Glad you guys came back to learn more about the business model canvas strategy and how it can help your startup. If you missed out, please read Part 1 and Part 2 before continuing with this article. So anyways where were we? Oh ya, Facebook.
So I will give you a brief overview of the remaining categories.
Value Propositions are reasons that customers user and are happy with your product. These should touch on both sides of your customer base. For the Facebook example, Facebook has both free social media users and paid advertisers and app developers and must present a useful product to both parties. The value proposition provided to individuals would be it’s social media platform, allowing people to interact virtually and share things. On the other side of things, Facebook provides advertisers with a massive audience it can send targeted ads to and a user base for games and apps.
Value Propositions are a slippery slope however, they should not be features, but rather functionality. This is because people do not care the technology behind something, as long as it works. For example, if your startup is selling turbines, a bad Value Proposition would be: high speed technology because your customer doesn’t care that it is high speed. Instead, a better one would be energy efficient. Try to take the technological lingo out to make it something your consumer can understand and relate to.
Customer Relationships is the type of relationship your startup will have with your users. This could include online forums, self service, telephone or online customer service etc. Facebook wants their users to be long term and sticky, as in repeat users, as opposed to some company who wish to sell just one of their products and consider that successful. I honestly do not know what network effects is supposed to mean.
Channels are how the company plans to distribute and or sell their product or service. Facebook, because they are such a large and successful online company do not need to market or work much outside of their organization to successfully accomplish their mission. Their channels would be primarily their website, their ad site and their own and 3rd party apps and games.
Customer Segments, in addition to Value Propositions are the hardest, yet most rewarding parts of any startup’s business model canvas. Customer segments are target audience for the company. Ideally you will want to hammer down on your target customer until you have your stereotypical consumer well defined. In order to successfully accomplish you, your founders must first attempt to determine a generalized customer base. For example, if you were selling ugly Christmas sweaters, your target audience will probably start out as older women in their late fifties that have kids.
Facebook identified global internet users are their potential customers. This is much too broad for a startup and much to idealized to succeed. Initially Zuckerberg started with just Harvard. Pick your niche and start from their. Additionally, Facebook realized that large companies and small advertisers could use the platform to advertise and game/app developers could benefit as well.
Revenue Streams are how a company makes money.
So how do you make money? Your company can sell a product or service, offer advertising, subscription models, etc. All of these plans have certain advantages and disadvantages so you must weigh these when deciding what your startup company will do.
That is the business model canvas. You are now ready to write your first one. You can download a canvas template. Got any questions on anything to do with the article or Vespyr in general? Sign up and follow @VespyrTeam on Twitter