Businessmodel of Tado

Customer Segments

Tado has a mass market business model, with no significant differentiation between customer segments. The company targets its offerings at homeowners who seek energy-efficient heating and cooling solutions.

Value Proposition

Tado offers four primary value propositions: accessibility, convenience, cost reduction, and brand/status.

The company creates accessibility by providing a wide variety of options. Its solution works with around 5,000 heating systems and nearly all types of remote-controlled air conditioners, including split/wall-hanging, portable, and in-window ACs. If a customer’s AC brand is not in Tado’s database, the solution can adjust by learning any necessary commands from the AC’s old remote.

The company offers convenience by making life simpler for customers. Because home air/heating can be controlled with its mobile and web apps, homeowners can turn on, turn off, and adjust settings for relevant devices from anywhere using their smartphones/tablets/computers. They can also program the app to schedule different temperatures for different times of the day to save energy. The app can also provide valuable information such as when devices were turned on automatically, what triggered it, and how much money was spent on cooling/heating on a given day.

The company reduces costs by providing energy savings. It claims that customers using its solution can save as much as 40% of their air conditioning costs, and that it can pay for itself in less than a year. Combined, Tado’s customers can save the energy of up to 52 wind turbines a year.

The company has established a strong brand due to its success. It bills itself as a market leader in intelligent home climate control. It has also won a number of honors, including the iF Product Design Award, the iF Universal Design Award, the eco Internet Award in the mobile category, the Ecosummit Award, and the Deutsche Telekom Smart Home Award for Best Startup of the Year.

Channels

Tado’s main channel is its website. It also sells its offerings through online stores such as Amazon and Newegg and through physical retail store chains such as Best Buy, The Home Depot, and Brookstone. The company promotes its offerings through its social media pages and advertising.

Customer Relationships

Tado’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees.

The company’s website provides answers to frequently asked questions and includes a database that visitors can use to see if their AC brand is in its database. It also features a “Press Lounge” section that includes studies, fact sheets, videos. That said, there is a personal assistance component in the form of phone and e-mail support.

Key Activities

Tado’s business model entails designing, developing, and delivering its products to customers.

Key Partners

Tado’s key partners are the third-party manufacturers in Europe that produce its products.

The company also partners with various technology/telecommunications product and service providers to enhance offerings for customers. These include IFTTT, Amazon Echo, and AT&T.

Lastly, the company works with various organizations to help promote smart home climate control. These include the European Climate-KIC network, the Fraunhofer Institute for Building Physics (IBP), and the Federal Ministryof Economics and Technology (BMWi).

Key Resources

Tado’s main resources are its human resources, who include the engineers that design and develop its solutions and the customer service personnel that provide support.

As a relatively new startup it has relied on funding from investors, raising $56.29 million from seven investors as of April 2016.

Cost Structure

Tado has a cost-driven structure, aiming to minimize expenses through significant automation. Its biggest cost driver is likely cost of goods sold, a variable expense.

Other major drivers are in the areas of sales/marketing, product development, and customer support/operations, all fixed costs.

Revenue Streams

Tado has one revenue stream: revenues it generates from the sale of its products to customers. Its Smart AC Control solution starts at US$179.