Pay Per Laugh Business Model – Strategy With RS
Welcome to On Demand economy. In this economy customers will ‘pay for performance’. Realising this reality business are reworking on their business model to cater to this new reality.
Let us take pricing model followed by venues hosting live shows of stand up performers.
The performer promises to deliver a performance that will have the audience in splits. But the potential audiences are circumspect. What if I buy the ticket & do not find the show funny? My money will be wasted. This dilemma scares much potential audience from patronizing live shows.
Releasing this dilemma, Teatreneu Club in Barcelona, has introduced the ‘Pay Per Laugh’ system of payment – the audience will not be charged upfront & entry will be free. But every member of the audience will be will charged per laugh. Yes per laugh. To record the laugh, the auditorium owners have deployed facial recognition technology. A tablet is fitted to the back of each seat, which reads each audience members’ facial expressions and records the number of smirks, chuckles and belly laughs. Each laugh is charged at €0.30 (24p), and once a person has chalked up €24 (£19), s/he can knock themselves out – every subsequent laugh is free.
Even in India ‘pay for performance’ has made its debut in the entertainment business. But it is being implemented to ‘invite’ performers based on the ‘laugh’ they are able to generate among the audience.Comedy Clubs have ‘Open’ mike where new comers are given a platform to showcase their talent. A meter is installed in the auditorium which is ‘sound’ sensitive. It records the clap, whistle, intensity of laughter, spread of laughter, frequency of laughter & more. If a performer scores high on these attributes s/he is invited to perform as a ‘paid’ performer.
Business Lessons for us:
1. In an On demand economy customers will ‘pay for performance’. This means that business owners cannot make a promise & get away without delivering it.
2. Every business should measure how well it is delivering on its promise in a transparent manner.
3. The feedback that is collected should be deployed to ensure 100% of the time the promise made to the customers is being delivered.
4. Brands who wish to stand out in the crowd & win the hearts of customers will deliver just a little bit more than what they promise.
In this series, Rajesh Srivastava, Business Strategist and Visiting Faculty at IIM Indore gives you a regular dose of strategy case studies to help you think and keep you one step ahead as a professional as compared to your peers. Rajesh is an alumnus of IIM Bangalore and IIT Kanpur and has over 2 decades of experience in the FMCG industry. All previous Strategy with RS posts can be found here