Free services, can companies still make money?

Can you offer your primary products/services at no cost to your clients and still make a profit? It seems like a highly improbable and quite likely a mission impossible. Agree? But if it’s achievable, it will be win-win for both the company and its customers.

In Germany, any individual and/or organization can own/run public toilets. The German government requires that there should be one public toilet every 500 metres in downtown and other high-density areas; one every 1,000 metres on all other roads. The toilet/people ratio of an entire city should be between 1: 500 people and 1:1,000 people depending on the size and population density of each city.

Can you make money running public toilets? It’s indeed a challenging project. First of all, toilets are scattered across a city; that alone increases the construction, operational and maintenance costs. In addition, although using a toilet is a basic need for everybody, most of the public toilets are free. Even if it’s a chargeable service, you can’t charge much for it. How then can you make money with this kind of a venture?

In 1990, it seemed impossible for most of the competitors to make this viable, however, Wall AG, a German company specializing in street furniture won the contract that they would build and maintain the required number of toilets in Berlin at their own costs and provide this service at no cost to the public. In return, the Berlin government would only charge minimal annual management fees. Let’s see how Wall AG made this venture possible and actually created a highly successful and profitable outcome.

1. Innovative usage of space - outdoor advertising and indoor wall decoration/advertising. Because the toilets were present in downtown shopping areas, train stations and airports, the advertising revenue was an opportunity. In fact, Wall AG has received tens of millions (euros) in 5 major cities alone, including Berlin, Frankfurt and Munich.
2. Strategic partnership and complimentary services offered added value to customers - Wall AG installed public phone booths in every toilet. They earned a portion of the profits from telecommunication companies. The company also worked with American Express, retailers and restaurants in the shopping malls providing discount coupons to customers using their American Express card in the toilets.
3. Increase brand awareness through high-end toilets - besides the free toilets, Wall AG also built some luxurious paid toilets that offer services including diaper changing, shoe cleaning, and massages .etc. Customers could listen to music and read books/magazines from its large content library. This not only satisfied the special needs, but also increased its brand awareness as a quality and trustworthy service provider.
4. Cost management through high technology - Wall AG created its own cleaning services. It sent patrol cars and maintenance staff to check all toilets 3 times a day. In Berlin, they have 20 cars and offer 7/24 hour patrols to ensure they can fix problems in time at every location. They also installed an automatic cleaning system in every toilet that cost less than deploying staff.

Is this the end of the story? No. Wall AG entered into the U.S. market by building toilets for disabled people in New York. In the late 1990s, they had built over 1,000 simplified men’s toilets for free in other European cities such as Paris, London and Rome and received substantial advertising revenues. In addition, they also hired top designers from Italy and Japan to create innovative toilet products and sold it globally. In 2009, Wall AG was purchased by JCDecaux Group, the world top outdoor advertising company.

Are you overwhelmed marketing in a digital world?

Many of us have been to a hairdresser’s shop, but the experience may not be pleasant. The process started with the first step of washing your hair. The assistant recommended several shampoos, names you had never heard of. If you did not choose one, they would pick the most expensive one. When the hairdresser started to cut your hair, he/she would try as hard as possible to sell all kinds of expensive hair dye and maintenance products, as well as membership cards. What’s worse, it took so long because of the persistent marketing and up-selling.  

The competition in the hairdressing market is fierce and many of them are struggling with marketing in a digital world. QB House is a famous hairdresser’s chain that offers 10-minute cut only service. It was founded in 1996 in Japan with over 550 shops and now it has opened chain shops in Singapore, Hong Kong and Taiwan .etc with more than 125 visitors on a monthly basis on average. It only charges $10.46 for a 10-minute cut. QB House has already achieved over 4 billion yen in revenue (approximately $42 million Canadian) in the first few years. What makes it so popular and profitable?

1. Innovative water free service - QB house uses a special vacuum cleaner to clean the small hairs left on the customer’s neck and clothes.
2. Simplicity - there is a standard cubicle for each hairdresser with essential tools such as scissors, combs and mirrors .etc. in order to save the space. Customers use an automatic ticket machine to make a payment and obtain a number card to wait for the service. It costs less than to hire a cashier.
3. Convenience - there are signal lights in front of the shop and in the waiting area from where customers can check whether the service is available and how long they have to wait. For example, the green light means the service is available right away. The yellow light means you need to wait for 5-10 minutes and the red light means the waiting period is more than 15 minutes.
4. High tech - There is a sensor under each chair that can automatically send the customer’s information to the backend system that enables the headquarters to calculate real time customer flow information and make strategic decisions accordingly.

You may wonder why the founder of the QB house had so many innovative ideas. The answer is that it’s based on his own uncomfortable experience and customer feedback/surveys. In a digital world, marketers are overwhelmed figuring out how to engage customers with numerous new technologies and channels. It’s time to take a step back to Marketing 101 and focus on customer needs and behaviour. Do you really know who you are trying to reach? Do you understand the processes they take to make decisions? Can you quantify the returns on your marketing investment? And can you use the data and web analytics to do segmentation and targeting for your Customer Relationship Management (CRM) strategy?

Tips for overcoming procrastination

For some time now I have been wanting to write an article about procrastination. Procrastination is the behaviour that we know we should do something, but we intentionally delay the start date. Meanwhile, we feel guilty and stressed about the pending task. For example, many people have downloaded an eBook, but keep postponing to start reading it. What's worse, we can’t find time to read it because we get tied up doing many other maybe less important but easier things. This task has sat on the “to do” list forever.

How can we deal with procrastination? if you search Google, you will find numerous books, articles and methodologies on this topic. The Pomodoro Technique is one of the famous philosophies that assists users to complete a task faster with maximum focus. The idea is that you work consecutively for 25 minutes, which is called a pomodo, named after the Italian word for tomato. Each time you finish a pomodo, you mark an X. Each time you have the impulse to procrastinate, you can switch gears to work on another task each for a 25-minute chunk of time. This technique may work for some people, but the key to utilize this technique lies in the motivation to get people to start to do a task in the first place.

Procrastination is harmful in that we may concentrate only on one thing, however, since we continue to procrastinate, we end up doing a lot of non-essential stuff. As an example, before writing an essay, a student might get engrossed in a video game, feels hungry after the game, has something to eat and then feels sleepy and falls asleep. All designed to avoid starting the essay which will take some concerted effort.

The following tips may work for those who have difficulty getting started on an important task:

1. If the task involves creative thinking, start to think about it in advance and make sure you divide the whole task into different sections. This way it breaks down and makes it easier to begin. For example, instead of thinking the every aspect when you design a web page. You can focus on the page title at one time and the layout at the other time. To some extent, it allows the whole task become more structured and therefore you need less creativity for each piece.

2. Set a deadline and involve a third party to check the result. This creates a sense of urgency. Also, once you have to report the progress to others, in general, you are more committed to the task itself. This technique has widely been used by those who wants to lose weight. They set a deadline, let’s say, lose 10 pounds in three months. They then share the goal with their family members who will keep an eye on their diet, join a gym or hire a personal trainer.

3. Invite other people to help you complete the task if possible. Divide the task into small parts. Each person is in charge of a portion. Teamwork can increase the efficiency if we use it properly. One of my friends wants to refurbish her basement. This topic has been mentioned every time when I met her for almost 6 months now. I suggested her why not you invite your husband and kids, each person takes responsibility for whatever he/she is interested. It’s early April now, her basement transformed into a lovely entertainment room.