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by ig1
3701 days ago
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I don't disagree on the size of market, but you need to do a bottom up analysis and not just a top down one. Very few businesses which aren't inherently social/viral manage to make social media, referral, etc. channels scale without significant cost. Unless you've got a strong expertise in making such marketing channels work you'll be likely to struggle (and investors will know this and won't take you seriously if you make this pitch). I'd recommend you look at other businesses in this space (ComparetheMarket, uSwitch) in other countries. Generally they make a brand play and then amortise the cost of customer acquisition by up-selling price comparison on everything (insurance, mobile contracts, etc.) so they have a much higher revenue per-customer. I wouldn't assume attrition is going to be low either, especially if you require user effort (photographing bills) and presumably your cohorts will decrease in value organically over time (i.e. if you keep switching to cheaper providers approximately each switch is going to be a smaller saving than the previous). |
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We think this business is inherently viral because everyone everyone knows buys electricity, and people who find a simple way to save money are usually eager, even proactive, about telling their friends about it.
We respectfully disagree with your assumption that the value prop diminishes over time or that we would have high attrition. The value is not in the relative price of the switched plans but in the total time & money savings to the customer versus staying with their more expensive incumbent supplier.
The snapshot of a customer’s bill is only needed on signup, not ongoing. In fact our system is designed to be zero effort after signup. The whole point is for us to work in the background, saving our customers money without them having to worry about a thing. However we will employ site features and notifications to remind users of how much they’ve saved and will continue to save, as well as how much we’ve saved our customers in aggregate. Once a customer is in our system there is high incentive to stay and refer their friends, and little reason to leave.
P.S. Thanks for Fizzbuzz!