A 360 View of the Business Model Canvas

     Visual images can be helpful tools for understanding complex concepts. For example, imagine trying to grasp how the Earth looks without a map, or learning all the chemical elements without a periodic table. It would be more difficult trying to wrap our minds around either without an organized visualization of the concept such as a map or chart. 

     Businesses can be complex as well, a visual tool can help understand how it delivers value now and in the future. A Business Model Canvas (BMC) is one visualization tool for businesses that every entrepreneur and executive needs to be able to put to good use. Afterall, how can one run and improve a business that they do not fully understand inside and out?

      Businesses are rarely simple; they tend to be rather intricate and even convoluted at times. Each organization, both for- and non-profits, consists of the following important components:

1. Value proposition

2. Market segments

3. Key activities

4. Customer relationships

5. Delivery channels

6. Resources

7. Partnerships

8. Revenue streams

9. Cost structures

 

Most people can hardly wrap their head around 2-3 of these components at any one time, let alone all 9! A BMC is the perfect tool for visualizing a business’ key factors, all in one place.

     To help build your BMC, here we outline and define the 9 components, along with some good questions to help get you started with formulating your answers. 

 

1. Value Proposition

     A value proposition clarifies a business’s purpose for existing. It is essentially an understanding of the problem being solved, or need being satisfied, by the business. This can be quantitative, such as price or speed. Or it can be qualitative, such as how it looks or feels. 

     The more compelling the Value Proposition, the more potential customers will be drawn to it.  Forbes (2013) has an easy guide for constructing your business’ value proposition here

Some questions to draw this out:

What value do we deliver to customers?

  From the customer’s perspective, does it solve a problem or satisfy a need?

  Why do customers use us instead of other similar businesses?

 

2. Customer Segments

      It is beyond important to know what kinds of people would be interested in your business product or service. Knowing these groups makes marketing efforts significantly more effective. If you try to focus on everyone, you are not focusing. 

      Dividing up potential customers into groups based on certain characteristics or criteria provides a clear target to pursue. Such segments can include groupings based on common needs, age, sex, location, income, and habits. Not only does it create a laser-focus for your marketing campaigns, but it gets your brand in front of those that might actually be interested in buying from you. 

Some questions to draw this out:

Does our product/service satisfy the need of a certain group of people?

For whom are we creating value?

What do our potential customers tend to think, see, feel, or do?

Who are our most important, or profitable, customers?

3. Key Activities

     Key activities are the things a business does that enable its Value Proposition. These are things that go on in the background that make the business model work and operate successfully. 

Service industries tend to be easier to list out, such as providing quality repairs, stellar customer service, or unique expertise. Product-based businesses also have key activities for how they produce their products. A beverage product may conduct key activities like filtration, quality control practices, or annual certification.

Some questions to draw this out:

What does our business do to enable the Value Proposition?

What is required to make our business model work?

What uniquely strategic things does the business do?

 

4. Customer Relationships

      Customer relationships describes how the business establishes favorable interactions with customers. It starts in the beginning when they first purchase from the business and goes on all the way through to the support they get after. Each time a customer interacts with the business, judgements and impressions are being made. The businesses that are able to ensure each of these customer experiences are impressive can be sure to gain loyal customers that return and provide referrals – the holy grails of sales.

Some questions to draw this out:

What experiences do our customers expect from us?

How do we rate our customer service? Why?

What marketing strategies do we use to capture and retain customers?

5. Channels

      Channels consist of the flow of information, distribution, and sales. They are the way customers hear about, purchase, and receive from the business. Channels are how the customers buy and businesses deliver. Understanding the different channels through which products and services are delivered can lead to process improvements and innovations in how deliveries are made.

Some questions to draw this out:

Where can customers buy from our business? How do we reach them?

How do we raise awareness of our value proposition?

How are we integrating them with our customers’ routines?

In what ways do we help customers evaluate our value proposition?

