Using Business Model to Make Marketing Decisions
One of the things that we are really big on at Element Three is ensuring that there is alignment between your business strategy and your marketing strategy. And so in order to do that, we need to understand, at a really quick snapshot level, what is the business model that you run.
And when we say business model, we mean what is your value to your customer? How do they receive it? How do you make revenue happen? And then what are the costs on the back side that allow all of that to come to life? So a really easy tool to use, and one that we use, is called the Business Model Canvas. This is developed by a company named Strategyzer, and what it does is it allows you to see in a two minute quick conversation, here’s how our business works.
And so we use this when we’re working with a business and understanding again, how do you serve the marketplace and what sort of costs are associated with that. This is valuable for your business to have because at any point when you go to change an element of your business, maybe you want to test a new customer segment, you want to test a new value proposition, or you want to test a new revenue model, you can look at that model and say, okay, what other areas are going to be impacted and what else needs to change in order for me to pull this off.
So a good example of this is a client that we’ve been working with and they are looking at targeting the market with a brand new offer. And to do that they have to understand, do my current customers want this offer, or am I also entering a new market? Do I have the manufacturing capability on the back end to produce this? Do I need to find new distribution partners? What sort of costs am I going to incur to bring this to life? And does my revenue potential outweigh the costs that I’m going to incur in order to do this? Is the business viable?
This model allows you to see that very quickly and it gives you almost like a checklist of have I considered this? Have I considered this? And if you get through that piece and you understand, either I can manage the changes that occur across my business model or well, actually just changing this one customer segment or changing this one value proposition or changing this channel only impacts it slightly.
It gives you a better opportunity to understand if that test is worthwhile. So here’s why this matters for your marketing. I just mentioned value propositions. I mentioned customer segments. These are things that your marketing can really impact. So if you’re trying to communicate a new value proposition to the marketplace, the channels that you go through, social media, LinkedIn, Google, paid search, events, speaking engagements, being on podcasts, like all these different options come to life and you need to evaluate that in the standpoint of where are my customers going to experience me normally? How are they going to experience this new offer that I have in the marketplace? What is the relationship I want them to have with me?
These are all things that marketing can directly impact and the kind of tactics that you choose to go do — the way that you execute on that plan — will all be impacted based on what the business model needs to come to life. So at the very beginning of this video, I talked about how we try to ensure that your business strategy and your marketing strategy are working hand in hand. And so when you make the decision to take on a new customer segment, make a new value proposition to the marketplace, and then we do what we just talked about with understanding how am I going to bring this to the marketplace and what tactics am I going to use to do so, using the business model as the thing that you go back to, to evaluate through helps to ensure that your marketing strategy and your business strategy are playing hand-in-hand and you’re not making decisions about your marketing strategy without considering
how it impacts the overall business.
There we go. Saying words. Business model Canvas.
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