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How To Choose Winning Online Business Models

by Michael J. Russer

Dear Mr. Internet:

I'm hearing about all kinds of new ways to market myself and my listings online. Is there some way to tell if a particular new method or system is worth trying?

Barry Shealy
CENTURY 21 Bob Capes Realtors
Columbia, SC 29210

Dear Barry:

The beauty of the Internet is that it breeds innovative ways to do business. The tough part is figuring out which online business models offer effective ways to keep you on the competitive cutting edge—without getting sliced.

Fortunately, it's fairly easy to test a new online marketing method and quickly determine its viability.

First, consider how well the model meets the needs, wants, and capabilities of the Internet Empowered Consumer, or IEC. (See: " 21st Century Practitioners Learn to Give Up Control to Consumers.") Ideally, a viable business model will

Respect the IEC's privacy and desire to maintain control.

Provide a new and improved way to do something that not everyone is offering.

Be easily understood and implemented. If you have to educate consumers about the model's benefits or it requires a radical change in their behavior, you're fighting an uphill battle.

Provide a payoff high enough to overcome users' inclination to behave the way they usually do.

A fifth factor you should consider is risk. You may risk the investment of your time or money or damage your goodwill because of unmet consumer expectations.

Let's look at two new business models that are getting attention: One is basically an online listing presentation service that helps you pitch your services via an online presentation to sellers who have registered at the site. The second is the online real estate auctioneer that allows consumers to buy and sell property via a real-time online auction process. (See " Sold Online . . . Almost".)

Using a scoring system of 1 – 5, the table below gives a quick overview of how well these new business models meet the criteria of viability:

	Online Listing Presentation Services	Online Auction Services
Builds Relationship	Score: 5 Such a service (HomeGain.com is the only one operating today.) uses the Internet to give consumers more control and privacy when evaluating salespeople. The service allows consumers who are thinking of selling to evaluate salespeople and their marketing plans anonymously and objectively before meeting them. HomeGain's service is free for consumers.	Score: 4 Although consumers have a great deal of control and privacy, the services often require the use of an intermediary, or salesperson.
Provides Unique Value	Score: 5 Short of surfing the Web, there's no other way for consumers to screen listing salespeople anonymously.	Score: 4 Traditional auctions have been around for a while, however online auctions are new
Easily Understood and Implemented	Score: 2 This is a new paradigm that requires a fair amount of consumer education for “by-in”	Score: 3 While easily understood, consumers may be slow to shift to non-traditional methods for purchasing a home
Perceived Benefit	Score:3 Many potential sellers may see the process as a “hassle” compared to just using a listing agent they already know	Score: 3 An easy decision for sellers, less so for buyers given the size of the transaction and potential perceived uncertainties
Agent Risk	Score: 3 There's a cost to being part of such a system. You'll also spend time creating marketing plans, with no promise of ever being contacted.	Score: 4 The financial risk, if any, depends on the auction service's fee structure. And if salespeople don't carefully explain the process, they may encounter unmet consumer expectations.

This exercise isn't meant to create a definitive means of measuring the success factor for a new marketing model. But it does give you a way to subjectively evaluate new business methods to decide whether they're worth pursuing.

Not every new idea that comes down the digital pike will be a winner. But whether you succeed in your marketing efforts depends on your ability to identify, evaluate, and adapt to new online business models that may just end up transforming your business.

"Shopping" on the Internet becomes a strategic issue if you can quickly, easily, and consistently find better prices for business-related items than your competitor.

The advent of "shopping-bots" like RUSure make this a snap! RUSure is a "browser companion" program, downloadable for free, that activates anytime it senses you are on a shopping site.Once you click on a product (i.e. digital camera, software, book, etc.), it will immediately search other sites for a lower price.The animated interface is extremely clever (and entertaining) as it goes through the comparison process.

The long-term result of these kinds of tools is that they make the online shopping comparison process so easy, they keep steady downward pressure on prices -- which is great for all of us that know about it!

Published: March 29, 2000

Use of this article without permission is a violation of federal copyright laws.

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Michael J. Russer (a.k.a. Mr. Internet®) is an internationally acclaimed speaker, trainer, author, and strategic consultant to the real estate industry and small business. He is also the exclusive Internet columnist for REALTOR® Magazine, the architect of the revolutionary e-Productivity^TM system and leading voice for the use of Virtual Assistants in small business. You can subscribe to his free monthly leading-edge newsletter ePOWER NEWS by going to ePowerNews.com.

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