Making more with less through digitally driven revenue efficiency

When I attempted to identify UK’s digital leaders, I analysed companies based on their Profitability and Revenue Efficiency. The latter is an often overlooked element of digital transformation that effects the customer experience, operations and business model development.

Revenue efficiencies crucial question is how do I make more money with fewer resources. This could be considered in terms of having fewer assets, people or working capital. Specifically I’ve used two measures to give me a business’ revenue efficiency:

  1. Revenue per Employee (RPE) – the revenue of the business divided by the number of employees, and
  2. Return on Assets (ROA) – the profit the business generates on the assets it holds

For instance a business that generates £1m in sales from 10 employees is more efficient than the business that does £10m from a 1,000 employees. It’s really a question of scaling.

Tech giants are leading the way

US tech giants Apple, Google, Microsoft and Facebook were the leaders in my analysis.

The best of the four was Apple, which manages to generate an incredible 18% ROA and close to $2m in revenue per employee!

Other non-tech giant companies that fared well were ITV, IG, Sky and EasyJet. Also there was a general strong performance from builders and property investment companies.

Achieving revenue efficiency through digital transformation

Truthfully I think that true market leading revenue efficiency comes from more that just the clever use of new technology. It’s about brand, product, marketing, pricing, competitive forces and operation excellence.

However digital transformation has a role to play:

Digitisation of customer touch-points
Uber runs a taxi service but has managed to cut the cost of running a call office to book cabs. By completely digitising the connection between the passenger and the driver they have stripped out a cost and given themselves the ability to rapidly scale into new territories.

Providing that you create mobile and web digital experiences that are optimised for the customer, you can sell more with centralised scaling resources.

Digitisation of business operations
Increase business efficiency by replacing broken processes with new digital solutions to reduce errors and improve the speed of operations. Again this is a challenge of scaling a business effectively.

A CEO I recently met would challenge his executive by constantly rephrasing questions of scale. By asking “is this the right approach if we have 100x more orders?” he could determine whether the operation would scale efficiently over time.

Cloud computing also offers the ability to scale systems and infrastructure in line with customer demand. Therefore the business is buying capacity as its needed rather than after the fact.

Creation of new digital business models
Finally, digital leaders can improve revenue efficiency by launching digital products and services.

This may be an entirely new proposition (as Kindle was for Amazon), a complete market disruption (as iTunes was for the music industry) or an added service for customers (online training for purchasers of a product).

These provide a way to either attract new customers or grow sales amongst existing customers.

Revenue efficiency league table

The table below ranks each business profiled by their Revenue Efficiency. Each business’ rank is a product of it ROA and RPE.

Mean scores:
ROA : 5.3%
RPE : £466,000 per employee

Of the companies listed, only 17 performed better than both averages. These companies are:

  • Apple
  • Google
  • Telecom Plus (aka Utility Warehouse)
  • Microsoft
  • ITV
  • Facebook
  • Persimmon
  • ASOS
  • Bellway
  • Crest Nicholson Holdings
  • Lancashire Holdings
  • Redrow
  • Bovis Homes
  • Taylor Wimpey
  • Telecity
  • Hilton Food
  • Tate & Lyle

The full list of businesses is as follows:

