Business model hacks
Rethink your pricing strategy, acquisition model, and key activities. Here's a growing list of smart business model ideas to copy in 2020.
Intercept buying intentions earlier on (or, how to steal sales from Amazon).
What do you do when you want to buy a book? Do you Google it and buy it on Amazon? The Google Lens app takes pictures of everyday objects and gets rich information about them. We've caught ourselves taking pictures of book covers and then being redirected to Google's preferred store instead of Amazon.
Make clients postpone their cancellation.
Try to cancel your subscription to some services, and they will ask why. For example, if you select, "Reading 1 book/month is too much," Audible may propose, "Switch to 1 book every 2 months," or, "Pick a free book on us." This way, Audible gets a better understanding of clients' reasons for unsubscribing and can show a counterproposal.
Give access to vast catalogs through a single subscription.
Paintings are expensive, and when you buy a painting, you are stuck with that one. Meural is offering a subscription service to make it more affordable to have art. For $5 per month, clients get one electronic frame with access to tens of thousands of works of art.
Make smart use of users' time.
Duolingo is an app for learning languages, and it's completely free. How they make money? By using your Duolingo answers to translate articles. It is as accurate as professional translators and it's much faster. Duolingo is currently translating articles from Buzzfeed, CNN, and other content platforms.
Turn long, bureaucratic journeys into a short, hassle-free experience.
Selling a house was always a multi-month hassle until Opendoor harnessed technology to do instant evaluations of properties. As a seller, you can get an instant offer on your house. Opendoor then renovates the house if necessary, and tries to sell the property above market value.
Lower the barriers to exclusivity.
The Public House of Art is an artwork leasing service that targets millennials who can't afford art. For €20-50 a month, users can take any artwork home and exchange it anytime. Monthly payments accumulate in the account over time, meaning that every 2-3 years a customer may be able to purchase one of the artworks.
Set goals, connect data streams, and pay when you are not making progress.
Beeminder allows you to set your personal goals (e.g., run 30km per month), and connect data sources for tracking them (e.g., a smart watch). If you don't reach your goal, expect to get punished; the fee is repurposed as an incentive system for the user.
High-quality content platform as a sales channel.
Quora has created an interesting reward engine for content creators. Everyone values Quora for high-quality answers to interesting questions. But why do highly paid experts spend their free time on Quora answering random questions? We see more and more perennial Quorians using the platform as a sales channel for their own services. It’s a good place to answer questions and brag about your knowledge, because chances are that someone reading your answer might be interested in contacting you.
The advertising platform for the open internet.
Criteo automates your paid advertising campaigns. What's unique is that they already have huge data sets of online customer purchasing behavior (larger than Amazon and Ebay combined). This lets them use machine learning to purchase impressions (pay per thousand ad views) from Google or Facebook, and resell them to their customers as clicks (pay per each click). They purchase a large number of impressions at a discount, use their own datasets to identify customers that their clients want to reach online, and then retarget them more cheaply than what the customers are paying for the clicks.
Make clients pay only if they have a slow customer service.
Users can contact businesses via Whatsapp. If a company takes longer than 24 hours to reply, the company is charged per message sent. Faster replies are free. It's a smart incentive to position Whatsapp as the quickest channel for getting answers from companies.
Tie unclaimed premiums to social causes to decrease fraud.
Contrary to traditional insurance model, Lemonade keeps a flat 20% of a customer's premium while setting aside the remaining 80% to pay claims. Unclaimed premiums go to a nonprofit of the user's choosing in an annual “Giveback.” Lemonade said the donation model was designed to help fight insurance fraud, which is common in traditional models.
Capture value in emerging markets.
Carriers in emerging markets are struggling to serve huge parts of the market because customers are not ready to pay large amounts for 4G plans. KaiOS is a new operating system that can operate on "dumb" phones with keypads and runs on just 256MB of RAM! KaiOS partnered with major carriers (Vodafone and Orange, among others) to offer emerging markets cheaper phones with better OS. They also empowered carriers to win back their business by introduced super-cheap 2G data plans.
