5 under evaluated business strategies that proved to be successful
Among growth hacks, SEO, conversion rates and other industry trends entrepreneurs tend to forget the crucial factor of a success — winning business model and the strategy of growth. In this article, I’m going to present 5 strategies that still aren’t that popular although proved to bring great results.
Using the power of the community
Duolingo is a language learning online platform with a very active community of 60 million users. It provides lessons for free and without ads. So how they make money? Learners simply translate the articles as they learn. CNN sends them pieces in English that are translated by English speakers who learn Spanish or Chinese. Most of the learners have poor language skills but community together decides what is the best version of a certain sentence.
User generated content is exchanged for the offering of free lessons. If fact users pay for the course with time spent learning and translating. But they would do so either way.
Customer loyalty program
A lot of companies offer reward programs to thank for customer loyalty. They range from discounts in a supermarket to getting access to beta-test in case of software. But why not to leverage customers loyalty towards other customers?
Friendsurance puts this model into living with a fossilized insurance business. It invites groups of people who already know each other to buy “person-to-person” insurance that for the moment covers small claims for a fee much lower than the standard one. For example, if none of the friends will make a claim, they will get a refund at the end of the year which normally would be a profit of an insurance company.
So how the Friendsurance manages to stay profitable? If you’re insuring a pool of people who know each other they are less likely to cheat with insurance money. The quality of risk improves as friends are more honest with each other and fraud is unlikely.
Surprise your client
Science has proven that we humans like surprises. That’s how our brain works. You can take it as an advantage on many fields — nice talk with a client on live chat, prolonging premium month or delivering the product faster than expected.
But why not to lean the whole business model on a surprise? One of the first companies in this field was a Birchbox, where you sign for a subscription and get a gift box every month. What’s inside? Surprise! Not completely, because customers always know that there will be some cosmetics or other beauty products inside but they don’t even know a brand.
Following the success of Birchbox other companies have created their own surprise gifts of condiments, comics, coffee or special packages for gamers or dogs.
Create competition between business models
Who should decide which of your business models is the best? Is it Freemium or subscription? To charge a one-time fee or monthly subscription? That should be customers. Rely on their reasoning to choose the most accurate service according to their needs. Here is one of the examples.
Meditation software Headspace offers you to choose whether to pay per month or buy unlimited access to their collection. They also picked one of their plans to guide customers towards hypothetically the best option.
Here comes the most controversial company mentioned in this article — 23andMe, which provides personal genomic information for only 199 dol. Although it operates on a model of direct sales that’s not the most important revenue stream for the company.
4 out of 5 customers gave permission to share their genetical information for research reasons. That’s a huge opportunity for 23andMe to work on new therapies and develop drugs which are the responsibility of the second department in company’s group. In fact, just a few months ago it signed multiple deals with biopharmaceutical companies to monetise the information it already possess.
Thanks to big data 23andMe shapes the next wave of personalised medicine, but personalized experience in case of any startup would definitively help to growth.
Are you up for the challenge?
Those were just a few of the most inspiring strategies that one day could disrupt the market in different areas. At hub:raum, the innovation hub powered by Deutsche Telekom, we face a lot of challenges with picking the right strategy for an early-stage startup, which gives us priceless mentoring experience. Not only we advise young companies but also we invest, help to find business partners (commercialization, scaling, go2market), and back them with working-space. Want to join us? Write us an e-mail — firstname.lastname@example.org.
Jakub Probola, Head of hub:raum (for CEE region)