Rank Company ROA % RPE £k
1 Apple 18.00 1,974
2 Google 11.93 1,289
3 Telecom Plus 11.50 977
4 Microsoft 14.00 678
5 ITV 15.90 580
6 Facebook 9.09 1,342
7 Persimmon 10.70 854
8 ASOS 10.70 841
9 Moneysupermarket.Com 16.30 450
10 Bellway 10.50 758
11 Crest Nicholson Holdings 8.86 932
12 Lancashire Holdings 6.57 4,688
13 SKY 13.50 375
15 Connect 11.70 413
15 4imprint 13.00 380
16 Redrow 8.74 692
17 James Halstead 18.50 270
18 Bovis Homes 6.94 936
19 Domino’s Pizza 17.00 261
21 Taylor Wimpey 7.55 670
21 Diageo 9.72 386
23 Burberry 17.20 247
23 Quindell 19.50 238
24 Telecity 7.93 493
25 Micro Focus International 21.10 224
26 Hilton Food 7.65 501
27 Tate & Lyle 7.29 545
29 Reckitt Benckiser 12.10 262
29 A.G.Barr 12.30 261
30 Betfair 17.30 226
31 Majestic Wine 10.80 269
33 Booker 8.70 367
33 Provident Financial 9.09 329
34 888 Holdings 15.60 230
35 Beazley 4.64 1,335
36 IBM 13.43 231
38 Imperial Tobacco 5.23 754
38 esure 7.52 373
40 Amlin 4.06 1,229
40 Inchcape 6.29 455
41 Hiscox 4.28 864
42 Wolseley 7.31 333
43 Catlin 3.78 1,223
45 Britvic 6.21 413
45 Unilever 10.70 218
46 Conviviality Retail 3.75 1,008
47 United Utilities 7.08 320
48 AVEVA 17.70 150
49 N Brown 8.61 243
51 Netflix 2.40 2,165
51 Next 29.70 137
53 National Grid 4.12 604
53 British American Tobacco 13.50 161
55 Talktalk Telecom 3.80 694
55 Lookers 4.32 506
55 KCOM 11.10 188
58 BMW 3.95 664
58 Euromoney Institutional Invest… 11.70 175
59 Fidessa 12.90 166
61 Cranswick 8.82 214
61 Ted Baker 16.60 147
62 Brit 2.22 1,486
64 Dairy Crest 6.13 306
64 Mail.ru 34.20 116
66 Centrica 2.95 775
66 Wynnstay 4.17 466
67 Novae 1.58 1,814
68 Chesnara 1.09 5,406
69 Sports Direct International 10.70 158
70 BT 7.99 206
71 Game Digital 1.28 1,441
72 Travis Perkins 6.22 247
73 Vertu Motors 3.04 506
76 Phoenix 0.44 4,309
76 SSE 1.04 1,549
76 Stock Spirits 5.41 265
76 Dunelm 28.00 89
79 Prudential 0.64 2,717
79 UBM 9.30 155
80 Starbucks 22.30 86
81 SuperGroup 7.79 193
83 Just Retirement 0.70 1,721
83 Pendragon 3.46 426
85 St. James’s Place 0.34 3,670
85 Greggs 6.68 214
86 Legal & General 0.26 4,261
87 Cambria Automobiles 3.21 413
89 Standard Life 0.33 2,531
89 PZ Cussons 8.91 149
91 TUI Travel 4.25 293
91 ARM Holdings 6.26 220
93 SABMiller 6.84 206
93 WH Smith 20.00 79
94 Caffyns 2.21 509
96 Aviva 0.39 1,456
96 Enterprise Inns 0.68 1,244
96 Computacenter 5.09 247
99 Datatec 1.77 628
99 Laura Ashley Holdings 11.40 117
99 Playtech 15.40 93
101 Friends Life 0.11 1,584
102 InterContinental Hotels 8.47 146
104 Entertainment One 1.32 591
104 Admiral 8.63 139
105 Kingfisher 7.07 168
106 Essentra 7.02 168
108 T-Mobile 0.73 706
108 Daily Mail and General Trust 6.66 178
109 Sage 10.90 100
110 JD Sports Fashion 7.80 141
112 Norcros 7.96 130
112 Ros Agro 18.80 60
113 Marks and Spencer 6.41 169
114 Restaurant 17.50 49
115 Orange 2.43 305
116 International Personal Finance 7.87 120
117 Direct Line Insurance 2.84 265
118 Halfords 9.23 83
