How to Thrive in the Digital Economy—The 4 Digital Keys to Success

Spotting an industry-wide trend fifteen years ago, AppDirect’s founders noticed that B2C marketplaces efficiently facilitated the purchase of consumer goods and services. Yet, B2B software procurement remained a complex, time-consuming, and costly process. Companies grappled with multiple providers, invoice processes, and billing systems, and inefficiencies were rampant.

This was the catalyst for the founding of AppDirect. The aim: to simplify finding, buying, and managing solutions on a single marketplace platform, and it’s what led to the discovery of four important keys to digital success for business.

Read on to discover the strategies that rocketed B2B commerce giants to achieve 300%+ growth using marketplace platforms and how you can use them to future-proof your company.

The B2B procurement marketplace—Your catalyst for growth

Speaking to a packed audience at AppDirect Thrive in Chicago, Chairman and CEO Nicolas Desmarais recounted the founders’ going-in premise from 15 years ago—that the cost to compute was going to decrease rapidly in coming years, the number of available business apps was going to explode, and so, too, would the complexity and costs of procuring and managing all of those apps.

“It’s this realization that sparked our vision to develop a platform that combines a marketplace for monetizing digital services with a workspace that unifies quoting, purchasing, billing, identity, and data management, along with every process that goes into day-to-day management of subscription commerce,” said Nick.

A flywheel effect to generate growth for everyone

At its core, the centralized marketplace platform creates a value chain—a flywheel effect—that generates growth for everyone. Providers find value in joining AppDirect's platform to monetize their services, creating an advantage for advisors wanting to expand their portfolio with new products. In turn, their end customers get access to the vast range of services in the AppDirect catalog and the assurance of industry-best expertise and support. The ultimate result is a cycle of continuous innovation and growth for all.

But this tells only part of the story of how to succeed in the subscription commerce economy.

The four keys to digital success

To better understand what makes the top B2B commerce companies great, we took a deep dive into the key characteristics that set them apart. These were companies that consistently outperformed their peers in market capitalization growth, exceeding those peers’ performance by more than 300% on average. We also looked at the bottom performers, who underperformed the average by 70%.

What we found: All top performers shared four fundamental keys to digital success that were weak or absent among the bottom performers.

"When you look at digital winners, they share one thing in common: they tend to be multi-sided platforms that have no inventory. Instead, they invite 3rd parties to develop inventory, sell inventory, and consume inventory on top of their platform."

— Nicolas Desmarais, Channel Futures, September 18, 2024

1. Digital platform

The first key to digital success lies in developing a digital platform. For the top-performing B2B technology companies, this meant pivoting from a monolithic architecture to embracing a service-oriented one, enabling third parties to build new products and services on top of their own infrastructure, resulting in greater economies of scale.

For those top-performing companies, a critical factor in unlocking a significant increase in revenue potential was the transition from vertical to horizontal scaling.

Traditionally, companies have grown vertically by adding more products or services to their portfolio but typically, revenue potential flattens over time with increased competition.

Horizontal scaling expands reach and reduces costs

Horizontal scaling, on the other hand, enables expanded reach and capabilities without necessarily adding more products. “By becoming a platform you reduce the cost curve so that new entrants can come in, and you take a percentage of every sale,” explained Nick. It's all about leveraging existing resources to more effectively cater to a wider market. This sharp focus is what has enabled Uber to capture 74% of the ride hailing market as of 2024.

Key takeaways for your business

Providers that sell products and services should develop their platforms as a service to build new products and experiences on top of their infrastructure.

With a platform, you can scale more efficiently and monetize new products to a much wider market through third parties. Airbnb is a case in point: they reduced the cost curve for anyone to enter the hospitality market, and they receive a share of every booking.

AppDirect simplifies this by making all of our technology available as a platform as service and API-addressable Our platform has all the tools to help you succeed in multi-vendor commerce. On top of the developer APIs, we’ve built a customized storefront builder, invoice editors, notification editors, and made them accessible through our developer portal.

“As a result,” said Nick, “we’re proud that we now have leading brands all around the world that are launching marketplaces on top of AppDirect and building their own commerce journeys. We power over 3 billion API calls per year, over 350,000 per hour.” These API calls power transactions, integrations with third-party applications, analytics and reporting, and more. 