Help people engage with what they care about the most.
Mybrightwheel is an app for schools and teachers to log each child's activity (e.g., What did each kid learn today? When did they go for a nap?). It's faster and easier than logging this in a notebook, but that's not why the school usually decides to pay for the service. The application also provides parents a window into their kids' activities during the day. Parents can get more engaged. and 100% of users report higher satisfaction with their school. The parents are also the best sales channel, as they can invite schools to use the service.
Extend your influence from booking platform to brand.
OYO started as a hotel listing and booking platform. Over time it started partnering with hotels to provide a consistent customer experience across India, as if each booking was managed by the same hotel chain. In return, they get % of the operating revenues. This unique business model empowered OYO to become India's largest hospitality company, with over 8,500 hotels in 230 cities.
Let people sell their car in 30 minutes.
The process of selling a used car is usually a lengthy adventure. The German website Auto1 created a bidding platform connecting car sellers and car dealerships. This allows people like you and me to drive to Auto1 offices where they inspect 200 aspects of a car and place it on a bidding system. While you wait 30 minutes in the lounge, car dealerships bid on the car. You walk out as a happy seller, with cash in your hands, and Auto1 retains a % of the price.
Help people save money effortlessly.
Generic drugs are often as good as the branded ones. Following this thesis, Blink Health's team created a service that turns your expensive branded prescriptions to generic prescriptions (up to 90% cheaper). You can buy them online and pick them up from your local drug store.
Other smart business models to add?
Outsource operational activities to your users.
Bird asks their users to "hunt and charge" the company's scooters overnight. A user can earn $5 to $20 for a single charge of a scooter. This way, Bird created a scalable way to keep their devices charged all year long without building an expensive internal process to achieve the same goal.
Do good on behalf of your customers.
Capture more clients by letting them be effortlessly generous. Amazon Smile provides the same Amazon service, with the only difference being that it forwards 0.5% of revenues to a charity of the client's choice. To date, the initiative has donated 100 million dollars.
Apply gaming business model to the music industry.
Musicians are dependent on record labels to distribute their music and manage their fan audiences. United Masters is a service that allows musicians to take control back. Artists pay United Masters a competitive rate to distribute their music across different platforms (Spotify, iTunes, Youtube, etc). Then the service pulls back all the analytics, identifies the biggest fans, builds CRM, and allows the artists to retarget their top fans with ads for tickets. United Masters empowers musicians to capture huge amounts of value from their top-tier fans, the same way that gaming companies profit the most from their 5% most active/spending users.
Distribute your products to distributors, so that you gain more reach with less effort.
Personal assistants that help you with household chores (e.g., cleaning, groceries) have been around for a while. Most of them died out because the costs to deliver value were too high. HelloAlfred has a different approach to service distribution: it signs contracts with landlords rather than tenants. This way they get access to 40-100 targeted professionals right away. For the same reason, they manage to keep the costs (and pricing) lower because they centralize the areas that they serve.
Premium version? A shortcut to dates.
By design, the swipe-based interface is a slow way to browse dating partners: think about the time we spend looking at profiles of people who may be not using the App anymore, or who didn't swipe us right. Tinder gold members can skip this inefficient process and only browse people that already liked them.
Grocery discounts for B2C, trial incentive from B2B.
Scoupy is an app that provides discounts in local stores on groceries, hygiene products, and more. In return, those customers share their shopping basket information with Scoupy. It's nothing spectacular on the B2C side, but the problem that Scoupy solves is actually on B2B side. FMCG producers have a hard time nudging consumers out of their usual behavior, and product sampling campaigns can be very expensive. Scoupy helps FMCG brands nudge customers with discounts to try out new products on a large scale. At the same time, Scoupy can collect a lot of customer information that FMCG brands crave but can't normally access.