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  • Customer Solution Profit

    Define Customer Solution Profit .
    Give Examples of Companies / Products

  • #2
    CUSTOMER SOLUTION PROFIT


    In this model study is done on customers where number of services are provided by giving a custom solution along with making a relationship with customers.
    A research is done by investing time and energy to know about customers so as to make a specific solution for them.
    They incur loss of short time and make money for a long time


    Companies like FedEx, Tesla Motors, PayTm can be few examples of this Model


    Earlier PayTm provides DISCOUNT!!!! & CASH BACK!!!!!! to influences consumer to buy online and creating loyal customers who may get inelastic for the price they sell at, in the future. They occur loss for short term (Rs 372 crore loss in 2014-15) but after making a habit of purchasing online and also by demonetization effect they paused these cash backs and now they are making a huge profit.



    Siddharth Mall
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    • #3
      Customer Solution Profit
      • This case whole about how a company of 36 people generate $24M in revenue, compared to 400 people generating $40M in revenue?
      • The company generates his profit by working like they identified the customer they needed, they sent 2-3 people to work there for 2-3 months, and learned everything about the customer’s business. Then they sold their product to the customer, fully integrating it into their business therefore they don’t have any kind separate team for a particular customer the work can done by 1 person only or may be part time basis.
      • So at initial stage their operating expense are more but later it will very less so the profit at earlier stage are less later on the profit increases.
      • The matrix of is Customer Solution Profit like as shown below
      Profit Models


      The business which are example of Customer Solution Profit are
      1 Patym at starting they give a lot of offers and discount but as people become more dependent on it, so slowly and gradually patym stopped providing the offers and discount.
      2 Jio at initial stage they does not charge single penny from customer and build a habit in people of using their services as we can only after jio the you tube become more famous and there are some other site also. But now they are started charging as membership fee and monthly plans.
      3 Mcafee antivirus which is provided by Intel so at starting it is free and the simple antivirus remover version is free for lifetime but after a certain period the other services become chargeable buy this time everyone become use to the services provide by it so people usually buy the paid version of it.
      4 Tata Ace as at beginning Tata provide the mini truck in the name of Tata Ace at price of 2 lakhs but now it is the most popular mini truck in India and Tata has slowly increased it price to 3.5 lakhs.

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      • #4
        PROFITABILITY THEORY
        Customer Solution Profit
        There is always a very important six letter word related to business which is “PROFIT”. Every organisation work for making profit and always invest in a deal keeping in mind the profit aspect i.e. returns on investment.
        When the amount of revenue gained from the economic activity is more than the expenses, costs, and taxes needed to sustain the activity is known as profit.
        The Customer Solution Profit refers to the theory wherein the main focus is given on the “Customer Needs” which will ultimately lead to earning profit. Now if I broadly explain the theory it says every company who is basically customer oriented on its first stage meet with some losses than gradually earns profit as soon as the customer starts accepting the product or services of the company. It is a forward looking approach taking the customer needs in future. In simple words, it defines that after a perfect market analysis understanding the customer needs a product or service must be introduced and at the initial stage it will definitely incur losses but in the long run it will reach the Break-Even point and then start growing. The company adopting this theory eventually earns extraordinary profits in future by investing heavily to capture the market.
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        • #5
          Customer solution model basically focuses on the building business on the basis of “Invest time and energy in learning all there is to know about your customers. Then use that knowledge to create specific solutions for them. Lose money for a short
          time. Make money for a long time.”
          Every company wants to get the investment back as quickly as possible but with patience one can be the market leaders.
          Understanding the needs of the customers is really important and making changes according to them will help the companies gain profit in longer term.
          Examples are-
          Whatsapp-
          After constant failure in the beginning regarding the acceptability of users the founders have made changes on the basis of apples new notification theme and brought the status update model which has increased the number of users by 250000 and after that rest is history.
          2. Tesla
          After the failure of it’s first car Roadster the company had almost reached to the stage of bankruptcy but after the detailed analysis and understanding consumer expectations of wanting a car in small budget but better performance they launched Model S which is now inarguably the best car in world in terms of cost and performance.

          Companies like Tata after launching Nano didn’t able to get better market share but the dream of providing the small car was there and after the initial failure but after detailed research and specific changes the car has picked up the pace of production and cars are selling at good pace.

          Kelloggs oats is the classic of this as they have incurred losses in the very beginning but with the aim of selling for the future generation they incurred losses in the beginning but now they are running in profits.