 

6. Key Resources

     Key resources are vital assets in place that enable your business model to run. These resources include physical things like facilities, people, computers, or vehicles. Key resources can also include intangible things like registered patents or trademarks. They can be owned, leased, or acquired.  

Some questions to draw this out:

What assets does the business require to create its value proposition?

What resources are used in distribution channels?

Which resources are in place to maintain favorable customer relationships?

 

7. Key Partnerships

      Relationship building is an important part of being successful in business. No one person or organization can be good at all things, so they partner with other firms that can help. Amazon has been utilizing delivery firms for decades like USPS and FedEx because it makes sense to let them do what they do best: home deliveries. Organizations often aim to accomplish goals by leveraging industry expertise such as marketing, accounting, and consulting professionals. Partnerships are also commonplace in non-profits where organizations with a similar cause join forces to gain traction and awareness. 

Some questions to draw this out:

Who are our key partners? What key activities do they perform?

What outside firms do we use to deliver our products or services?

Who are our key suppliers?

 

8. Revenue Streams

        Revenue streams are the way businesses collect money from each customer segment. Business models have various ways of creating revenue

streams. These can be through one-time transactions like auctions, or recurring mechanisms like subscriptions or annual memberships. Netflix’s primary stream of revenue comes from their streaming services that are billed monthly, but they also have another stream coming from mail-order dvd options. The more ways businesses can make money, the better.

Some questions to draw this out:

What are customers really willing to pay for our value proposition?

How do customers pay for our products or services? 

How much does each stream contribute to the overall revenue?

 

9. Cost Structure

     The cost structures of a company are the main drivers of costs to operate. They describe the costs incurred to do business. Almost all key activities and resources have costs associated with them in order to create and deliver value. Fixed and variable costs are the obvious ones, but economies of scale and scope can uncover new ways of creating value.

Some questions to draw this out:

What are the biggest costs to operate?

Do you buy raw materials, partially built components, or outsource and resell?

How are sales personnel paid? Salary or commission?

 

 

 

Conclusion

   BMCs are great tools for understanding how business models work and can lead to innovative ways for businesses to create value. There is no excuse for entrepreneurs and executives to lack a full understanding of how their business model works. Spending the time to create this simple “map” can help leaders better understand, design, innovate and implement the strategy that they envision. By creating what a business model looks like now, one can plan for how it can look in the future. This is the tool used to get there.

Download your free BMC template: Click here. 

 

   Modern Consulting 360 (MC360) specializes in consulting with new and existing businesses to build out strategic plans for achieving their goals. BMCs are just one of several tools used to shape an understanding of your current business model. From there we discover new and upgraded ways of marketing and selling your value proposition. Contact us today to find out what we can do for you.

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Sam Mohammad Sam Mohammad May 27, 2020 0 Comments

2020 Social Media Marketing Trends

Every year, the advancement of technology gains more momentum than in years previous, and 2020 will be no exception to the phenomenon. As technology evolves to meet our needs, businesses have to stay ahead of social media and marketing trends in order to remain relevant in a time when consumers have the world at their fingertips, and due to Coronavirus, are more online than ever. If a company is merely keeping up with trends, then it has already fallen behind. Therefore, our digital marketing team has compiled a list of the top social media trends to help you and your business make the most of 2020.

1. Continued effort to decrease “vanity metrics”

In 2019, Instagram rolled out a new feature that hides the number of “likes” a user gets on his or her posts, so only individual users are able to see the total number of likes that each of their posts receives. The purpose of this change was to encourage users to focus more on the quality of a post rather than the quantity of likes that it could accumulate. We can expect to see this trend continue throughout the year as social networking companies make an effort to combat the negative effects that social media can have on a person’s self-esteem. 

Although Instagram is currently the only company to start hiding likes, other social media sites are attempting to minimize the emphasis put on likes or follower counts in their own ways. Youtube, for instance, is now abbreviating a channel’s follower count, so rather than seeing 12,050 followers on a Youtuber’s page, the number will simply read 12K. While it is only a small change, it is enough to begin drawing eyes away from follower count and refocusing them on the quality of the content that Youtubers are producing.

