A business model canvas aka a lean canvas is ideal for startup businesses for internal use. It is arguably a short, 1-page strategic version of a conventional business plan. A business model refers to the design or configuration of a business operation, specifically, how its key components create value for its customers. These key components include the value, revenue sources, costs and so on. Its design is aimed at ensuring that you have adequately prepared to deliver value, a central point of doing business (see #1) in ways that are 1) profitable and 2) efficient. Each side comprises a group of inter-related components that together contribute to profitability on the one hand (the right side) and efficiency on the other (the left side). Consequently, entering and analyzing details of any one component should be done while considering previous ones. For instance, you may start with the (unique) value proposition and then consider how well each subsequent component complements that primary objective and any other preceding component until the final components (#5 revenue and #9 costs) of each of the 2 sections.
This post may be used as a guide for completing each component in turn for your business' lean canvas.
1. (Unique) Value Proposition(s).here1uvp What problems (ie pain points) are you resolving and or needs you are meeting? Think of Maslow's 'hierarchy of needs'. Unspoken, often unconscious, visceral customer needs are powerful considerations because they are your customer's truest motivation. Perceived problems are often only symptomatic of needs. For instance, a customer searching for lipstick perceives the problem of having lips that are too pale in color. However, the need from which that perceived problem arises is social, specifically, wanting to look attractive to others. It corresponds with the need for social belonging, in this case, possibly 'belonging' to a romantic life partner. From a marketing perspective, this need is always useful to note because red lipstick is only one of several competing ways in which the customer can meet her need. Consequently, this understanding may help you to use emotional marketing to also communicate how your product meets that visceral need in the form of your unique value proposition. To be clear, stating value delivery is hardly about listing features but mostly about meeting often unspoken needs that delivers value to customers, from their perspective. Learn more about crafting a unique value proposition. This should be written from the perspective of the customer's perceived value. Example: To treat acne (consumer problem); To resolve social confidence (consumer need); To acquire more customers (business problem); To increase revenue (business need).
2. Customer Segment(s) / Avatar(s). Who are your customers? What psychographics do they have (that will make them want to buy)? What is your avatar or target customer profile and customer personality type? Describe them as you would a specific person. Considering the earlier component, how can you see a direct connection between this section (each avatar) and the value proposition? It should be clear how each avatar will perceive value.
3. (Distribution) Channels. What are your means of contact with each avatar re lead generation communication channel, doing the sale transaction, arranging the shipping, support, etc?
Example(s): Customer avatar 'Lili' (trusts influencers more than conventional advertising and prefers online shopping). Indirect channel, ie the marketer does not have direct contact with Lili. The marketer may reach her via a selling influencer's product reviews. The sale transaction and fulfilment may occur either via the influencer who has products to sell or more commonly, the influencer encourages Lili to buy the over Facebook using the 'Buy' CTA button. In such a case, the fulfilment is done otherwise.
4. Customer relationships. How do you acquire, retain and increase customers? Discuss the customer's journey through your sales funnel, ie from lead generation onwards.
Example: Gen Z 'Lili': customer acquisition via referral programs driven by influencers and gift card sales. She will be entered into the loyalty / rewards program to maintain the relationship.
5. Revenue Streams. How do you earn money after having 1) provided value to 2) each market segment? Consider all of the components on the right side of the value proposition to provide a comprehensive response.
6. Resources. Considering each aspect of your business setup and operation in turn (corporate setup, Marketing 4Ps in turn, HR and so on, what resources do you need to fulfil each of your entries thus far? Consider resources of all types, whether financial, legal, human resources, materials, real estate, internet space and so on.
Example: Marketing communication (for Gen Z 'Lili'): video informercials on a Youtube channel in which the brand's founder showcases the manufacturing process and how the brand incorporates its principles into its operation.
7. Key partnerships / stakeholders. Consider these strategically. Specifically for instance, they should help you to optimize the allocation of your resources. Considering all of the previous components, who are the key stakeholders that will actually contribute to your business' ability to achieve your goals?
8. Activities. Consider earlier components (like the list of partners) and then list the activities that are required.
9. Costs & Expenses. What are the list of costs you will have to run this business model? For instance, consider all of the activities and all earlier components on the left side of the value proposition to provide a comprehensive response. It is also useful to make a notation (like 'FC' and 'VC') regarding whether these costs are fixed or variable as these types hold a different level of risk; fixed costs carry greater business risk because they incur even during a business' inactivity. Also consider the extent to which your cost of production allow you to charge a price with which customers can agree. The end of this section may have a summary that highlights highest FC, most costly resources, most costly activities, scale economies and so on.
CONTENT RELATED TO DESIGNING A BUSINESS MODEL CANVAS
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