Business Model Canvas: Customer Relationship

Summary

In this video, Steve Morris discusses the importance of customer relationships within the Business Model Canvas. He explores various approaches to customer relationships, from transactional to highly personalized services, and explains how these choices impact other areas of a business model, such as value proposition, channels, costs, and resources. He emphasizes that understanding customer expectations is key, and that the customer relationship strategy can become a core innovation for businesses, much like Amazon's reinvented book-buying experience. The video encourages entrepreneurs to carefully consider their customer relationship strategy and test it with real customers.

Takeaways

• 😀 Customer relationships are critical to business success, helping with customer acquisition, retention, upselling, and referrals.
• 😀 There are various types of customer relationships, ranging from transactional (e.g., kiosks) to highly personalized (e.g., in-person assistance).
• 😀 Businesses must consider both their own desires and their customers' expectations when developing customer relationships.
• 😀 Customer discovery is crucial to understanding the type of relationship customers expect and value when purchasing a product or service.
• 😀 Some types of customer relationships include self-service (e.g., websites), community-based relationships (e.g., forums), and co-creation (e.g., YouTube content).
• 😀 The chosen customer relationship strategy impacts other aspects of the business model, including value proposition, customer segments, and channels.
• 😀 A customer's preferred buying experience, such as purchasing books online versus in-store, influences your business model and segmentation strategy.
• 😀 Channel strategy plays a vital role in customer relationship development, impacting how you market, sell, and support customers post-sale.
• 😀 The choice of channel strategy (e.g., online vs. brick-and-mortar) affects costs, partnerships, and revenue streams for the business.
• 😀 Key resources and activities may change depending on the type of customer relationship and channels chosen, highlighting the interconnectedness of the business model.
• 😀 Customer experience and customer relationship strategies can be at the core of business innovations, as demonstrated by Amazon's reinvention of the book-buying experience.

Q & A

What is the core focus of the video?

The core focus of the video is to explore the 'Customer Relationship' aspect of the Business Model Canvas, discussing its importance, various strategies, and how it interconnects with other parts of the business model.

Why is customer relationship critical in business?

Customer relationship is critical because it drives customer acquisition, retention, upselling, and referrals. A positive relationship helps ensure that customers are satisfied, which leads to ongoing business success.

What are the different types of customer relationships companies might develop?

Companies can develop a variety of customer relationships, ranging from transactional (like using a kiosk) to self-service (such as an online platform), and even to very personalized, hands-on relationships (like in-person assistance). Other approaches include community-based relationships and co-creation where customers actively contribute to the product or experience.

What role does the customer discovery process play in customer relationships?

The customer discovery process is important for understanding what kind of relationship the customer expects from the business. It allows companies to align their approach with customer preferences and to validate assumptions about customer needs.

How do customer relationships relate to value propositions?

Customer relationships are directly tied to the value proposition. The type of relationship a company develops can affect how the customer perceives the value they receive from the product or service, whether it’s through convenience, personalization, or community engagement.

Can you give an example of different customer experiences based on customer relationship strategies?

For instance, when selling books, some customers may prefer the ambiance and personalized service of a physical bookstore, while others prefer the convenience, search capabilities, and customer reviews of online bookstores. These different preferences represent different customer relationship strategies and influence the value proposition.

How does the customer relationship strategy impact other parts of the business model?

The customer relationship strategy affects multiple parts of the business model, such as the channel strategy, cost structure, revenue model, key resources, and key activities. For example, an online sales channel for books has different costs and partnerships compared to brick-and-mortar stores, which influences the overall business model.

What is the connection between customer relationship and channel strategy?

The channel strategy is how a business will market, sell, and support customers. This strategy is directly shaped by the type of customer relationship the business wants to establish, as different relationships require different ways of interacting with customers, which influences the choice of channels.

How can customer relationships impact partnering strategies?

The type of customer relationship a business aims for will influence its partnering strategies. For example, if a business sells books online, it needs to partner with online book platforms. In contrast, selling through physical bookstores requires partnerships with those brick-and-mortar retailers.

What is the importance of customer relationship as an innovation in business models?

Customer relationship can be a core innovation in a business model. For example, Amazon reinvented the book-buying experience by offering a convenient, home-based shopping model that emphasized customer relationships through ease of use and personalized experiences.