Business Model Canvas

Module 3
Business Model
Development

1. Customer Segments 2. Value Proposition

• Clearly defined target audience: Identify the specific

groups of individuals or businesses your technology aims • Unique and compelling offering: Clearly
to serve. Avoid the temptation to cast a wide net; focus articulate the value your technology provides to
on a niche where your offering solves a specific problem your target customers. What makes your
or addresses a unique need. solution better than existing alternatives?
• Understanding customer needs and pain points: Deeply • Focus on benefits, not features: Don't just list
understand your target audience's challenges and features; explain how those features translate
frustrations. What specific problems does your into tangible benefits for your customers.
technology solve, and how does it make their lives or
work easier?
3. Channels 4. Revenue Streams

• Reaching your target audience: Identify the most • Defining your income model: Determine how your
effective channels to reach and engage your technology will generate revenue. Popular models in
target customers. This could involve online tech include subscriptions, freemium (offering a basic
marketing, social media, partnerships, or version for free and premium features for a fee),
attending industry events. advertising, or transaction fees.
• Seamless user experience: Ensure your chosen • Scalability: Consider how your revenue model can scale
channels provide a smooth and user-friendly as your business grows. Can your chosen model
experience for potential and existing customers. support a larger customer base without significant
changes?

5. Key Resources 6. Key Activities

• Core functions and processes: Outline the essential

• Identifying essential assets: List the resources critical for activities needed to develop, maintain, and deliver your
your business to function, such as skilled personnel, technology to your customers. This could include
intellectual property (patents, trademarks), software research and development, software development,
infrastructure, and hardware (if applicable). marketing, customer support, and data security.
• Sustainable access: Ensure you have sustainable access • Efficiency and effectiveness: Strive for efficiency and
to these resources and can maintain them over time. effectiveness in your key activities. Streamline
This might involve building internal capabilities or processes to minimize costs and ensure smooth
establishing partnerships with key resource providers. operation.
 7. Key Partnerships 8. Cost Structure

• Understanding expenses: Identify and categorize all the

• Collaboration for mutual benefit: Identify potential costs associated with running your business, such as
partners whose offerings complement your personnel costs, technology infrastructure
technology and can help you reach a wider audience maintenance, marketing expenses, and customer
or access specialized resources. support.
• Mutually beneficial relationships: Build partnerships • Cost optimization: Continuously seek ways to optimize
that provide value to both parties and contribute to your cost structure and minimize unnecessary expenses
the overall success of the business model. without compromising quality or functionality.

9. Customer Relationships
A strong business model for technology-
• Building and maintaining loyalty: Establish strategies to based ventures shares many core
build strong relationships with your customers, foster components with traditional businesses,
loyalty, and encourage repeat business. This could
involve providing excellent customer support, offering but with some added considerations
loyalty programs, and actively seeking customer specific to the unique nature of technology.
feedback. Here are some key elements:
• Adapting to evolving needs: Be prepared to adapt your
customer relationship strategies as your customers'
needs and expectations evolve.
 A strong business model for technology-
based ventures shares many core
components with traditional businesses, BUSINESS MODEL
but with some added considerations
specific to the unique nature of technology.
Here are some key elements:

Software as a Service (SaaS)

Freemium
•Concept: Customers subscribe to access and use software Concept: Offers a basic version of a software product or service for
applications over the internet, typically on a monthly or free, with limited features or functionality. Upgraded features or
annual basis. premium services require a paid subscription.
•Examples: Salesforce, Dropbox, Zoom, Microsoft Office 365 Examples: Spotify, Dropbox, Evernote
•Pros: Provides recurring revenue, reduces upfront costs for Pros: Encourages user adoption and trial, generates revenue from
customers, allows for easier scalability and updates. paying users, collects valuable user data to improve the product.
•Cons: Relies on continuous customer acquisition and Cons: Requires a strong freemium model with clear value
differentiation between free and paid tiers, needs significant
retention, can be competitive with many players offering
marketing efforts to convert free users to paying customers.
similar services.
 Platform Marketplace
Concept: Creates a platform that connects different user groups, Concept: Acts as an intermediary between buyers and sellers, facilitating
enabling them to interact, share data, or conduct transactions. The transactions for specific goods or services. Revenue is generated through
platform itself may be free, with revenue generated through transaction commissions, transaction fees, or premium listings.
fees, advertising, or premium services offered to specific user groups. Examples: eBay, Fiverr, Upwork, Airbnb
Examples: Uber, Airbnb, Amazon Marketplace, Etsy Pros: Lower initial investment compared to a full-fledged platform,
Pros: High scalability, network effects can lead to rapid growth, diverse benefits from network effects, diverse range of potential sellers and
revenue streams. buyers.
Cons: Requires significant initial investment to build and maintain the Cons: Relies on maintaining a healthy balance between buyers and
platform, attracting a critical mass of users on both sides of the platform sellers, managing competition within the marketplace, ensuring user
can be challenging. trust and security.

