Business models
I always ask my kids annoying dad questions when we walk into a coffee shop.
"What do you think is their main moneymaker? How much money do you think they make or lose in a day?"
I'm trying to cultivate curiosity about business models. If you develop that muscle, it's like a pair of X-ray vision goggles that lets you see and secure opportunity faster. (Yes, I'm a metaphor mixer).
When exploring a potential partnership opportunity, one of the first questions should be, "What's their business model?"
Compare it to your own. Do they conflict, or compliment?
Incentives are more powerful than intentions. Understanding the incentive structures faced by each individual, department, and company will help you create a mental map of where and how a partnership can create mutual value, and where it may cause problems.
Fill the gaps with service partnerships
Some SaaS companies overlook services firms as partners because they don’t see the value.
Partnering with them seems like more of a hassle than a value-add.
Andrew Porter, in his most recent article, explains why overlooking services firms could be detrimental to a business.
Porter recognizes that services firms fill a critical gap which is a huge cause of churn.
Here are some stats from the article:
According to Bain & Company, a customer is four times more likely to defect to a competitor if the problem is service-related than price- or product-related.
Defaqto Research finds that 55% of customers would pay extra to guarantee better service.
“By addressing the Service Gap we can reduce churn, drive topline revenue and unlock a scaling mechanism for the most un-scalable resource-intensive component of the SaaS business model: customer success and professional services.”
Read it here.
Nerdy Idea of the Day
Partnering adds complexity to tasks and goals. But it also has the potential to add resiliency and anti-fragility.
I thought of this when I came across research on video games that is trying to understand how multiparty community projects get done via "swarm intelligence".
Minecraft is well suited to studying a joint construction task. Data collected during these tasks can be used to study how the interdependence of sub-tasks impacts collaboration, performance, and learning among the participants.
Reduce churn
No one wants customer churn. Send this to someone who might be needing to fill their SaaS services gap.
