Startup Secrets Sandbox

Customer-Centric Business Model

Create a Customer-Centric Business Model that includes your Customer Value Proposition

Frameworks

Workshop Slide Deck

Video Recording

Business Model Examples

Why does one even need a business model?

In its simplest form, a business model is how you deliver value to customers and make money in return.

Business models are incredibly important for 2 reasons:

They set you up to deliver your value proposition repeatably, sustainably, and profitably.

Beyond your product or service, they provide another opportunity for you to innovate and disrupt. See

Business Model as a Disruptor⁠

The best business models are

Customer-Centric Models⁠

that keep you aligned with your customer and keep your customers succeeding and coming back to you in an

RSVPD⁠

way.

For profit business models

In a commercial environment, your business model is a strategic plan that outlines how your venture will engage with not just customers, but all the key stakeholders such as suppliers and shareholders in your business environment, and how you aligns and operate use your resources effectively to ensure ongoing profitability.

Here are some key considerations for developing a strong commercial business model:

⁠

Customer Value Proposition⁠

: Understand your target customers' needs and pain points to create a value proposition that truly resonates with them.

(As a point of order, we therefore recommend you create your

Customer Value Proposition⁠

before approaching your broader Business Model.)

Revenue model: Determine the most effective way to monetize your product or service, whether it's through subscription fees, advertising, licensing or other means.

(Explore

Business Model Examples⁠

)

Cost structure: Carefully consider your expenses and unit economics to ensure long-term sustainability.

Look at

Multipliers and Levers⁠

around your

CORE⁠

as ways to increase revenue and decrease costs

The most successful business models are

Customer-Centric Business Model⁠

s. They capture value in alignment with your customer's success. By following these principles, you can develop a business model that not only generates revenue, but also creates real value for your customers.

In this section, you’ll learn how to do just that. We’ll share how to identify your

CORE⁠

business value and outline how to align your

Business Model as a Disruptor⁠

to your competitors but a fuel for your customer’s success.

Non profit or cause driven ventures

Sustainability replaces profitability

Even if you're a non-profit or working on a cause-driven venture, your business model remains crucial. At the very least, it helps manage resources and balance cash flows, ensuring your venture's sustainability. Ideally you’ll design a business model that sustains your venture to fully achieve your mission and leaves room for the unexpected.

Timing. When do I need a business model?

As early as possible, but not before you figure out the value you're delivering to the customer.

Try to at least consider your business model as early as possible, as it can be game changing. See

Business Model as a Disruptor⁠

Here is just one example. As you design your product or service, imagine if you realize that you can license what you are developing rather than build it and / or sell it.

A licensing business model would be literally completely different in that you could:

- license the patent, and never have to produce anything - license the technology to enable others to build the product - license the product and never have to build a

Go to Market⁠

engine

So the earlier you can determine where you're headed with your business model the better. However, don't panic if you haven't figured it out early on. There is a natural order to this. For example, trying to define your business model. Before you even understood your

Customer Value Proposition⁠

and specifically what value you really are delivering to your customers could be a mistake.

Take the time to understand what your customers perceive as valuable in your product or service. This understanding will give you a clear picture of what you have to work with. Then, use the

Gain/Pain⁠

ratio to understand all aspects of delivering this value before deciding how to profit from it.

The reason this may therefore take time is that you are unlikely to fully understand the full cycle of engaging with a customer until they have not just bought, but deployed and successfully adopted your product at enough scale that it is proving the impact in their business. See

Customer-Centric Models⁠

for a view of that cycle.

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