REPORT PREPARED FOR · marketing cost Cost Component Analysis >>APMG 8119: DIGITAL ENTERPRISE Costs...

>>APMG 8119: DIGITAL ENTERPRISE

REPORT PREPARED FOR:

BY XIU QIN LIU, 1463349GUANG HUI DUAN, 1474497

XIN LI, 1488916MOHINI MARIA, 1481596

POSTGRADUATE DIPLOMA IN BUSINESSAPMG 8119: DIGITAL ENTERPRISE

2017


Background of Pushpay

Found in 2011

Listed on NSX & ASX

High-tech firm

Provide third party payment/engagement/community solutions

Easy, Fast, Simple: in 10 seconds

Markets: Faith sector, schools, charities, S&M enterprises

Functional features: Cash and Check Recording, Autopay, Text

Giving (enable donors to pay via text message link), Annual

Giving Statements, Echurch Apps


Background of Pushpay

2017 Performance Highlights

key metric FY 2017 (US$) FY 2016 (US$) Change

Increase in Annualised Committed

Monthly Revenue (ACMR) over the

year

$30.9m $15.6m +97.9%

ACMR $50.5m $19.6m +157.7%

Total Customers 6,737 3,766 +78.9%

Average Revenue Per Customer

(ARPC)

$625/M $434/M +44.1%

Staff Headcount 376 215 +74.9%

Published App rank in the Apple

App Store worldwide

5 13 +61.5%

Transactions processed over the

year

6.1m 1.9m +220.1%

Annualised Monthly Payment

Transaction Volume

$1.8b $0.6b +193.1%


Market Position

The Pushpay Market Position in the US Faith Sector

Market Size TOP 20 largest Top 100 largest

Pushpay Customers 10 42


Future Plan

Short term plan - the company

focuses on increasing its markets

share in the US faith sector in width

and depth.

Long term - the company is to

develop and grow market shares in

three additional target areas,

together with churches. The

customer numbers are displayed in

the table, with a total market

potential of $5.5 billion.

Market Churches Public schools Private schools Not-For

Profit

Market

size>340k >98k >3k >1.6 million


Revenue Analysis

Revenue Creation

Individual users

payment through

Pushpay.

Pushpay transact the

money to churches,

schools, charities and

S&M companies.

1. Subscription Fee

2. Processing Fee

3. Grant from government

4. Interest

Pushpay also provides

engagement solutions for

organizations for online

community establish.


Revenue Analysis

Why is this revenue created?

Pushpay delivers business value through their services which meets customer needs initiated by e-commerce and mobile device development.

70%New Zealanders own

a smartphone by 2015

Communication with Online APPs is replacing physical interactions.

Higher demand on convenience and simplification of nearly all aspects of daily life.


Revenue Analysis

Revenue estimation

62.6 Annual Committed

Monthly Revenue

(In Million US dollar) 100 2017 June 2018 March

Key drivers for revenue growth:

• Monthly payment increasing due to cohort growth with the enlarged customer size.

• Customer number growth based on the optimistic market potential, in terms of the huge amount of churches, schools and Not-For-Profit organizations.

• New market development in faith sector.


Revenue Analysis

Risk and Opportunities

Major risks of revenue

component

Major opportunities of

revenue component

Trust and satisfaction are the core of an

online transaction platform like Pushpay,

which is highly related to customer

experience when using APP or website.

• External risks: substitute product

would emerge along with the

widespread utilization of social media.

(WeChat as an example)

• Internal risks: system stability and

optimization.

Further revenue opportunities of

Pushpay is generated by its competitive

advantages as follows.

• Completeness of solutions providing

with both payment and engagement.

• Mature network and recourses within

the industry, such as social network

with top churches.

• Cooperation with other companies

by customer resource sharing to

enlarge Pushpay market share.


• Professional service fees, occupancy costs, stock exchange listing expenses.

• Offline process cost.

• External advertising cost, promotional events, brand building and corporate communications.

