can you grow your RegTech firm during a pandemic?
I am sure a lot of us started the year positively; we had defined our growth targets for the year and were confident that we would deliver on these and have a good year. In March, however, the world changed. We have all been affected by the COVID-19 pandemic, being no longer able to travel, go to work, visit prospects and clients, and being confined to working from our home offices. It is clear that whatever business we are in, we have had to take a very different approach to business growth than anything we could have imagined.
With a second wave of the virus now sweeping through Europe and no signs of the virus going away anytime soon in the United States, firms are facing the reality that we are now living in the “new normal”. In a recent interview with Bloomberg, Bill Gates suggested that it will likely be the end of next year before the US is out of this pandemic, and that it could take other parts of the world even longer, stretching health and financial instability well into 2022.
Many smaller firms have really felt the weight of the global economic downturn and subsequent recession. I have spoken with several firms whose order books and active sales leads were wiped out overnight. Late in March, I recall speaking with a firm, who very despondently told me that over the course of a week, the firm had gone from having 18 active projects down to one, and with it, wondering how their business would survive.
With many technology firms worrying about how to keep going, is it possible to think about business growth?
FROM STRUGGLING TO SURVIVE TO NEW MARKET OPPORTUNITIES
As the first wave of COVID-19 spread across the world, firms quickly (pseudo-)digitalized their operations, sending staff home to do the jobs they would normally carry out from the office. The traditional actors of the financial services industry, who have for decades resisted becoming digital businesses, were suddenly faced with a need to deploy technology solutions to enable their staff to continue to function, and, perhaps more importantly, to keep in contact with their clients. Performing this rapid change, many firms were forced to cut corners, introducing new information security risks and at the same time, struggling to supervise their staff, leading to opportunities for fraud and misconduct.
In all of this sudden change, of course, lie opportunities for firms who have products and services which can provide real value in this new situation. Some parts of the financial services sector are still struggling with manual processes, and desperately need solutions to bring them into the 21st century. Opportunities for RegTech, WealthTech, AdvisorTech, and RiskTech firms, to name a few, are certainly there, though the question many then ask is how do we find and access these opportunities?
WHAT SHOULD OUR STRATEGY BE?
Though we need to balance what we do in the short term with how we want the business to be positioned long term, a complete pivot away from an overall value proposition may be ill advised. So, what can you do?
Over the last few months, we have seen a massive rise in webinars and short stories, as technology firms, big and small, scramble to be seen as “thought leaders” in their respective fields. Online events have replaced the usual mass of conferences and smaller events that happen all the time around the world. While sharing a message, these online events lack the interaction, and rapport with the audience that we are used to having with the audience. How many technology sales people go to conferences solely to listen to the presentations? I suggest, not very many, and that the real reason for attending conferences is the interaction and discussions which happen during the coffee breaks and lunches! Of course, that is not to say that content-based marketing is not a very valuable tool; it can really be used to drive real engagement and generate real leads if done with an objective in mind – I will explore that more about that in a later article.
There was a feeling at one time in the technology industry that marketing and making sales was easy. Phrases circulated like “build it and they will come”, and “cool technology sells itself”. One thing is sure: in times of uncertainty, these phrases no longer ring true. In a market where there is less money around and potential buyers have to focus on keeping the business running, there is less time, and indeed, budget for innovation programs, and we are starting to see some of the larger innovation labs scaling back their activities.
CREATING VALUE FOR YOUR PROSPECTIVE CLIENTS
For some firms, becoming a COVID-19-centric firm might seem appealing, however, completely pivoting your whole business and its value proposition is going to be extremely costly, and will come with a very high risk.
For other technology business, it is about not moving too far away from what they do, and do well, but positioning their proposition to help clients and prospective clients right now who are struggling with the current situation they find themselves in.
Distinguish between the short term revenue generators and perhaps more tactical point solutions, and your long term strategy. Let’s face it, in an uncertain economic environment, your prospects are probably are not making huge strategy changes or running many multi-million dollar technology transformation projects.
You can, however, still make sales. Understand your (prospective) client, understand where they are at, and how they are coping themselves. The pandemic is clearly having an impact on business models, and changes are happening in their industry value chain. Ask if your solutions fill any gaps firms have in their improvised operating model, and can you help firms to operate better themselves in this new remote-centric model? It is vital that technology firms understand their clients’ new value chain and identify where they can create value for their clients, and in some cases, their clients’ clients, in this new model.
FROM GETTING NOTICED TO MAKING REAL SALES
So, how do we access these opportunities?
Perhaps obviously, we need to start generating some real leads! One of the first places to start is with our existing customer base, firms who have already bought something from us, and trust and have confidence in what we do. Even more importantly, as many firms will have experienced, regulated firms often (usually) have long vendor due diligence processes, which may take even longer to complete while their staff are working from home and focused on other things. Our existing clients are likely to be facing challenges and up-selling to them is likely to take far less time than bringing in new clients.
Back to those PR activities we mentioned earlier in the article. Rather than using the opportunity only to tell everyone that you are still in business, use these activities as an opportunity to interact with the market, especially to your prospective target clients. Listen to the challenges they are facing, and adapt your messaging to match their needs. Pay attention to your branding, and brand strategy. How are you seen by your clients? Will this help you to access their emergency budgets during the pandemic?
Going beyond the PR exercises many tech firms have engaged in, real marketing is about far more than being seen as a “thought leader” or a “top 100 firm” – it is about creating a real need or demand for what you have. Position your products in the context of the current needs and focus of the market.
What kind of firms can you sell to in this situation? As we mentioned earlier, large firms have long sales cycles, and deep vendor due diligence, which can take months, if not years, to complete. Smaller to medium sized firms, however, are also suffering from lack of the tools and technology to enable them to function in this new situation, and the reality is that they can probably move more quickly if you can fill one of their urgent short term needs. This may even prove to be a foot-in-the-door which can help you to sell more strategic solutions to these firms once the environment is more stable.
Don’t give up on or neglect those longer cycle strategic sales though; at some point, businesses will start to make strategic purchases again, whether that is due to a vaccine being found, or simply having to adapt to a long-term reality where everything happens remotely.
WEATHER THE STORM AND DON’T GIVE UP
It is certain that it is not going to be an easy year for a lot of businesses, and it is likely that many, large and small, will not survive, but with the right tools and approach, it can be possible to “weather the storm”. With the right focus now, you will be even better positioned to deliver on your long term strategy when things finally return to “normal”.
In the next part we will take a deeper look at some of the new opportunities that the pandemic has created for RegTech firms.