Business Model Canvas: Value, Channel and User | Divante

Imagine that you are using a certain internet platform as a user for the first time. The platform is perfect. Everything is clear and where it’s supposed to be, you are navigating the platform as if you have known it forever. Getting to interesting content is a piece of cake, and the entire project evokes your positive emotions. How to design platforms which are the user’s dream come true? You will learn that by reading a series of articles about the UX/UI.

The above scenario is not that far-fetched. In Divante, our business motto is: “We help buying, we help selling.” Why are these two elements so important? The order is not accidental. We know that by assisting the end-client in purchasing a product or accomplishing the goal he has when navigating the platform, we generate sales. In our work, we focus on the User-Centered Design methodology, where the main aim is to meet user needs in a way most convenient and intuitive for them. We believe that quality generates quantity.

We’re all on the same side

How to get started? First and foremost, your client and you are in the same team, you have the same goals to achieve. In each team, communication is the key. Why? How do we know that we are thinking about the same thing when I say ‘pool,’ for instance? One word, so many meanings. People have different mental models which lead to different perceptions.

In order to foster successful communication, you have to get to know your client, or rather explore his business model. In our Little Book of Success, we describe several case studies that are worth investigating. Visit your client’s workplace, not only his office. Show your interest in how his business is running from the inside. Discover his company’s back-office and warehouses, see how orders are processed. We offer our clients workshops during which we learn about their business models and analyze their needs. We do it to speak their language.

Borrow tools

Draw from the resources used in other industries. You can’t reinvent the wheel. There are great tools out there used to identify and illustrate the key areas of your client’s business. Driven by the adage “a picture is worth a thousand words,” we use the Business Model Canvas, described in the book Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. This is a tool developed by two Swiss business thinkers, Alexander Osterwalder and Yves Pigneur, based on the experience of 470 successful companies from 45 countries. With this tool, you can see how the following vital areas of your client’s business work and impact one another: Customer Segments, Value Propositions, Channels, Customer Relationships, Revenue Streams, Key Resources, Key Activities, Key Partners and Cost Structure. The tool is available under open licensing. A ready-made template is available here: www.businessmodelgeneration.com/canvas/bmc

Get to know your clients/users

The key to your company’s success is knowing a lot about your clients. Knowing what needs the end-users of your services have and how to fulfil them determines your business triumph. You have probably heard many times that there is only one boss – the customer – and he can fire everybody. Before you could blink, he can just move his wallet to the competition and that’s it. Your client wants to implement a project through which he will be able to sell products and services to his specific customers – his users. In BMC, “Customer Segments” is one of the nine key areas. By getting to know its customers and creating segments for them, the company is able to exactly respond to the needs of specific users.

In order to discover the company’s customer segments, find out:

• What customer segments does the company have now?
• Who are its customers and what are their characteristics (e.g. age, sex, education, social status, etc.)?
• Who is the key customer?
• What are the customers’ characteristic behaviors and habits?
• What expectations and needs is the project to satisfy?
• In what way does the project inform the customer segments about the offer that is addressed to them?

Why are Customer Segments so important for UX/UI? They will let you see for whom the company’s products and services are. It is a good foundation which will allow you to create personas and empathy maps based on individual segments. You will be able to look at the project through the eyes of its end users.

Value Propositions

Value Propositions is another crucial area (it is not placed in the center of BMC for nothing). What generates value for customers? Certainly, it is a product or a service that will satisfy their needs and thus which is valuable for them. Value will be a reason why the customer chooses the company and doesn’t go to the competition.

Values could include: newness and uniqueness, design, brand, customization, price, convenience, usability, accessibility.

Some questions that you may ask to learn about customer values:

• What is the greatest value for the customer?
• What are the reasons why customers should choose the value of the company and not of the competition?
• Which customer needs are being satisfied and what problems does it solve?
• What is the company’s offer for individual segments?

See how the information you will now receive is different from the feedback you used to get. Do not ask the company what it wants to sell. This limits the perception of their product or service. What I was once told during the sales training was, “I don’t sell mousetraps, I sell lack of mice.” Find the value propositions the company you work with wants to provide to its customers, and you will know how to present the product within the project to emphasize its benefits.

Channels

Channels are the ways in which the company communicates its offer to individual customer segments. In BMC, Channels are located between Value Propositions and Customer Segments. With this layout, you can match a specific value to a particular customer segment via an appropriate channel.

Types of Channels may include: sales network, wholesalers, online retailers and own Internet sales.

Examples of questions:

• Through which channels do particular customer segments want to be reached?
• How is the company reaching them now?
• How does the company want to reach them?
• How are the channels integrated?
• Which channels are most cost-efficient?