• Offline Process cost

• Technology platform maintenance

• Online process costs

• Transactional fee and payment to third party

• Online process cost

Third party direct cost

Product development

and maintenance

cost

General and other

administration cost

Sales and marketing

cost

Cost Component Analysis


Costs 2017(US$000) 2016(US$000) Change

Third party direct

cost

14869 4580 225%

Product

Development and

Maintenance cost

7821 3050 156%

Sales and

Marketing cost

19206 10044 91%

General and other

Administrative

cost

15101 5865 157%

Total Cost 56997 23539

Estimated Total Cost


Risk

• Processing cost are expected to increase in the near future.

• The fast changing development in technology may lead to higher technology investment.

Opportunity

• Focus on reducing third party direct cost by forming good ties with financial institutions.

• Reducing client success fees by focusing on cloud-based solutions.

• Increasing R&D efficiency by obtaining grant and social sharing.

• The strategic alliance with intuit-the accounting software firm.

Cost Analysis- Risk and Opportunities


Value Propositions

Simplicity

Community Enhancement

Efficiency

Empower-ment

Security

Transparency through

engagement

Mobile

Value Propositions


The Value Creation Process

Church

Pushpay

Donor/Payer

CharitySchoolS&M

Companies

3rd Party Developer

Engagement

Participation

Social Community

Payment

Engagement

Payment Payment


Content

Customer

Experience

Platform

▪ Products info for church, charity and

school are very brief

▪ Details and demo has to be

requested by customers

▪ Simple and efficient payment solutions

through mobile app., web and text.

▪ Provides engagement and community tools

for churches, donors, and among them.

▪ Datacenter-hosted platforms to support

payments through mobile, text, website &

3rd party APIs.

▪ But valid only in USA, AU, NZ and CA

▪ Debit card, and credit card of VISA,

MasterCard, American Express and

Discover only.

The Pushpay Business Model Status


An External Perspective

Dimensions Church School Charity S&M Businesses Note

Loyalty High High Low Low Extent of shared interest

Size Small High Medium High Group size

Wealth High Medium Low Medium-Low Purchasing power

Competition Low High Low High Competing offerings

Revenue

ModelChurch School Charity S&M Businesses

Business

Model Bias

Pay Volume-based

Pay

Mixed of Free

+ Pay

Free&

Volume-based Pay

Note Pay to

Access

Small Unite Access fee Advertising Fee and/or Small

Access Fee


Value Proposition Indicators Pay Free MixCompelling ContentCoverageDistribution controlChoiceContextConvenienceConnectivity CommunityCommentCustomizationConversationCollaborationCitizenshipCustomer experienceApplicationConsumer review and compensation

Source: KPMG,2009

An Internal Perspective


The Business Model Matrix

School

S&M

Charity

Church

School

Revenue

Model

Bias

Pay Supportive

Initiatives

Free Supportive

Initiatives

Mix Supportive

Initiatives

Churches Pay Strengthen distribution control for

client commitment

Schools Volume-

based pay

Strengthen distribution control for

client commitment

Create features of community, connectivity

and collaboration between schools; expose

school products online for easier identification

Enhance customer

review and

compensation

Charities Mixed of

free+pay

Strengthen client control, as well as

more functional applications

Create features of community, connectivity

and collaboration between Charities.

Enhance customer

review and

compensation

S&M

EnterprisesFree&

Volume-

based Pay

Create features of community, connectivity,

collaboration between schools; increase

products exposure, as well as product

citizenship impacts for clients

➢ Enhance customer

review and

compensation

➢ Launch distinctive

features and more

functionality.


Theoretical and Managerial Implications

• The model(platform, customer experience and

content) must be coupled with understandings of customer needs and industrial analysis first.

• The 20c value proposition theory more appropriate for ender user market, less for business-to-business software providers: connectivity, engagement, community

Theoretical implications

• Continuous product development for leading functionality and system compatibility to cope with risks (platform stability, increasing social media functions) .

• To reduce costs, good ties with financial institutions, strategic alliance, obtaining grants and social sharing R&D, support via Cloud-based solutions

• Prioritize initiatives by the revenue model bias.

• Church market is appropriate for pay model, charities and school for less-pay model and S&M for free to volume-based model.

Managerial implications

REPORT PREPARED FOR · marketing cost Cost Component Analysis >>APMG 8119: DIGITAL ENTERPRISE Costs...

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