In this edition of BIA Advisory Services’ Vantage Points, we share insights from Mangesh Wadegaonkar, BIA’s new executive industry adviser in our strategy consulting practice.
Mangesh has deep expertise as a strategist in Internet cloud-enabled businesses, adtech, location marketing, SaaS, Big Data, and Customer Experience (CX) life cycles. In this article, Mangesh sits down with BIA’s Managing Director, Rick Ducey, for a session.
The Vantage Point series taps the perspectives of various lookout points from around the local media and tech sectors. The views expressed do not necessarily reflect that of BIA. Contact Rick Ducey, Managing Director, BIA Advisory Services, if you have insights to share.
RD: Mangesh, you spent time with several different kinds of firms at several stages of evolution. This includes Wireless Registry (VC-backed IoT analytics rebranded in January 2019 as SignalFrame), EventBank (cloud and mobile solutions for professionals), Surefire Local (SaaS martech solutions for SMBs), Mspark (direct marketing), and Everyscape (MIT video tech start-up). What kinds of general insights have you developed from these experiences?
MW: In general, West Coast companies tend to be more SaaS oriented in their business models allowing them to create scalable platforms for DIY professionals and businesses. A lot of the adtech and martech firms still rely on managed services at core to their business model. This increases the labor overhead with headcount heavy in servicing accounts and when combined with low engagement from the customers, adds friction to scaling opportunities. With the competition in the market offering similar solutions the customer is unable to differentiate between them leading to a race to the bottom in pricing.
The key driver for SaaS companies is getting more people on the platform. Driving leads and getting engagement need to be core activities to drive growth. For example, a new kid on the block doing phenomenally in the listings and reputation management space is Synup, a SaaS company based in New York City. Ashwin Ramesh, Synup’s CEO sees strong growth prospects with their model and execution.
RD: I know you’ve done significant work with companies struggling with “digital transformation.” How do you define this and where do you think companies are with this challenge?
MW: With digital transformation mainly what we are seeing is that people are not using the right tools, particularly legacy companies trying to protect their traditional revenues, margins and product set in about that order. Meaning that companies will stick to their core product set too long and let declining revenue dictate cost reductions to protect margins.
Digital transformation is two-faceted including internal and external transformation. On the internal side, it’s about the mindset, workflow, processes, and tools. Fundamentally, in a digitally transformed company, the culture changes the mindset and the legacy tools become useless.
Company can’t and shouldn’t do everything themselves, so they must rely on vendors and outsourced solutions. The transformational decisions involve determining what to outsource and what to keep in-house.
For those products and services that you don’t want to develop, many of these companies need help on which vendors to pick and rely on. However, while doing so companies typically do not think strategically about how the different solutions fit together for serving the customer the right way. The owned & operated and vendor fulfilled products need to fit together as part of core growth strategy to allow for sustained profitability.
A recurring issue is that executives frame transformation in silos, not an omnichannel play. They don’t think about customer retention. It is possible to begin a transformation with a verticalized approach, but it must be part of a bigger picture that management develops along with strategies to get there. By focusing on customer lifecycle value and how to retain customers, this can inform thinking about where and how companies need to confront transformation sooner rather than later.
RD: Could you give an example or two of what digital transformation means, as you’re thinking about it?
MW: Sure, one an example is a martech company I know that served small and midsize businesses in a couple core segments where they developed software and data solutions optimized to their problem set. With a mix of organic product development and acquisitions, they built a client base drawn to their mix of products. Part of their business model was to provide a managed service layer on top of the products. It worked fine for a while, but without an underlying and unifying digital platform this company faced scalability challenges beyond their core customer base. By addressing these issues and focusing on customer retention and growth via a SaaS platform that unified services and products along with internal workflow, the company has been rewarded with significant growth.
The firm I mentioned earlier, Synup, is an example of a company launched from the outset as a digital company, leveraging the principles of scale, platform, integrated services driven by a SaaS business model. This lean start-up approach allowed the company to gain traction and acceleration against entrenched incumbents.
And we can look at the YP and direct mail segments as well. Customers want both digital and legacy services. But the terms of service can’t be set by the need to protect revenues and margins for legacy products or these companies will become increasingly less competitive.
RD: Thanks, Mangesh. Any final thoughts for the BIA community of publishers, advertisers, agencies, and vendors operating in the local advertising and marketing space?
MW: Yes, I would like to highlight three different areas that I see are consistently ignored by many in the industry for various reasons.
- Consumer Journeys: It is imperative that every single stakeholder in the advertising industry realize that consumer journeys are cyclical not linear in nature. This is an important distinction as this drives the way customer funnels are designed for marketing & sales activities. Companies that still use the older liner model quickly run into the “leaky bucket” syndrome. They have a tough time keeping existing customers, which in turn balloons their customer acquisition costs.
- Consumer Data: Having worked across the entire ecosystem in the advertising space, I have come to realize that most customer data used to make strategic decisions is extremely poor. There is a lot of regurgitated and static data that is in circulation and many use it without comprehending effects on their business. The companies that have relied on primary and dynamic data are the ones ahead of the game and delivering the appropriate solutions at the relevant time to their customers.
- AR/VR: Finally, as we look in to the future, virtual assistants (voice) and augmented reality/virtual reality (AR/VR) will become commonplace for all customers. For example, Alexa and Google Home have already changed the shopping behavior of hundreds of thousands of customers. Further, with Siri and Google assistant at everyone’s fingertips if businesses aren’t thinking voice they are missing out. Additionally, AR/VR equipment is introducing new ways to engage with content and provide unique experiences for customers. As economies of scale take effect adoption will skyrocket and advertisers that are ready for it will be able to capitalize on their investments quickly.