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          • #6
            CUSTOMER SOLUTION PROFIT MODEL

            “Art of Profitability” There are many ways to make profit and it is unlikely that your business all of them. Most people don't care enough about profitability.Too many people take numbers from unreliable sources.Customer-Solution Profit Know your customers incredibly well and create a solution specifically for them. The book lists down 23 different models which give the concept and path to be followed to result in profitable returns on investments.
            There are many ways to make profit and it is unlikely that your business does all of them. People will pay different prices for the same thing in different situations. Good profit models are easy to brainstorm and hard to execute. Specifically taking about Customer-Solution Profit model, the model revolves around the locus of customer needs.It is a forward looking approach taking the customer needs in future.So at initial stage their operating expense are more but later it will very less so the profit at earlier stage are less later on the profit increases.


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            • #7
              PROFITABILITY THEORY
              customer Solution Profit.
              This model has been described by David Zhao great knowledge of Profitability which helped Steve to gain insights into the concept .Zhao described that organisation do not much care about profitability, because they are not good in number. The company Factset knew the fact how profit can be achieved and appointed 2-3 employees to analyse the customer need, requirement and fulfil the requirement of customer. The customer solution profit focus on customer, during the initial stage, the cost is huge but revenue less, work on short term process and in long term revenue will be high and cost will be less. Know your customers incredibly well and create a solution specifically for them.
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              • #8
                CUSTOMER SOLUTION PROFIT

                The theory states that the way out to get the profits in the future has to be accomplished only when the primary focus of the company is the customers. The research and analysis of the customer has to be the primary focus for the company for the product designing since the ultimate goal is the fulfillment of the needs of the customers. The customer solution profit model suggests that at the initial stage of starting the business one has to invest time and energy in learning all there to know about the customers. Then use of the same knowledge to create specific solution for the problems faced by the customers. Lose the money for the short- time and make money for the long time.
                PRIMARY OBJECTIVE OF THE ORGANISATION IS TO UNDERSTAND THE ACTUAL NEEDS OF THE CUSTOMERS.
                The profit will gained automatically through the better understanding of the customers in the marketplace. The implementation of the theory can be determined through the examples of the various companies such as Reliance Jio, Kellogg's, TATA Nano,etc.
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                • #9
                  customer solution profit
                  The needs of the customer have a direct impact on the growth of the company. The product or the services which are provided by the companies are able to meet the desires of the customers. Basically, the customer solution profit deals with the entry of a product or a service into the market, it has to go under some phases to make a positioning in the customer's mind.
                  Whenever the product launched it has a demand and earns the less revenue. As it gets the publicity and makes its awareness in the market. So as the time as passed the sales are going to increase in the growth of the company. At the point of the time period, it crosses the breakeven point. The breakeven point is that there is no losses and gain. As if grows high it seems that firm is earning profits. And thus it's in a stable state to gain its profits.


                  It is basically to know the customer, create a solution, and develop a relationship. This causes losses early in the relationship, and thereafter significant profits.
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                  • #10
                    Customer Solution Model

                    Invest to know the customer, create a solution, and develop a relationship. This causes losses early in the relationship, and thereafter significant profits.
                    In simple words, in this type of profitability, a company invests its efforts and money to know about the customers and then finding solutions to a customer’s need. Lose money on the initial stage but gaining a lot of money in the long run.
                    In this profitability model although there is loss in the initial stage but in the long run companies can become market leader because they understood the need of a customer.
                    For Example:
                    Kaspersky: In 1997, Russian government and people around Russia were desperate need of an antivirus program to block malware, phishing attacks on their PC. Kaspersky was developed to tackle that initially it was of free subscription. But after 2003, it used paid subscription method to earn profit.
                    OLA: Initially Ola provided a lots of offers and promo codes to attract new consumers but the rate of promo codes and offers were decreased with the passing of time and with increase in customer base. Ola started earning a lot of profit.
                    Reliance JIO: JIO applied destructive marketing to attract customers by providing free data, voice calling and SMS. Now with a huge customer base, Jio is charging Rs.99 for renewal of service and thus earning the loss in the initial lose with the investment.
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                    • #11
                      There are many ways to make your business profitable and one of them is "CUSTOMER SOLUTION PROFIT”. In this approach company has to know their customers incredibly well and create a solution specifically for them. Investing time and energy in learning all there is to know about their customers and use that knowledge to create specific solutions for them. In other words lose money for a short time and make money for a long time.”

