What is Customer Relationships in the Business Model Canvas?
Published: 17 April, 2022
What are Customer Relationships in a Business Model Canvas?
The Customer Profile section we’ve developed for the middle of the business model canvas draws on neurolinguistic programming and psychological research into motivation and choice architecture in order to focus on the rational and emotional factors behind decision-making. Unlike some models of decision-making, it focuses less on a dichotomy between “pains” and “gains” because people can be motivated by pains and gains in different ways.
Most innovations and businesses struggle to grow. The key to driving growth is to improve solution/market fit (and not just increase the marketing budget!). To improve solution/market fit, organizations need to better understand their customers, which requires a consistent outside-in perspective. Don’t assume you know what your customers’ need is, go out and ask them.
Identify specific customers by understanding their Jobs to be Done, an important element of the business model canvas. What sort of services do different customer segments expect, and how can you help them complete their Jobs to be Done?
Types of Customer Relationships
We can differentiate how we interact with customers of our businesses, and it’s helpful, too, to consider how we interact with service providers ourselves. It’s not necessary to interact with customers in all the possible ways in order to be successful, and in fact, your business may brag about doing one of them better than all of your competitors. It is necessary, however, to understand what your customers expect when they have contact with you, and make sure you are meeting—and surpassing—those expectations.
Dedicated personal assistance
Unless your business is built specifically around truly dedicated personal assistance – like a home care provider or a personal shopper – chances are you’re only providing it on a very limited basis.
More likely than dedicated service, personal assistance represents a relationship over an extremely time-limited basis. The attention a customer often receives when purchasing a car would apply in this case.
Poor customer experiences are often a result of poor personal assistance.
Many successful businesses are built around the self-service concept. Vending machine enterprises and gas stations are good examples of businesses where customers expect to meet their needs with little if any contact from the business owner. In the traditional customer-vendor relationship, for example, if the machines are working properly, the customer will never meet the vendor.
Customers may briefly interact with employees – may be asking for a re-stocking – but generally expect to be on their own.
As robot and AI technologies advance, we can expect more and more truly automated services. Today, one good example of a business built around automated services is a car wash that collects money and delivers the service entirely on its own. With the exception of some servicing and restocking of soap, the machines handle all of the labor as well as all the interaction with customers.
We should not remove the “human” from even fully automated processes. Even if your business model revolves around experiences with technology and machines, there is human interaction taking place.
That interface is your customer service representative: Is it acting as a quality employee?
Sometimes the interaction between customers and a business is community-based. Many online platforms fit this description. In some ways, a visit to a place of worship is a good example of this sort of contact.
Different customer segments will approach the notion of community differently. Is the business providing the community, or is it the community interacting with the business? Positive relationships depend on our understanding of how those transactions are taking place.
One of the hallmarks of Web 2.0 was the collaborative relationship between service providers and users, who would be responsible for the generation of much of the content found on the Internet. We hardly think twice anymore about a blog post or a Twitter account.
As a shift from customer self-service models, co-creation relies on customers to bring much of the value to a business model. In the technology sphere, companies maintain online communities while users exchange knowledge and create value. Businesses rely on users–and content creators–to maintain a personal relationship with other users. Customer relationships are built between the content creator, the platform provider, and the third-party users in a complicated exchange of experiences.
Co-creation requires businesses to balance control over the platform and content creation with their customers’ productions in oftentimes difficult ways that we’re still working to understand as a culture.
Importance of Customer Relationships
The key is to focus not on what you don’t have, but rather on what you do, as a large organization, you have major assets you can use to your advantage. For example, you have a brand, you have existing customer relationships and thus customer access, you have deep technical expertise in specific areas, you have buying power, you have distribution relationships, you possess financial resources, and you probably have a ton of other assets and capabilities.
A start-up has none of these things, nor likely do many of your competitors. These are the things that can form the basis of your own Unfair Advantage if you use them well!
Benefits of Building Positive Customer Relationships
There are clearly many benefits to fostering good customer relationships, but it’s beneficial to unpack them to understand each more deeply.
A business that has a reputation for developing strong customer relationships will attract new customers more easily. People who’ve enjoyed positive customer relations with a company describe those experiences to other people who may then also choose to frequent your business.
When you focus on customer relations, your company establishes itself as a worthy partner. Business is always about human interaction at its core. Building positive customer relations helps keep those customers coming back.
You should research how much of your business model relies on repeat customers: if the percentage is high, you must allocate resources to customer retention appropriately.
How do we differentiate retention from loyalty? Retained customers return, but loyal customers become evangelists for our work. The relationship you build with customers, and how you maintain personal relationships, will determine the depth of connections customers have with your work.
