Staying relevant in the face of fickle consumers is akin to a tightrope act. Hershey‘s, a century-old behemoth of the American confectionery industry, learned this the hard way when its inertia at the turn of the millennium almost proved fatal. Here’s a look back at this textbook case of a failed digital transformation… then a successful one.
The most blatant example of a digital fiasco is the misadventure experienced by Hershey’s in the late 1990s. At the time, the American firm was rushing to deploy an ERP system that was supposed to streamline its operations.
This technological big bang came to nothing: at the height of the lucrative holiday season, the multinational found itself unable to process $100 million worth of orders! Chocolate bars were no longer reaching distributors, to the consternation of consumers.
What was the cause of such a mess? A clear underestimation of the integration challenges. Pressed by the Y2K deadline, Hershey’s decision-makers made one mistake after another. The schedule defied all logic, the complexity of the project was neglected, and testing was incomplete.
In short, all the ingredients for failure were present:
The debacle left a lasting stain on the brand’s image. Its turnaround will require a thorough overhaul of its digital strategy.
Learning from its mistakes, Hershey’s methodically deployed a new ERP solution from SAP in the 2000s. The multinational invested heavily to ensure successful integration this time.
Management motivates its teams by communicating transparently about the project’s objectives. In-depth training is provided for all users, regardless of position. Far from the untenable deadlines of yesteryear, a realistic timetable is put in place, with a progressive module-by-module go-live.
On the technical side, large-scale user testing is carried out throughout development. Risk prevention becomes an obsession, with strict data backup and restoration procedures.
Thanks to this cautious strategy, the launch of the new ERP system went off without a hitch. Hershey’s internal processes became smoother, and analytical dashboards enabled finer control. Internal satisfaction is palpable.
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Aware that the failure of its previous digital transformation was largely due to a lack of transparency and dialogue, Hershey’s management is making a 180-degree turn in terms of communication, both internally and externally.
Within the company, it is establishing a genuine culture of exchange, where every employee is encouraged to share his or her ideas. Silos between departments are broken down thanks to high-performance collaborative tools. Employees now have easy access to the information they need to do their jobs.
At the same time, Hershey’s is proactive in its dealings with consumers. On social networks, community managers respond promptly to their questions. The brand also interacts closely with them to design new trendy products.
In this respect, the use of customer data is fundamental; thanks to machine learning, Hershey’s is able to anticipate fluctuations in demand or potential controversies linked to certain ingredients.
Hershey’s digital transformation also involves the introduction of a more collaborative corporate culture. Management understands that without the support of its teams, no technological progress would be possible.
It therefore initiates a variety of actions to empower employees and foster their commitment. Team-building seminars are organized on a regular basis to bind teams together around shared values. Initiative is rewarded through a system of innovative bonuses.
The result: in just a few years, Hershey’s has become a great place to work. Staff turnover plummeted, while productivity soared. The ultimate sign of success: employees are proud to introduce their employer and feel a real sense of belonging.
Hershey’s also recognizes the growing importance of content in promoting its products to digital consumers. The brand is therefore deploying an entire editorial ecosystem around its confectionery.
On its website and social pages, you’ll find a host of articles and educational videos explaining the origins of the cocoa beans used, the manufacturing process and recipe ideas for using Hershey’s chocolate. The historical dimension of the brand is also highlighted, with tasty anecdotes.
This content adds considerable value in the eyes of Internet users. They reinforce the image of the century-old firm as a benchmark in the sector and contribute to its visibility. Shares on social networks explode.
What’s more, this editorial component nurtures conversations with the online community and collects a wealth of valuable marketing data thanks to analytics.
The final key component of Hershey’s digital strategy is the optimization of purchasing paths to improve conversion rates.
The brand relies on the latest innovations in AI; machine learning algorithms analyze visitor behavior on its e-commerce site in real time. They can determine the friction points that lead to abandoned shopping baskets, and rectify the situation almost instantly.
At the same time, the company is constantly testing new page versions (A/B testing), both in terms of ergonomics and content. Those with the best results are retained.
The result: in the space of just a few months, the conversion rate of the Hershey’s site jumped by 12%. Proof that the marriage of digital marketing and AI is bearing fruit!
The Hershey’s digital adventure highlights the dangers to which companies are exposed when technological modernization is rushed and neglected. By suffering the full force of poorly integrated system failures, the company came close to industrial and financial disaster.
This case study is a reminder that the digital shift, if improvised, can have catastrophic repercussions on production, the supply chain and, ultimately, sales. Without adequate training, testing and safety nets, the risk of operational chaos is high.
Fortunately, Hershey’s learned from its initial failure. Its successful turnaround and final digital transformation demonstrate that it’s never too late to do the right thing. Provided that one intangible principle is respected: technology must serve people, not the other way round.
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