In this lesson we discuss relationships in the business model canvas. How do we interact with our customers? How do they want to interact with us as we deliver value to them. This is closely related to the channels that we use to market and distribute our solutions them. It is different though. Human life is about the connections we make and the relationships that we have. In some businesses – such as adult services, consulting and luxury goods the relationship is of critical importance to either deliver the value. In other cases the relationship is far less important or is minimised due to cost reasons. Google could use a concierge to answer all the queries but algorithms do just as good a job for the majority of cases. Likewise large scale B2C businesses such as FMCG manufacturers and telecoms companies claim to care about relationships but the cost of maintaining them with customers is prohibitively expensive for their business model.
This building block is about how you communicate with your customers.
First, determine what is the most effective way to gain new customers. For example, it could be via online or door-to-door sales. Next, determine the types of service your customers value and learn to retain them. As mentioned, it is important to learn from your customers.
Relationships in the Business Model Canvas
Relationships with your customers are critical. You have to have good ones to manage retention and recommendation. Relationships at the business model canvas level focus more on ensuring that you have relationships that fit with the rest of the business model. Why is this? Many business models skew towards either highly personal customer service or low cost automation. Normally if you have a low cost business model having high cost relationships causes lots of imbalance in the revenue to cost ratio. It’s too expensive. Likewise in many highly customised services an expensive relationship is required by the customer. The service is part of the value not a way of delivering it.
It is also worth thinking about how customer service effects relationships in the business model canvas. You can have low cost automated sales but then have Zappos style hugely expensive customer service that ensures that you retain every customer
Below are a few options you can apply:
Personal Assistance – Concierge Test
This type of customer relationship focuses more via the human touch. Customers have the opportunity to interact more with the sales representative, building a bond between them.
Today’s advanced technology (the internet) enables us to collect data about various demographics. We are able to read into their habits and understand their perspective about an issue.
We can create a platform for individuals to share their knowledge and experiences with each other.
With this, you not only create a personal relationship with your customers but also strengthening the relationship between customers. Hence, creating a strong community.
The nature of company and customer relationship is evolving. Companies are involving customers in the process of creating an end product. This gives customers a great sense of ownership over the product or service.
Amazon encourages customers to publish their book reviews on the website for other readers to evaluate.
It is a cheap and efficient way to attract more customers. Test panels, expert groups, and sounding boards are helpful to further learn, improve and bond with the customers.
Self-service and automated services
This method is cheaper but does not allow you to understand your customers on a personal level. More time is invested in creating tools for your customers that enables them to serve themselves.
However, what would happen if you decide to change your service/proposition or segment? This could be a waste of effort and funding. For the time being, we suggest that you keep away from “self-service” until you are ready to apply it.
How to Build a Great Business Model Canvas – The FREE Course
In this lesson we covered relationships in the business model canvas. Do look at the other lessons in this course on using the business model canvas to develop your own business.
- Lesson 1 – Customers
- Lesson 2 – Value Propositions
- Lesson 3 – Marketing & Distribution Channels
- Lesson 4 – Customer Relationships
- Lesson 5 – Revenues
- Lesson 6 – Key Resources
- Lesson 7 – Key Activities
- Lesson 8 – Key Partners & Suppliers
- Lesson 9 – Costs