the organization wants to prioritize control and cost, or whether there is a need to move at speed and be strategically flexible.
Related Article: Harnessing AI: Top Use Cases for Digital Commerce
Digital Commerce Strategy Step 3: Implement the Roadmap and Continually Improve
Finally, it is critical for organizations to mobilize projects to address the gaps identified each with one to three target objectives that will be used as the measure of success for each project. Digital commerce changes at a rapid pace, making it necessary for organizations to continually monitor, assess and implement as necessary to ensure capabilities are regularly improved to drive competitive advantage. The gap analysis, prioritization and roadmap to digital commerce strategy also need to be revisited annually to continually identify new capabilities required as digital commerce evolves.
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