Value-added Services
For any business, it is important to be able to increaseÂ? their potential customer base andÂ? increase their connections with current customers. Of course, the ability for a business to do this without the two interfering with eachother is always a difficult juggling act. How easy it is to develop a new aspect of a company while maintaining the focus and attention that the original and/or current aspect of a company. This is especially true for start-ups trying to capitalize on a broader focus. It is easy to lose traction with a small staff stretched too far for too long.
What a company must then look at is the cost-benefit trade-off between increasing their customer base or increasing their sales with their current customers. The Real Canadian Superstore, a company we think of as Canada’s attemptÂ? at aÂ? Wal-Mart or Costco, has a variety of clever ways that has taken the company beyond the simple boundaries of groceries and socks. One of their first moves was to establish their own, in-store bank. More than just a credit card, Superstore was one of the first companies to offer no-fee banking, with interest gained on any savings the customer has in their account, and even the opportunity to apply for a mortgage. Now Superstore is offering their own cellphone service. Of course these services are piggy-back partnerships with large players in the industry, but the potential userbase allows Superstore to act as a wholesale customer and provide added value for a customer with these services. The company doesn’t lose focus on their core business, and the new services are implemented so they don’t detract from or tarnish the company. Most people who we know who use these new services are quite satisfied, and it gives them a stronger tie to the “grocery” store.
This is fairly similar to eBay owning Skype and PayPal. These services can easily be added on to their core business of online auctions, and if done right, give the company a broader userbase, for example, tapping into the popularity of Voice-over IP (VoIP), and providesÂ? value for their current userbase. eBay users are obviously comfortable with the Internet as a platform to do business, and they won’t have the hang-ups that the average person may have to make a move to something like a VoIP phone service. Some of the new features of Skype, like the newly released, real-time translator,Â? are going to be key to not only Skype’s success, with competition heating up quickly in the market, but also eBay’s success, with competition heating up in that market too.
AOL and the recently release AIM Pages is another example of a company expanding their services correctly. We’ve mentioned previously that AIM Pages provides a very interesting opportunity for AOL/TimeWarner to monetize the potential of their collection of digital content. We think the site has been done properly, on a Web 2.0 platform, and will probably make a nice dent in the social networking market. Google, on the other hand, has released a variety of programs that just don’t have the same overall affect. The company obviously want to increase their interaction with their customers, moving away from being a search engine almost exclusively to being comparable to a Yahoo! and their growing list of services. I feel the company is getting by with their name alone on a lot of these latest releases, but Silent Rob is quick to point out the key to distinguishing what we’ve liked and haven’t liked about Google as of late and that the company shouldn’t be judged too quickly.
What Google seems to have done right, or done well, with their latest products is acquiring companies that have done things right. The acquisitions of Writely and Sketch-upÂ? offer value to the average computer user. The products are easy to use, and in the case of Sketch-up, builds on one of the more popular Google applications, Google Earth. It would make sense that Google would be able to identify solid companies and release them effectively, harnessing the talent and creativity of those outside of the Google’s umbrella, and I’m interested to see how Google’s infiltration of Olive plays out. Will Google be able to release a comparable product, or will it lack whatever it is that these smaller companies have that makesÂ? their productÂ? special?