How can you leverage the best business models?

Disruption is either going to happen to you or because of you

"You don't build websites!" (The challenge came to me.) "You've got to think higher than that - what does the website enable your clients to achieve? A better lifestyle, perhaps?"

Well, I have thought about this and I know we are on about productivity. A website cuts out significant sales effort if done correctly. It's about developing trust with people, without having to say what you say over and over again with your time. 

I went along to The Entrepreneur Club Melbourne's meetup and there we were presented with the "10 Hyper-Disruptive Business Models" that an entrepreneur could adopt to take over their industry.

I found with a bit of internet-sleuthing that this is a concept that comes from researchers Jo Caudron & Dado Van Peteghem and their book "Digital Transformation: A model to master digital disruptionDigital Transformation: A model to master digital disruption". One to put on the wish list for sure.

They're asking the question: how do companies dominate their industry? How is Netflix dominating the video rental business? How is Google dominating search - and advertising? How did Airbnb dominate well-established hotels? How is Uber dominating the taxi industry? These businesses started small, like you. 

What are the 10 hyper-disruptive business models? (Yes, they've actually crossed out just the 'disruptive' ones: these ones are the big ones, according to their research.)

1. The Subscription Model

You pay $10/mo for Netflix, $20/mo for Spotify music, $49/mo for your Project Management tool. Previously, you bought software for a one-off fee. It's not that scalable and it's hard to get people back if the software still 'works' after 5 years. This method ensures your business gets regular recurring income, and lowers the barrier of entry ($10/mo instead of $100 outright sounds better). 

Subscriptions are in your reach! WordPress, Joomla, Drupal, Shopify, WooCommerce and the like can be configured for SMBs that want to tap into the disruptive subscription model. 

2. The Freemium Model

Hey, try this, it's free! Except it's not really because there's ads that you have to pay to get rid of or a lot fewer features. It's "free", plus a premium (paid) service (indeed, perhaps combining the subscription model). This only works if you can get the free sample out for next-to-nothing. 

SMBs might use something like Asana to project manage, which has a "forever free" plan which is quite generous, but you'll pretty quickly want to upgrade when you get more serious. Spotify gives you free music but has ads in between that you pay to get rid of. Newspapers might give you a few free articles per month, after which you have to pay. Software companies can release a free version of their product, but probably on the proviso that they know they have to pay for support or the premium version.

To make good money from this, you'll either need tons of people with a small percentage converting to the premium plan, or if you can't get that many people and need more paying customers, you'll need to make the free model quite lacking, or the premium so much better

Trials also come into this, but they don't disrupt as much as "forever free" services because you can't actually use trials consistently. 

3. The Free Model 

Microsoft bested their rivals in the early days by providing Windows free. Soon, everyone was using it. Google also provided their search engine free - and so it soon became the de facto standard, and everyone wanted to pay for ads on it.

Facebook is "free" by way of selling your personal data to advertisers, who can choose very fine-grained options for who they want to put their ads to because you've given them not just your age, but your likes, your friends, your location, and with a few correlations, your rough income level (and probably everything else in between).

If you can get enough people coming to your site/service/email list, ads are a compelling option. We are savvy enough to disrupt most adblocking too! 

4. The Marketplace Model

Supermarkets disrupted the single store by providing much greater value to customers. Why would you go to the store by the side of the road that probably doesn't have parking, for one item only, when you can go to the supermarket and get everything at once?

Same with websites. Why go to your website when you can go to Amazon, which has everything, or eBay, or the App Store? It's just easier, quicker, and often cheaper due to the higher competition. 

It's now actually quite easy to setup your own "marketplace" online! There are amazing solutions, so come to us with your ideas, and we'll make your dreams come alive (okay no one can promise that, but, we have the smarts to make a good shot at it). 

What you do is gather a whole lot of vendors/store owners, gather their products onto the site (they can do this themselves, but you may need to help them), and then you'll want to send people to this marketplace. Each time a person buys something, you get a percentage of the purchase. 

You'll need to watch out for purchasing that occurs outside of your platform. There are means and ways of encouraging people not to pay elsewhere. 

