Sales

Sales

This post from Nora Ghaoui takes a look at revenue models that work for smart products with a digital service.

Making a smart product needs more than adding an app. You need to cover the costs of the digital service or risk losing money. Which revenue model can you use? And why would anyone pay for this service?

The revenue model for a digital service needs to cover the costs of running it

Let’s consider the options for a new B2C product, for example a smart refrigerator. To be able to run the service, you need to add hardware and software to the product. The hardware costs and upfront software development costs can be covered by a higher price for the fridge. It has extra features, so a higher price is expected.

The digital service costs continue after the sale. They include providing feature and security updates, storing and analysing customer data, providing customer service, and so on. You can estimate for how long the service needs to keep working, then add X years of its costs to the purchase price.

If the service needs to keep working “indefinitely” then the incremental costs of maintaining it may exceeded the revenue you earned at the time of sale. If you do not balance these, the service will be loss-making for the company.

Using new sales to pay for the service

While sales are growing, you can cover the costs through new sales, subsidising the costs for earlier products that are still using the service. This delays the moment when the service becomes loss-making but does not prevent it. 

This “new sales to cover costs” model is why software makers keep making new versions of their products (e.g. MS Office, Windows). Once everyone has the product, you need to give them a reason to buy a new one. This model fails when the product is already good enough (e.g. Windows XP, then Windows 7), so software makers have switched to the subscription model (e.g. Office 365, Adobe Creative Suite).

 

Key points include:

  • A service that meets customer needs
  • Eight possible revenue models
  • The need to beat “free”

Read the full post, Which revenue model works for a smart product with a digital service?, on LinkedIn.

 

Carlos Castelan shares a report on the post-COVID impact on high-traffic malls.

Malls in the U.S. continue to experience closures in the wake of the pandemic and changing customer behavior.

The Background:

Walkthrough of “Mall of America” located in Bloomington, Minnesota

Goal to understand changing customer experience in leading malls and how stores are changing amidst the current landscape

Observations supplemented by insights from company websites and publicly available information

Key points include:

  • Mall vacancies and tenant turnover continues post-pandemic (even in high traffic malls like the Mall of America)

  • Design and look & feel are important to an elevated customer experience and brand perception

  • Niche retailers and DTC players are testing brick-and-mortar concepts to engage customers 

  • Continued focus on health and wellness – as well as offerings such as office space – are still being tested post-pandemic

Access the full report, Mall of America visit: Bloomington, on NavioGroup.com.

Umbrex is pleased to welcome Cecile Bernheim with S2E Partners. Cécile created S2E Partners consulting firm in 2014. She advises Boards, CEOs and executive teams of small and mid-cap companies on Strategy-to-Execution and Corporate Governance. Her action is guided by her conviction that “aligned strategy, disciplined execution and good governance lead to greater results”

Cecile put her deep understanding of consumers, customers and market dynamics at the service of her clients and delivers valued insights and recommendations.

Her professional experience prior to S2E Partners includes strategy consulting with Bain and Company as well as senior executive roles at Coca-Cola internationally in General Management, Strategy, Sales and Marketing and in Pharmaceutical Research and Development.

Umbrex is pleased to welcome Markus Gremmel. Markus runs his independent consulting and investment firm with focus on sales, marketing, sales partnerships, and development of business models. Markus has a deep industry expertise in cards, payments, consumer lending, and financial services in general, emanating from a variety of senior roles in banking: e.g., Chief Marketing Officer (CMO) at BAWAG Group, non-executive board member of a leading card issuer and ATM operator, board member of a niche bank in debt capital markets.

Markus is a strong problem solver with a renowned entrepreneurial spirit. He loves to develop and implment new business opportunities for his clients and himself. Markus enjoys living in Vienna. He is happy to support projects in EMEA

Umbrex is pleased to welcome Cyrille Alheritiere with Marmenia Consulting. Cyrille is a Freelance Consultant running his own firm based in Geneva. He specialises on advice to SMEs in particular in the preparation of business plans, valuations, due-diligence, sales & operations and fundraising pitch books.

Prior to starting his own activity, Cyrille spent 14 years at UBS in Front and COO management roles, his last role as Head of Wealth Management Latin America Geneva. Here he gained a deep understanding of entrepreneur’s needs and saw the opportunity to work closely advising SME owners. At McKinsey he worked out of the Business Technology Office in Brussels and Amsterdam on strategic banking and technology projects. An engineer with a PhD from University College London, an MSc from Georgia Tech, he has recently completed a degree in Sustainable Finance from the School of Sustainability Management Switzerland.

Husband, father of two and avid skier, he works on short-term or part-time retainer projects with SME owners who need a confidential, senior sparring partner who still greatly enjoys getting deep into an excel spreadsheets & powerpoint analyses to solve problems together. He is fluent in English, French, Italian and has good command of Spanish and Portuguese.

