Success Factors of Digital Business Models

Everyone is talking about digital business models. However, just as in the case of other hyped topics (innovation labs and blockchains, for example), developing an actual solution that's adapted to the specific situation isn't always easy. This is the challenge that sum.cumo meets anew each day. We're not talking about a simulation game: For our customers in the market for financial services, this is serious business. And for many years now, those customers have been building digital businesses with sum.cumo – their tech partner. That is the pool of practical experience from which sum.cumo has isolated five critical factors for the success of a digital business model:

  1. Effective all-round marketing

    Although it's already standard in many industry sectors, online marketing retains massive growth potential for many financial service providers and other companies in similarly well-established fields. At a rough estimate, only about 20 percent of the available potential is already tapped. In many cases, selective individual measures are implemented without any holistic and cross-channel marketing strategy behind them. Often, a company's expertise is insufficient to reap the benefits of including modern online marketing in their marketing mix. Target groups are addressed by participants of various sectors, with conflicting terms being used for important keywords. Large players in the market (such as Check24) nevertheless know how to attract attention, which gives them an advantage over smaller individual companies. Yet it's precisely for those smaller players that online marketing offers numerous benefits. Budgets can be set depending on success figures that are refreshed on a daily basis, and they are incorruptible and precisely measurable. The profitability becomes apparent within a very short time, meaning it can be optimized continually. For example, the insurance market pays billions of euros each year in commissions for traditional broker channels – why does it have such trouble with online sales, which can deliver synergistic results and whose market is still under-served? We here at sum.cumo know how to do it better. 

  2. Fast, customer-centric front ends

    Successful online marketing draws the interest of the target group. The user's expectations need to be fulfilled the moment they call up the provider's digital offer. This involves more than just a solid foundation of technology; a good user experience, information transparency, and simple processes are just as important. The speed and usability of a front end today directly affect customer satisfaction – both during the sale and with the service. Customers nowadays expect pages that are easy to understand and that answer their questions immediately. Every click and every data prompt needs to feel like it brings added value, page design needs to follow a mobile first methodology, and results needs to be delivered instantaneously.

  3. Simple digital products

    Assuming the user is provided with a perfectly usable and understandable front end, then the goal is to convince them of the benefits of the service or product on offer. This is the point where traditional companies often stop thinking. They fail to realize that this can't be compared with a conventional, "analog" product; it's something completely different. In the digital realm, a product consists of much, much more: Customer portals, self-service options, flexible and customizable offers, dynamic pricing, post-purchase adjustments, and device-independent information are only some of the options that play a pivotal role in the digital arena. Products and services should be free of complicated obstacles as far as possible. For example, if someone decides to buy a product online, but then they're forced to download a complicated smartphone app, they may quickly be overwhelmed by the complicatedness of the process, reconsider, and break off the purchase. 

  4. Value-adding ecosystem

    The attractiveness of digital products depends on a combination of numerous components and services. The provider needs to have external partners in the background in order to be able to provide various services and features without negatively impacting their margin. The problem is, any external solution has to be integrated into the product offer and the IT system landscape, which may involve complex interfacing, but most existing core systems aren't designed to handle such deep integration. One possible result of this is a web store with "store opening hours" – because it incorporates systems without real-time interfaces. This is something modern customers won't put up with. Right out of the box, any digital platform that sum.cumo builds for a customer or partner comes with a large number of interfaces for frequently used third-party services – and it can be extended easily. 

  5. Intelligent business processes

High-capacity front ends, digital products, and ecosystem logic all presuppose the existence of a flexible, high-performance back end system. That's where all the essential business processes take place – according to a different set of rules for every company. No matter how much AI and machine learning may support these processes, it's critical that the technical means is available to quickly and simply implement new requirements and that the results are reliable. Intelligent implementation and configuration can reduce processing times by orders of magnitude, thereby saving costs. Automated processing becomes the default. The back end system is the digital brain – and thus the core element – of any digital business model.

These five success factors are easy to put into a PowerPoint presentation to the top management. But the decisive ingredient is understanding realistically how a not-yet-digital company can put a new, digital business model into practice. With sum.cumo, this can be done for an insurance or lottery company within three months.