Raul Martinez, Chief Growth Officer at Angaza, gave this talk at the Revenue Acceleration Festival in March 2021.
Following the events of the last 18 months, we’ve been living in a VUCA World, one that’s volatile, uncertain, complex, and ambiguous.
In this article, I’ll share my experiences operating in this environment and explain how you can adapt your revenue engine in uncertain times following four steps to optimize, readapt, and mitigate the negativity of uncertainty in business.
I want to talk on the topic of how to adapt your revenue engine in uncertain times - and we are certainly living in very uncertain times.
I myself have led teams in over 25 markets globally, emerging markets, which are, by definition, much more uncertain, much more unpredictable than European or Western markets.
I've had to drill down on my toolkit over the past year and a half and I'll share with you some of my experiences in the past year, but also in general. Hopefully, it can help you in your day-to-day.
The new normal: we live in VUCA World
The new normal is we live in a VUCA world; volatile, uncertain, complex, and ambiguous.
Changing geo-political landscape
We have changing geopolitical landscape, we had Brexit not so long ago although it seems like a long time ago. We have changes in leadership in different countries, more polarisation.
Faster introduction regulatory changes
This, in turn also creates a faster introduction of regulatory changes, because there are a lot of moving parts around the world.
There are macroeconomic pressures that are boiling up.
Shifting consumer habits
Consumer habits keep changing much faster than they did 10 or 20 years ago.
Other external factors
And there are other external factors like climate change that drive decisions, how to do business, and how to change.
All of this was before COVID-19. The world was already becoming more volatile, more uncertain, more complex, and more ambiguous before the COVID-19 pandemic hit us.
The addition of COVID-19
What has COVID-19 added to all of this?
- It's added full or partial economic disruption in many parts of the world.
- It has completely stretched supply chains around the world.
- It has imposed mobility and travel restrictions that we have never seen in our lives.
- There is this uncertainty of when and how this normal will be and how we will return to our normal ability.
So we live in a very complex world right now and it doesn't seem that it will get predictable in the future either.
What impact does this have on businesses?
I would assume everybody has some level of relation to any or all of these points.
You see a reduction in consumer demand. It varies by industry, but overall, there's less economic output in the business. Some of your clients might be completely stopped during the pandemic, if you're in the hospitality business you're severely impacted. If you're in the PPE and healthcare business it's probably booming.
But as an average, the world output has reduced.
Secondly, companies in times of uncertainty will tend to slow down or freeze investment. That has happened in a number of industries.
As a consequence, even if companies are not slowing down investment, even if demand is quite high in the industry that you operate, you might be seeing slower B2B pipelines. Especially once we're adapting to a new way of working, doing business online, not being able to travel, that probably created a slowdown in new business development.
You might be also facing currency fluctuations that have increased your sales quotas. In my previous role, we were having quotas in countries like Brazil where the currency has depreciated more than 30%, and the quota was in euros. Therefore, our quota was effectively increased by 30%.
You might also be facing low team morale. This again, in turn, drives lower productivity. It complicates everything, it can really go into a downward spiral.
But how to adapt your revenue engine?
But at the same time, you're here because you really want to accelerate business, and either you are in an industry where there is a growing trend, or you want to reverse the trend to real revenue growth acceleration.
I'm going to talk to you about how to optimize and readapt your revenue engine to really get the best and mitigate the negative of uncertain times.
How do you adapt your revenue engine?
Adapt your value proposition
The first point is adapting your value proposition.
What do I mean by value proposition?
Value proposition is basically the entirety of your offering to your clients that includes all your product, and includes the overall experience that you're offering to your client.
How do you adapt your value proposition to ensure you are capturing value for customers?
I'd like to refer to what I use as a very simple value proposition framework. It's very simple.
It's really what I call the aims, pains, and gains.
Aims is really understanding:
- What are your clients trying to achieve?
- What is their goal?
- Has that changed now due to the uncertain times?
- And how do we recalibrate it?
- Where are the pain points?
- What are the things that are in the way of hitting their target or hitting their objective?
- How can we help them in the game?
- What is the solution that we can do?
I'll share with you a very simple and practical example. In my last business, we were selling digital solutions to mobile operators around the world, primarily in emerging markets.
During the COVID-19 pandemic, it was very clear that one of the aims they have even before the pandemic was they wanted to increase customer loyalty. And they wanted to move customers much more from prepaid contracts to postpaid contracts, because that drives loyalty, churn, and predictable revenue.
