Ten distinct strategies to creating profits through pleasing customers
The good news for your Board and CFO is that pleasing customers can create great profits. Here is a list of ten strategies that can be followed to create profit through pleasing customers. It is inspired from Lars Tvede’s website on Supertrends (which is a great book and well worth reading):
- Wholesale to retail strategy is one of the biggest single sources of wealth in business. The retailer utilize the differences between wholesale and retail prices, but the key skill set involved is managing clients relationships and all that goes with it, from sales to financing, marketing and supply logistics.
- Secondary sales model is about charging little or nothing for the first or primary product and then making the money on what may come after.
- Mass customarization is based on the idea that each customer should have a tailor made solution, but that this should be fully automated. This is almost entirely done over the Internet. It includes 1) involving the customer in the production and design process, 2) using IT to manage the relationships from customer to suppliers, and 3) enabling the customer to generate more information about their own preferences through interaction with the company and other customers. The marketing expert Alvin Toffler coined the term “prosumer” to describe the how a consumer thereby contributes to the production process. This, by the way, is not only efficient, but also emotionally evolving – people love it, and it creates strong customer loyalty.
- A Central aggregator may be an Internet portal, a television network, or a digital exchange combining services from multiple partners. Once the aggregator grows, it tends to attract more contributors, since it has the critical mass – in digital media: “eye-balls”. The model can become very successful, if the content is not only created by third parties, but delivered for free, which is the case with Internet sites such as Google, Facebook, YouTube, etc. The money is then typically made on advertising.
- A Solutions provider is a company which analyse what the client really needs and assemble from any source. This is often called an “open architecture”, and is frequently used by IT companies such as IBM, as well as by many banks.
- Niche dominator is where you more carefully select a part of the market and dominate that.
- A Price differentiator finds ways to sell the same product at different prices to different people, depending on what they are willing to pay.
- Converting to service means that instead of just selling a product, you sell continuous delivery, upgrades, service etc. as a service. Software-as-a-service is a good example.
- Converting to sharing means a business model, where several people share the same asset, as in cloud computing, time sharing, etc.
- Converting to digital is a broad category that involves changing from physical to electronic. Classical examples are downloading of music to digital players instead of sales of CDs, or download of movies and books. A shopping experience can evidently also be digitized and in fact anything involving decision making, instructions and confirmations (e-tickets, for instance).