The Guide to Digital Optimization

Digital optimization is a set of practices and tools for optimizing the value of your digital investments, with a focus on driving sustainable growth, customer value, and innovation.

Think of it this way: Your business has a website. It might have an app, an IoT device, or other digital platform as well. With all these products come new touchpoints with the customer, and a wealth of first-party behavioral data that describes how customers interact with your business.

If you’re not capitalizing on this information to drive customer value, you might as well be handing your competitors a check. Every digital touchpoint is an investment in engaging with your customers; the digitally optimized companies leverage the behavioral data, the digital touchpoints, and the complete view of the customer journey to identify new growth and revenue streams.

The digital optimization movement isn’t just about getting critical business insights, though. Digital optimization fuels product-led growth: a company culture in which teams have democratized access to data and the support of leadership to take quick action based on insights. In practice, this movement operates like a series of growth loops: each team that impacts the digital experience surfaces insights to inform actions that produce outcomes. As long as company leadership empowers teams with the technology, processes, and metrics to engage these methods, the product-led growth cycle continues.

You want your organization to be product-led. You want to drive sustainable growth and innovation. Digital optimization is how you get there.

Key Takeaways on Digital Optimization

• At its core, digital optimization is a set of tools and capabilities that enable a new way of working.
• Customer journeys are more complex now, third-party cookies are going away (and can’t measure up to the insights of behavioral product data anyways), and customers have higher expectations for digital experiences. Your business must deliver, or get left behind.
• Digital optimization is an organization-wide movement that propels each customer-facing team to derive insights from data, take action to improve the customer experience, and drive critical business outcomes.
• Digital optimization won’t happen unless business leaders empower their teams with:
  • Democratized access to data
  • Best-in-class tools and technology to take action based on data
  • A product-led growth mindset
• Digital optimization and digital transformation often happen in parallel.
  • While digital transformation spurs the development of new products, digital optimization is about improving those products and capitalizing on the data they provide.
• Digital optimization operates as a series of growth and innovation loops, cycling from insight, to action, to outcomes.
  • As the cycle continues, teams are able to drive visibility, velocity, and growth. This means they can unlock data and insights that enable them to build winning ​​product experiences faster and optimize for business growth and customer value.

Competitors, customer behaviors, and the digital landscape are all constantly evolving. To be the business that wins, your strategy needs to evolve too.

The last few years have seen unprecedented adoption to digital—and this is just the beginning. IDC states that "Global spending on the digital transformation (DX) of business practices, products, and organizations is forecast to reach $2.8 trillion in 2025, more than double the amount allocated in 2020."

Your competitors are ready to invest in product-led models and capabilities. And your customers expect top-notch digital experiences. In a time when customers can order groceries in a few clicks, exercise with a digital community, answer the doorbell from the laptop, and unlock the car from an app—all before getting that morning coffee via mobile pickup—your clunky app and website won’t cut it anymore.

It’s not easy to rethink processes, systems, and technology. But the reality is that if you don’t, your competitors will. And while it may be years before the tailwinds of change catch up to your company, sticking to the status quo now means becoming the next Blockbuster tomorrow.

Customer journeys are more complex, and outdated methods can’t bridge the gap

Customers are using multiple devices to interact with a brand. These cross-device experiences mean that the customer journey is simply more complicated now. There’s data coming from the social media account; data from the website; data from the marketing emails; data from the app. And that’s just the tip of the iceberg.

While customer journeys have become more complex, many businesses have stuck to the old ways: trying to force-fit web and marketing analytics—with a combination of business intelligence tools, heat mapping, and anything else that can track data—to answer questions about customer behavior.

But these dated solutions were built for a pre-2020 world: when the idea of every company becoming digital-first seemed years, not months, away.

Vast data, complicated workflows, and interconnected stacks translate to limited visibility and lost agility when teams don’t have the tools to see a full view of the customer journey. And it’s even worse when they’re working in silos, delayed by outdated processes, and making decisions based on gut instinct instead of rich data.

The cookieless world is here, and third-party web data wasn’t sufficient to begin with

On top of this complexity, there’s a new reality companies need to confront: the cookieless world.