2. Video content is taking over

Hubspot conducted a marketing survey and discovered that video is currently the most popular form of media used in content strategy, more so than blogs and infographics (hubspot.net). This trend will continue as more marketers catch on to the success other businesses are having with video content as a primary tactic of their marketing campaigns. Those that haven’t utilized videos to market their products or services should integrate this into their marketing strategy as soon as possible to combat a decrease in sales and customer interest. 

There are certain benefits of video marketing that no other medium can properly produce, especially when it comes to demonstrating a particular product or service. Because the marketplace is saturated with similar companies vying for the same customers’ attention, it is more important than ever to communicate what it is that makes your business unique. That uniqueness can come through in a behind-the-scenes style video, a quick thirty-second clip with your tip of the day, a tour of your home office – the possibilities are endless. And it’s important to remember that not everything has to be a big-budget production with an entire camera crew at your disposal. Customers just want another way to connect with the brands that interest them.

3. Ecommerce Tools Galore

Instagram is leading the pack when it comes to new features for users to explore. In March 2019, the platform added more eCommerce tools to the mix, most notably the ability for users to make in-app purchases straight from the brand accounts that they follow without ever having to visit the actual company webpage. This is a game-changing feature because it concentrates the user’s experience of a brand within a single app. Customers can find a product on Instagram, learn more about it on the brand’s account, scroll through pictures, videos, and testimonials within the comment section, add the product to their carts, and pay right on the app. Facebook conducted a survey of 21,000 Instagram users to learn how they use the app and for what purpose and these were the results:

  • 83% said they discover new products/services on IG
  • 81% use the app to research a product/service
  • 80% use it to determine whether they will purchase a product/service

Imagine surveying 100 people on your social media performance, and 80 of them are judging you against your competitors on Instagram. This is a huge group of potential customers that are using the app to determine who they give their business to from the moment your account appears on their screens. It is absolutely worth it to invest time in optimizing the way your brand comes across on this platform. 

Instagram has become a popular platform to research and purchase products, but it is not the only app that users flock to for more information about a company and what it has to offer. Facebook is a commonplace for customers to learn more about a business, read reviews and browse photos. Money can also be sent or requested through Facebook, and the Marketplace is perfect to buy or sell just about anything in your area, but neither of those features are as sophisticated and formal as the eCommerce tools utilized by Instagram, nor do they reinforce brand identity. They are actions experienced separately from the brand, while Instagram seeks to immerse its users in a single brand from discovery to purchase. If your business has products for purchase but you’re unsure whether you could benefit from this new Instagram feature, consider speaking with social media experts to determine how to get the most of your online presence.

4. Brand outreach as a form of customer service

Companies are recognizing the importance of having genuine interactions with their customers and how it affects the way they spend their money as well as who they spend it with. It is clear that customers love to see brands responding to comments and questions in their social media feed – it confirms that the brand is not only aware of customer concerns but that the company cares enough about its customers to take the time to reach out to them. By engaging with your customers, you build trust, through trust you enhance your brand’s reputation, and with a good brand reputation you can encourage brand loyalty. 

According to an article on Sprout Social, more than half of consumers will increase their spending with a brand that they feel drawn to, and 76% will end up purchasing a product or service from that brand over a competitor. The experience that a customer has with your brand will absolutely determine how that customer interacts with your business in the future, so in 2020 focus on building strong relationships with consumers and lean into the social aspect of social media. 

5. User-Generated Content is more popular than ever 

User-Generated Content, or “UGC”, is akin to “influencer” marketing in that it is content created by an individual showcasing a brand’s product or service, but rather than relying on a few specific users to share their experience with your brand, UGC gives any social media user the chance to essentially advertise your business for you. When you repost User-Generated Content, you are doing two things at once: filling your social media pipeline with little effort on your part, and encouraging other users to share content pertaining to your brand with the hope that they, too, could be featured on your accounts. The simple truth is that the more you engage with your followers, the more your followers engage with you. It’s a win-win.

