Analysis on BillShrink

BillShrink is a Silicon Valley startup providing web service to customers to find out the best gas, phone and credit card deals by analyzing individuals’ lifestyle and spending behavior. A brief analysis of BillShrink and proposal for future growth from an outsider’s perspective follows.
Consumer spending can be categorized into recurring spending and discretionary spending. Recurring spending includes such items as cell phone and gas while credit card usage could include discretionary spending such as travel, dining and entertainment. BillShrink has developed internal algorithms to match consumer behavior and spending patterns with the best possible deal. Some of the other markets that can use similar algorithms would be car insurance, rental insurance and financing options. In all these cases, the markets are very similar with a large number of service providers from which consumers can choose from. The partnerships needed to deliver the best deals to the consumers need to extend on the technology developed for the gas and phone markets.

It is clear that all the cases of recurring spending need an aggregation point at various levels. The insurance markets (auto, home, rental, travel, and healthcare for visitors) provide a lot of choice to consumers with varying levels of coverage, liability and other options such as rental and towing coverage. An insurance agency such as Progressive also claims to provide people with their rates against the rate of the competition. However, customers typically use insurance agents to obtain their policy selections. BillShrink could serve as an aggregator of information about insurance companies, rates and service and provide matching criteria based on customers’ preferences. The revenue model of BillShrink is based on lead generation to service providers. With no insight into its current business relationships, it is clear that the model is based on significant volume in terms of the number of referrals. Hence, markets such as insurance with potential for significant volume provide good revenue growth opportunities.

BillShrink can also use its technology to provide services that might not have much aggregation but can generate volume through repeat users and referrals. One such example would be to provide the consumers with the best bang for the buck at a particular product level. Let’s consider the case of Hi-def televisions. Based on the customers’ budget, BillShrink would direct them to the right mix of product and cost. This would require partnerships with categorization search engine companies such as Kosmix.

On the discretionary spending of consumers, BillShrink’s approach to provide savings requires detailed analysis of credit card usage. Once the expenses are analyzed, it can be used to provide customers with alternate options that provide better value based on customer preferences such as reliability, quality, and other personal preferences.