Their pain point, even before the pandemic was that their cost of acquisition was quite high. They were driving most of these acquisitions through their stores and their call centers. They have very little digital penetration.
Their internal pain points were they didn't have those skill sets and the COVID-19 pandemic created additional pain points, which was all of the OPEX and CAPEX they had earmarked for digital transformation was being frozen, being rechannelled to upgrading the network.
The pandemic created a great demand for connectivity with everybody working from home so they needed to optimize their CAPEX spend, therefore, leaving them with even less money to be able to spend on digitalization efforts.
So we sat down, analyzed, and we came up with a solid value proposition for mobile operators, where basically they would not spend any OPEX, any CAPEX, it was a complete revenue shared base.
We created a digital solution to onboard customers and to transform them or upgrade them from prepaid to postpaid. And we will take a commission out of every successful upgrade. It solved their problem, it was relevant and it was well-received.
In conclusion, that's a very simple way.
Ensure you have fact-driven input
Obviously, for all the theories, you need to ensure that it's fact-driven, that it's validated through real customer feedback, and that it's fact-based - it's not an anecdote.
Lastly, you need to understand any triggers that generate new sales opportunities. In this case, it was the COVID pandemic. In other cases, it might be an end of contract, it might be an M&A, an acquisition by your client to another company that creates a new opportunity for you.
Always be on the lookout for what is happening, what are the triggers, but also recalibrate your value proposition depending on the situation and the uncertainty.
Rethink your channel and distribution strategy
The second one is rethinking your channel and distribution strategy in uncertain times. What this means is really be very early in evaluating changes in behavior, and being able to shift your go-to-market strategy quickly in these times.
Physical vs. digital
The most obvious one in COVID-19 is moving from physical to digital. McKinsey estimated that in-person business development reduced by around 55%, retail physical in Western markets reduced almost as much as 90%.
Whereas digital forms of business development in the B2B world increased dramatically. The biggest gain now is obviously videoconference, which was around 66%.
Direct vs. indirect
Another thing you might want to look at is direct versus indirect. Sometimes, in times of crisis, you might need to shift from one port to the other.
Local vs. regional/global
Another approach is how much local versus regional or global you're going to deal with, especially when you're dealing with multinationals.
Drill down the best digital touchpoint
The tip here is to drill down on what is the best digital touchpoint. Because it's not just digital, which is the most convenient for your clients? How do you do that?
It's doing some research, testing, seeing the efficiency of online chatbots, video conferencing, there's a big array and a lot of research going on on this right now which is really interesting.
Think about partnering with indirect channels
I will say, from my experience, also think a lot about partnering with indirect channels that have already established relationships, especially in times where there is reduced mobility, there is uncertainty in terms of travel.
We had a very aggressive quota with our Asian business but didn't have the right setup, we were managing it from our Dubai office, or from our European office.
We had to make a very quick decision to hire a regional head in the region, but also to reach out and to partner with strong local players that were complementary to our product and already had very strong relationships with our potential clients.
It was going to take a much bigger effort in terms of time to revenue to actually go by ourselves. So that's on the channels and distribution strategy.
Focus on cross-selling and upselling HVCs
The third one is really about focusing on cross-selling and upselling your high-value customers.
If you already have an established base, probably around 10% of your clients might be generating between 80 to 90% of your revenue, depending on how segmented you are.
But in any case, you will always have a high spending base of your clients which you already have established relationships and in times of crisis, it's probably a good way to start.
Why focus on them?
Faster sales cycle
First, it's a faster sales cycle, we already have established relationships, already an approved vendor for them, you already know a lot of the problems they're facing. You can use all of that information to recalibrate your value proposition.
More efficient vs shifting acquisition costs
It's much more efficient in terms of acquisition costs, versus acquiring new clients, especially if you're in situations where you cannot do traditional business development, and you have to spend more.
Reduces churn propensity
Actually, by taking care of your high-value customers and upselling and cross-selling them, you're actually reducing the propensity that they will churn and go out of contract with you. Because they're more engaged, and you were there for them even in times of uncertainty.
In-depth account reviews
My tip here is, if you're in uncertainty, you cannot move, you cannot travel use this time to do an in-depth account review, and really overlay what I said on point number one about value proposition to come up with a revamped value proposition and address the problems the customers are facing.
I'll give you a couple of examples.
We were in a market where we were deploying a mobile money product across our mobile customer base. The government decided to change the criteria of onboarding new clients, the know your customer criteria, which completely hampered all of the new acquisitions that were happening in terms of customers.
