Need a new business model? Learn form these 10 best practices
There are over fifty different business models and every year new business models are invented. Are you looking for a new business model? In this article, I will try to inspire you to look at your business model from a different angle. While in this article I will mainly use the word ‘product’, you can also apply all of the mentioned techniques to services.
Ten tips for a new business model
I will illustrate every business model from the point of view of a flower shop. Some examples in this article may seem obvious or far fetched. The purpose of these examples is to demonstrate how you can apply the model. Keep in mind that a particular type of business model can be obvious for one business while simultaneously extremely radical for other businesses.
1. Create barter deals
Exchanging products or services is older than the invention of money itself. In the old days, it was the only business model around. But even today, this old model can still be very useful. Take the Dam, for example, an alternative virtual currency that entrepreneurs in Rotterdam can use to exchange products and services and grow their business without the need to spend any ‘real’ money.
– What product or service would benefit your business at this moment? What do you need right now?
– What would you be willing to exchange for this? What do you have to offer that your supplier would find useful?
The owner of the flower shop could, for example, create a barter deal with a Webdesign agency. A new webshop plus maintenance in exchange for a new decoration of the web agency’s office with awesome looking plants. Or perhaps a producer of garden tools could provide store shelves for free, in exchange for a good shelf position and brand promotion in the store.
2. Go completely digital
In the last decade, almost every market has been disrupted with the help of digital technologies. And every time, the market changed. Just look at a few famous examples. Airbnb, the largest hotel, doesn’t own a single room. Amazon, the biggest store in the world, has no physical stores. And Uber, the largest taxi service in the world, owns no cars…
– How could you offer your product or service in a digital form?
– In what ways can you digitise your knowledge or expertise?
Obviously the flower shop can sell its products online, however, there are several other ways the organisation can become digital. The knowledge about pruning and maintaining plants, for example, is perfect to turn into subjects for video-series, ebooks or manuals.
3. Lease your products temporarily (instead of selling them)
A fairly recent business model concept is to pay for ‘usage’ instead of ‘ownership’. Just look at the shift from owning CDs, to the mainstream acceptance of streaming music from services such as Spotify or iTunes. Paying for short-term use of a car (instead of owning one) has also taken off in recent years.
– Which of your products and services do customers only use once in a while?
– How much are your clients willing to pay to use your product temporarily?
The flower shop, for example, could lease garden tools to people who want to give their garden a makeover, or to people who only want to work in the garden when the sun is shining. These customers probably need specific garden tools that they only use a couple of times a year. Surely they’d prefer to lease these tools instead of having to buy expensive equipment.
4. Offer a subscription
Name a topic and you can find a subscription for it. Most people are used to pay a couple of bucks for things they use daily or weekly. For instance, to binge-watch movies and series (Netflix, Disney+, HBO) or to listen to the music (Spotify, Tidal, Apple Music), but even for ordinary objects such as jeans, a washing machine or a student bike, subscriptions can be found.
– What element of your product or service can you turn into a subscription?
– What do you have to offer that would be of recurring interest to your customers?
With a ‘fresh flower subscription’, our flower shop would be able to offer a unique proposition to the market. A monthly fee would provide customers with a lovely bouquet for in their homes or offices. Or perhaps the flower shop can rent planters (including maintenance) to shopping malls, to create an attractive entrance with blooming beautiful flowers year-round.
5. Sell additional products
Offering additional products makes sense. It’s an easy way to earn a few more bucks while serving your current clients. Think for example about your hairdresser who also offers hair care products.
– What related products can you sell?
– What would make a logical combination with your products?
The flower shop can sell extra products that are within the same category, such as; flower pots, a shovel, garden soil, garden gloves, plant food, etc.
6. Sell products from another category
If you know your customers, their pains and the tasks they need to fulfil, you can use this knowledge to offer them products from another category. It’s highly likely that your customers will also have a need for other products (e.g. buying snacks at the petrol station) or that they want a product that is not in your standard product range (e.g. a shoe store that also sells fashionable scarfs that fit the designer shoes it sells). However, be careful. If you will offer too many products, customers will not be able to understand when they should be visiting your store.
