B2B Marketing Assignment - 1

Section A
Case – Making stickK stick

By-
Shorya Parihar
190101109

Q1 What is the business model and what would change if it takes a B2B approach?

Ans.
StickK used tenets of behavioral economics to help users reach goals and maintain research
partnerships with various universities, which helped take informed future product decisions.
The Business Model Canvas of StickK for B2C Approach is as below:

Key Partners

Key Partners for stickK consist of software application developers, investors,

referees / friends of users who give accurate and timely information of usage,
research institutions for further guidance and development of application.

Key Activities

It works in following 4 steps from the user:

1) Set a Goal
2) Set Stakes
3) Set a Referee
4) Ask for Support

Transfer the amount to concerned parties.

Key Resources

The front-end application and their supporting back end features. Intellectual Property
Right (IPR) regarding the application.

Value Propositions
Since stakes are involved and loser loses all of it, discipline and dedication get imbibed in
usage. Further, money going to referee /friend /anti- charity in case of failure to attain
goals motivates people. Goals of other applications like PEER Trainer, Virgin Pulse,
Healthy Wage and Keas can also be fed in the stickK application and wager be set around
it.

Customer Relationships
Customers typically expect honesty and integrity in transfer of wager money being sent /
delivered to the ones as indicated / fed in the application – referee / friend / anti-charity,
etc. Customers expect accurate functioning and timely grievance redressal with respect to
the application.

Channels
Online Application and Website for Mobile and laptop / desktop users.

Customer Segments
Everyone who wishes to achieve something in both professional and personal space of his
/ her life. Typical Customer Segment includes people who are ready to put something to
wager for achieving their goals in life – both short and long terms. Some unique goals are:
pass my citizenship test, learn to play fiddle, finish reading bible, save $200 pay check,
clean garage, lose weight, go skydiving, etc.

Cost Structure
Typical costs are associated with employee salaries, research costs paid to developers,
scientists, economists and research institutions involved in the development of the
application, amount transfer costs from and to users.

Revenue Streams
Revenue is generated from the Wager Money. stickK collected a percentage of wager
money, which varied based on the stake’s destination. stickK takes no money when the
money went to user, but takes 19.5% if the money went to a charity and 29.5% if wager
money goes to anti-charity.

The following would be the changes if stickK goes for B2B Approach:

• The shift from B2C to B2B segment requires a constant need for adding resources
such as Account Managers, Web Designers, and other crucial resources required for
 the maintenance of product for each client. In the case of B2C, since the same
platform has been used for many years, resulting in the removal of glitches from the
Operating System, a staff of mere a dozen employees was required to grow the
platform to millions of users.
• There would be a shift from the stakes system to a points and rewards system.
• There will be partners who would approach StickK or vice-versa for putting up their
advertisements, offering their products as incentives which are in turn part of users’
goals instead of making corporation asking their employees to pay
• The B2B customers, being corporates, require a unique private label site. This shift
would require StickK to create a customized platform for each of the customers,
shifting from its Product-based Business model in the B2C segment to a partial
Solution-Based Business Model as per client’s requirements.
• Relationship Building with corporations will play a huge role for long-term
businesses.
• Corporations would approach stickK for using wager money as donations, of which
a cut could be offered back to stickK.

Q2 How does stickK make money? Calculate revenues for B2C model and B2B
model. Which one is more lucrative?
Ans.
Revenue Generation for B2C Approach:
Revenue is generated from the Wager Money. StickK collected a percentage of wager
money, which varied based on the stake’s destination. StickK takes no money when the
money went to user, but takes 19.5% if the money went to a charity and 29.5% if the
wager money goes to anti-charity.

Revenue Generation for B2B Approach:

StickK charged a flat start-up fee of between $20,000 and $50,000 to develop a private-
label platform for the client. StickK also charged a monthly administration fee of
$10,000 to $20,000 depending on the number of users.

B2C Calculations:
Contracts per year = 70000
Contracts with stakes = 70000 * 32% = 22400
Contracts which generate revenue for StickK (Charity) = 21.6% * 22400 = 4838
Contracts which generate revenue for StickK (Anti-Charity) = 52.1% of 22400 = 11670
Failure Rates for Anti-Charity = 100% - 87.1% = 12.9%
Failure Rates for Charity = 100% - 80.1% = 19.9%

Revenue = 19.5% of contract amount (Charity) & 29.5% of contract amount (Anti-
Charity) Revenue from Charity contracts = 19.5% * $360 * 19.9% * 4838 = $67,586
Revenue from Anti-Charity contracts = 29.5% * $360 * 12.9% * 11670 = $1,59,877

Total Annual Revenue for B2C Case = $2,27,463

B2B Calculations:
1 Deal / 2 months = 6 deals / year
Flat Start-up fee range = $20,000 to $50,000
Mean of Flat Start-up fee range = $35000 (Software Development)
Monthly Administration fee = $10,000 to $20,000
Mean of Monthly Administration fee = $15000
(Assumption – Client on the 1st day of the year)
Total Administration Fees = $15000 * (12+10+8+6+4+2) = $630000
Total Startup Fees in cost = $35000 * 6 = $210000
(Assumption - 2 account managers per year)
Account manager costs = $85,000 * 2 = $170000

Total Annual Revenue for B2B Case = $ 630000 - $170000 = $4,60,000

Therefore, the B2B case is more lucrative than the B2C case.
Q3 What would you recommend to Jordan Goldberg?
Ans.
As per the calculations done in the previous question, the B2B Approach seems more
lucrative than the B2C Approach. Also,
• B2B Approach will be a fixed source of income, as it does not depend on the
preferences and performance of the user.
• B2B Approach will be more systematic and will give a holistic financial
performance.
• The B2C Approach will be more uncertain and difficult to predict. The B2B sector,
being price inelastic and more conscious about the physical and mental health of its
employees, will provide a steady derived demand for the StickK platform
• However, the B2C Approach should not be taken away entirely as revenue
generated from B2C should be invested in the further operational costs of B2B
• StickK’s business value is to eradicate the Obesity epidemic. The B2B platform
can be used as an execution platform for health-related commitment contracts.