When you satisfy customer needs, they leave happy. The customer experience will always impact customer retention.
Even businesses that rely on self-service or automated processes must keep in mind that they still must build meaningful relationships with their customers.
Digital Leadership Recommendations for Building Positive Customer Relationships
What do good customer relations look like in practice?
It’s easy to claim you have or want to have good customer relations, but in truth, they take investment and consideration. Businesses don’t deliberately abandon beneficial customer relationships, but rather we’ve found the breakdown of customer interactions occurs like a slow-motion car crash that can’t be stopped.
Positive relations also take a plan. Below are some practical steps a business can take to help build positive customer relations.
Build Strong Communication
Make sure your internal communication practices are solid. Focus on communicating through as few channels as possible, but use those channels well. With so many options companies can use to monitor workflow and connect with each other, it’s easy for much of it to become distracting noise.
Welcome customers into your communication channels as much as you can. Be honest about availability and response times. Monitor online communities and be certain your company establishes guidelines for public-facing communication.
Understand Your Customer Goals
Our businesses exist to help customers meet their goals. Understanding those goals is paramount to our business success.
How do we come to understand those goals? We ask them, of course. Your customer service team must be trained to provide the kind of personal assistance that reveals these goals, and that information must become part of a dossier for each of your clients.
Customer relations over time require us to shift with our customers as their goals change, but we can only accomplish this move when we take the time to ask our customers to clearly articulate what they hope to accomplish.
Share your Knowledge
What do you know? Who else could benefit from knowing the same things?
Knowledge is rarely a commodity. Rather, the delivery and the execution of knowledge become the cornerstones of our business model. Therefore, you can develop customer relations by sharing your expertise. Through blogs, white papers, social media posts, and other forms of outreach, you can let customers and potential customers share what you know. That builds trust and helps with customer acquisition.
Putting what you know into practice can be monetized. Speaking directly to customers about what you know contributes to building a direct relationship.
Treat Clients as Individuals
Consider your experiences as a consumer: what makes you want to frequent your favorite restaurant or store?
Chances are, significant elements of your attraction to these favorites are the personal relationships connected to these places. You’re made to feel important as if your needs are specific to you, and that business is ready to help you navigate your challenges.
Remember that your customers appreciate the same kind of attention. While it’s true that most people can be placed in specific customer segments, no one wants to feel like they’ve been packaged with someone else. Returning customers remain loyal because of how they’re treated. Generous loyalty programs help customers feel seen and may provide your business with unique marketing opportunities.
Efficient customer service includes surpassing customer expectations as a practice, not as a gift.
Support the efforts of your team, to be honest during the sales process so that they aren’t making promises the company can’t keep just to bag a client. Manage customer expectations: let them know what you’ll deliver, how, and when. “Managing” is guiding in this sense, not working to diminish whatever expectations a customer brings to your business.
Focus on providing an excellent customer experience, and make aggressive changes when the experience isn’t meeting expectations. The poor customer experience is your Kryptonite. It will kill your business.
Customer relationships that are centered on service will appropriately keep appreciation an important element of a business’s practices.
Connecting The Dots: The UNITE Business Model Framework
How to Create Innovation includes a number of canvases that focus on value creation and finding the right business model to meet your customer segment and customer needs. The framework is built to inspire drastic changes that help you find a competitive advantage. Our hope is that your company grows through business model innovation, and so we again encourage you to look deeper into our website and the book.
Here is a summary of the key ingredients of the framework:
The centerpiece is the Business Model Canvas, which covers the six main areas of a Business Model (the Operating, Value, Service, Experience, Cost, and Revenue Models).
A Business Model can be broken out into its numerous aspects. Depending on what challenges you face, you can zoom in on your area of interest using an appropriate tool or canvas:
- Your Business Intention and objectives as well as your Massive Transformative Purpose summarize your drivers and give direction to what you do.
- The Value Proposition Canvas details the central components of your offering (the product or service).
- To dig into your Customer Segments, work with data-driven Personas.
- The JTBD Customer Job Statement and Job Map frame the JTBD of your customers.
- The Business Model Environment puts your Business Model in a market context composed of emerging trends and disruptive forces.
- The Innovation Culture Canvas helps you understand and consciously shape a culture that supports innovation.
- The Innovation team structure enables you to draft a team structure for your innovation initiative.
- Using learning and growth metrics, you can measure progress at the initial stages of development. These metrics help you focus on what really matters instead of creating a detailed business plan that will not really help you. Later on, you can expand the financial aspect of the Revenue and Cost Models with a full business case.
- The Operating Model Canvas helps you think through the Operating Model.