                      Let us take some examples of companies that follows Customer Solution Profit approach:
                      Reliance Jio
                      Jio at very initial stage understood the need of customer and provided free calling and 4g services to the customer and build a habit of using internet in people and made 100 million user base But now they are started charging as membership fee and monthly plans and started earning profit.
                      Paytm
                      Paytm at a very initial stage provided various cash back and discount offers to attract their customers and to influence them to buy or recharge online by providing them lucrative offers and later when they have generated there customer base they started reducing their offers slowly and gradually and started earning profit after short term loss of Rs 372 crore loss in 2014-15
                      Nestle
                      As we all know Maggie gained popularity and secret recipe that make it popular was its Maggie masala and company Nestle understood the need of customer and launched Maggie masala initially at Rs2 and as they gained customer base Nestle started increasing the cost of Maggie masala and now it cost Rs5 And they are earning profit out of it.
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                      • #12
                        If we talk about the consumer solution profit theory, then this theory is mainly focused on the “need of the customers”. In this theory the major part of investment is done at the initial level to know the customer and their need, then to create the solution for the customer’s problem and develop the relationship with the customers. This causes losses to the organization to at the initial level of this model, as the company only invests their time, people and money to their customer, but do not get return at initial level. But at the long term, this model gives a great return.
                        In other words, this model is based on the forward looking approach, in which after understanding the need of the customer the product or the service is been launched, which incur losses at the very initial stage. But, as soon as the consumer starts accepting the product or the service the profit starts increasing gradually.
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                        • #13
                          Customer Solution Profit:

                          This profit model focuses on the needs of the customers. of a business.

                          Consumers are crucial for the success of every business. No matter what type of product or service our business offers, it must meet needs of potential consumers.
                          This profit model suggests investing time and energy in gaining knowledge about the target customers.

                          After that knowledge is gained, it is used for developing specific business model that will address the problems faced by the customers

                          This approach may lead to losses for the business in the initial stages. But later it will yield results as more and more people take on the product or service being offered.

                          For instance,

                          Royal Enfield
                          Once a dying motorcycle brand, is now one of the most popular bike brand in the country.
                          But the scenario was not at all like this in 2005. The company reached saturation point, and there were only 25,000 units being sold in a year.
                          Then, RE hired a complete new team of personnel who gave the bike a new feel and look, eliminating various issues that the consumers were facing resulted in huge step forward in sales.
                          The company was able to position their product in the minds of consumers as masculine and vintage charm. This strategy paid up, and sales figures shot up, and with more 3,00,000 units being produced per year.

                          Paytm
                          Paytm is an Indian e-wallet platform launched in 2010. At the stage of digitization, the company was able to see the immense growth potential in the market. They were able to understand the need and ability of the masses and therefore introduced Paytm, which became popular quickly.
                          To penetrate the market, they offered many discounts and offers in the initial period.

                          Nestle Milkmaid
                          Nestle’s Milkmaid failed initially in the market as the company did not conducted the proper market analysis, or assumed wrong conclusions. As a result of this, their product failed.
                          But later, when it was introduced as an ingredient needed for desserts like kheer and other sweets, it was able to gain sales as this time, the product was re-designed in a way that the Indian consumers accepts it, and understand its usage.

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                          • #14
                            Customer Solution Profit
                            Invest to know the customer, create a solution, and develop a relationship. This causes losses early in the relationship, and thereafter significant profits. This approach may lead to losses for the business in the initial stages. But later it will yield results as more and more people take on the product or service being offered. This customer solution profit model is use by many company around the world.
                            Examples of company who is using customer solution profit are as follows: -
                            1. JIO

                            [IMG]file:///C:%5CUsers%5CABHISH~1%5CAppData%5CLocal%5CTemp%5Cm sohtmlclip1%5C01%5Cclip_image001.png[/IMG]
                            Reliance Jio is using customer solution profit model because it want to increase the consumer when it is giving free data, calling, and messaging for a while and now they are charging Rs. 99 for recharging with Jio prime membership for the extend of their services from that they are earning money and in every month the Jio prime member have to recharge and from that they earn money and they will gain profit out of them.
                            1. KELLOGG’S
                            [IMG]file:///C:%5CUsers%5CABHISH~1%5CAppData%5CLocal%5CTemp%5Cm sohtmlclip1%5C01%5Cclip_image002.png[/IMG]
                            When kellogg’s start their business they tried to increase their customer base so they use to follow customer solution profit and they tried to set into the mind of the people that it is the healthy food for the kids so the customer start buying their product. For many years they are in loss but after the change in the mindset of the people they start gaining profit and now-a-days they should using different method of profit.
                            1. Kodak
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                            When Kodak start it business they does not thought of profit because they want customer but after a while they start earning profit by applying different strategies in the business and few years back they are in huge loss and after that they start merging with other brands and start selling their cameras to Apple’s iphone, blackberry etc and now they are earning profit.
                            1. Flipkart
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                            Flipkart is using customer solution profit because the company wants to increase the customer and todays current scenario is that it is having loss from last 2-3 years and it has increased the customer base like anything. Its average products selling per minute it 10 items and it is running in loss and it needed to implement some changes in the business for increasing the growth in future.
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                            • #15
                              Customer solution profit theory means know your customer and create a custom solution set with multiple services. Develop the relationship with the customers. You have to invest your time and energy in learning all is know about your customer. Then use that knowledge to create specific solutions for them.
                              Lose money for a short time and make money for a long time.
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