At the latest ATI conference, held in Milan last Thursday, I had the chance to capture some interesting best practices in identifying and serving an anti-cycle market.
An anti-cycle market is one that goes up when anywhere else sales go down.
A typical example are the “Hobby & Works” type of stores, that when economy downturns, see their sales soar, cause people is looking to help themselves in order to save money, or/and have plenty of time in their un-employment condition to do home-works for their home or the one of the neighborhood.
There is a peculiar anti-cyclic market that every company has at hand-reach and can tap.
It’s the service side of their own business.
Service has all the characteristic of an anti-cycle market: It goes up, when new units sales go down:
People tending to refrain from new investments need to keep running their existing plants and machinery. Extending the useful life requires more maintenance, and pushes the machinery towards the area of larger performance degradation, if not even to the end-life of the machinery where lays the chances of catastrophic failure.
Upgrades and revamping of existing units are less risky than venturing in realizing whole new plants. Furthermore, stops and reduced capacity utilization are surely a better time to halt the process to introduce modifications than a time of full speed operations.
But how to tackle this potential market?
At ATI conference I had few conversations that highlighted some interesting paths:
The first example comes with EDISON:
The Energy Company EDISON has highlighted how they have recently bought a new ESCO, (Energy Services Company) capable to suggest to industrial business and municipalities a portfolio of energy saving solutions, and implement them on existing power islands or districts.
The interesting piece of the story is that an Energy Company (EDISON) has invested into an ESCO, a business whose mission is to reduce the Energy bill – and therefore the revenues – of its parent company.
In reality the move makes perfect sense: EDISON has a large portfolio of Clients eager to save money, that, matched with the ESCO capability, will assure a stream of projects that the ESCO would never tap by itself.
EDISON brings to the business model a portfolio of Clients, ESCO a portfolio of capabilities.
The second example I run into was while talking
with a former GE colleague.
This Senior engineer highlighted me how their new energy saving solution ( the ORC OREGEN) has won the attention of a Middle East Oil & Gas Company, thus fighting the myth that efficiency is not a topic of interest in the Gulf region.
The reason is that the CEO of the Oil & Gas Company sees every kWh saved, not per the costs of the fuel injected into his plants, but as the price of the fuel he will sell on the market.
This example clearly shows how shifting the customer attention on the right message, can win big.
The third example comes from a different industry:
the wholesale of offices tools.
Here a friend of mine has just started an on.-line business with the aim of providing a mean to the Office Tools Shops, to aggregate their demand, and thus increasing their bargaining power toward the companies providing the office products.
Till here: nothing unusual… if not for the piece of information I can add to this business model:
My friend runs since years a quite successful software house whose main product is an ERP suite for Office Tools Shops, that counts more than 400 clients in Italy.
Again, he was able to tap into the service side of its business (more aggregation - less ERP needs…) connecting a service solution to an existing portfolio of potential Customers.
I hope that these 3 examples may help you light-up some new idea.
In case you need a hand to refine it or to brainstorm a bit more:
I will be happy to help.
Just call me at +39 02 8719 8498 or drop me a line!
Have a nice Summer!
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