– What need does your product fulfil? Why do people buy your products? (What’s your customers ‘Job to be Done’?)
– What other products (from other categories) fit this need?
Obviously, most people will enter a flower shop with the purpose of buying flowers, however, it’s also likely that these people have a broader goal. For example, they might be looking for a suitable present for their mom or something to decorate their house with. By exploring these higher goals, the flower shop would be able to sell entirely different products (such as; flowers, paintings, scented candles, etc.) that would still match the needs of his customers.
7. Turn your product into a service (or vice versa)
Funny as it sounds, you can always turn your service into a product. A product (especially a digital one) doesn’t usually require more time once you’ve created it. A digital product is scaleable and this will make it more attractive than charging your own hours. After all, you can only spend your hours once. Think for example about a massage parlour that teaches their massages (service) via online video-courses (product). It’s also possible to do it the other way. E.g. a writer who provides consultancy (services) on the topics of his book (product).
– What is the most valuable knowledge you have?
– How can you turn your product into a service? Or vice versa?
Instead of selling products (the flowers), the flower shop can also start a ‘flower-service’. This might be of interest to funeral homes, who want to offer suitable ‘stage setting’ to their customers. The flower shop can specialise in finding the flowers and wreaths that match the personality of the deceased person perfectly.
8. Connect two target audiences
Creating a platform is extremely difficult. However, if you succeed and connect two target audiences, you have a wonderful opportunity to make a profit! Think, for instance, of platforms like eBay, Etsy, Alibaba, Airbnb, etc. All of these are platforms where sellers and buyers are matched.
– Which target audiences (in your market) can you connect?
– If you look at your market, what kind of exchange-platform would be interesting?
Inside the store or in an online environment, the flower shop can start a platform that provides space for local amateur growers or vegetable garden owners who want to sell their seeds, plants or vegetables in the neighbourhood. The flower shop could ask a small percentage for every sale. The sellers could also be asked to pay a small fee to participate. A third option would be to ask a premium-fee for sellers who want to have the best spot on the platform.
9. Find alternative ways customers can make you money
Nowadays we all know you don’t need paying users to earn a lot of money. And this is all because of a very ingenious business model. The most notorious example of this is selling customer data. This controversial way of making money enables loads of tech companies to offer their services cheaply or for free. Think about companies such as Google or Facebook. Another famous example is the free newspapers, mostly seen in public transport areas. Their business model is to provide ‘eyeballs’ to advertisers.
– What other organisations would be interested in your customers?
– What data do you have about your customers that you can sell?
By starting a collaboration with a plant food producer the flower shop can use this business model. The products can be promoted and sold in the store. The shop could ask for money to place advertisements. The producer can also pay the flower shop to provide plant food with every sold plant. If the plant food is included with the plant, it’s highly likely that customers will buy the same brand if they run out of it.
10. Apply the Razor and blades model
The producers of disposable razor blades have a brilliant business model. They give away free razors and ask high prices for the disposable blades you need. This will create a ‘Lock-in’. Getting in is easy and attractive and afterwards, the customer stays loyal and will keep buying the blades. The customers will quickly be used to the razor and, of course, only one kind of blade fits the razor. This business model has been successfully copied by loads of other companies. For example, by companies selling printers, coffee machines and videogames. They all sell ‘cheap’ machines, however, to use them you need relatively expensive capsules, cartridges or games.
– What do customers (in your market) need on a regular basis?
– What system can you introduce with an inexpensive entry-level model and a lucrative recurring source of income?
The flower shop could sell plants that need a specific type of plant nutrition. To which the flower shop has exclusive rights. This way the flower shop can offer the plant itself for a low price to customers, after which a regular sale of expensive plant food is guaranteed.
Want to know more?
The most famous tools to be creative with your Business Model are of course the Business Model Canvas and the Value Proposition Canvas. Many books have been written on the topic. My personal favourite is The Business Model Navigator by Oliver Gassman, an amazing source if you are looking for a new business model. In this book, you will find 55 inspiring business models. A must-read for every innovator.
Are you looking for a new business model for your company? Do you want to discover new ways to increase your profits? Are you looking to find new customers? Contact us. We’d love to help you with your challenges. Send me an email or give us a call for more information.