Winning business models will use the web to lower costs and add value. There are three primary methods by which this can be accomplished:
1. Giving customers access to information.
How many customers are calling your company for pricing, manuals, and information that could be posted on the web? If only 1/5th of an employee is devoted to this task, think about how much money that costs? You can pay for a lot of computer programming with that cost. The web changes you make will be permanent and last for years. Machines are always cheaper than men. Providing transparency for information on the web is a great way to improve your business model. Below is a sample screenshot from the UPS.com website. The entire tracking menu is customer self-service. UPS provides access to internal information and greatly reduces customer service cost. In fact, UPS determined that a phone call to customer service cost over $2 while a web request cost only pennies.
Think how ATMs did this for banks. ATMs made banking more convenient and allowed banks to be open longer hours with fewer employees. ATMs gave customers the ability to self-service instead of being forced to wait in line while a trusted bank employee punched the computer buttons. Having a bank employee access the information was nothing but an unnecessary toll booth. ATMs completely changed the business model for banks.
2. Sales automation
You simply cannot sell the same way you did in the 1990s. Who’s to blame? It’s closer to what’s to blame. The answer will surprise you: TIVO. TIVO taught us a) we don’t need to be a slave to the TV network’s schedule. We can easily watch what we want when we want. We are not in control, not them; and b) we do not need to subject ourselves to advertising. TIVO has radically changed our thinking. We now understand that advertising is something we have the right to opt out of. Interruption marketing is dying.
Here’s an example: It’s 1975 and you want to buy a Mercedes. You are looking for information. What do you do? Well, you probably go to the dealer and walk through the front door and “expose” yourself as a prospect. You might as well raise your hand and say, “Hi, my name is Bob Smith and I am a prospect for a new Mercedes. Would you please subject me to a sales call so I can get the information I want.” In the old days, the vendor was in control. Effectively, the vendor withheld information the buyer needed in exchange for a sales call. Vendors withheld pricing, specifications, and the like so the buyers would HAVE TO expose themselves.
Today is a far different story. Ask yourself, how do you buy that Mercedes today? You go on the internet and virtually build the car. You probably are half-sold on the Mercedes before you ever visit the dealer. Where is the “selling” in this scenario? The selling isn’t done by a salesperson. It’s done through progressive disclosure of information on the web. What has radically changed in the world of selling is that if you refuse to give prospects information, they will refuse to expose themselves as a prospect. You will lose the business and never know it.
That’s the bad news. The good news is that it is cheaper than ever to prospect and sell if you leverage technology. This technology is video and the web. Proper use of video can be more effective than an expensive sales person. Click here to see an interesting example of how to use video to replace expensive and ineffective cold calling.
3. Flexible outsourcing. .
Aside from buying an expensive building or machine, nothing is more costly than an employee. You have training cost, lost productivity, vacations, under capacity, over capacity, and many more issues. Business models of the future will utilize more outsourcing, contract workers, off-shoring, temporary staff, consultants, and the like. These business models will be needed as the government relies more and more on business to provide ever-increasing benefits to employees. This added burden will make having full-time employees more costly and cumbersome. Creative business models will find a way to work with flexible staff so the expense of product/service deliver can be better matched with revenue. For a business model to be successful, it must have a flexible cost structure. The most effective way to create a flexible cost structure is to make payroll and human cost as variable as possible. The best business models will find a way to do this.