6. Increase in Augmented Reality and Artificial Intelligence adoption

Augmented Reality is yet another tool that fosters consumer engagement and enhances customer experience. One example is GlassesUSA, an online eyeglass store, which uses AR to allow users on their website to “try before you buy,” a feature that involves uploading a picture or turning on the computer’s webcam to let the user virtually try on a pair of glasses. We have seen AR used on a number of platforms, especially apps like Snapchat and Instagram, where users can pick different filters that alter their hair, eye color, face shape, and so on. However, we can expect to see AR play a much bigger role in the way people shop as companies begin to invest more time and money into creating virtual mirrors in which to try their products. 

As consumers shy away from brick and mortar businesses to shop online instead, new demands are being met to attract potential customers who require a little more security before making a purchase. AR aids in the buying process, and Artificial Intelligence is gaining popularity as a tool to give consumers a more well-rounded virtual experience. Whether it is a chatbot that sends updates on a customer’s order, or a program that analyzes customer buying patterns to better recommend products or services in the future, AI is changing the way people interact with businesses online, and the technology becomes more advanced every year. 

Conclusion

The landscape is changing quickly, and business owners can struggle to keep up. It is important to invest in your company and make sure you are being strategic with your efforts. Our team at Modern Consulting 360 can help you navigate the ever-changing digital and technological landscape so you can not only keep up with the market but stay ahead of it. Don’t just get a marketing person or team that simply goes through the motions, make sure they take the time to understand your business and look ahead to scale your efforts. 

Get a customized action plan for your business. Contact Us to get started today.

Sources:

Instagram Launches ‘Checkout on Instagram’ to Facilitate In-App

ShoppingSocial Media Trends for 2020 and Beyond

Insider Drift Conversational Marketing

#BrandsGetReal: What consumers want from brands in a divided society

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Carmen Devine Carmen Devine April 21, 2020 0 Comments

Marketing During a Crisis

As we navigate through uncertain times, many questions run through the minds of not only the nation, but communities around the globe. Cities, states, and countries continue to escalate restrictions, slowing down operations to a crawl worldwide. We continue to watch the news and social media for updates on the Coronavirus and its impact in order to determine the best course of action for ourselves, our families, and our businesses. No matter where you stand in the political climate or the concern spectrum, there is a widespread need for many businesses and entrepreneurs to continue making strategic decisions on how to best move forward with marketing their business. 

So, how should you market during this crisis or recession? Where do you start?

Here is a quick guide on marketing strategy during emergencies:


1.Pause and evaluate your current marketing efforts. What do you have scheduled or on autopilot on various platforms and mediums? Do you have ads running or email campaigns scheduled to go out? Identify all queues and put a stop to them immediately if it makes sense to do so. It will be much better to delay communication from your brand to evaluate and update it, rather than risk the interest, trust, or even respect of your follower base due to messaging that is not relevant, tone deaf, or in bad taste

2. Update your customers and followers on what your business is doing. Yes, we see news about it everywhere, but it’s important to let your customers know what to expect during the foreseeable future. Make sure you update your Google listing, website, and social media pages with adjusted changes (i.e. hours and closures). If you are able to assist those in need, be sure to have clear information on how customers or community members can take advantage of your products or services. Even if you are unsure of how you will move forward long term, acknowledging the circumstance and informing your followers with updates goes a long way in keeping your brand relevant

3. Be real and genuine in your efforts. Address your employees, teammates, and consumers with a caring message. No matter what industry or vertical in which you operate, nor the size of your company, people’s lives are being affected. Almost 89% of American consumers say that they are loyal to brands that share their values, so it’s wise to emphasize your core values in your messaging and how you will be handling what the future holds. Communicating empathy reinforces qualities that are human, and offers a chance to reinforce an emotional connection with your audience. Messaging using “we”, “us”, and “together” shows solidarity with your company culture and gives a positive message of resilience.