Thanks to this information, you will be able to see how the customer can get the value he is looking for. This knowledge will allow you to factor in the broader aspects of e.g. looping, or certain technical aspects like order collection in brick-and-mortar stores.

Customer Relationships

This area is placed between Values and Customer Segments, and above Channels. In his book UnMarketing, Scott Stratten writes extensively about relationships and their significant role in business today. In the pyramid of customer purchasing decisions, relationships are the key part.

Examples of Relationships: dedicated personal assistance, personal assistance, self-service, automated services, communities, co-creation.

Guiding questions:

• What type of relationship does each Customer Segment expect the company to establish and maintain with them?
• Which ones has the company established?
• What types of relationships are the most costly?
• How are the current relationships integrated with other business elements?

It is a crucial element in your project. It will allow you to see customer preferences and if and how they can be automated or improved, so that it is possible to maintain the same good relationship. If the strongest argument why the customer buys the company’s services is e.g. Dedicated Personal Assistance, think well how to streamline or automate the buying process in a way which will leave the customer-company relationship intact (e.g. the customer segment of seniors who are not everyday Internet users).

Revenue Streams

The area of Revenue Streams spans the right side of BMC. This area will show you how the company’s business model brings profit generated by Value Propositions.

Revenue Streams include profit from the sales of products or services, usage fees, periodic income, renting, leasing, brokerage fees, advertising, etc.

Some questions about Revenue Streams:

• For what services or products do customers currently pay?
• For what services or products do customers pay the most money or the most often?
• How does the sales revenue through various Channels affect the company’s total revenue?

How can you use this knowledge? I’ll give you one example, and I’m sure you’ll discover a lot more. You can compare best practices among all Revenue Streams. You can look at them closely and draw conclusions on why one Channel sells more than the other, and how this knowledge can be applied in the project.

Key Resources

Another area of BMC includes Key Resources. The company’s Key Resources include physical resources, infrastructure, sales network, intellectual resources (knowledge or patents), human resources (team, relationships with partners, contacts), etc. Here are some questions that you can ask:

• Which Resources does the company use to deliver value to its customers?
• Which Resources does the company use in particular Channels, Relationships and at each stage of generating Revenue?

Why is the knowledge of the company’s Resources so important? You can use this information e.g. to design innovative solutions based on the company’s knowledge and resources.

Key Activities

Each company has an area called Key Activities. These are activities that the company undertakes to operate effectively.

Examples of Key Activities: production, problem-solving services, networking, etc.

Questions that will help you:

• What Key Activities do the company’s Value Propositions require?
• What Key Activities does the company undertake for Channels, Customer Relationships and Revenue Streams?

Key Partners

I can’t think of a company that is 100% self-sufficient. Key Partners include external partners who collaborate with the company or provide it with services. This area will help you identify which Key Activities partners help to perform, and what resources the company obtains from them.

Some questions:

• Who are the company’s Key Partners?
• Who are its key suppliers?
• Which Key Resources is the company acquiring from Partners?
• Which Key Activities do Partners perform?

This area may provide you with the information on whose services are essential to e.g. deliver the product bought by the customer. Delivering goods or providing services by external partners is an important aspect. It may be regulated by various conditions, for instance deadlines, and it is of paramount importance to present those conditions to the user within the project.

Cost Structure

This area spans the left side of BMC, i.e. Key Resources, Key Activities and Key Partners. By analyzing the company’s Cost Structure, you will discover its fixed costs (salaries, rents, utilities), variable costs, economies of scale, economies of scope, etc.

Useful questions:

• What are the most important and the biggest costs of the company?
• Which Key Resources are most expensive?
• Which Key Activities are most expensive?

 Where, how, when?

The Business Model Canvas should be used during creative sessions at the beginning of your work with the company. As I mentioned at the outset, fruitful co-operation is based on mutual understanding and communication. The BMC is an ideal tool to discover the ins and outs of your client’s business, its objectives and business environment. By getting to know the different areas, you enter the world of your client and his company. The area of Customer Segments is an excellent start to broaden your knowledge about customers-users. Based on particular segments, you can develop personas and empathy maps (more information on these tools will be presented in the next articles).

Value, Channel, User

The biggest virtue of the BMC tool is its transparency. As you can see in the picture, the tool is one page long (the larger paper size, the better). It is a simple way to see you client’s business model at the initial stages of the project. You will know what to talk about and how to do it.

What the UX/UI department cares most about is the areas showing what values and through which channels the company delivers to its specific users. With BMC, you will already have a general overview.

In the following parts of the publication, you will learn which tools you should use to explore values, users and mental models.

Still straggling with opening own business? Ask yourself a question “Can I find business plan writers near me?”. The answer will solve all your problems.

You can also check our presentation: 

Business Model Canvas from Divante