The CEO of Plastiq is in a quandary on how to proceed with his go-to-market strategy. He is challenged with finding the appropriate profile for his sales representatives. How should the sales team be led? Should they be led by an experienced sales executive? Or would a mid-level sales manager do?
Jeffrey J. Bussgang, Gaurav Jain, Liroy Haddad, Luke Langford, Matt Noble
Harvard Business Review (813125-PDF-ENG)
December 16, 2012
Case questions answered:
- a) State Plastiq’s value proposition.
b) What are the advantages and disadvantages of Plastiq’s business model?
c) What are the key assumptions Plastiq needs to test?
- a) Should Plastiq sell through a merchant acquirer or go direct to merchants? Explain.
c) What tests would you propose that Buchanan and Choi run to reduce the risk of that decision?
- a) Which salesperson should Buchanan and Choi hire: Adama or Espern? Explain your choice, comparing the two candidates.
b) What do you think of the interview process that Plastiq used? Do you have any suggestions for them?
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Case answers for Plastiq
Plastiq: Go-to-Market Strategy
1a) State Plastiq’s value proposition.
Plastiq offers a simple online interface that allows them to use a credit card for a service fee.
This is convenient for customers who would like to use credit cards for large-ticket purchases that normally require cash payments (such as tuition, rental, auto, and tax returns). It allows them to pay with convenience, earn large loyalty points and cashback, and offer a flexible payment schedule.
To merchants who are providers of large-ticket products and services (such as private schools, car dealers, and ax-prep specialists), the company offers a simple online interface with no cost.
This service accepts credit cards without imposing surcharge by themselves that may cause lawsuits and never turning down a customer due to the inconvenience of cash payment.
To acquirers, Plastic offers a net new model that provides an opportunity to penetrate a large merchant segment, allowing them to gain additional transaction volume with low risk.
1b) What are the advantages and disadvantages of Plastiq’s business model?
- Plastiq’s targeted merchant categories (such as tuition, rental, auto, and tax returns) presented a large market opportunity with over $1 trillion in addressable transactions.
- The company’s business model that collects net fees with low variable cost allows it to earn very high gross margin revenue.
- This business model created advantages for multiple parties in the payment-processing system: for customers, it offers convenience and flexibility; for merchants, it allows them to not turn down a customer because of cash payment; for acquirers, it offers more transaction volumes.
- The company partners with the existing players in the ecosystem without disrupting the delicate economics of the existing business models to avoid facing strong resistance from the entrenched industry players.
- The ecosystem that the company is playing in is inherently very complex with established players and large inertia.
- Plastiq’s business model requires it to deal with multiple stakeholders. The company needs to deal with acquirers, card associations, and issuers in addition to customers and merchants. This presented more challenges and complexity for the company since parties can have conflict interests.
1c) What are the key assumptions Plastiq needs to test?