In any business that you’re running the Revenue Streams section of your Revenue Roadmap your one page business plan is crucial. In fact it’s one of the best places to innovate.
First, identify sources of income
Revenue streams are the lifeblood of companies. What sources of income keep your business churning?
Look at similar products to identify a pricing model that appeals to your customers. Be sure to avoid overcomplicating your pricing model. Here are five potential inlets to get you thinking about your company specific revenue streams, of course, there are plenty more outside of the ones below:
1. Asset Sales: Customers pay to purchase ownership of your product, be it a book, camera or coffee mug.
2. Usage Fees: Payment for the number of uses of your product such as the number of minutes spent on a phone or nights in a hotel room.
3. Subscription Fees: Consumers pay for unlimited usage of a product for a given time period like a monthly gym membership or a yearly newspaper subscription.
4. Delivery or Installation Fees: Consumers pay for the installation and/or delivery of your product or service.
5. Advertising: Companies pay you to advertise their product or service on your site.
Innovation isn’t only what people buy. But how they buy it.
Let’s say you own a bakery and you’re selling muffins. Every other bakery in the city also sells very similar muffins. Yes, you might have a unique ingredient that you put in. Let’s say your hero item is a banana bread type muffin that you’re going to add cardamom to and that’s your secret innovation. But do you know that even your revenue base can still be innovated?
What would a bakery look like as a subscription?
For example, what would it look like if instead of a ‘dollar for a muffin’ revenue model, you actually made it a subscription. Perhaps you’re selling to office buildings. Perhaps you’re selling to people who are just coming out of the gym or just heading into the gym and need a healthy muffin, and they don’t want to carry money with them. So they pay you a subscription and just pick up a muffin every day on their way out of a workout. Same time same place, on the way in or out of the gym.
So have a look at your Revenue Streams part of your Revenue Roadmap and think about if there is a way that you can innovate there. What are other industries using as a revenue model? Because there are lots of different ways to price things. If you can create a revenue stream that is very unique for your business or your industry you might just have the beginnings of a really great business idea and potentially open up a whole new market that you’ve never considered before.
A thought experiment tool
To stretch your thinking about your own product or service, try to imagine what your business would look like if your core offering :
- Brought an offline behavior online
- Is sold as a subscription
- Was a rental to the market at lower cost
- Was free or very cheap
- Was an online marketplace of its own
- Is a discovery driven experience
- Produced original and exclusive content (videos, images, articles)
- As a streamline a process through technology
- As purely a messaging interaction. A conversation.
- An audio/voice interaction object (like Echo, Google Home etc.)
- Took a new consumption or creation format
- Enabled easier creation of something
- As a mobile-app
- As a blockchain technology
- Removed features to launch a simpler/better version
- Used AI to create a unique kind of value
- Targeted a crazily specific segment of the market
- Had a technology layer
- As an “On demand’ offer
- As an online community
- As a Peer-to-Peer sharing model
- As a service (if it is a product)
- As a product (if it is a service)
A key part of creating value for your customers, which drives revenue growth, is knowing what the alternatives are to what you’re offering.
Your biggest competitor: “Doing nothing”
So you’re running a business and you know that your customers have a particular problem, or that you can solve a particular list of problems. The next thing you want to do is to find out what the existing alternatives are for your solution. It may not necessarily even be a competitive product. It may actually be that your prospects do nothing at all. It may be that an existing alternative is to not do anything because they are too scared of making the mistake of getting the wrong product, or getting the wrong service. So your would-be customer delays the decision-making process even longer.
An existing alternative might be a competitive product, in which case you need to figure out, “Well what is it that I solve that my competitor doesn’t solve?” If you’re a Business-to-Business (B2B) company selling tasks that are outsourced to you, an existing alternative could actually be your customers hiring an internal team to do it instead. So you might actually be competing against an internal team. In this case you’ll want to frame your solution in a way that explains the benefits of using an external team versus an internal team.
The point is, don’t just think about competitive products. Also think about some of the excuses and the things that people do, sometimes even just out of human nature, that would replace your solution in their problem context – even if it means they’re doing nothing.
So what are the existing alternatives?
How else can your customers address their problems? What products or services already exist as alternatives to yours? This section is where you identify competition. Who are you up against?
Research your competition using multiple methods. Ask target customers about other products or services they’ve explored or used. Utilise search engines, social media and trade publications to become an authority on your industry.