Digital Initiatives  95
purchase an item of clothing in a store or online, to be shipped to the buyer’s 
home or to a local store. If the local store doesn’t have the right size for an in-
store shopper, the customer can order it on the spot and have it delivered to 
the customer’s home. A customer who decides to return an item can return it 
to any store or mail it back, regardless of how it was purchased. Consumers 
can also track in real time the progress of shipments heading their way.
Using digitization to improve customer experience can add value to the 
business in a variety of ways. One leading manufacturer of agricultural prod-
ucts was struggling with low customer satisfaction scores and an erosion of 
its customer base. Using digital solutions, the company created a seamless on-
line process for ordering, tracking, and query management. This increased the 
company’s customer satisfaction score by 24 percentage points and improved 
throughput by 20 percent.19 In some cases, improved customer service also 
reduces costs. An electricity distribution company fully redesigned its cus-
tomer interfaces in a “digital-first” way that made a priority of the customer’s 
online interaction. Customer satisfaction rose 25 percentage points, employee 
satisfaction increased by 10 percentage points, and customer service costs fell 
40 percent.
As is the case with applying digital solutions to reduce costs, it’s critical 
to think through the competitive effects of investing in digital to gain a supe-
rior customer experience. Recall our earlier example of the mobile-banking 
app. The value proposition boils down to cash flow, but special considerations 
emerge. Does the improved customer service lead to higher market share be-
cause your customer service is better than that of your competitors? Or does 
it maintain your market share or avoid losing market share because your com-
petitors are doing the same thing?
In many situations, customers have come to expect an improved customer 
experience and are unwilling to pay extra for it. In the case of omnichannel re-
tailers, today’s customers routinely expect seamless transactions across chan-
nels from many retailers, but for the retailers, providing omnichannel services 
is expensive. The cost to ship online orders often makes these sales unprofit-
able, while in-store sales may be declining, leading to lower margins, as some 
costs are fixed. Even so, retailers have no choice but to provide the omnichan-
nel services despite lower profitability. If they don’t, they’ll lose even more 
revenues and profits.
New Revenue Sources  Some companies have been able to create new rev-
enue sources through digital initiatives. In these cases, the economic analy-
sis versus the base case is more straightforward, because at least for a while, 
you (and maybe your competitors) are making the pie bigger for the whole 
19 J. Boringer, B. Grehan, D. Kiewell, S. Lehmitz, and P. Moser, “Four Pathways to Digital Growth That 
Work for B2B Companies,” McKinsey & Company, October 2019.