The 'All Or Nothing' Business Model

I watch a lot of 'behind the scenes' business shows like Restaurant Impossible. Kitchen Nightmares, Mary Queen of Shops and Tabatha's Salon Takeovers; and the most common mistake they identify in the failing businesses is the business owners developed a business model with too many options for the customer to consider eg a menu with 20 entrees, 30 mains and 10 desserts.

Imagine that? Even just reading those numbers is making me feel overwhelmed.

Result: Customers either don't buy from that business at all because it's too hard or they choose probably one of the 3 most common dishes they already know (which makes life easier for the kitchen staff).

Why?

Because choice complicates the sale so showing customers (aka students) everything you can do for them, all at once, doesn't increase the bottom line like you might think – it actually stifles it.

So what then happens if you take the reverse approach and develop an 'All or Nothing' Business Model?

Let me share with you my travelling experience and see if you believe this is helping or hindering their business model, and thus the bottom line.

Last year, I was travelling around the Margaret River region in Western Australia and saw an animal farm attraction which had rides as well as the option to pat baby animals.

Now I wasn't interested in going on the rides but I thought it would be fun to pat lots of baby animals so I drove into the carpark to see what it might cost.

To my surprise, there was only one entry fee including the rides (except dodgem cars which was extra) of $20 per adult, pensioners $19 and children $18 – children under 2 were free.

Now as a business model and niche, it looks great on the surface – very simple and easy to manage – for the small business owner.

But let's look at it from the view of the customer.

Firstly, if you were a family with 2 children, that's $76 to pat some animals and go on a few rides which I believe is a very expensive day out.

Secondly, I'm sure there's lots of people like me including many travelling pensioners, who don't want to go on the rides but would love the opportunity to relax for 30 minutes or so and pat some baby animals.

But the 'all or nothing' business model didn't consider people like me or the cost they were asking families to pay which was probably why the carpark was empty.

Now think about this: how many more customers could the business attract by adding in just 2 more pricing options:

Option 1 $10 to pat the animals
Option 2 $50 Family pass (2 Adults and 2 children)

How many more families and travellers would have come to the farm if these options were also available?

I know I would have stopped and as the carpark wasn't full, think about what an extra 10 people a day ($100) could do to their annual bottom line?

By the way, it's conservatively an extra $10 000 for doing nothing extra in running the animal farm.

So would you want that in your RTO – an extra $10K for doing nothing except creating another pricing option? I know I would.

Now I understand the importance of needing to stand out from the crowd and ensure your products and services (and pricing models) speak to your ideal customer/student.

And maybe the people who just want to pat the animals are not the customers this small business desired, and that could be a sound business decision for them to make.

BUT I believe you have to be careful to ensure you are not turning away potential customers and quite frankly, easy money, by developing a business model which suits you rather than your customer.

So have you built an 'All or Nothing' Business Model which is actually hindering instead of helping your RTO?

Are you offering too many options to your potential students instead of simply asking them what training they need right now and converting that sale first?

Or are you only offering 1 option which works for you but doesn't work for your students or meet their current training needs?

And here's my final thought

If you have created a business model which isn't delivering the return, what's one thing you can do to easily convert those customers/students who are driving into your carpark and driving back out again (or landing on your website and quickly leaving) because one size definitely does not fit all.

Dedicated to your success

Tamara