2. Digital ecosystem

The second key to digital success centers around building and nurturing a thriving digital ecosystem made of trusted providers that complements your company’s core offerings.

Decentralized value creation for greater profitability

A thriving digital ecosystem allows companies to leverage the strengths and capabilities of various players, creating a synergy that fuels innovation and growth. “Top performers have vibrant developer communities with over 70,000 developers on average, while the bottom performers have under 1,000,” said Nick.

Overall, this shift has led to a staggering 88% increase between 2020 and 2024 in gross merchandise value (GMV) generated through marketplaces.

AppDirect understood the importance of this trend from day one. As a result we offer our customers all the tools they need to onboard their partners’ products onto their marketplaces seamlessly and efficiently. The AppDirect Network catalog makes it easy to discover new partners, enabling greater partner ecosystems. 

Today, we have over 29,000 technology products that are being distributed through AppDirect-powered marketplaces across categories including connectivity, wireless/mobility, SaaS, IaaS, and others.

Key takeaway for your business

A powerful digital ecosystem powers partner success. To illustrate this point, Nick emphasized that “for every category our partners add to their portfolio, it translates into a 2x-3x increase in sales. This has meant a 33% compounded growth in gross merchandise value (GMV) over the past five years.”

3. Digital channel

The third key to digital success is about adopting a strong, efficient digital channel strategy that focuses on shifting from a direct to an indirect go-to-market (GTM) approach. This enables service providers to expand their market reach by leveraging relationships like advisors and resellers.

“This strategy is really important because it offers better payback,” said Nick. The top performing companies on average have over 25,000 referral or reseller partners. This is in sharp contrast to the bottom performers, who have only 4,000 on average.

AppDirect made the shift to an indirect GTM strategy early on, selling exclusively through advisors and resellers. We invested deeply in our referral and reseller partner platform, which makes it easy for them to handle all aspects of selling and customer onboarding—with AppDirect back office tools for quoting, ordering, and commissions, expert support, and countless other tools and sales enablement functions. Today, more than 10,000 advisors sell through AppDirect.

Key takeaway for your business

How does this impact your bottom line? The numbers presented by Nick tell the story:

“Companies with mature channel programs vs. the ones that don’t enjoy a 2X growth rate and a 50% reduction in the cost of customer acquisition, which leads to a 2X improvement in the long-term-value-to-customer-acquisition ratio. That’s a huge ROI improvement on your sales and marketing dollars.”

4. Digital Hub

The fourth and final key to digital success lies in creating a digital hub—an essential component of shifting from a fragmented experience for customers to one that unifies billing, payments, workforce identity management, and data management for an optimal customer experience and streamlined operations.

To drive home the importance of digital hubs,  100% of the top-ranked companies we looked at had a complete digital hub, while 40% of the bottom-ranked companies did.

Impacts that go straight to your bottom line

Shifting from a fragmented to a unified experience leads to better customer retention, said Nick. “As you offer unified payments and identity management to your clients, it leads to a 60% reduction in IT support tickets. And as you offer data management tools across apps like search, you get a 15% improvement in customer satisfaction. We’ve invested in our billing capabilities by making sure your clients can benefit if you choose to offer them unified invoicing payment.”

For instance, the AppDirect platform prioritizes a personal user experience, enabling marketplace managers to set customized pricing, ensuring businesses can align their offerings to their specific pricing strategies. The company’s IT department can curate the catalog, making sure users access only vetted products. Even the URL is personalized, displaying the user's company name and logo every time they log in. “We’ve also invested in our ID management capabilities to make sure your clients can benefit from unified single sign-on and access management,” Nick added.

Key takeaway for your business

In essence, the Digital Hub strategy is about putting the user at the center of your digital experience. It's about streamlining processes, breaking down silos, and ensuring every interaction adds value to the user journey. Above all, it's about making sure your digital strategy prioritizes experiences that are personalized, seamless, and rich in value.

Watch the full video of Nick's keynote address for more insights.

Next step: Create your roadmap to success

As a technology advisor or channel partner, how can you apply these principles to drive growth?

Read our blog Your Roadmap to Success—Build, Expand, and Future-proof Your Business, to learn about AppDirect CEO Renée Bergeron's three-stage framework for guiding your growth in the digital economy.

Watch the full video of Nick's keynote address