There can be many reasons for implementing a STEP solution.
Perhaps you're keen to achieve a single view of product, customer and other master data.
Maybe you're hoping to optimise the processes along your master data value chain, enabling feeds of structured product information to essential marketing and sales channels, such as a webstore.
Delivering on these business drivers results in a master data platform that supports your organisation's current business model. These drivers help your company execute faster, obtain better and more reliable data, spend fewer resources on mundane tasks, break down silos in the organisation, and deliver many other benefits.
But what if you could use STEP to devise an entirely new business model?
In this article, you're going to hear some past accounts of how STEP provided the catalyst for exciting new sources of revenue and bottom-line growth through business model innovation.
The first example is a STEP project I led for a company that had grown quite big within a single product category.
Over the years, they had built an impressive homegrown system that successfully supported their single category focus.
But this market dominance had become a problem.
Their market leadership created little room to grow, creating the need for expansion into other product categories.
However, this was easier said than done.
Over the years, they optimised their internal systems for the single category. When they investigated adding new categories with different data and process requirements, it simply wasn't feasible to extend the legacy system.
With the STEP solution we implemented, they got a new platform for their product data that not only supported the complex requirements of the existing product category but also enabled easy expansion into new categories.
They now offer millions of products across more than 20 high-level categories and hundreds of subcategories.
A few years ago, I headed a STEP project for a large construction equipment rentals company that possessed many physical locations and a rapidly growing webstore.
The core business was doing well, but they were not fully taking advantage of their customers' unique situation when they walked into a store or visited the website to rent a piece of equipment for their building projects.
Their customers required additional related items and accessories that would be consumed as part of using the equipment.
The problem was their original system couldn't suggest these additional items, leaving the customer to remember and do the relevant searches, resulting in lost sales opportunities.
By transforming the customer interaction from "taking orders" to advising the customer about the type of construction task they were involved with, it became possible to cross-sell a range of products that the customer would otherwise have gone to a competing store to collect.
Within the webstore, the related products were carefully linked as up-sell or cross-sell options to each piece of building equipment, therefore maximising the revenue opportunity for each transaction.
But we went one step further and provided a personalised customer experience with detailed guidance on how to use each type of equipment for different building projects, which furthermore increased the customer loyalty and the average order
value.
In his best-selling book, The Long Tail, author Chris Anderson describes how 'endless aisles' of webstores represent a compelling business opportunity.
His idea is that most companies tend to focus their product assortment on offering the best-selling items in their market, which drives massive competition.
However, if a company can offer a high volume of products that only produce a sale here and there, the competition would be smaller, but the combined sales would add up to a significant amount.
The 'endless aisles' concept works on the assumption that:
Products that fit this description are mainly digital products delivered as downloads or streaming, but the model has even proven itself in the world of physical products.
In a previous STEP project, our challenge was to pursue a long tail strategy, thereby tackling the three points above that are inherent in selling physical products.
For a long tail strategy, the setup would need to ensure that:
Point 1 is the most relevant to the Master Data Management (MDM) team.
It's also the hardest nut to crack.
For distributors and retailers, onboarding lots of products from many suppliers presents a challenge.
Each supplier has a different level of maturity and sophistication in terms of how they deliver data about their products and to what extent. Data pools and Product Data Syndication solutions can be part of the answer to this challenge, but it 'takes two to tango'.
If you have hundreds or even thousands of suppliers, you will find that many suppliers will not necessarily dance to your tune unless you are an "800-pound gorilla" in your industry.
To embrace suppliers of different levels of sophistication, we defined a range of supplier data delivery options. Each supplier could choose to deliver data in a way that matched their particular level of sophistication.
But of course, we incentivised for the highest level of sophistication.
The most sophisticated data delivery mechanism allowed for a fully enriched supply of all relevant content, images and supporting documents. The supplier with the best data would present the best information to potential clients, increasing their likelihood of sales.
We also relaxed the data requirement for long tail products and removed any manual checks so that as many products as possible could flow directly from the supplier's files to the webstore.
A variation of the long tail strategy is to leverage the trust and customer experience that consumers already place in your brand.
A prime example of this business model is Amazon.com. 3rd party vendors have sold on Amazon’s platform for years. The sales from these sellers now account for more than 50% of Amazon’s total revenue. On top of that, Amazon is making billions of dollars from selling advertising and warehouse services to its third party sellers.
In this situation, the challenge you face is balancing consumer trust and loyalty with the reward of increased sales of products that are cheap to onboard and administrate. Sellers must commit to meeting your high standards whilst providing the buying experience that your customers have come to expect.
In a recent project, I led the team that received the product catalogue feeds from vendors.
Our priority was to ensure two goals:
We built a sophisticated data quality 'firewall' that checked incoming data feeds for a long list of data quality issues and data completeness to achieve these goals.
We needed a simple way to communicate issues with 3rd party vendors, so we built a detailed list of error messages and resolution instructions that got sent to each data feed owner whenever data defects were found.
This firewall system created a feedback loop that allowed 3rd party vendors to self-correct their product data without the need for more costly and time-consuming internal resources.
The result was a scalable onboarding process with very low variable costs per onboarded product.
There are many ways your business model can be extended or completely transformed with STEP. In this article you have learned just a sample of what is possible.
I have provided just a few examples of how you could extend your business model with e.g. cross-sell and up-sell capabilities.
I have also discussed building a long-tail product strategy, again underpinned through the STEP architecture.
You could also consider transforming your website into an Amazon-style 3rd party marketplace.
If you would like to explore in which ways your business model could be extended by leveraging the successful STEP implementations we have delivered in the past, the next step is to book a STEP Discovery call.