 

Robbie Kellman Baxter takes a look forward at subscription businesses in 2021 and provides a few tips on how to improve sales through improved membership strategies. 

The time leading up to American Thanksgiving is often especially busy, with a combination of major conferences, ambitious sales goals and, of course, planning for the upcoming year before people check out (physically and/or mentally) for the holiday season.

You’ve probably spent some time already thinking about your goals for next year, and what you are committing to your board and stakeholders.

A key ritual of setting the year up for success for many organizations is the Sales Kick Off (SKO).

But this year’s event is likely going to look a little (a lot?) different.

I was inspired by my friend and colleague David Meerman Scott, co-author of Standout Virtual Events to rethink the SKO. David provides some excellent tips for running a quality virtual event, including the right equipment, how to prep a speaker, and how to think about the whole program as part of a whole.

In this article, I look at the SKO from a different angle. I took a step back to really focus on the “Forever Promise” organizations make to their sales teams and which has resulted in the “product” of the SKO event. The Sales Kick Off is a time to educate, engage and inspire the team to maximize the likelihood of hitting all sales objectives in the coming year.

 

Key points include:

  • The modular model
  • Creating ‘lean in’ opportunities
  • Making the most of events

 

Read the full article, Rethinking Your 2021 Sales Kick Off With a Membership Mindset, on LinkedIn. 

 

Umbrex is pleased to welcome Kordt Griepenkerl with Med-Beratung. Kordt  spent five years in the McKinsey healthcare practice in Germany and then worked in leadership positions for the medtech firms Biotronik and Trumpf Medical (now part of Hill-Rom). He covers a wide range of fields from operations to sales and marketing and extensive international experience. He and has been running his own consulting firm  Med-Beratung UG since 2012.

Prior to McKinsey, Kordt obtained this PdD in theoretical physics. He lives in Reutlingen, South of Stuttgart, Germany.

In his spare time, he tries to improve this skill on his trombone and baritone horn as well as getting up to speed, running in the hills behind his house.

Kordt is happy to collaborate on projects in the healthcare industry.

Umbrex is pleased to welcome Chris Moe with Cartograph. Chris Moe joined McKinsey in 2011 as a BA, focusing primarily on Sales & Marketing for B2C companies, across topics including pricing, digital pricing, and growth. After leaving to spend two years at a structured credit hedge fund in NYC, he returned to McKinsey and split between Marketing and Sales and work in Education, focused on University transformations. Chris co-founded Cartograph in 2018, an agency focused exclusively on Amazon consulting for emerging CPG brands.

Chris now lives in Austin, TX, and is always happy to talk Amazon, eCommerce, or CPG.

Umbrex is pleased to welcome Mika Malin. Mika has broad experience in line management and business development roles, as a senior executive and as a management consultant.  He’s tackled complex board level as well as factory floor level business problems as a consultant at the BCG, in a boutique consulting firm and as an independent consultant.

Mika has a track record of successfully leading businesses and people with a P&L responsibility, as well as planning and executing strategy and M&A transactions in a publicly listed media company as a member of the corporate leadership team.  He’s sharpened his marketing and sales skills in world-class fast moving consumer goods companies, in both local and international roles.

MBA from Harvard Business School has provided him with a solid foundation for strategic thinking, an analytical mindset to problem solving and a structured approach towards business issues.

Mika is analytical but action-oriented, he believes in concrete strategy and brilliant execution, he like to structure complex issues into actionable concepts, he take challenges seriously but want to have fun in the team.

Mika lives in Helsinki with his wife and daughter. In his spare time he runs the Harvard Club of Finland as the President of a non-profit organization of 120 members, and what ever spare time he has left, he spends in the hockey rink or on the golf course.

Mika’s geographic focus is in the Nordics and Europe, but will be happy to discuss relevant opportunities beyond these regions as well.

Umbrex is pleased to welcome George Nahra with GZN Consulting.  George spent four years in the Chicago office of McKinsey, in the retail and sales & marketing practices, serving predominantly retailers and other consumer-facing clients.

After leaving McKinsey, he spent several years as a Senior Management Associate at Bridgewater Associates. He then returned to retail, re-joining Abercrombie & Fitch (where he started his career several years earlier) and building the company’s first Strategic Planning function.

He then move to Chico’s FAS, a women’s apparel/accessories retailer with three principal brands: Chico’s, White House I Black Market, and Soma.  At Chico’s FAS,  George led Strategy, Business Development, and International.

George has been an independent consultant twice – once between working for Abercrombie and Chico’s, and most recently since roughly December 2019.  He serves retailers across a wide range of topics.

George lives in Fort Myers,  FL, with his wife and dog. He’d be happy to collaborate on any retail projects