Today I wanted to have a little bit of fun. Long-time readers probably know that I grew up on a cattle ranch, and despite my 20+ year career in products and leadership, I still love cows, horses and the rural life.
When I found this comparison of cows and businesses, I couldn’t pass up the chance to share it. So, here’s my attempt to use a bit of ‘cow-sense’ to describe eight models that will hopefully shed some light on ways to run your business.
The Direct Sales Model
A direct sales business operates through a network of salespeople. Typically there is no fixed retail location.
Examples: Mary Kay, Scentsy and Stella and Dot
The Freemium Model
A business under a freemium model gives away a service at no cost before offering advanced services as add-ons.
Examples: Dropbox, Hootsuite, MailChimp
The Subscription Model
The objective of a subscription business model is to retain customers under a long-term contract and secure recurring revenue.
Examples: Netflix, eHarmony, copyblogger.com
The Franchise Model
Under a franchise business model, business owners purchase another organization’s business strategy.
Examples: Jimmy Johns, SportClips, Starbucks
The Loss Leader Model
Loss leader model is a strategy in which a store sells selected goods below cost in order to attract customers who will make up for the losses on more expensive products.
Examples: Samsung, Amazon.com, Apple
The On Demand Model
Good or services are sold to customers that are typically centered around online platforms. They often offer delivery in a short timeframe.
Examples: Uber, Airbnb, Udemy
The Crowdsourcing Model
Crowdsourcing is the practice of engaging a ‘crowd’ to contribute collectively to a project or cause.
Examples: 99designs, HitRecord, Upwork
The “Ziferblat” Model
A unique business model where customers pay for the time in a location and not for extra items such as coffee.
Isn’t it amazing how the simplicity of a humble cow helps you learn the operations of many businesses today?
Questions: What model fits your business best? Why does your business model matter? Please leave a comment in the space below.
The Product Management Perspective: Understanding the details of the business model your company has chosen will inspire the products you create, and especially the approach you take to understand the market. Study up on this important topic.