“A brand is the set of expectations, memories, stories and relationships that, taken together, account for a consumer’s decision to choose one product or service over another.”

– Seth Godin

4. Know your audience to understand and predict consumer behavior. We are seeing first-hand how individuals and groups act in crisis and uncertain situations. A lack of trust in media and news outlets, combined with an overload of information sources, causes confusion, fear, and distrust that drives people to act in ways they normally may not. Economic uncertainty drastically changes financial and buying practices for everyone.

Understanding your audience and their decision-making process allows you to create a strategic marketing plan that aligns with what is most important to them. Focus more on how you can help your consumers and what problems you can solve more-so than simply what your company does. Something like, “Got your hands full? Eliminate the stress of planning meals by ordering online!” will speak to your restaurant audience more than, “We are open and deliver”. Communicate what consumers could miss out on if they wait, let them know about how a product could be helpful during stressful times, and let them know you’ll be there for them whenever they are ready.  Use this time to lay a foundation to build brand loyalty as the economy improves.


5. Look for other creative ways to connect as consumer values and attitudes shift. If your company hasn’t modernized yet, it’s crucial that you do so now. Adopting videos, webinars, and video chat in communications will allow you to keep connected and top of mind. Find unique ways to reach out with a personal touch like handwritten notes to top clients. Send big supporters a private message on social media and let them know you are there for them. Think about parts of your experience that you can share to relate to your consumers. Our social media feeds will continue to be saturated with stressful information. Sharing a bit of humor on your feed can stand out to your followers and reinforce a positive sentiment, loyalty, and conversions when the time is right. Creating engaging content like polls and asking consumers to share photos is a good example of ways to connect. 

6. Stay focused and update your goals accordingly. While operations are slow, you will naturally have more time for other things. It can be a golden opportunity to PLAN! Make sure you are still paying attention to how you’re spending your time, even with adjusting habits to accommodate work-from-home dynamics. Think critically about projections. The business landscape will shift dramatically, but that doesn’t mean opportunities don’t exist. As competitors cut back, there may be opportunities to take advantage of lower marketing costs to increase market share. 

Make sure your operations are ready to handle increased interactions digitally. Make sure your website is optimized to be found on google. Take advantage of organic social media tactics to grow and connect with your audience, and provide a high level of customer service. And when you see a good story, pass it along.

If you are looking for customized recommendations for your business, our MC360 team is here to help. Contact us to get started today, or click here to read more on our strategy consulting services. 

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Kate Donadio Kate Donadio March 28, 2020 0 Comments

3 Key Relationships of Marketing & Supply Chain Management

How is marketing and supply chain management (SCM) related?

It is important for marketing and supply chain professionals to have a strong understanding of how the two fields harmonize. The marketing and SCM fields are so broad and interconnected, that it can be harder to think of how they differ, than how they relate. 

When decisions and efforts from both functions unify together, organizations can pack a more powerful punch in the results they pursue. They can satisfy customer demand triggered by the company’s advertisements, and by making their products and services consistent, companies can build long-term trust. When the two perform disjointedly, the organization starts pursuing different internal goals, which frequently leads to dysfunction or even disaster. 

The first step to understanding how the two business functions come together is through definition. 


Marketing Defined:

As defined by the American Marketing Association: “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” (AMA, 2019).

SCM Defined:

As defined by the Council of Supply Chain Management Professionals: “Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies.” (CSCMP, 2019).


Let’s look at some examples of how marketing and SCM are related.

1. Supply and demand:

This might be somewhat rudimentary, but it’s a powerful concept here. The whole basis of a free market economy is supply and demand. 

Supply is overseen by the company’s SCM personnel. Such functions include sourcing, procurement, logistics, inventorying, distribution, and more. Demand is overseen by marketing managers, like advertising, sales, differentiation, and customer feedback through surveys and focus groups. 