For years, it was standard practice for marketing teams to gather customer insights from third-party web data. This data is often sold by third-party companies that track user engagement through website cookies, which is a small bit of data that is used to identify users and monitor their activity.

GDPR and other privacy laws have now placed limits on the processing of personal data, user identification, and cookie tracking—as they should. Companies need to move beyond third-party web tracking and work with technology that is data neutral and agnostic, and provides total privacy and control over any first-party product data.

Beyond that, tracking users through ad clicks, page views, and third-party web data is a practice of the past. Leaning into the future means leveraging anonymized, first-party product data to understand which digital behaviors produce desired business outcomes—rather than drilling into the click rate of ads or bounce rate of webpages.

Customers demand better digital experiences, and your business needs a product-led mindset to meet those demands

Customer expectations for digital products and services have never been higher. When you’ve used apps like DoorDash and Instacart, you won’t settle for less.

In a world of abundant choice, companies need to offer dynamic, compelling digital products and services to compete and survive. Digital optimization is how you meet the moment.

Entire industries—such as the taxi industry—went to sleep at the top of their game, only to wake up and find that sticking with the status quo made their products and services irrelevant. You just don’t know when disruptions will happen to you. It could be today, tomorrow, or next year. And that’s the problem. You can’t predict the timeframe; all you can influence is how you operate, starting now.

Digital optimization leads to increased visibility, velocity, and growth across an organization. It is a way to remove or mitigate the many factors that contribute to slow, poorly informed decision-making:

• An incomplete view of the customer journey
• Unreliable or unhelpful data
• Resistance to change
• Reliance on assumptions
• Lack of innovation
• Siloed teams
• Disjointed technology solutions
• Uncertainty around what creates long-term customer value
• An inability to move fast

On top of that, digital optimization is how companies dig into the complicated questions of which efforts will truly drive lasting impact. Armed with a product-led mindset and behavioral data, teams can determine which products to develop, which digital bets to make, and how to increase customer lifetime value.

Digital transformation and digital optimization typically happen in parallel, although it’s the onset of digital transformation that spurs the need for digital optimization.

Think of it this way: When your company embarks on digital transformation, you invest in building out digital products and services. Once you have those products, you have more data and more touchpoints with the customer. What do you do with it? That’s where digital optimization comes in.

If digital transformation brings new products, services, and business models to the fold, then digital optimization is about improving these outputs. Digital optimization is a way of working; a feedback loop for teams to identify insights, take action, and drive critical business outcomes. Through this feedback loop, digital transformation initiatives accelerate.

Digital transformation is always ongoing, but you need digital transformation and digital optimization to drive innovation and growth.

Consider Walmart as an example. For Walmart, digital transformation began the moment they set up a website and started selling goods online. But that’s just the first step. Digital optimization at Walmart began when the company started leveraging product insights to determine:

• Which new services to provide
  • Same-day pickup
  • Mobile ordering
  • "Buy now, pay later"
• Which new products to build
  • Consolidating the grocery app and general merchandise app into a single app to deliver a better customer experience
• How to turn the digital product into a long-lasting revenue center
  • Growing a base of new and returning customers who are loyal to the top-notch digital experience of Walmart’s app

By providing internal teams with access to product data, Walmart ensured that digital experience owners were able to make data-based decisions—without barriers—and move quickly to improve the customer experience. As Walmart’s Head of Mobile Marketing Sherry Thomas-Zon put it:

As we continue to grow and face new challenges, one focus is to optimize the digital customer experience. We need to be very intentional in how we integrate our ecommerce platform and also serve mobile customers within the brick-and-mortar retail stores with tools and access to Walmart services… In such a large company, silos can form quickly, so you have to find a way to distribute valuable data across the business.

The Walmart team embraced digital optimization by prioritizing data access and breaking down internal silos—all while focusing on delivering the best customer experience.

"Our marketing and product teams are always looking at numbers," Thomas-Zon said. "You can’t work quickly without a self-service data and analytics tool for marketing, especially in an organization as large as Walmart. It keeps our teams agile, despite our size and the increasing amount of data we collect and analyze."