Advertising-based Transaction-based
Concept: Offers a free product or service to users while generating Concept: Generates revenue by charging a fee for each completed
revenue from displaying targeted advertising. transaction facilitated through the technology platform.
Examples: Google Search, Facebook, Instagram, and many mobile apps Examples: PayPal, Stripe, online payment gateways, e-commerce
Pros: Low barrier to entry, large potential audience reach, can be highly platforms
scalable with a large user base. Pros: Straightforward revenue model, benefits from increased
Cons: Relies heavily on user engagement and data collection to deliver transaction volume, minimal upfront costs for users.
relevant ads, privacy concerns can impact user trust and adoption. Cons: Requires trust and security to handle financial transactions,
competition can be fierce, and success relies on driving high transaction
volume.
 Value Proposition Development
Deep Customer Understanding Focus on benefits, not features: Don't just list technical
specifications; explain how your technology addresses your
Identify your target audience: Clearly define the specific customers' specific pain points and translates into tangible benefits
group of individuals or businesses your technology aims to for them.
serve. Avoid being too broad, focus on a niche with specific Quantify the value proposition: Whenever possible, quantify the
needs. benefits your technology offers. This could be increased efficiency,
Uncover their pain points: Conduct thorough research to cost savings, improved productivity, or enhanced user experience.
understand your target customers' challenges and Unique selling proposition (USP): Identify what makes your
frustrations. What problems does your technology solve? technology truly distinct from competitors. Is it superior
What are their unmet needs? functionality, unmatched ease of use, exceptional customer
support, or a unique combination of features?

3. Building a Competitive Advantage: 3. Building a Competitive Advantage:

Focus on a specific niche: Don't try to be everything to everyone. Network effects: If applicable, leverage network effects to
Specialize in a niche where your technology excels and solves strengthen your competitive advantage. As your user base
critical problems for a defined customer group. grows, the value of your platform or service increases for
Innovation and differentiation: Continuously innovate and improve existing users, further attracting new ones and creating a
your technology to stay ahead of the curve. Offer unique features barrier to entry for competitors.
or functionalities that your competitors lack. Brand building and trust: Establish a strong brand identity that
Data-driven insights: Leverage data analytics to gather valuable resonates with your target audience. Build trust and credibility
insights into customer behavior and market trends. Use these by showcasing your expertise, delivering on your promises, and
insights to refine your value proposition and tailor your offerings to prioritizing data security and user privacy.
evolving customer needs.
 Customer Acquisition Customer Acquisition

1. Identify your ideal customer profile (ICP): Clearly define the 3.Content marketing: Create valuable and informative content that
characteristics of your ideal customer, including demographics, educates potential customers about your technology and addresses
firmographics, and psychographics. This helps tailor your acquisition their pain points. This establishes your brand as a thought leader and
efforts to reach the most relevant audience. attracts potential customers organically.
2. Multi-channel marketing: Utilize a mix of online and offline channels
to reach your target audience. Explore options like content marketing, 4. Free trials or demos: Offer free trials or demos to allow potential
social media marketing, search engine optimization (SEO), pay-per-click customers to experience your technology firsthand and understand its
(PPC) advertising, industry events, or strategic partnerships. value proposition.

Customer Acquisition Customer Retention

1. Onboarding experience: Design a smooth and informative onboarding

5. Referral programs: Encourage existing customers to refer their
process that helps new customers quickly understand and utilize your
friends and colleagues by offering incentives like discounts or rewards.
technology's full potential.
Loyal customers can be your strongest advocates.
2. Exceptional customer support: Provide exceptional customer support
through multiple channels (phone, email, live chat) to address customer
inquiries and resolve issues promptly and efficiently.
 Customer Retention Customer Retention

3. Personalized communication: Personalize your communication with 5. Loyalty programs: Implement loyalty programs that reward repeat
customers by segmenting your audience based on their needs, interests, customers and encourage them to continue using your technology. This
and usage patterns. This allows for more relevant and engaging can include tiered membership programs, exclusive discounts, or access
communication. to new features.

4. Feedback and loyalty programs: Actively seek customer feedback 6. Community building: Foster a community around your technology by
through surveys, reviews, and support interactions. Use this feedback to creating online forums, user groups, or hosting events. This fosters a
improve your product, service, and overall customer experience. sense of belonging and encourages customer engagement.

Customer Retention

7. Continuous improvement: Continuously strive to improve your

technology, based on customer feedback and market trends. Offer
regular updates, new features, and bug fixes to demonstrate your
commitment to customer satisfaction and product development.