When these two components come together, a business can effectively supply the products that their marketers promoted. Marketing is the recognition of what customers need. SCM is the delivering of those customer needs. This is the broader essence of the relationship between SCM and marketing, but there is much more behind this face value.

2. Avoiding stockouts from promotions:

When items are promoted with advertisements and discounts, the number of sales tend to increase. Hopefully not so much as to cause stockouts, which is when the inventory of items is sold out completely. Stockouts are a SCM’s worst nightmare. 

Of course, it’s bad for the customer because they will lose trust in coming to your business for things, but it’s a huge opportunity missed for the retailer and manufacturer to earn profits. One saying goes “Stockouts cause walkouts”. Customers lose confidence in shopping at locations that fail to stock enough of what they came to purchase. This leads to the risk of customers developing new habits of shopping at competitor locations. For example, if CVS keeps running out of milk, people might start shopping at Walgreens.

When the marketing team is setting up promotions, it is important to communicate with supply managers to ensure some measures are put into place to prevent stockouts. Some SCM considerations to prevent stockouts:

  1. Forecasting accuracy
  2. Safety stock utilizations
  3. Fast resupply logistics capabilities (Just-in-time)

3. Brand quality:

Quality can be the key differentiating factor for many products and services, especially heavily competitive markets. A trust in a company’s standard of quality often keeps customers coming back for more. 

Take Häagen-Dazs ice cream, for example, the level of quality in their ingredients is held to a higher standard than most other brands of ice cream. They source their vanilla beans very precisely to keep consistency in their vanilla ice cream. This builds customer trust. Sourcing and procurement are critical SCM functions that facilitate a company’s quality standard. 

On the flip side, marketers need to be able to convey the right messaging in their advertisements regarding things like product quality. Good marketers know their products well. Häagen-Dazs marketers would benefit from having an understanding of their ice cream’s quality so they can formulate marketing strategies that speak to their target market. 

SCM personnel must communicate with marketing to ensure the right products are being produced and the right messages are being sent out. If the marketing department is sending messages that are inconsistent with the company’s SCM capabilities, customers can get misleading information and lose trust.

Conclusion: 

A company’s SCM and marketing departments are more interconnected than it may seem on the surface. The reality is that organizations that encourage communication and collaboration between the two are poised to be more in-tune with customer needs and delivery expectations. When properly integrated, the business model becomes inherently more cohesive and high-performing.

SCM needs marketing to facilitate communication with potential customers. Marketing needs SCM to fulfill the products and services advertised. The two go hand-in-hand. 

Perform planning and goal-setting sessions with representatives from both functions. Ensure processes are in place that promote communication and knowledge sharing between the two departments. Then encourage and recognize the efforts of collaboration.

Interested in learning more about Supply Chain Management or Marketing? Reach out to the MC360 Team. 

References:

CSCMP, 2019. Definitions and glossary. Retrieved from: https://cscmp.org/CSCMP/Educate/SCM_Definitions_and_Glossary_of_Terms.aspx

AMA, 2019. What is marketing. Retrieved from: https://www.ama.org/the-definition-of-marketing-what-is-marketing/

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Sam Mohammad Sam Mohammad December 10, 2019 0 Comments

2019 Social Media Trends

The time has finally come. You’ve poured your blood, sweat, and tears into your most recent content piece, and it’s ready to be packaged up and sent to the client to be pushed live. After a few final checks and only…

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MC360 MC360 July 25, 2019 0 Comments

Building Business Strategies is Like Throwing Darts

The time has finally come. You’ve poured your blood, sweat, and tears into your most recent content piece, and it’s ready to be packaged up and sent to the client to be pushed live. After a few final checks and only…

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Sam Mohammad Sam Mohammad July 9, 2019 0 Comments

Innovative Marketing: Keeping up with the times

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MC360 MC360 November 16, 2018 5 Comments

Making Your Website Airtight

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MC360 MC360 November 16, 2018 0 Comments

What is a Brand?

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MC360 MC360 November 16, 2018 1 Comment