Overview
1.How does Stickk help consumers accomplish their goals? Articulate the key features of Stickk that facilitate goal attainment.
Stickk was relied on some of the aspects of behavioural economics to help consumers complete their goals. It started with the idea of using commitment contracts for the consumers to achieve a goal. Stickk was modelled around individual commitment contracts wherein the consumer had to register with Stickk and set a goal for them. Some of the common goals were lose weight, maintain weight, race and quit smoking. Stickk provided the consumer with these generic options and also allowed them to set their own custom goals.
After this Stickk allowed the consumers to set stakes for themselves so as to leverage these stakes to help consumer achieve their goal. The stakes were either to be payed full-fledge or were divided in equal part depending on whether the goal was a one-shot commitment or an ongoing one. So, for example if a consumer had a goal to lose 10 pounds in 10 weeks and had staked an amount of 100$ then these 100$ would be divided as $10 in 10 weeks. So, if the consumer failed to lose 1 pound in a week that $10 was forfeited by the consumer. The stakes which the consumer forfeited would go either to a friend, a charity or an anti-charity (a charity which the consumer might be against) depending on the choice of the consumer. Based on the statistics, it was found that consumers who chose anti-charity were most successful in completing their goals followed by the ones who chose charity and the who chose friends.
The third step was that Stickk asked the consumers to name a referee for their commitment contract. The referee reported the consumer progress throughout the contract. If the reports of the consumers and the referee did not match, Stickk considered referee’s report to be true. Although consumers had the option to be their own referee Stickk recommended to choose an impartial referee for better results.
The last step in the contract was to identify supporters. The consumers blogged about their progress and could post this information on Facebook and other social media. Supporter who were mainly friends, family, health advisors, coaches and doctors were invited to join Stickk by setting up their own account and leaving support messages for the consumers. Stickk believed that getting support could get better results.
With all of the above features available to the consumer Stickk had developed an integrated model which helped consumers to achieve their goal. Apart from the referee and supporters
which were secondary, the most important aspect or the key feature of Stickk’s model was the stakes or wagers which the consumer had to set. It has been discovered after years of research that people who put stakes either money or reputation were most likely to achieve their goal. As a result, in the Stickk’s model about 32% of the contracts included stakes and 80% of these contracts which included stakes got committed too.
2.How does Stickk make money? Do they have a viable business model?
Stickk’s model was focused on commitment contracts which included stakes. This was where the money came from for Stickk to run its operations. At first, when a consumer decided to set a wager Stickk asked them for the credit card information and would charge the card for the amount that they staked. After the completion of the goal depending on their progress Stickk would refund the consumer the money. But charging the full amount up-front and sending it back later made Stickk incur much higher credit card fees. As a result, after 6 months of its launch Stickk started charging the consumers only when they failed.
Apart from saving on the credit card fees, Stickk’s revenue was from the money they collected based on the stakes destination; no money was collected when the stakes went to a friend, 19.5% of money was collected when stakes went to a charity and 29.5% of money was collected when the stakes went to an anti-charity. These percentages added up for Stickk’s revenue.
Behavioural approach of people played an important part in Stickk’s revenue model just like its business model. Statistics suggested that consumers were more likely to choose anti-charity rather than charity and friends as a destination to receive their stakes. 52.1% consumers chose anti-charity while the remaining percentage was divided among charity- 21.6% and friends- 26.3%. This naturally worked in the favour of Stickk as they collected the highest percentage of money from this channel.
Problems
3.How might the business model differ with B2B approach?
Addressing an elite business clientele is a complete different ball-game unlike the individual consumers. Staple and ACS acted as a test launch for Stickk to learn and understand how their model may be designed to suit the need of the business client. Unlike the individual consumers of Stickk who had the similar commitment contracts, different businesses needed to be attend to with different models as well. In the case of Staples, Stickk ran a 90-day reward program in which there were no monetary stakes involved but instead corporate rewards were earned on completion of a goal. Similar to the individual commitment contracts, the B2B contracts also had referees and supporters. On the other hand, ACS wanted additional functionalities that staples did not require. ACS wanted to raise awareness and also wanted its user’s supporters to donate money through Stickk for encouragement.
Although both the businesses had different functionalities one thing which Stickk understood that all the future B2B contracts would require a private label which was created for both these cases.
Another important aspect which Stickk had to tackle was the revenue model for the B2B contracts. For this they came up with a novel revenue model, rather than collecting money from failed contracts (due to lack of monetary amounts in such contracts) Stickk charge a start-up fee for $20000-$50000 which mainly went to development private label. Stickk also charged an administration fee of $10000 to $20000, depending on the number of users.
Entering the B2B market would be a shift in trend for Stickk. This was a brand expansion for Stickk and they had to ensure that adding new relations in form of B2B contracts would not affect their individual commitment contracts which potentially had grown to a million consumers. Stickk would also have to staff new staff and require a new site while monitoring and allocating their resources for building strong relationships with business clientele and maintain those with the individual consumers.
Recommendations
4.Which model, B2C or B2B, would you like to recommend to Goldberg?
The business model for Stickk is currently a B2C model wherein Stickk has commitment contracts with individual customers. With a strong base of a million consumers Stickk has made an impact in the B2C market. But with the four business clients which Stickk took aboard Stickk’s B2C model differentiated and emerged as a B2B model. This was a change in trend for Stickk. They were entering a new market and the B2B contracts were their brand extension from the individual contracts. As a result, I would like to recommend Goldberg the B2B model.
Stickk have learned and grew in the individual consumer market and similarly will have to learn and grow in the B2B market. Even though the process might be the same the approach is different. The private label is an important differentiation in this approach. Stickk will have to come up with a private label for each business client as every business client will have a different set of functionalities that they require. Since the basic model of Stickk is integrated and of high quality adding functionalities would not be a tough task. Another important aspect is the revenue which Stickk can generate from B2B contracts. Stickk can use the start-up cost for building a private label by using an in-house we development team or may contract other firms to do so. Also, the monthly fixed costs from the business clientele can act as operations revenue for the firm. Besides the revenue another thing Stickk can get through the B2B contracts is a strong relationship with the business clients which in itself is beneficial for networking among the business industry.
With an expansion to B2B model Stickk can continue with its B2C model for the individual consumers and also make sure to maintain a good relationship with these consumers.