IMPACT YOUR CUSTOMERS AND YOUR BOTTOM LINE POSITIVELY?
Innovative business models driving impact at scale
Creating value for the customers is the purpose of a company, but some organizations are going the extra mile : they either create even more value and/or they reach out to more customers, including the less wealthy. This strategy always pays off, as satisfied customers lead to more loyalty and to long term growth for the company.
1) Put the customer first
The key success factor of the GAFA (Google, Amazon, Facebook, Apple) is their « user-centric » culture. Their user-centric approach has led them to gain a large loyal audience. Monetization and finding a sustainable business model often comes later, once the company has built a captive audience and a database they can leverage on.
The link between customer satisfaction and the bottom line is pretty straightforward, but sometimes the company will have to make costly choices with the customer first in mind and bet on gains in loyalty leading to larger long term profits later. They also have to fight dishonest business practices or strategies such as planned obsolescence that help get more immediate sales but don’t build loyalty.
A mutual insurance company in France.
Business model innovation :
MAIF always place the interests of its members at the heart of its activities. Agents don’t receive a sales commission, as the insurer assumes that there is no honest advise which is financially interested. Their claim managers are taking twice more time and have more room to manage claims. During the COVID-19, they redistributed 100 million euros saved from a reduction of car accidents, to their members. MAIF is one of the first official « companie with a mission », a new status in France.
Impact : More loyal customers.
Scale & business value (ROI): Less immediate sales but they save 100 million euros in acquisition cost of new clients every year, because customers stay loyal.
Business model innovation :
Modular design to avoid e-waste. Customers can replace parts of the phone instead of throwing the entire phone. Fairphone also provides a transparent mapping of the supply chain and use conflict-free materials
Impact : This extends the life of the phones and reduces e-waste – it’s also less costly for the consumer
Scale and business value (ROI) : 175,000 phones sold (2019)
2) Make your customers your shareholders
To avoid conflict of interest between a customer first approach and benefiting the shareholders, some organizations are using a business model in which they have made their customers the shareholders of the company. For example, the microfinance bank Grameen in Bangladesh, also known as the « Bank of the poor », belongs to the people it is serving, which are the rural poor women in Bangladesh. Mutual insurance companies, such as the French insurer MAIF, are owned and controlled by its policyholders, who are asked to vote on different matters.
Even if a company has not been built on that model, they could involve their customers as shareholders in a different way. That’s what the startup Bumped is trying to do by helping companies offer shares as loyalty rewards to the customers.
A platform that gives banks, brands and businesses the ability to reward customers in fractional shares of stock.
Business model innovation :
They built a technology that rewards customers with fractional shares of stock, empowering consumers to become shareholders.
Impact & Business value (ROI): Stronger, loyal relationships with customers. 85% of Bumped users think ownership is more exciting than traditional rewards (i.e. points, cash-back).
Scale : Bumped has raised $19 million in 2018.
3) Make sure customers at the bottom of the pyramid can access your product or service
Some companies are innovative in their business model to make sure that the bottom of the pyramid can also access their product or service.
« Financial inclusion » is about looking at ways to include the unbanked or underbanked in the system and allow them to apply for loans. For example, credit scores based on the digital identity of a person have emerged to allow the poorest to also benefit from financial services.
In the healthcare sector, a model called « cross-subsidization » allows poor customers to pay less than rich customers. A few companies in emerging countries are following that model, such as Aravind Eye Hospital, Ziqitza, VisionSpring, Narayana Hrudayalaya Hospital or LifeSpring.
The freemium model is also benefiting customers at the bottom of the pyramid as they can access basic services for free, while richer customers might pay a fee to unlock additional features.
Other innovative models allow all customers to access for free and charge corporate companies through advertising or other services, such as many educative companies, for example the learning app Duolingo, or the free version of Facebook, Free Basics.
Some corporate companies are also going the extra mile by designing products specifically targeted to the bottom of the pyramid, in which they earn less or even no profit like the company Grameen Danone created by Grameen and the multinational Danone.
A company born from a partnership between Grameen and Danone producing and distributing Shokti+ yogurt, designed t to deliver 30% of the daily requirement for iron, zinc, vitamin A and iodine at an affordable price in Bangladesh.