120 Vodafone 0.72 431
120 Dixons Carphone 2.09 296
121 Amazon -0.64 727
122 Paragon of Companies 0.92 394
123 Punch Taverns -5.26 994
126 J Sainsbury 0.22 484
126 Sagicor Financial 0.78 370
126 Associated British Foods 7.31 109
126 Lenta 9.43 72
126 Whitbread 10.10 67
130 Informa 4.38 172
130 William Hill 7.90 90
131 Epwin 7.01 112
133 Close Brothers 2.06 252
133 Devro 7.16 103
134 Severn Trent 2.45 236
137 Guinness Peat -0.46 478
137 Low & Bonar 2.99 207
137 Jardine Lloyd Thompson 5.79 127
137 O’Key SA 8.49 75
139 Mecom 5.17 139
140 Dignity 6.96 94
141 Colt SA 1.35 242
142 Greencore 4.66 130
143 Millennium & Copthorne Hotels 6.06 106
144 MiMES Rostelekom OAO 2.94 180
145 Etalon 5.26 112
147 LinkedIn 1.13 237
147 AA 4.80 120
149 Old Mutual 0.37 268
149 HomeServe 3.58 150
150 RSA Insurance -2.13 368
151 Standard Chartered 0.64 247
153 Young & Co’s Brewery 3.94 130
155 Jimmy Choo -1.64 332
155 Merlin Entertainments 6.53 75
156 Real Good Food -0.42 288
157 Coca Cola HBC AG 3.24 141
158 SIG -0.45 269
160 Tesla -4.19 344
160 WM Morrison Supermarkets -3.03 329
161 John Menzies 5.31 82
162 Fuller Smith & Turner 5.16 84
163 Thomas Cook -5.31 344
164 AO World -10.10 360
165 Polypipe 2.06 157
166 Darty 1.03 196
167 Nationwide 0.43 210
168 Daisy -3.74 254
169 X5 Retail NV 4.91 70
171 Debenhams 4.07 82
171 TCS Holding 5.44 57
172 Cable & Wireless Communication… -2.84 240
174 New Britain Palm Oil 5.73 42
174 Carrs Milling Industries 5.79 36
175 Spirit Pub 5.32 48
177 Lloyds Banking -0.21 198
177 Acal 0.38 179
179 Royal Bank of Scotland -0.89 212
179 MHP SA 5.63 32
182 Virgin Money Holdings (UK) -0.13 190
182 Pearson 2.36 116
182 Carnival 2.71 107
182 Thorntons 4.67 59
184 Ladbrokes 3.72 79
185 Pets at Home 1.13 140
186 WPP 4.12 62
188 Tesco 1.67 122
188 Poundland 3.67 76
189 PPHE Hotel 3.24 81
190 Chime Communications -0.85 193
192 Cineworld 2.76 86
192 Compass 5.02 34
194 Mothercare -4.34 207
194 Tyman 1.16 125
196 Home Retail 1.20 121
196 J D Wetherspoon 3.62 66
197 Ocado -0.24 151
198 Bwin.Party Digital Entertainme… -3.92 182
199 Twitter -30.00 201
200 Innovation 2.13 78
201 Carpetright -1.42 149
202 Greene King 2.92 58
203 Rank 2.43 62
204 Bank of Georgia Holdings 3.35 20
205 McBride -4.36 154
206 Camellia 2.59 3
207 Mitchells & Butlers 2.02 48
209 Trinity Mirror -5.31 130
209 Saga 1.50 53
210 Card Factory 2.01 39
212 Premier Foods -4.09 112
212 McColl’s Retail 1.21 47
213 B&M European Value Retail SA -0.29 67
214 Phoenix IT -12.20 96
215 Marston’s -0.34 61
216 SDL -7.65 83
217 SSP -2.69 64
218 Johnston Press -4.47 65
Average 5.35 466

David Sealey is a trusted adviser to senior executives on getting the most from their investment in digital and data. David created Storm81 as a place to share his passion for business, digital technologies, multichannel marketing and everything else around these topics.

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