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    NYC-based Video Room is a video rental store that caters to digital resisters who still prefer using physical DVDs over streaming.

  • Drive efficiencies into existing processes and infrastructure

    So how does Netflix, so well known for its digital presence, still support a legacy line of business tied to analog customer behavior? For starters, the company eliminated much of the cost of running its DVD-by-mail operation, thanks in part to automation.

    “If you cut back on service, you are going to lose your subscriber base,” Hank Breeggemann, general manager of Netflix’s DVD division, told The New York Times. “Expect us to continue to ship DVDs for the foreseeable future.” Instead of cutting back on the service, Netflix engineers figured out how to improve customer service while also making the process of returning, sorting and shipping DVDs more efficient. At Netflix’s Fremont, California, location, instead of about 100 people responsible for this process, 25 employees now handle the work along with machines.

    This is a scenario many companies today face — many of them much older than Netflix, and therefore, with legacy systems of their own to manage. For these organizations, the answer may not be in a robotic arm that automates labor-intensive functions. To move forward with digital, these organizations must also find a way to increase the efficiency of existing IT systems, so they spend less time on maintaining the business and more time on revenue-generating initiatives. By modernizing their infrastructure, they can improve the performance and cost-efficiency of existing systems and automate the manual tasks that cause bottlenecks to their digital future.

    Create an irresistible customer experience

    For companies to move forward with digital, they must understand why some people cling to their analog ways. Then they can create experiences that help them part with those routines.

    “Digital resisters want a tangible, real, secure and trust-based customer experience,” said Brendan Read, digital transformation senior industry analyst at Frost & Sullivan.

    Some people need a gradual introduction to the latest technology and want to feel comfortable with the shift, according to Gary Small, author of “iBrain: Surviving the Technological Alteration of the Modern Mind” and a professor of psychiatry & biobehavioral sciences at UCLA.

    Companies should practice the principle of “train but don’t strain your brain,” according to Small.

    “There's this tension between wanting excitement and novelty and not wanting to disrupt things too much,” he says.

  • “Train but don’t strain your brain. ... There's this tension between wanting excitement and novelty and not wanting to disrupt things too much.”

    GARY SMALL, PROFESSOR OF PSYCHIATRY & BIOBEHAVIORAL SCIENCES AT UCLA

  • Based on the experiences of companies that have successfully weaned customers off analog services, these strategies are key to winning over digital resisters:

    Pace your product rollouts: Digital resisters need a gradual introduction to the latest technology and want to feel comfortable with the shift. “You want to introduce novelty at a level that's not overwhelming,” Small says. Cox Communications has been phasing out its analog cable television service in favor of digital over the last few years, requiring those customers who still connected their TVs to their walls to switch to a digital cable box. When Cox switched customers in Omaha, Nebraska, off analog service in 2014, the company eased the transition by offering a digital minibox for free for a year. By October 2015, more than 90 percent of Cox’s customers switched to digital.

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    The Ralph Lauren flagship store in New York City offers a “Call an Associate” button on fitting room smart mirrors.

    Offer a personal touch: Survey customers to find what endears a legacy service to them and create a digital service that speaks to that need. In its NYC flagship store, Ralph Lauren incorporated the personal touch by including a “Call an Associate” button on its fitting room smart mirrors. Installing the smart mirrors led to a customer-engagement rate of 90 percent, according to Digiday.  

    Educate customers about digital services: Going digital provides incentives for both the company and the customer. According to a Fiserve study, mobile banking users produced 72 percent higher revenue than branch-only customers and were less likely to leave their bank or credit union. To encourage adoption of mobile banking, TD Bank uses digital signage in its branches to educate customers about mobile deposit, and Capital One has introduced an educational program called Ready, Set, Bank to enable older adults to become more comfortable with online banking. The institution uses “micro-learning” to educate seniors about mobile banking in small steps through more than 40 short videos of no longer than 120 seconds.    

    Entice customers to go digital: Find ways to make embracing digital services fun. To digitally engage customers, Wells Fargo launched a mobile app called Daily Change. The app encourages customers to participate in daily challenges like drinking tap water instead of bottled water. “Everyone knows that saving money is a good thing. But this app puts it right in front of you, makes it real and helps you understand how it works,” Jonathan Burke, a lead teller at a Wells Fargo branch in Winter Park, Florida, told Wells Fargo Stories.

    Reassure customers about data security and privacy: Be transparent with customers about security measures to protect their information in the digital world. In a study by Edelman and The University of Cambridge Psychometrics Centre, 58 percent of consumers steered clear of digital services due to privacy concerns. For companies to increase adoption of digital behavior, they need to alleviate customers’ concerns about being hacked or scammed and demonstrate a credible commitment to protecting their privacy. To gain the trust of the public and encourage them to share valuable data, transparency is key, according to Julia Porter, Guardian News & Media’s director of consumer revenues. “If you do explain, you are better able to gain people’s trust and they are more likely to share data. There is a virtuous circle in being open and transparent about what you are going to do with the data and people feeling able to share it,” Porter told Marketing Week. The Guardian makes this transparency fun with animated videos and infographics that explain privacy policy, how cookies work and why customer data is important to the organization.

  • “At some point, the cost of supporting the analog market is going to outweigh the revenue derived from that market. At that time, you’ll see physical distribution go away.”

    MICHAEL GOODMAN, DIGITAL MEDIA DIRECTOR FOR STRATEGY ANALYTICS

  • The digital tipping point

    Companies often lack a consensus on when is the right time to eliminate analog services altogether. These decisions can sometimes result in conflict among management, according to Rob Enderle, principal analyst for the Enderle Group.

    “Often a legacy service can remain for excessive periods of time due to an inability to address a dependency timely,” Enderle says. “This results in secondary problems with security, interoperability, cost, performance and dependability.” 

    When introducing digital technology, executives must create balance between the digital resisters and moving full-speed ahead with innovation at the risk of losing legacy customers.

    “There is a far greater tendency once one of these programs gets momentum to go the ‘damn the torpedoes, full steam ahead’ route for fear the effort will be stalled,” Enderle says. “Balancing between the procrastinators and the ‘full steam ahead’ folks is often what makes a job in IT far more exciting than it needs, or the employee wants it, to be.”

    As seen with Netflix, Ralph Lauren and Wells Fargo, how well a company manages this tension determines its ability to capitalize on digital opportunities and drive growth.


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