How to maximize the use of Business Canvas Model? (Part 2)
Figure 1. Business canvas model
One of the most effective methods to (re)design a business model is the application of a Business Canvas Model (Figure 1). This model provides a convenient framework to analyze an organization via nine essential factors/blocks. In the previous post, we have gone through Customer segments, Value propositions and Channels, while mthe post today will give you a comprehensive description over Customer relationships, Revenue streams, and Key resources.
#4: Customer relationships
This block displays the type of relationships an organization establishes with its customer segments at different stages in the Marketing Funnel. Some categories of Customer relationships are:
- Customer service support/ Personal assistance: with this kind of relationships, customers can contact with a customer representative to get help and information during the sales process. After-sales services are also included in this category as a way to maintain customer relationships. This relationship can be established with several customer segments (e.g. individual, businesses) and channels (e.g. owned and partners’ website, call centers, emails, physical stores).
- Self-service: an organization has no direct relationships with its customers. Examples are self-scans at supermarkets, chatbots, check-in kiosks at airports, etc. This type of relationships can be integrated with another one, namely customer service support.
- Automated service: this relationship is a mix of two relationships above. For example, a chatbot is designed to answer common customers’ questions and refers to a real customer representative in case outside its scope. Another example is email subscription where a customer indicates their preference over particular products or services.
- Communities: creating a community is one of the most common and effective ways to sustain a customer relationship. This platform allows customers to exchange knowledge and help each other out. Microsoft and One Drive Community are digital platforms where users can raise their questions and get support globally from others who have had the same experience. This kind of relationship also helps maintain customer loyalty. By encouraging customers to join an organization’s community to enjoy more exclusive promotions, customers tend to return for future purchases.
- Co-creation: in this customer relationship, an organization and its customers create values together. For example, some websites invite customers to write reviews after their purchases to collect points for discounts. “Subway” is an outstanding example for this kind of relationships where it enables customers to create their food based on personal taste.
#5: Revenue streams
This aspect allows us to analyze the cash flows an organization generates from each customer segment delivering value propositions. Multiple ways to generate Revenue streams are the following:
- Asset sales: this is the most commonly used method to create revenue. An organization can sell physical products, whose prices can be fixed or dynamic depending on certain sectors. Fixed prices can easily be seen in grocery, books, clothing, whereas dynamic pricing often occurs in negotiations, real-time markets and auctions.
- Usage fee: this technique is based on the logic that the more a service/product is used, the more the customer pays. Examples are diverse packages in mobile data and minutes of callings, different weights of parcels sent from one location to another, etc. An outstanding example of this method is carpooling which has recently become a popular trend to reduce costs as well as to protect the environment.
- Renting/Leasing: this kind of cashflow creation relatively overlaps with the one above, in which customers are temporarily granted rights to use a particular asset in a certain period of time. This meets the need of several customer segments, for example, who temporarily live in an area (e.g. rent an apartment, book a room via Airbnb, etc.), or those who barely use a specific product unless needed (e.g. event décor, tools, camping/ hiking equipment, etc.)
- Advertising: this Revenue stream stems from advertising fee for products/services. Facebook, Instagram, and YouTube offer platforms for million users to promote their products and services via multiple kinds of advertisements from a small banner to a short clip. In return, users will pay a corresponding fee.
To better understand the revenue streams, why don’t you try to read through an annual report (especially financial aspects) of a particular company?
#6: Key resources
Without key resources an organization can’t fully fulfill the needs of its Customer segments. This perspective includes the most essential assets, enabling a business to create and offer Value propositions to the right customer segments, and maintain Customer relationships. All can be transmitted via the right Channels at the different stages of the Marketing Funnel. There are four kinds of key resources that you should know:
- Human: all businesses require human resources, even though staff varies in size and their expertise for different sectors.
- Physical: this category consists of a wide range of physical assets, such as machine, buildings, manufacturing facilities, physical products, etc. Supermarkets and fashion brands rely heavily on physical resources. Although automotive and chemical industry don’t seem to be capital-intensive, raw materials and components account for a large amount of their key sources for production and post-sales.
- Intellectual: this key resource has become one of the unique selling points to attract customer segments, as well as building a sustainable business innovation. Examples are patents, copyrights, brands, proprietary knowledge, etc. Qualcomm, one of the biggest semiconductor suppliers, depends heavily on its patented microchips for mobile products. Technological, automotive and pharmaceutical firms substantially invest in this key resource to explore new insights and offer innovative value propositions. Due to its critical importance, intellectual resources are highly confidential.
- Financial: without financial resources, it is hard to establish and maintain business operations. This kind of resource can be internal-owned (e.g. revenues/profits, stocks) and external-owned (e.g. loan from banks and capital markets).
It is time to put these knowledge into practice. Try to analyze your organization by filling in these three blocks. If you haven’t read the post related to another three block of this model, I highly recommend you to do so in order to gain a clearer picture of the Business canvas model. An example shown below might give you some inspirations.
Figure 2. Business canvas model for MS Teams (made by the author)
Thank you for reading! Please share if you find the article useful.
Book “Towards sustainable innovation – A five step approach to sustainable change” (Pastoors et al, 2017)
Image 1 source: https://www.pinterest.com/pin/315040936405544097/
Series Business Canvas model
Business Canvas model: key activities, key partnerships, cost structure + A relevant example
Business Canvas model: customer relationships, revenue streams, key resources.
Business Canvas model: customer segments, value propositions and channels.