New Venture Lab: Equipping Christian Entrepreneurs

Question

If you have existing customer base used to one business model, is it smart to change or start new brand?

Answer

I think it all depends upon the size of the company and the entrenchment of the brand.  For example, NetFlix is shifting from DVD delivery to online streaming video.  They are a large company with many customers and their transition from one to service to another is to offer both simultaneously, educate the customer on the benefits of switching, giving free access (making it easy to try) and I don’t think they will skip a beat in slowly phasing out the DVD delivery over the next few years.  When the extra cost of the DVD system outweighs the contribution margin of serving those remaining DVD customers, they will likely announce a shutdown of that service.  My guess is that it will be a 3 to 5 year transition and I think it serves as a good model for a business model transition.