One of the bigger strategic drivers for Quote to Cash implementation has been to respond to disruptions in an industry or to defend against such disruptions. There have been examples in the finance space where companies like TransferWise have gone after high-margin low-cost segments of international money transfers.
We’ve also seen other examples of ‘challenger’ banks like Monzo and Sterling going after the customer banking sector leveraging new technology to deliver better customer experience at significantly lower costs. These businesses are establishing themselves as long-term players and are causing genuine challenges to the more established players. How does a mature low growth business stay relevant in an industry where their higher-margin business areas are experiencing growing competition?
Most times, this has forced the hand of the market leaders to fast track their digital transformation, taking the step to remain ahead and defend against the new players. Most times, market leaders take an incremental step to enable quick responses as they see the risk of disruption increasing. Where the need is often well understood in either case, many customers struggle with execution.
One of the major issues we have encountered with our customers on this journey is with the desire to preserve their current margins and revenues while delivering the needed transformation. To transform, one or both may be affected in the short term in order to protect them in the longer term.
The main drivers to disruption are factors that themselves erode revenue or margin. If the competition can deliver the same services more quickly and seamlessly using new technology, it is likely to impact customer acquisition and retention. This will affect your revenue.
If there is a need to invest in new technology to respond, your margin will also be impacted while making the investment. If you find you are thinking: “That is acceptable when I’m responding to disruption, but what does that have to do with disrupting my own business?” Well would you agree that it is also acceptable when you are making changes within your business?
For clients who are aware that their business is ripe for disruption, leading their industry to transform (and effectively, being the disruptor) gives room to preserve much more of the existing margins and revenue. There will still be near term dips in both as the digital transformation program is delivered, however, there is greater control if a market leader is choosing to do this in a space where they already have an advantage. The investment to transform will cause a lag on both revenue and margin, reflecting the time to deliver such a program to create the platform and opportunity for future growth and margin protection.
The nature and quality of investment is key to driving the value of such a program. In executing the digital transformation, many customers start the conversation around the need to transform their business, but when faced with the reality of defining and navigating the change, they tend to drift to focus on technology change and not a true fit for purpose business transformation. There must be a strong focus and executive support to ensure the transformation is truly beyond swapping the technology stack or just repurposing the existing stack to optimise for the current model.
There needs to be ‘start-up’ like thinking. Who are the new customers you need to attract? What do they want to buy and how do they want to buy? What does that mean for your products, pricing and processes? What will the changes do to your existing customers? How do you ensure existing customers realise greater value from the new approach so you can minimise churn?
Defining the outcomes clearly and creating a roadmap to move your company from your current to new ways of working is critical to delivering great success. Part of driving that success is getting early feedback to validate how well the program is delivering to the outcomes and how valid those outcomes continue to be over the life of your transformation program.
Your Quote to Cash transformation gives you a platform to deliver change in the near term but more importantly, gives you a lower cost means to innovate and adapt as your company continues on the path of success. Get in touch at email@example.com to discover how Olaitan and his team can support you through your Quote to Cash implementation.