Business Model Ideas: Broaden Your Consumers' Horizon

If you want outsized returns, go beyond what's expected or traditional and aim at changing the way your consumer thinks about your product or service.

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Hello friends,

Welcome to Fundraisedd, the newsletter that tells you all you need to know about fundraising and startup finance.

A special howdy to all the new subscribers who’ve joined this week! 🤠

A key question that every founder has to answer is: “how will we make money?” Once this is answered, you might then ask “are we extracting the full value from our customers, and if not, how can we achieve this?” This question and your answer will get investors interested!

Maximising value extraction is an art as much as it a science, but there are things we can learn from the best out there and that you can, by analogy, apply to your own circumstances.

One strategy to do so is to broaden your customers’ horizon.

Let’s look at a few examples, and see how we can extrapolate some general learnings from them!


Starbucks

🔬Limited scope

  • 😖Many people find coffee bitter and don’t like the taste of black, unsweetened coffee.

  • 🥱Coffee is often limited in its variety by tradition or a lack of creativity, yet consumers demand innovation.

  • 🤢More and more people have specific diets (lactose-free, vegan) and will therefore be prevented from consuming fancy coffees (cappuccinos, lattes,…).

🌌 Broad horizon

  • 🎨Offer a wide range of creative drinks that includes flavours, syrups, creams, and any other ingredient that can hide the coffee taste.

  • 🌊Play with seasonal and global trends (Christmasy drinks, cold brew and iced tea, local adaptations), don’t hesitate to get into new product verticals (teas, juices).

  • 🔀Offer alternatives to regular ingredients (milk, sugar,…)

💰 Business Benefits

  • 📈Increase total addressable market by touching people who would not have consumed a standard coffee

  • 💵Increase revenue per customer and customer loyalty by providing new, innovative offerings that always bring something different

  • 📆Remove the seasonality of consumption by offering products that are in line with trends / events (pumpkins spice latte & christmasy drinks in the Winter, cold brews and juices in the Summer).

  • Chage the daily habits of consumers who thought coffee was only a breakfast drink or an after-lunch espresso.


Stripe 💳

🔬Limited scope

  • 💳Companies need a way to process payments online.

  • 🦺Service should be limited to payments and focused on safety.

  • 🏛️People rely on lawyers and banks for more complex financing structures.

🌌 Broad horizon

  • 🤖People want integrated services that will offer a wide range of services around payment processing (subscriptions, platform payments, in-person payment)

  • 🏦People trust online businesses with more complex processes (Stripe issues credit cards, manages fraud and risk assessments)

  • 💡People looking for payment processing solutions are in the process of setting up a company: Strupe offers incorporation services.

💰 Business Benefits

  • 💵Increase revenue per customer by capturing more of their financial processes and bring them on your platform.

  • 🤝Increase customer reliance on you by becoming their main partner.

  • 🤝Build trust with simple-to-deliver services that allow you to sell more profitable services down the line.


Canva 🖌️

🔬Limited scope

  • 🎨People have irregular needs for design that are best catered by pros.

  • 🔧Design tools are complex and a web-based platform can only take on a limited set of features.

🌌 Broad horizon

  • 🖼️We are a picture driven society where design and visuals matter a lot, and people are willing to invest a lot of time, efforts, and money into their online presence.

  • 📃Designing is not limited to pictures, but also includes documents (CVs, letters, books, theses,…) and current solutions are limited and unwieldy (word, latex).

  • ➕People looking for design solutions will need publishing and printing services too (t-shirts, posters, photo books,…).

💰 Business Benefits

  • 💡Reach the enthusiastic amateurs that want to do the pros’ job but don’t have the tools and the time needed to learn them: long-tail strategy.

  • 🥇Become the new gold standard of web design: spread virally and exponentially.

  • ⏫Integrate vertically and sell assets (pictures, fonts, illustrations) upstream and publishing solutions downstream.


Through these 3 short examples, I wanted to demonstrate how broadening the horizon of your customer can help you achieve oversized returns by:

  • capturing new market segments

  • creating new consumption habits

  • integrating deeper in your customers’ processes

  • encompassing more steps of a business process

These allow your company to create a new normal that is yours. People come to you for a specific, limited need, and discover an entire universe of solutions that are relevant to their persona and their circumstances. Their ability to spend more time and money with you is therefore multiplied!


Have a great week, looking forward to connecting with you through the comments,

Best

Nicolas