What we did was went and analyzed our highest value customers in the B2B side, as well as on the B2C. We really created a product suite and a value proposition that was really solving their needs.
Beyond, for instance, accepting payments, they could do salary disbursements, they could do microloans, they could do intrabank transfers, through mobile money.
We created a range of services that enabled us to grow and actually achieve our growth target by upselling and cross-selling our base to compensate for our new customers.
Similarly, more of a COVID example, we had a customer in South Africa, a mobile operator customer, who in this time needed to support their customers, given the pandemic, with information about COVID.
The government was putting pressure on mobile operators to increase access to the internet for the population. We worked with them and we created a platform where customers could have a freemium experience, they could have free information about COVID, about other important and useful metrics.
And then they could also fund it through advertising, and at the same time, be able to upsell customers if they wanted more premium services, such as video or Netflix or something like that.
Really focusing on that helped us achieve a target, for instance, versus growing new customers in other regions, where probably we didn't have very strong relationships.
Acquire emerging customer niches
Having said that, you do need to grow your customer base and you need to keep growing your business. So what normally also happens in times of uncertainty and times of change is new customer niches start to appear.
If you're there to capture them, and to offer the best value proposition to them, you're likely to succeed and you're likely to grow out of all of these clients.
There are always winners and losers, so you need to really understand those not currently in your prospects that can be compared to your prospects.
How do you do that?
Use common sense and channel feedback
The first thing is to use common sense. Then feedback from all your channels and your partners about what is happening, what they're seeing in the market.
Keep an eye on global/regional/local trends
You need to be keeping an eye on global, regional, and local trends. Really understand what is happening beyond what you're currently doing.
You need to analyze your competitors because it's not always just about being first, but it's being the best and the fastest in doing this.
Use the value proposition methodology
Lastly, use the value proposition methodology I discussed - they need to be relevant solutions. I'll give you a couple of examples.
Mobile Money platform
One from my own experience, again with our Mobile Money platform and FinTech business. In an emerging market, we saw there was a regulation to approve to start online betting.
We created a very ambitious plan to acquire new customers and to provide really targeted solutions, not only for the online betting that we created the platform for customers to pay into the betting company, but also to receive the payout, with a very attractive fee model that was very successful.
But again, we understood the trends, we understood what was happening, we analyzed what was happening in the market, and we were the fastest to do that.
In COVID, for instance, if you're in the online educational platform business, or online platform business, in general, universities, higher education, pre-pandemic, were probably more focused on the physical delivery.
Now, the demand for online services is much, much higher. These customer niches were probably not at the top of the list but now are much bigger and much more appealing. These are things you need to be looking after.
There is growth, you need to understand where is the growth coming from.
The glue that holds it all together
Lastly, I'll talk about what glues everything together.
Keep teams informed, motivated, and re-skilled
That's really about keeping teams informed, motivated and re-skilled because your revenue engine will go and work as well as the team that is behind it.
Leading cross-functional teams
In times of uncertainty, firstly, leadership and communication are the key components. Because people need to have clear guidance, and clear information, and communication, to be able to feel comfortable, and to be able to be working as a team.
You need to first take feedback from the key functions; product, sales, marketing, and build your action plan. They will have very valuable information, they will highlight the concerns and you need to take that into account.
Keep them informed
You need to keep everybody informed about the plan and the changes and the alignment. Especially now with COVID, you need to find the best way of working as a team remotely.
That has been a challenge for everyone. Doing that will actually ensure everybody's on the same page, and you don't have misalignment.
Dedicate more time to listening and coaching
Lastly, you need to dedicate much more time to listening and to coaching. The pandemic has changed a lot the way we operate. Sales teams that were used to being on a plane, dining and wining clients, they can't do that anymore. It's frustrating.
You need to be there to help them and to also reskill and retrain them how to really deliver results in a different way by adapting the four elements, putting it together, but also that they feel comfortable with the solution and they're really motivated to push it.
Sales enablement teams are critical
And in this process, sales enablement teams are really critical to ensure there is collaboration, there is implementation and communication, training teams.
In the end, it's really everybody working together that delivers the end result of what I've discussed in this article.
Test-learn-adapt and reiterate
One final thought on all of this which is very important is this does not mean that you do it once. This is continuous.
You need to test, learn, adapt, and reiterate all of this process because changes will continue to happen.
Sometimes some of the elements you thought were the right ones did not work, you need to quickly pivot and adapt.
That's my overall advice. I hope it has been helpful.