If Walmart had stopped at merely building out an app and hoping customers would use it, they could have become a story of "another company disrupted by new digital competitors." Instead, Walmart leveraged the power of product data to optimize its digital experiences and drive data visibility, innovation velocity, and business growth—resulting in a beloved app that’s the #3 shopping app on the Apple store and has an average 4.8 rating from nearly 5 million customers.

Digital optimization is the movement. In daily practice, though, it requires the proper mindset, processes, and technology to get the job done. That’s where solutions like Amplitude—and an entire ecosystem of top-notch tools—can help.

While Amplitude is the Digital Optimization System and pioneer of the digital optimization concept, a combination of tools can also fuel this movement. Digital optimization tools should meet these key requirements:

• Capture and make sense of what users do—their actual behaviors and the non-linear paths they take across multiple devices, products, and marketing channels during the entire customer lifecycle—from acquisition to activation to engagement to retention.
• Unify disparate data sources through data integrations and pipelines, create a single view of the end user with identity resolution technology, and improve data quality with data governance tools.
• Eliminate barriers to insights and unify organizations around common data by using intuitive, no-code user interfaces with collaboration tools embedded throughout.
• Enable personalization, which includes segmentation, predictions, and experimentation, that is integrated with analytics to assess the performance of experiences in real time.
• Connect to and power the technology ecosystem used across various digital teams, including data warehouses, customer data platforms, and customer engagement, collaboration, and workflow tools.

Amplitude powers digital optimization capabilities, but it is not the only set of products that can meet these needs.

In digital optimization, each customer-facing team—product, marketing, customer success, engineering, analysts, and more—should cycle through the insight, action, and outcome phases to turn product data into tangible growth. With each new insight comes an opportunity to drive a valuable business outcome. With each outcome comes more data to provide deeper insights.

The story of Anheuser-Busch InBev encapsulates this insight-to-action-to-outcome trajectory. In late 2019, AB InBev launched BEES, an app for small- and medium-sized businesses to place orders, schedule deliveries, gather business insights, and more.

In just two years, BEES reported the app had more than 1.5 million monthly active users, making it one of the world’s largest B2B ecommerce platforms. According to Consumer Goods, "Anheuser-Busch InBev’s BEES B2B sales platform is powering its digital transformation, with the platform accounting for 80-90% of revenue in some markets and unlocking business-driving insights along the way."

Here’s how the team at BEES used digital optimization to capitalize on data insights and generate a new growth stream:

Insight

The BEES team used the Amplitude Digital Optimization System to learn more about SMB retailers and their digital behaviors. They noticed that 30-40% of retailers placed orders after working hours and away from the establishment.

Action

Digital teams at BEES created personalized in-app messages that matched each end user’s purchasing habits. For example, they began sending push notifications with recommended products to purchase after 6:00 p.m.

Outcome

By leveraging product data for customer insights and taking immediate action, the BEES team drove more than 1 million orders per week, with 65% coming directly from personalized recommendations.

"Every click, every swipe, and every app interaction was honest input directly from our customers," BEES SVP of Product Jason Lambert said. "It turned out to be a thousand times better than any of our previous strategies or assumptions, and we were humbled by the results. We got a ton of hard data telling us precisely what they needed, why they needed it, and where and when they wanted it."

Digital optimization is about embracing the next wave of change. It’s about putting product data at the center of decision-making and breaking down barriers for collaboration. In a landscape of more competition, increased digital complexity, and higher customer expectations, your business can’t wait two years to gather data, run some tests, and finally make a decision. Customer behaviors can change overnight—but only the digitally optimized will be prepared to adapt to that change.

When done correctly, digital optimization empowers every digital-facing team to gather insights, take action, and drive outcomes. The product becomes a revenue center. Product data is leveraged to drive high CLV. Customers choose your product’s digital experience over competitors’.

While this guide provides an overview of digital optimization, it’s just the first step for companies and leaders to embrace a product-first mindset. Now that you know the basics, it’s time to learn more and bring these concepts to your organization.