Business model

Transactional, recurring revenue w/ no up front costs & same day implementation. What's the catch?

Chicke Fitzgerald

April 4th, 2016

I have a unique product that has no competition.   It is a utility that is needed by most companies, venues and events.  It is easy to implement (minutes or hours, not days, weeks or months) and it provides a quarterly "make money while you sleep" opportunity for our enterprise clients and their customers, as well as a contribution to their charity of choice annually based on activity.  

We have not been as successful with this model as I would have hoped.  The product is solid and has been in the market for nearly a year, but I do not have a dedicated sales team yet, as I haven't wanted to raise money and have been attempting to fund from revenues.

Do you think that customers are skeptical that this model is too good to be true?  

Niels van der Linden

April 4th, 2016

Hello Chiche,

How do you define 'not as successful as you would have hoped'? Did you expect a 100 sales and only managed to realize 20?

Also, the customers who showed interest, but you weren't able to close, did you ask them for feedback?

What is your experience with the customer you did deploy with? Did they continue to use your service?

Michael Hunter Therasoft Online

April 4th, 2016

I would think that being one of the top players in your industry for the last 20 years should count for something. I've done a couple of side ventures here and there that weren't directly tied to my field or scope of practice, but the connections I've made over the years were substantial enough that when people heard what I was doing they were happy to be a part of it, because they knew me and know what I'm capable of. When what I did for them was successful, they did most of the selling for me (both because they like me and because what I had done for them made them money).

Who are the people you know that would be happy to take a risk with you because they know you? It sounds like (from what I've read so far) that you're talking about a product for people who already have a successful business model. However likely your product is to generate additional revenue, changing a successful formula always carries with it some degree of risk and inconvenience, which most business owners are going to be sensitive to, especially if there's still a lot of growth potential out there for them that requires constant attention. I've certainly fielded my fair share of phone calls every week from people wanting to give me or sell me something that will "make me money". 

"Everyone we speak to is enthusiastic but they have a full plate for their IT teams and don't really believe how easy it is to implement." 

This really sounds like the crux of the matter. What could you do on your end that might address this for users (aside from simply trying to "convince" them that it's easy)? Maybe there's a creative opportunity here to find a way to address this for your customers so that they're more likely to onboard.

Thomas Petersen International Trouble Maker

April 4th, 2016

it's hard to say before we can have a look at what exactly your product is and how your are charging them.

Sometimes the issue is that you are charging them for things they don't find valuable and isn't charging them for things they would pay for.

But more info is needed to be helpful here.

Ken Anderson Director, Entrepreneurial and Small Business Development, Delaware Economic Development Office

April 4th, 2016

Firstly, there is nothing new under the sun and you probably have 20 compeititors at various stages with this or a similar product. But just say you are right, validating this product at the early stage is a key strategy. Can you get traction as evidenced by customers who are willing to pay? How big is the market? What is your total available market within that bigger marketplace?That is key. I love the fact that you are funding operations by revenues. You should continue to do that as long as you can. You will come to a point where your continued validation of the product, will force changes that should grow and expand your customer base. At some point you will reach a metric where external financing will be an appropriate next step. This could be a longer term process than you might have expected. Focus on customers, channel partners, validation strategies....therein is the key to whether there is a sustainable, profitable business in the making.

Chicke Fitzgerald

April 4th, 2016

Great questions Niels.  Our launch client for the product is a software as a service provider that integrated our product into 2300 clients that exposed our trip planning capabilities to 24,000 events per month. 

 That is our model - one installation reaches many. 

That particular implementation is challenging, as we are dependent upon the client of our client to tell their customers about the online page for the event and from the results we can see that this is not consistently happening. We don't have a relationship with those customers, so we rely on our client to do the education.  We are seeing regular, recurring activity.

We've also had great success with events, like ComicCon. We get great conversion for those clients that do see our tool - substantially better than the industry average in our category.

We believe our product is best positioned as a "do you want fries with that" prompt in the buying path of ticketing and registration systems, which will be much more successful. So we have shifted our attention to event ticketing and registration systems, as well as going directly to large events, venues and companies that have people traveling to them.

Everyone we speak to is enthusiastic but they have a full plate for their IT teams and don't really believe how easy it is to implement. We need to get over that hump with a few key clients in our target markets, which also includes health care and tools providers (calendaring, sales automation, video/photo digital asset management platforms).  References will be key on this front.

I am looking for a business development partner that can help me full time to build the business, but right now I'm a one (wo)man band, so it is slow going.

I may end up raising a round of funding to accelerate the business, as the product is solid and we are ready to rock and roll!

Ramesh Barasia Certified Business Coach | Help Business Owners Get More Money, Time, & Freedom

April 4th, 2016

Your post has got my attention. If you are interested in having a conversation, Pl let me know. Ramesh *Ramesh Barasia* CEO, TAB North Atlanta 205 Bright Water CV, Suite 100 Johns Creek, GA 30022 Office: 678-812-1201 | FAX: 770-521-5307 Mobile: 770-309-3971

Kaustubh Prasad

April 4th, 2016

That's a tough one. Honestly, if your product is actually unique and has NO competition, that in itself is a huge achievement. On top of that, you say it is easy to implement and provides a fantastic money making opportunity for your clients. All these statements put together sound too good to be true. 

Having said that, you know your product best, and all of the above statements could possibly be true. And therein may lie the problem of being so confident about your product and its magic that you fail to see it from the perspective of a customer who has never experienced it. Sometimes people talk about the greatness of their product so much that you don't even feel like trying it. I don't know if that is the case with what you are doing.

Chicke Fitzgerald

April 4th, 2016

Ramesh, I just sent you a LinkedIn connection as all your contact info was stripped out of your response.

Chicke Fitzgerald

April 4th, 2016

Kaustubh - I am one of the industry's top consultants in my field and have been consulting to the top players for 20 years.  It is because of this experience that I know the value of what I have built.  All other trip planning tools focus on airports and city centers and I have built a tool that allows people to plan to where they are really going.  It saves time on the side of the person that gets the "where should I stay" call and those that are trying to figure out what hotel is close to where they are going.   The magic is that it is integrated and intelligent and as easy to install as embedding a video in a website.  The revenue opportunity is gravy.  

I will keep plugging away, but frequently wonder whether I'd have more success charging for our capability, versus giving it away with no up front cost.  

David Croson Business/Economics Professor, Venture Advisor and Investor

April 4th, 2016

You are (probably unintentionally) "pooling" with scam businesses. If you're trying to get traction with clients with the same description you offered us, you are describing it exactly the same way that describe opportunities that are, indeed, too good to be true. Combine this with "we'd like for you to install this on your systems and host it" and I'm not surprised that potential clients are not returning your entreaties; it sounds like an attempt to install a Trojan Horse more than a money-making opportunity.

 My suggestion: Set up a structure that doesn't require IT support on your customer's side. The decision should be made by their event planning, travel, or client management staff -- not by their IT department. Focus on getting them to sign up to offer value to their own clients/travelers. Given that you probably don't have a lot of computing/data requirements if clients are not using it, you may be able to use cloud services (where your costs are incurred only when your revenues would be coming in) without needing to raise a round of funding.