…has called for radical responses
All of these impacts have occurred against a background of sudden and enforced social distancing. So, how have tech companies responded? Drawing in many cases on the EY Enterprise Resilience Framework, they’ve navigated robustly through the initial turmoil of the pandemic, moving at pace to make radical changes to their businesses.
Key actions have included activating business continuity planning (BCP) protocols and ensuring the safety of employees, while mobilizing work-from-home infrastructures, including securing the operational effectiveness of shared services and call centers. Tech companies have also been assessing the impacts of the crisis on near-term revenue opportunities while triaging cash collections and assessing liquidity positions. Some have introduced “free” entry-level offers: witness Cisco making Webex free to new customers for 90 days⁷ and Microsoft offering free access to Microsoft Teams for six months.⁸
Now it’s time to take stock
The net results of all these actions? Stabilized operations — and a strong-enough platform from which to seek out and target the growth opportunities that are certainly out there.
As we emerge from the crisis, now’s the time for tech companies to carry through with the resilience they’ve shown during it. This means taking a deep breath, reassessing the “Now” — and working out what’s “Next.” The question for tech leaders to address is this: “Now that the immediate maelstrom is behind us, how should we be responding to the risks and opportunities we face in the coming one to three months?” If you don’t answer this question, you can be sure your competitors will.
Five priorities to reenergize your growth trajectory
As EY teams identified, the combination of exponentially accelerating innovation and unprecedented geopolitical and economic uncertainty means success in the tech sector now depends less on particular products or services, and more on building platforms that can adapt to unforeseen opportunities. Nextwave technology companies will outpace the competition, not because they’re better at predicting the future, but because they are world-class at orchestrating a diverse ecosystem of producers, service providers and customers to service new demand rapidly. They’ll also have the financial agility and effective contingency plans needed to respond, stabilize, recover and, then, reimagine growth.
To seize revenue opportunities, tech companies should focus on five priorities:
1. Re-segment customers and markets
Examine your current customers and markets to challenge the segmentation models you rely on to drive decisions. In the coming weeks and months, your most reliable and predictable customer segments may well demand to be served in entirely new ways. And these new behaviors may change again before long. Adopting “dynamic customer segmentation” will enable you to meet customers where they are and pinpoint new opportunities.
How? Take three common customer segmentation variables in IT services companies:
- Cost of sales
- Account leader tenure
- Service/offering penetration
In normal business conditions, it’s clear how each of these helps decision-makers prioritize sales and marketing resources. But after the pandemic, opportunities may exist at prospects where you lack long-standing relationships or where a first-time sale would be far costlier than selling to an existing customer. Tech providers that refocus their segmentation toward new addressable opportunities will be better placed to stay relevant and discover new paths to growth.
2. Reimagine the sales experience
Adapting your sales process to a world of remote touch points will pay you back for years. While it’s unclear how long social distancing will last, it’s safe to assume two things. First, a return to meaningful face-to-face sales interactions is a long way off. And second, any innovation in the sales experience that drives expense-to-sales ratios down will be welcomed by customers and investors alike.
Before the pandemic, a FinTech organization scaled its remote selling capability for new and existing customers, with a focus on driving sales productivity for “long-tail” customers too costly to reach through field-based sales programs. Now the focus is shifting to remote and digital selling for customer retention and sales growth, with the added value levers including:
- Orchestration of digital first into digitally assisted client interactions
- Algorithmic cross-sell and up-sell sales programs
- Honed remote product demonstration capabilities
The pandemic has made it imperative to expand remote selling capabilities and behaviors across all field sales associates and for customers of all sizes, while minimizing channel conflicts. Tech leaders already have collaborative sales models meshing together field, desk and digital. Now this “nice to have” has become a core capability that will be key to reinvigorating growth.
3. Build the financial agility not only to survive, but to thrive in a post-pandemic world
Some tech companies with strong balance sheets are already eyeing potential acquisitions, while many others are struggling to operate in a remote environment with antiquated finance and accounting processes. Liquidity and continuity are key concerns of the “Now”; optimization of finance and operations and strategic planning for the “new normal” should be the focus of the “Next.”