Tightening up on business-model alignment means shifting the way you do business in line with customers’ needs and expectations.
Arguably, the better you do this, the better the potential development of your value proposition built around your competitive advantage. This is the essence of surviving and growing.
The question then becomes: Tighten up, or significantly change?
Both could be relevant and could go hand-in hand.
Business models are the way businesses structure their engagement of markets by segment, as well as their transaction processes with intermediaries (channel participants) and, ultimately, end-users.
Market-environment and competitive-landscape issues such as import trends, local competition, rising costs, changes in market volumes, opportunities provided through digital connectivity and diluting margins … all these can be key triggers for reviewing business models, depending on the industry sector.
Is it more important to tighten up business models in the b2b or, the b2b2c sectors?
In my opinion, what’s important is your particular market space.
There’s no substitute for a good market-mapping exercise to illustrate the producers, importers, channels to market, distributors, resellers, influencers, regulators and customers at trade level, and end-users. This will expose your potential segmentation approach and the design of your distribution strategy. Add the volumes through the market map and eureka moments emerge to help you understand what’s likely to unfold.
Some manufacturers use intermediaries such as distributors to engage, distribute and sell their products to their end-users. Others in service sectors utilise a mix of in-house resources as well as agents, brokers and authorised re-sellers. It depends on the market dynamics.
To some extent, the business model design can be affected by regulation, geography, technical issues and so on. Typically, business models evolve slowly because industry sectors in Australia change little. But transaction methods can change relatively quickly through technological advances which reduce servicing costs.
dedication to providing exceptional customer service drives everything we do. Technology, logistics and service are the three key pillars underpinning this user experience and it is what allows us to distinguish our customer experience as one of the best in the world.
Winning Group and Appliances Online, headed by CEO John Winning, gets it right in the online kitchen and laundry appliances space.
I know from personal experience with a recent minor laundry emergency that their offer, transaction process, delivery and installation service is brilliant. I asked John what drove the development of his apparently successful business model, both online and through his bricks-and-mortar outlets.
“We put the customer at the centre of everything we do,” John said.
“From the moment a customer lands on our website right through to the delivery and installation of a product and beyond, we have a dedicated team of employees hard at work to ensure we provide the best possible shopping experience”.
“This dedication to providing exceptional customer service drives everything we do. Technology, logistics and service are the three key pillars underpinning this user experience and it is what allows us to distinguish our customer experience as one of the best in the world.”
Sometimes, analyses of your market segments show that certain customer groups are becoming more important in volume terms. Direct engagement may be a viable option rather than relying on intermediaries. It’s a balancing act which must be managed carefully. Distributors have long memories when they’re shut out.
Those who ignore their competitors’ business model re-alignment may also get locked out, making it even harder to catch up down the track.
It’s the opportunities that really matter. That may require a change in your business model to access tomorrow’s customers and institute competitive service paradigms.
An effective business model keeps the competition at bay and the customers happy … until the opposition catches up!
Should you tighten up your business model alignment to market trends and opportunities?