Business Models do Matter
Not too long ago, I watched a TV program about COSTCO which explained why the company was so successful. It revealed several of their “secrets of success” such as no signs on their aisles, store layout to create maximum impulse sales, and most importantly, the preparation that entered into their apparent simplicity. Chief among them was the selection of products and limited choices for consumers. COSTCO purposely limits the number of products in their stores in each product category to those which provide the best value to the consumer. This simplifies decision-making for their customers.
The program prompted me to reflect on the genesis of my own Venmark International business model. Prior to founding The Venmark Corporation, I wrote the national sales training program for Fireman’s Fund American Life Insurance Company and was subsequently approached by a company who developed marketing plans for small businesses. They wanted me to create a product publicity company using the life insurance business model. And they wanted to do this for two reasons: first because publicity should be the first step in any marketing plan because it is powerful, a true marketing equalizer, and it is free! Secondly, because of the efficiency of the insurance business model as it relates to the communications business.
In the life insurance business, salespeople don’t have to be actuaries and underwriters, they just have to know the features, benefits, and applications of their policies in order to sell them. Very efficient. That efficiency didn’t exist in the advertising and public relations businesses with their conventional business models where account executives were highly compensated and beyond the scope and reach of the majority of small businesses. Moreover, their focus was on “creative solutions” and not “free publicity.” Consequently, highly professional and effective product publicity services were not available to startups and small businesses at reasonable fees. Ironically, the very companies who could benefit the most from publicity.
Given the above market reality, I created a business model which involved teaching salespeople how to sell publicity and writers how to create and write effective press releases. This was coupled with creative photographic direction and accompanied by manufacturing-like, automated production systems. This novel business model allowed Venmark to provide high-level, creative product publicity services to small businesses on a project basis for very reasonable fees. We explained our offerings very simply without fancy proposals, annual retainers, and the costly stuff of ad agencies and PR firms.
Like COSTO, we simplified the decision-making process for our small business clients because publicity is the most cost-effective marketing tool and Venmark International’s business model is logical. It is easy for prospective clients to see how we’ve designed a process that works for them. As mentioned above, it has allowed us to provide highly professional publicity services which are extremely valuable and measurable for hundreds of small businesses since 1977, many of which have been hiring consistently since that time. Business models really do matter.
© 2014 Steven M. Stroum