How Companies are Allocating Digital Funds between Now and 2017

We asked survey respondents to estimate the percentage of their digital investments by business function between now and 2017 – in marketing, sales, distribution, manufacturing/production and R&D among others. Across all companies and regions, the largest percentage goes towards the marketing function (23%), and much less to R&D, manufacturing (or production in a service company), and distribution.

That distribution is consistent with how spending is allocated now – with 23% of total functional spending on digital initiatives earmarked for marketing and another 18% for sales. (See Exhibit ll-12.) Translation: companies want to invest their digital money to generate as much revenue as fast as possible. What are they using it for, exactly?

  • An executive at a B2B travel provider told us that the company needs to aggregate data on everything it manages, including the data on the 3.7 million hotel rooms the company books annually. It also wants to connect this data with marketing program effectiveness.
  • In a bid to boost efficiency, the head of digital strategy at a business services company we interviewed says that it has been accelerating its sales process by
  • providing customers with much greater information online about its products. “By the time the sales force touches a customer, he has already collected about 60% of the information he needs about us online – all of which has come from digital marketing,” the executive told us. “Thus, the sales cycle is much faster.”
  • A financial services company executive explained his company’s approach to leveraging social media to reshape the sales cycle. The company believes it must rethink its use of the call center, supplementing it with social media and digital listening. “That’s a higher-value model. Social selling is the same thing – finding and generating signifi cant leads by being digitally connected to clients. It’s about turning a traditional sales cycle on its head.”
  • Some companies are also using the spending not on revenue-generating strategies, but on pure cost-cutting. Only five years ago, one large software company told us it spent an average of $300 to handle each customer support call. Now it has used online customer communities to reduce that cost. Questions put out to the user online community are answered by other community members or from an online knowledge base. With 500,000 users, it’s cutting millions in support costs. And it’s to the customers’ benefit: their issues are now resolved about twice as quickly as they were before.

Exhibit ll-12: Digital Spending by Business Function

Exhibit ll-12 Digital Spending by Business Function

Breaking it Down: Spending by Region/Country
Regional Differences in Digital Spending