Scaling Businesses
What the Martech era will do is enable brands to scale businesses fast – leading to exponential forever profitable growth forever. Let’s unpack each of these four words, in reverse.
Growth: because the Total Addressable Market (TAM) is large, and others are hungry. Without growth, there is only stagnation and eventual irrelevance. As customer habits change, accelerated by the pandemic, new brands without the baggage of legacy are redefining customer reach and relationships. Digital first brands are unencumbered with the physical world distribution limitations and are able to reach customers independent of geography. The world is, quite literally, the market, and the opportunities are infinite; new products, new markets, new categories (organic or acquisitions) constantly beckon.
Profitable: because investor money to burn will soon run out. While losses in the early years may be acceptable, investor patience will wear thin given the options their capital has. Too much capital for too long also creates bad habits which are then difficult to get rid of. Profits also give the business the freedom to focus on expansion and acquisitions, rather than being in a constant fund-raising mode to fund day-to-day operations. Founders and CEOs must therefore chart a path to profitability, because profits are the only sustainable way to build an enduring, great business.
Forever: because it is now possible to build recurring revenues (subscriptions) that can last a long time. With customer identities known and digital helping in continuous engagement, the inflow of data can help brands anticipate the future needs of customers and be there for them at the moment of desire. New-age brands are being valued like SaaS companies – with double digit multiples on revenues. The belief is that these brands will not only expand their product portfolio over time, but also build lifetime relationships with their customers.
Exponential: because we are living through an inflexion point in disruption, and low and slow growth is no longer acceptable. High beats low, and fast beats slow. Exponential is the expectation because the opportunities are infinite. Just as SaaS companies can sell via the Internet to businesses globally, consumer companies can also now attract buyers anywhere in the world – either through marketplaces or directly. These winners are then valued highly, giving them a currency to acquire less nimble rivals to drive consolidation, and capital to deploy in R&D for rapid expansion.
A business which succeeds in the Martech era will create in its category a profits monopoly – “profipoly”. This will be the ultimate competitive advantage and moat in tomorrow’s world. It is what companies like Google, Facebook, Amazon and Apple have done extraordinarily well – by sucking out the profits from their industries, they deprive competitors the oxygen needed for growth. Consumer businesses have an opportunity to do the same in the Martech era.
We will discuss five secrets of scaling to become exponential forever profitable growth businesses: a new customer segmentation methodology (Best-Rest-Test-Next), the 4 Rs mindset (retention, rewards, reactivation, and referrals), full stack, progency, and rebudgeting. But first, let us understand the tech trends that are the disruption drivers.
