Best Business Model: Make Your Customers an Employee

I recently starting receiving the magazine from Business Week called “Small Biz.” It is probably the best magazine for small businesses I have read in a while and I defiantly recommend it. In any case, I found a great article in the past issue about making your customers employees titled: True Believers. I did some research on the internet on this one and love the idea. Here is how it works:

Instead of dictating to your customers of what to buy and how to buy it from yourself, allow them to make that decision. Sounds confusion right? How can you possibly allow your customers set your product line and decide how to sell your products? Believe it or not, it is possible and easy to implement. I feel that the business model may not be that usable in all sectors, such as in my sector of web design, however a portion of it can be used somewhere in your business to enhance it. In addition I think this model is ideally suited for the retail industry since it has the most customer influence. In fact that is the sector that pretty much started this whole thing.

I was very impressed by the company described in the article who lives by this model. Karmaloop (Check out all our brands at Karmaloop.com) is an urban clothing company based in Boston, MA. Although I am not a big fan of Boston, New York all the way, LOL I am still very impressed. Not only does this company exhibit a great business model, it sells my favorite clothing lines!

So enough background on this one, here is how this thing works. For Karmaloop, the customers submit designs for the clothing. Allowing the customers to control the product line for optimal products. Next the company has set up an affiliate and “street team” program to allow the customers to be the salesmen and women. There are about 8,000 “street team” members who get a commission or discount for selling certain amounts of clothing. The affiliates share the same rewards, except they pull in their sales from a website that they own.

In addition to sales and deciding the product line, members also dictate the advertising by also submiting artwork for a discount on products if their work is chosen. In all, this is defiantly a win, win situation. Some numbers to this monster’s success: Karmaloop is a $4 million a year company and growing, it is only four years old, and its “street team” accounts for less than 1% of it’s sales! The less than 1% customer sales team represents almost 15% of the company’s total sales, a big accomplisment.

So if your in the retail business, learn from these guys and make the customer not only #1, but a part of the process. These guys sold me so well that I have decided to even become an affiliate. So if you are in the market for some great clothes, click this link for some great brands:

This entry was posted on Friday, January 5th, 2007 at 11:47 pm and is filed under Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.