Hey, happy Monday!
I hope all is well in your neck of the woods. We seem to have just entered what many newspapers have called a semi-lockdown. Another attempt to make up for lost time doing nothing. At not fixing hospitals, schools, public transportation, activities to the public.
The March lockdown only saw its effects in the summer. That must be why those who could change things spent the vacations anesthetized only to find themselves in September with homework still to do.
This DPCM is yet another example of how bureaucracy never meets science.
Let’s get ready for another wave of free webinars and courses, although in the end what matters right now is that a closed business stays closed even if you market to it…
It is necessary to be more practical now.
Marketing is about facilitating sales when sales can happen. Now, however, it is critical to adapt the business model to a new way of creating value. Reorganizing atoms to create new molecules with which to synthesize the oxygen we need. Follow me for the next five minutes, and I’ll show you something….
Let’s turn on the microscope…
Atoms are the business units that drive your company’s revenue. They are what you have decided, in your business model, that customers must pay for. Reconfiguring these atoms in a new way, you will see, will have a huge impact on price, profits, growth logic, competition, and generally on the operation of the business itself. This reconfiguration is the secret to the most profitable business models ever.
For some companies it is easy, the atoms are written on the invoices and coincide with the units of physical products sold to customers but for others it may be more difficult, indeed sometimes it is this fragmentation that makes activities inefficient. “How much does this project cost?””It depends…”
Properly defining the atomic unit of business is critical to accelerating sales by neutralizing competition, and many innovations that are part of our lives today are but innovations that occurred at this atomic level.
When we used to buy music on CDs or cassette tapes we paid for all the tracks even if we actually listened to only one on repeat. Then MP3s disintegrated compilations and gave rise to Online Music Stores with so many clumsy attempts by the industry to counter piracy until Apple in 2003 launched the iPod and iTunes with its pay-per-song model (though not the first, but the first to have an experience that made sense). 3 years later, in 2006, Spotify was born in Stockholm and you no longer have to pay-per-song but can have all the music you want as long as you listen to some advertising or pay €10 per month.
As you can see, the atoms, that is, the songs, have remained the same. They were just reconfigured. Customers first paid for a CD, then an mp3, then a subscription, to always have the same thing: to listen to that damn song.
Netflix also owes its success to working on its atoms. In 1998 the business model was very different from what it is today in fact it distributed DVDs by mail and, like Blockbuster, charged penalties to those who were late in returning them. From the customers’ point of view the benefit was only that of not going to a physical store but the frustration of return was identical. Customers just wanted to pay to see a movie and not pay for the delay as well. So he launched an experiment: he asked his customers to indicate a sequence of movies to watch by allowing them to receive the next DVD only upon return of the previous one. Many customers decided to make “switch” to this new subscription model that brought a huge increase in value: clear rental costs, no penalties, great selection, and unlimited movies.
Netflix has thus validated its new business model by reconfiguring its atoms by stopping charging per DVD but for the experience of watching any movie.
Ah, if you haven’t heard of it yet, I recommend this newly released book: The only rule is that there are no rules. Netflix and the culture of reinvention , I have not read it yet but it is on my reading list.
Molecular engineering
As you have seen, changing business units, it seems almost natural for companies that have businesses that overcome the law of gravity (No. 23) but it’s something everyone can do, including you, especially if doing so can make it less costly and risky to make the “switch” from your current solution to your own. It will be difficult for your competitors to adapt to your new business model.
Set up a short meeting now to try to find alternatives to your current setup. I have put together some examples to use as a catalyst:
Charge for:
- Single physical unit (one product)
- A service (done-for-you)
- A subscription (to a service, product or resource access)
- A specific outcome (lead generation)
- Time (hours or days of counseling)
- Consumption of assets (computing power)
- Benefit (% ROI, % on savings, % on sales)
- Benefit created for the end customer (distribution)
What to do next:
- Select your ideal customer with precision
- Quickly build new marketing assets for your new offering
- Use the first client to build procedures
- Reduce your acquisition costs and get on with it
It is important to work now on your next competitive advantage.
Good work!
Make yourself heard.
