Getting a career start in advertising allowed me to learn a very important lesson in business: always think of your business through the lens of your customers.
Wanting to develop myself further, I ended up doing an MBA in Oxford, where the second important lesson came about: how to run a sustainably successful business by putting together the right business plan. Around this time began my adventures with entrepreneurs, who wished to grow or start a new business.
The third instrumental idea-cum-toolbox came about, when I started working with the Business Model Innovation canvas, guiding my clients through the nitty-gritty of understanding their business models’ sustainability and focusing on customers instead of products and services. The lesson? While business plans and strategies are important to conceive, they never stand a chance of survival beyond the first contact with real customers. Therefore, you need to be able to fail soon and easily to pivot your model into something truly sustainable. Based this, I will let you in on three secrets that will be instrumental to your business success.
Forget your business plan and think of your business as 9 building blocks that tell a story.
Every business has 9 building blocks. Imagine these 9 blocks as a theater with a front stage and a back stage. When you put on a show, you target customer segments with specific value propositions. Your value propositions are delivered through unique and relevant channels to your customers. Your customer service should make it easy and efficient to service customers. Your customers will generate revenues only, if your value proposition addresses certain key jobs they want to get done; key pains they need addressed; and gains they expect or desire. When your customers come into contact with your business, this is what they will see.
To be able to put on a show like that, you will require some backstage work as well. You possess certain key resources that allow you to carry out key activities (to produce value propositions for your customers). These activities will incur costs, and at this point you should ask yourself: ’Am I really doing the things that I should be doing in-house, or are there processes and parts of activities that should be done by relevant partners instead of me?
The secret to having a great business model is to have interrelated building blocks. If you have odd building blocks standing by themselves, think about their purpose again! What/how do they serve?
Action to take: map out your business plan into the 9 building blocks! Can you tell a story with your business model canvas?
Segment your customers the right way: according to jobs, pains and gains to give meaning to your value propositions. Products and services are meaningless without customer context.
Most businesses tick the box of customer segmentation by saying ’our customer is typically (age) old, lives in (place of residence) and is (marital status). Perhaps a few ’insights’ on what they think or feel at times of wanting your highly valued product or service. Sound familiar? Well, these same businesses often go out of business or stagnate exactly because of this dead-end profiling.
The solution? Don’t start with your product or service (again), but go out of the building and talk to potential customers to identify jobs. What do they want to get done that if they can’t/don’t, it will have a painfully negative consequence for them? Or a missed opportunity they could benefit from? List these and prioritize your post-its. Customers not only want functional jobs satisfied (mow the lawn), but also social ones (have a party in a garden that impresses guests) and emotional ones (look good as the host with a nice house and garden). Say I want to help business owners grow their business by innovating their business models. My customers’ main jobs to get done would be to find, learn and apply methods; make decisions with confidence; assess and reduce risk; improve or build a business; improve skillset and advance their career, etc.;
Next: identify their pains and gains. Such pains could be lack of time; dealing with risk and uncertainty; going down the wrong path; wasting time with ideas that don’t work; or not having a clear path to applying method. Their expected gains could be: leads to results, quick win; clear indicators to measure progress; can apply with confidence; connect with like-minded people; leads to better collaboration; concrete tips (e.g. to reduce risk) and applicable ideas.
Now comes the fun part! Take a look at your value proposition box (see below square) and see how you create gains that address customers’ expected or desired gains; and how your pain killers address customers’ pains; You won’t be able to address all gains and pains with your gain creators and pain relievers – but don’t worry, customers don’t expect you to do that anyway. Focus on the most important ones. Keeping the above business consulting example, I could help my customers shape ideas, create products and services people want, provide a proven and effective suite of business tools, offer a common/shared language to communicate and collaborate with your team, help you understand what matters to customers and provide step-by-step instructions to get started. Those are the gains, while addressed pains could include a practical, visual and enjoyable format, minimizing risk of (big failure) and offering a brief, clear and applicable content.
Action to take: draw up your customer profile circle and value proposition square the way illustrated below and described above.
Image based on ©Strategyzer
Secret #3: prototype and test with real customers!
Take the mentality of start-ups and play around with constraints. What if you had to offer your core product or service for free? How could you generate recurring revenues? Could you become a platform model? Could you scale your business model? Increase the cost of switching? Develop a value proposition for other segments as well? And finally: go and test it on real customers to see if it works! There are so many businesses that fail because they haven’t tested their ideas first. Don’t be one of them!
Business Growth Coach and Trainer