Business models can sometimes be applied from one industry to another with great success. We typically think of places like golf courses or health clubs as having memberships, but what happens when a retailer does this? Stores like R.E.I. and Costco both offer membership to their stores, and in return members get special rewards in lower prices or unique experiences.
What would happen if your business became a membership only business? Could you pivot to a new model that might offer some distinct advantages? Is it time to join the club?
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Companies like Costco make more than 70% of their profits through membership fees. They do it by selling products at incredibly low prices although you do often buy in units that are different than a traditional retailer. So, you might pay half the price for a pound of coffee, but you have to buy it in 12-pound bags.
Could a business to business supplier or a software company adopt this model? Could they lower prices so far that there would be a significant incentive to have you buy their goods, even though you have to pay an upfront fee? If you run a manufacturing business, can you imagine joining a cooperative to buy cardboard boxes? Would you be willing to pay a fee upfront if you get a significantly lower price? Talk about thinking outside of the box.
Call it a club, a coop, a subscription or some other name, but changing your business model can disrupt the competitive environment. Imagine a wholesaler who only sells office supplies to businesses. They sell products that other distributors also sell and pricing is very competitive. But what if for a $100 annual fee, you could buy from an office supply cooperative? Would you have a new incentive if prices were always lower and that $100 you pay, is easily earned back in a few months? In some industries, this business model shift could help a company go from struggling to becoming turbocharged.
What interests me is how you can think about being different, by dramatically altering how you sell to your customers. If I am a distributor who competes with other distributors, maybe a fresh approach to marketing your business is worth review. Here is more information on a wonderful book about business models from a previous post.
Clubs can be exclusive and if correctly positioned, offer benefits that motivate your customers. Imagine reaching out to the people you currently sell and informing them that they can buy from you at a price that will be 20% lower than their current price– all they have to do is pay a fee and join the club?
Could a conversation about a new business model help you set a new path? Join the club and connect with me through Clarity. Schedule a short call to start the conversation.