Business model innovation : The Shokti+ yogurt has been designed to fight malnutrition in Bangladesh, and is sold at an affordable price. Grameen Danone is built on a model in which only 1% of the benefits are going to the shareholders, while everything else is reinvested for the cause. It has been one of the first BCorp in France in 2018.
Impact : Fight malnutrition of children in Bangladesh.
Scale : 300,000 children.
Business value (ROI) : The partnership with Grameen had positive impact on the company’s reputation as a pupose-led company, it offered Danone access to a new pool of consumers as the Bangladeshi market is growing, an opportunity to better understand the needs and purchasing behaviours of the poor, as well as to develop ways to reach lower-income consumers. The company was created in 2006 and is still trying to reach its break-even.
The app uses game concepts like unlockable levels (lessons) and points and high scores to motivate you to learn a language.
Business model innovation : Initially, Duolingo’s revenue model was very interesting to allow the app to stay free for its users. First, they made money by selling translation services to companies like CNN and Buzzfeed. So, for example, these companies write their news in English, and send it to Duolingo. Duolingo then gives it to their students, who in order to practice their English skills, help translate this news to their native language. Then, Duolingo launched a new app, the Duolingo Test Center. Duolingo is giving everyone the chance to prove that they have language skills without having to pay the $250 normally charged by the existing proficiency tests such as the TOEFL or the IELTS. Duolingo’s tests will cost $20 and will help their educational app stay afloat. Today, most of Duolingo’s revenue comes from its $84-per-year ad-free version. Only 3% of users pay, but with such a giant customer base, that adds up.
Impact : Give access to everyone to learn a new language. For example, knowing English in non-English speaking countries increases job prospects. They can make 25 to 100% higher salary.
Scale : over 300 million users (2020)
Business value (ROI) : The company is “breaking even” and close to turning a profit (April 2020).
A virtual platform that anyone can access anonymously at any time, providing counselling and answers to queries on daily life issues including health, psychosocial and legal matters.
Business model innovation :
A premium service is accessible allowing users to have their queries answered in ten minutes instead of 3 hours, and to ask unlimited amount of questions. The data it collects also has the potential to be monetized in the future. Experts are paid based on answers. Through technologies like natural language processing, Maya Apa can route questions to the right expert. They have a training module and a separate website for the experts.
Impact : Allow anyone to get answer to their health and legal questions for free.
Scale : It answered 5000 questions per day and more than 2M users interacted with the platform in December 2019 alone.
Business value (ROI) : Revenue information not available. Maya has raised $1.6 million so far.
4) Care about customers health and wellbeing
Some companies are paying particular attention to their customers wellbeing and health. Sound management of chemical to minimize effect on health is the 4th target of SDG 12. For example, the startup Yuka, with its products scanning app, is contributing to push companies to pay more attention to the real impact of their products on their customers health.
Companies are also acting on making their products healthier for the customers. Unilever, for example, has reduced the sugar content of its sweet drinks by almost a quarter.
Mental health should also be an important consideration for companies. Unilever has also been active in this area, with its brand Dove and its Dove self-esteem project, for example.
Business model innovation :
The user scan the barcode of a product with the Yuka app to get a rating. Products are analyzed independently and provide a detailed data sheet to explain how it is evaluated. The app also recommends similar items that are better for your health. The app is free with premium features (offline mode, search without scanning and dietary preferences).
Impact : Improving health and driving manufacturers to offer better products. For example, the supermarket Intermarché in France stated that “two-thirds of the French people who use Yuka have decided to abandon a particular brand or product over the past twelve months (…) ». Intermarché has changed its offer to have the highest-scoring products possible.
Scale : 17 million users (2020). 20% of customers in France use the app!
Business value (ROI) : In the case of Intermarché, the increase in value and quality is translating into an increase in price. 52% of French people say they are ready to pay more for quality products, which they say is a six-point increase in four years.
Dove is a skin and hair products brand from the multinational Unilever. Since 2004, Dove has the mission to build self-esteem in young people.
Business model innovation : Dove uses only real women in their advertising and have a strict stance on airbrushing and photoshop. They invest some of their profits to fund educational programmes to build self-esteem in young people.
Impact : Improve self-esteem among their customers.
Scale : Dove claims that by 2030, they’ll have helped ¼ billion through their programmes.
Business value (ROI) : Unilever’s Sustainable Living Brands have accounted for more than 75% of the company’s recent growth. According to Unilever, the portfolio grew 69% faster than the rest of the business.
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