SPRINGBOX / Insights

Shareholder Value — The Ultimate Result

by Tom West, June 4, 2018

Springbox Chairman Tom West breaks down how our digital leadership model can help growth companies achieve significant gains in shareholder value.

Hands typing on laptop with graph superimposed

I spent years running e-commerce companies and now lead Springbox, an agency that is engaged in helping our clients achieve digital leadership status, and, from this vantage, I can see clearly that the most significant measure for our clients is the creation of shareholder value.

In today’s digital economy, disruption and transformation are happening at the most rapid pace in history. The cycles of innovation and competitive advantage are shortening. More capital than ever (both public and private) is available to invest in companies that show the greatest promise.Increasingly we are seeing the valuation premiums between the leaders and the rest of the pack widening.  

Shareholder value journey

At Springbox, our shareholder value journey began nearly two years ago. We noticed that our clients were significantly outperforming competitors in their industries. Our clients with privately held companies were achieving great valuation outcomes that could be measured by liquidity events and new funding rounds.

The public companies we were working with on mission critical digital leadership programs were well ahead of their peers in market cap growth. Our winning clients were looking to double down on digital leadership to drive even more value and separation from the pack.

Sensing we had something, Springbox started working with our clients’ CEOs and CFOs to actually track shareholder value performance. If I have learned anything in my 20 years of running digital and e-commerce companies, it is that you have to measure the thing that you want to impact.

Approach to measuring shareholder value

We selected seven clients to be part of a pilot group where we would track and measure outcomes. We worked with the CEOs, CFOs and Private Equity owners to establish a baseline of measure from the time we launched our first digital initiative.

We established a quarterly cadence to measure those results and report on them internally. For the private companies, we agreed not to share any of their valuation data externally and only to report it in aggregate. This was critical for them to gain the comfort needed to share both positive and negative outcomes with us.

For years we had measured operating metrics and digital results from clients’ analytics accounts to provide the data they needed in order to drive growth and profitability. However, this was the first time that any of them had been asked to share such sensitive information. In addition, we didn’t want to take credit for the bull market we have seen over the last few years.

What our clients were looking for was overperformance. As a result, we developed a market baseline index for each client industry that could be used to assess whether a client was outperforming their market.

Shareholder value results

The results of the program have been nothing short of spectacular. In the 18 months since we have been measuring, our clients have created shareholder value outperformance of $1.1 billion collectively. Every company achieved results above their peers.

Q2 ebanking, which is a public company (meaning we can share the results), more than doubled its market cap. Another PE-backed company achieved an exit that resulted in the highest IRR in the 20-year investing history of a major PE Fund. A third company achieved over 3x growth in inbound digital customer acquisition velocity that led to a significant increase in the mark to market valuation and ultimately a dividend recap that returned 100%+ of PE shareholder investment with no dilution in ownership.

We are now so confident in this approach that Springbox is rolling it out to all of our Digital Leadership clients and even taking equity in lieu of fees where possible. We find that the more aligned we are with the outcomes our clients are seeking, the better we can make those outcomes come about.

Role of Springbox as a partner

One thing that is important to emphasize is that it is not about Springbox taking credit for the results of our clients. In every successful case, we have visionary clients who have the courage to make a major bet on Digital Leadership.

These change agents recognize the importance of digital strategy to the overall strategy of the company. Typically, these clients have placed digital leadership and transformation among the top 3 initiatives for their companies, setting their digital experience up to be one of those ingredients that amplifies everything else.

Digital leadership methodology

Becoming the digital leader in your industry is a process that can be projected and measured. To become the digital leader, you must first understand the market and competitive set. We have found that every industry — both b2b and b2c — has unique dynamics that can be measured.

Springbox has developed a proprietary formula that allows us to establish a baseline of the playing field. The elements of the formula are:

Digital leadership formula

Once we establish what it takes to win in an industry, we can build customized strategy to make our client the digital leader. This will usually involve a multi-phased approach that starts with the greatest areas of opportunity.

Typically, we find that there are 2 critical vectors for achieving digital leadership. Once a foundation is in place, the first involves investment in what we call Digital Excellence. This is about having the most efficient marketing and sales engine in your space.

Our approach utilizes the latest technology and AI-based platforms to build a measurable and scalable demand gen function and combines it with an action-compelling conversion experience built on a modern tech stack. This full-funnel approach supports measurable outcomes and creates growth levers that can be invested in for scale.

The second vector, called Digital Disruption, is focused on transforming business models and achieving breakthrough customer experiences. While less formulaic in nature, winning on this vector requires a deep understanding for your customer and opportunities to bring value in ways never seen.

The time to market from idea to launch has compressed dramatically in the last few years. Modern technologies allow for development of scalable solutions, using pre-defined code bases, where the key to success is no longer the plumbing but creating a world class user experience and integrating elements and APIs into a working solution.

At Springbox we are an AWS-certified partner and work with modern technologies like React, Bootstrap and Netlify to deliver at record time and for budgets that are unheard of relative to building solutions on legacy technologies.

Companies that are driving both Digital Excellence and Digital Disruption are what we call Digital Leaders and are in the best position to drive sustained overperformance in shareholder value.

Digital excellence chart

Summary

Shareholder value is a goal that we all have, but few of us have a clear roadmap to achieve it. The market is rewarding those that have made the investment to become digital leaders. Springbox has developed a proprietary, data-driven approach to achieving shareholder value that we believe represents the agency model of the future.

While the vectors of achieving digital leadership are becoming clearer, the still rare leader is the one who will stand up to drive change and innovation. Ultimately, we have come to believe that in the new economy, the technology and digital strategy decisions of today represent tomorrow’s shareholder value.

 

Learn how our Digital Leadership Model can support your business needs — and help you win your category.

 

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About the Author:

Tom-WestTom West is a career Digital Business Leader having run multiple top 100 e-commerce sites as CEO, president and general manager. Today he acts as a digital director for multiple companies and helps many more to reach their full digital potential through his company, Springbox. Springbox provides turnkey digital leadership solutions, including strategy, customer experiences and demand generation.

 

Topics: Digital Success, digital transformation, digital leader, Digital Strategy