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:
- Revenue per Employee (RPE) – the revenue of the business divided by the number of employees, and
- 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
- Telecom Plus (aka Utility Warehouse)
- Microsoft
- ITV
- 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 | 11.93 | 1,289 | |
3 | Telecom Plus | 11.50 | 977 |
4 | Microsoft | 14.00 | 678 |
5 | ITV | 15.90 | 580 |
6 | 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 | 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 | -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 |