When you think of your competition, who comes to mind? For many, there are quite a few businesses who offer a similar service or product, which make it hard to differentiate oneself in the market.
Unless, of course, there’s an innovative business model to the business.
We’ve seen this time and time again with companies that came out of the woodwork with a unique new model – and they are not to be ignored. Hubble Contacts reimagined how to order contact lenses with a subscription model. Lime reimagined traditional forms of transportation with electric scooters. These new business models made it harder for other competition to emerge: simply because they were the first in the space.
So, if you’re struggling with competition and considering switching business models – or if your new idea includes a never-before-been-done business model, here are four tips for forging it successfully.
4 Things To Consider When Changing Your Business Model | Stephanie Burns
1. Take Advantage Of Major Trends
Markets are always changing — but sometimes, major trends affect all the markets. A prime example of this is the “sharing economy” – a term that refers to the new widespread inclination towards sharing vehicles (Uber), workspace (WeWork), and homes (AirBNB). Many new businesses hopped onto this trend with new business models. The Founder’s Guide shared a few, such as Rent It Today for sporting goods rentals, Borrowed Time Watch Company for renting watches, and Parkatmyhouse for parking spots.
When you notice major trends such as the rise of the sharing economy, ask yourself, “How can I better fit my product or service within this larger trend?” It will also help in brainstorming new ideas too.
2. Know What Business You’re Really In
Because new business models create such new business types, it’s of paramount importance to thoroughly understand what your business does – and to not stray from that. Lorelei Starbuck is the founder of Elope in Austin, a company that specializes solely in elopements. She originally owned a wedding chapel, but when she moved to Austin, Texas, noticed there weren’t many chapels in place that could assist in a quick, spontaneous wedding without the long guest lists. Taking advantage of the major millennial trend towards experiences, she reimagined weddings by offering “micro-weddings” (an updated term for ‘elopements’) – because it’s what her customer was asking for.
“We’d get a call and they’d ask, ‘Will you meet us in the park?’” She remembered. “But new businesses aren’t as easy as just opening your doors,” Starbuck shared. “If you’re going on and off focus on your brand and shifting away from your model to be all things to all people, you’re going to fail.” She makes sure her business never strays from what it does best: micro-weddings – which means they say no to traditional weddings. This pronounced clarity helps their overall brand.
3. Understand Your Customer
Of course, the most successful business models represent a deep understanding of their customer. While this is important in launching any new business or business pivot, it’s particularly important when a new business model is in consideration. Take Warby Parker for example: their model of sending five “take-home glasses” to customers to choose their frames worked, but only because they understood what their customers wanted – the convenience to try on their frames in their own home and take their time in making a decision.
Sarah Schmidt notes that the best way to understand the customer is not through tracking website traffic or surveys – but rather, syndicated third party research. These reports are generated with greater details into market research – often through observations. So be sure to take advantage of research already out there about your target customer.
4. Consider The “One For One” Model In Some Capacity
If you’re still coming up short with ideas for a new business model, consider the “one for one” model, spurred by TOMS Shoes. They promise to donate one pair of shoes for every pair donated – something Warby Parker has also done with eyeglasses, DIFF Sunglasses with sunglasses, and Nouri Bar with meals for hungry children.
Deborah Small, a marketing professor at Wharton, shared that “we know from research that people are most motivated to help when they feel a connection to those whom they’re helping.” What are some ways that you can donate your service or a unit of your product? Not only is it an admirable action to commit to from a philanthropic standpoint, but it can also help your customer understand the benefit of your product and service.
In whatever way you feel called to change or start a new business model, keeping it customer-centric and staying in great commitment and clarity to whatever you choose, is a surefire way to make it a successful transition.