Business/Revenue Models & Markets
Isolde, the head of Siiquent, makes gene-based diagnosis technololgy for hospitals and diagnosis labs. Though they sell machines at near cost2, they enjoy profit on test compounds, kids, and other consumables. Siiquent knows that their client (AKA public facing hospitals) value efficiency, reliability, and profitability — therefore it’s low-priced consumables, flexible pay-pertest pricing, great customer service, and adaptability to client concerns is what keeps their customers loyal. It’s not strictly the quality of the product, but the product’s usefulness and how it fits with the specific needs of a client, that attracts customers.
Emanueal, the head of Teomik, targets research labs and gene-based studies, which are customers less limited by price and more concerned by quality. Its customers did not suffer from budget cuts or from executives trying to optimize profit. Teomik’s differentiator lies in its legacy — because it’s been pioneering patent-protected devices for dozens of years, it’s earned the trust and loyalty of research institutions and enjoyed free marketing from its role in research papers. Teomik is, and will continue to be, successful because research institutions already trust its instruments!
Pros & Cons
Pros for Single Revenue Model:
- Simplify operations and messaging
- Reduces internal conflict/competition and customer confusion
- Unified customer base, strategizing, marketing, operations -> cut costs
Perils for Single Revenue Model:
- Misalignment with diverse customer body; could risk losing an entire portion of customer base, which is especially perilous since customer satisfaction and loyalty is key.
- Reduces flexibility to respond to changing market trends, competitors, technologies, etc.
- Isolde and Emanuel are smart, capable leaders of their respective companies, who have achieved success for their product and their customers thus far. They have long time experience and are familiar with the niche in the market that they occupy. It’s clear that they are invaluable. Going against their advice could not only be unwise, but create tensions and resentments within leadership.
Pros for flexible revenue model:
- Can continue to adjust quickly to changing market trends, competitors, and appeal directly to customer base
- Minimizes disruptions to existing customers, who rely on and are happy with current product and price
- Allows Isolde and Emanuel to do what they do best!
Cons for flexible revenue model:
- Potential cannabilization across two segments
- fragmentation is difficult to organize, less stable, and confuses customers
If there were a merging process…
- Identify a North Star metric that captures both business goals. Instead of choosing between one business model or the other, aim to CREATE one that serves both companies best. What are the joint business goals across both companies? Customer satisfaction, great customer service, reasonably priced consummables, flexible pricing & partnerships, cutting-edge research machinery, academic prestige, etc…
- Test assumptions through user interviews, testing, and data. After implementing murger, analyze metrics 1 month, 3 months, and 6 months out. Is there a drop in a particular customer segment? Why?
- Align external messaging so that customers perceive and experience one coherent brand
