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August 8, 2010

6 Killer Business Models bring Money

As a student of marketing, business development, leadership and sales, I have seen many business models existing around us. A few might surprise you, because Bill Gates taped into one to make his billions.
This will truly open your eyes towards the possibilities there are to make enormous amounts of money. If people can make billions from basic ideas, we sure can make our millions if we get it 1/1000th of it right. Lets check it out:

1. Retail Distribution model

Here you establish relationships with distributors who can help get your product on retail shelves in front of thousands upon thousands of consumers. The key here is to sell your idea to these distributors.

2. Subscription based model

Magazines, newspapers, online membership websites usually use this model to get the customer ONCE, and get them to pay on a weekly/monthly basis. Remember! the most  expensive task in any business is usually new customer acquisition. Subscription based business models, by design make multiple sales to a single customer, making them one of the most stable & predictable amount of revenue.

3. Infomercials model

Infomercials are basically product demonstration of an item that has a darn good price. Hundreds of thousands of dollars are spent in commercial production and buying airtime. You think they make money on those cheap $20 stuff?

If you have ever called in to order these cheapys and summed up the dollar amount of all the stuff they try to up-sell you on, while you are in the order process on the phone, you already know the money is made on the up-sell products and not on the $20 cheapy product. The front end product is just a lost leader to get you in a buying mode. Once you are in this mode, selling other useless expensive things is far more easier.

4. Affiliate Marketing model

Affiliate marketing is basically an online sales person who is purely paid based on performance. An affiliate marketer has greater control on how creatively & cost effectively sell a product. Many websites and vendors create product depending 100% on third party affiliates to get them sales.
The vendor is happy since she is getting sales person who only get paid on performance, and affiliates are happy since they know how to make sales, without having to worry about customer service, product creation, delivery and other related stuff.

5. Social Media Marketing model

This is the online version of networking, with the added benefit of open communication that other people can join, read, share, analyze, and rate. This is truly a phenomenon in human history, where content is created, rated, and distributed by humans. And the same humans decide which platform(facebook, mySpace, LinkedIn, Youtube, etc) they like the most to carry out these activities. Billion dollar companies are tapping into social media communications to understand, and serve their audience better.

The fact is that human behavior is getting much more easier to understand online, as it is in offline. Companies like Comcast, Google, and Microsoft are keeping an eye on these free-flow communication on these platforms to get a better feel of their customers deeper needs and desires. pretty cool stuff!

6. Joint Venture model

This is my favorite business model. It creates win-win-win relationships, it sometimes almost guarantees success, and it has already made 100s of billions per company. let me explain:

The vending machine person formed a joint venture with a shopping mall to place its machines in their location. This guarantees automated sales to the vending machine provider, and its quick easy money for the shopping mall owner.

TCF bank joints ventures with Jewel Osco and establishes its banking location inside the shop. This way TCF bank targets, customers of Jewel Osco, who find TCF bank convenient since its inside their shopping store already. Win Win Win for all.

Microsoft joint ventures with almost all computer hardware provider to provide software (windows) for their machines. Turns out in a few years, the whole world is dependent on this software.

pretty eye opening right? Its interesting to see how we humans have evolved business, and we have come up with solutions to sell more and more stuff to our fellow humans.

Now you have to decide, which model is right for you.

One Comment on “6 Killer Business Models bring Money

Creative
December 26, 2010 at 8:32 pm

I’ve found lots of great information. I also noticed that you did not list 7 models and the number 3 was used twice in the listing.

Thanks.

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