Importing A Business Model
Hello again, Stevie here, today I want to look at importing business models.
It’s certainly true that what works in one country doesn’t necessarily work in another. But it is also sometimes true that you can save an awful lot of research time by looking at business models used in foreign countries and importing them. This is particularly so if the country has a similar culture. Like Canada and the United States or maybe the U.K.
So, I was somewhat intrigued when I studied how Hassle Free Boilers had entered the U.K domestic energy market by “borrowing” a business model from Canada.
Background To The U.K Market
The U.K market had been pretty much tied up with big corporates like E’on and British Gas. Despite pressure from the regulator and to some degree Government prices remained stubbornly high so the market was ripe for a disruptive influence. I must admit to being a big fan of disruptor business models. I think it’s that old “against the odds” thing in me that likes to see a David triumph over a Goliath.
So, what exactly did Hassle Free do?
As they say, let’s start at the beginning because it’s a very good place to start. If you were a U.K resident five or six years ago and needed a new gas boiler, chances are you would go to either one of the corporate suppliers or get a local engineer on the case. The boilers were expensive and installation costs were not that far behind. All in all it was an expensive business. I read on the HFB site that it is the 6th or 7th most expensive household outlay. However, it is a necessity, especially with some of the bad winters the U.K has experienced in recent years.
At this time the market was very much monopolised by the big corporates and price fixing on boilers, installation and indeed energy prices were de rigeur.
Going local was cheaper, but there was a lack of any guarantees with a local install. So, the market was polarised. You either paid through the nose and got your guarantees or you went cheaper and took the risk. Even if you went witha company like Scottish Power, the guarantee only covered certain parts for 12 months so you needed a maintenance contract as well.
In Canada, meanwhile, things were much more civilised.
The Canadian Model
The standard business model was for domestic energy companies to proivde a “one-stop shop” service for their domestic customers. They offered a range of boiler makes, installation and servcie contracts all bundled into one monthly cost. Indeed, because of their buying power, they could provide the hardware much more cheaply and…here’s the kicker, they were prepared to write off the boiler cost over the life of the unit. So, for one low’ish payment per month the customer receives a new boiler, free at point of installation and an on-going service contract over the life of the boiler.
After extensive U.K market research the Ecovision Group believed that the U.K market would receive a similar business model well and they created Hassle Free Boilers to do just that.
Initialy providing the service selling Vaillant boilers only, they quickly expanded to offer both Ideal and Worcester Bosch boilers as well. The three premier brands of domestic boiler in the U.K. Using their buying power to drive prices down, HFB offered the full gamut for just £35/month. When worked out over the life cycle of a boiler significant savings could be made over the traditional model. Estimates put the saving at somewhere between 40-50% depending on te model of boiler and energy usage.
Come what may, as a Hassle Free Boilers customer you benefit from a new energy efficient grade A best combi boiler. They also save significantly on gas usage over the course of the year as well being significantly more energy efficient than most current home’s boilers.
However, HFB went one step further than their Canadian counterparts. They negotiated an advantageous spot energy deal so can supply gas at a more competitive price as well. It’s the full domestic heating service at a great price.
It’s a “no-brainer” and I am delighted that they have made significant headway in the U.K.
As it happens Government have now stepped in and forced gas prices down with all of the main supliers starting to fall more in line with spot prices. But it took a serious market disruptor to make it happen! This is why I love the disruptive business model, it drives change for the benefit of the consumer!
You also get a free Nest with every install at the moment! How cool is that?