The customer is who you are biulding your business for. You need to see what you are solving and who you are solving it for. By the end of this, you need to have a personna of who your customer is, who they are, and what they do.
First of all, you guess who your customer is and then go outside of the building to see if they are who you thought they were. You may realize that your customers are actually someone else, or that your customers were who you thought they were, but your product features do not match up.
You need to make a list of what the customer gains from your product such as: savings, feature, happiness etc.
You also need to figure out your customer problems and pains are. You also need to know there ranking of pains. You need to get to know your customer's top 10 pains and try to solve them.
Sometimes, many different customers are part of your customer segments. For example, google search have web users and advertisers as customers. When you have a 2-sided customer segment then you need a two-sided business model that include value proposition and etc. for both customer segments.
When you have a two-sided market, each segment has a value proposition and a revenue stream, but one cannot survive without the other.
How do you get your product to your customer?
There are two different things your product can be. It can be either a virtual product on the web or a physical product. Then there is the direct and indirect channel. The direct channel means you go face-to-face with your customer and indirect means that you will go sell your product to customers without ever meeting them.
Web Distribution Channels
There are several channels that you can bring your product to your customer via the web. You can have a website or make an app. You could sell your product on Amazon or eBay. Another tool you can use is facebook and twitter.
Physical Distribution Channel
Another form of distribution is physical. You could sell your computer chips to companies such as Apple and utilize their marketing to sell you product. You can also resell products at a higher value. Another way is with a direct sales force. This way you can have sales representative sell your product for you. You can also use the web to get to your custoemrs as well. Finally you can sell your product to retailers and have them sell it for you.
Pricing is a tactic, but not part of your revenue model. It is also a mistake to price your product based on how much it cost or to base your pricing to be lower than your competitors.
You need to know what value are customers willing to pay for your product. Then you need to find out how they will pay for your product and how much they are currently paying.
This refers to the sale of product to a physical market. For example, this can refer to this can be Ford or Walmart where you sell your assets for a profit.
This refers to companies such as Telus or amazon where you pay everytime you use a service or product.
This is a fee where you are charged a month to have access to a service or product.
Renting refers to money that is made from lending your product or service.
This is an example of companies such as Google where people may use for free, however companies will pay Google to advertise there company to the users.
Its is very important to have key partners that with supply you with the goofs you need. There a two types of suppliers:
- These are suppliers that supply manufactured goods such as supply chairs, and back office supplies.
-These are suppliers that will ship you raw materials and components for the manufactured goods.
Key Partners and Suppliers
When it comes to a business partners and suppliers are the key to thriving. As a start-up, you might not be recognized at first by other companies because in their eyes, you are nothing but a spec.
Why Have Partners?
Faster time to market and New marketWhen you partner with a company you have access to there whole market and their customers. In turn you have a faster distribution.
Broader product offering The company you partner with also have products and while they are experts with that product you can incorporate it with your product to make a more broader product.
More efficient use of capital Why spend your own money doing something that another company is good at? When you partner with them they can more efficiently use their own money to give you the best service.
Unqiue customer knowledge or expertise With partners comes a new customer. These companies know there customers well and with this you learn more about a borader spectrum of customers.
Risks to Having a Partner
One of the biggest partnership disaster was the building of the Boeing 787. They decided to have different parts made in countries all around the world. They ignored the engineers when they said that the parts need years of experienced people to make. In turn, many difficulties came up and it slowed the building process by a couple of years. Not all partnerships are prosperous. This partnership made by Boeing was made by accountants and not by technical staff.
Managing partners are very important because there are some partnerships that just don't work out. When you look for a partner you need to find someone that will bring something to the table. You need to ask yourself how they can help you and how you can help them.
The problem with some partners is an argument between decisions. You need to know who is in ownership of the customer. It is hard to keep the power in balance. Another issue is having a committee or multiple people running the business. This makes it even more difficult to decide on a certain matter since not everyone will have the same objectives, and when heads butt, that is when a business crumbles.