5. The Access-over-Ownership Model

Renting. Rent a house - Airbnb. Rent a car - Uber. Rent a desk - coworking. Works well if you have large capital, or if you can tap into consumers who have some sort of physical capital they can rent. 

Coworking, where businesses rent just a desk or a small office, is booming because the cost for access to a single desk is far less than renting an entire office or buying a place. If you can gather even 10 or so people who want to work together in the same space, you could have regular rental income with almost zero effort! 

You could create a "marketplace" for expensive items that people have like power tools or agricultural equipment or factory machines and let people list them. As customers come to rent them, you take a percentage. 

It really isn't hard technically to do this anymore. Talk to us if you want to see what's possible. 

6. The Hypermarket Model

Otherwise known as the monopoly model, I think? If you become as big as Amazon and can use your scaling efficiencies to sell below everyone else, you can dominate. 

At Agape Media Consulting, we help Small to Medium businesses, so, unfortunately, we can't help you to become a monopoly! (It's probably not an ethical pathway either!)

7. The Experience Model

People pay more if they believe they can tap into a greater experience. Why do people line up for hours for the latest Apple product? They get bragging rights - and get personally noticed - for having the latest and greatest. Windows, however, is always full of bugs and it's much harder to use than Apple. 

I know plenty of restaurants and cafes that strive to go above just selling food, by setting a great mood, and creating a relaxing or elegant or fun atmosphere. 

Adobe puts it this way: businesses that have a design focus on average have 1.5 times as much market share. A better design and a better experience go hand-in-hand. Think of how beautiful Apple's products are compared to their competitors. 

Our speciality is in hand-crafted, non-templated websites and apps.  

8. The Pyramid Model

No, not a pyramid scheme. There are plenty of businesses who achieve ridiculous disruption by paying resellers and affiliates commissions for selling their products. This creates a 'pyramid' as the resellers pay part of the sales to the owner of the products at the top. 

If your product or service is good, you might be able to sell it in a chain store, or even give people an online platform, ready to go with a shop that they can advertise and earn commission.

Alternatively, you just give people an "affiliate" link so when customers click it to buy the product, the affiliate's name is listed as the person who referred the customer, and they get the commission. 

This to me sounds like the classic wholesale business, but for online businesses. Online, of course, you don't need to buy stock, so it's far more scalable, and therefore it disrupts far more. 

9. The On-Demand Model

If you've got lots of busy people, you can get them to pay for something as they need it, and only when they need it. Airtasker lets businesses post little jobs they need doing, such as cleaning or reviewing a website, and everyday people put in a quote for it. It's like freelancing, but at a micro level. 

Uber follows this too, by letting people sell a ride in their car. They take a commission from each trip. 

This looks like another form of a "marketplace", but for services instead of products. 

Can you pull together a group of service providers? We can help provide an online platform to showcase them and get customers onto them.

10. The Ecosystem Model 

If you're a restaurant and you can not only provide food, but also grog, and then also coffee beans, and provide meeting rooms - you're on your way to massively increasing your value and your customers' dependence on you. 

Online, massive ecosystems have been created by Google, which has a product for just about everything now, as well as Apple, Microsoft, and a host of others. 

The SMB can create an ecosystem too. Consider digital agencies, that provide marketing, websites, apps, system design, and possibly even IT services. It's a one-stop shop, and you can cross-sell to current customers the products and services they haven't tried yet (yes, we're looking for marketing and IT service agencies that would like to add websites and system design to their product lineup). 

The aim is to create customer dependency, apparently, but ethically we don't like that aim. However, if your other products or services are so valuable that people are happy to buy into your other services because it provides genuine value to them, that's the sweet spot. 

Providing a neat integration into another complementary system will help customers get the other services you provide - because it's providing value by way of making it easy. Two-birds-with-one-stone type wisdom. 

Closing thoughts

Do you know the latest IT trends that are almost certain to negatively impact on you if you don't join the bandwagon? Are you stuck in a dying business model, but don't the tech know-how to do anything about it? Have you researched thousands of hours into the thousands of apps and services out there which you can leverage? 

This is where we can help - so why not give us a call, or find out more about us now.