For most people booking a hotel used to mean going to a hotel chain — typically one that maintained multiple buildings and hired vast numbers of service workers. Now, many room seekers just head to Airbnb, which uses an online, community-based platform to challenge an established business model. The result is new revenue generated with minimal costs and the ability to expand room inventory with near-zero capital investment.
This is a great example of digitalization and should inspire sales leaders to look for and support digital opportunities in their own companies. In order to identify digital initiatives most likely to drive market share, revenue and profits, sales leaders must first understand six key ways that digital business can lead to net-new revenue.
6 Ways to Earn New Digital Revenue
There are six key ways to earn new digital revenue:
- Sell existing digital assets: Sell assets that others consider valuable, such as information, know-how or brands.
- Digitalize a product or service: Do this to complement traditional, nonconnected offerings in the enterprise’s product mix.
- Sell metered revenue: Sell on a pay-as-you-use basis so buyers can reap the benefits of the asset without sinking resources into owning or managing it.
- Contract assets based on shared-risk outcome: Vary prices for buyers based on a shared-outcome metric, such as service level maintained, a successful sale or a health outcome.
- Run a platform business: Enable the trading of products and services without having to own or distribute the products or services.
- Move into adjacent or new industries: Explore the organization’s potential for using its know-how in one industry to launch its way into another.
Some of these options are more transformative than others or require more time, resources or dedicated workstreams. Others focus more on using digital technologies and approaches to improve existing revenue streams versus creating net-new ones.
The degree of transformation also affects the amount of value contributed to market share, revenue and profit. For example, $1 million in revenue earned via one of the six digital revenue categories will likely have better financial characteristics than the same amount earned from traditional analog ways.
If sales leaders fully understand the degree of transformation and the value-generation potential of each digitalization approach, they can collaborate more productively with senior executives to prioritize and articulate how they will contribute to the rest of the organization.