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Business Model Canvas
Gyles Denn

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describe, design,
challenge, invent,
and pivot your business model.

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What is a Business Model?
A business model describes the
rational of how a business creates,
delivers and captures value.

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http://www.youtube.com/watch?v=QoAOzMTLP5s

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Customer segments

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For whom are we creating value?

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• Their needs require and justify a distinct offer
• They are reached through different distribution
channels
• They require different types of relationships
• They have substantially different profitabilitys
• They are willing to pay for different aspects
of the offer
Customer groups represent
separate segments if:

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Value proposition

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A Value Proposition creates value for a Customer Segment
through a distinct mix of elements tailored to that segment’s
needs.
Values may be quantitative (e.g. price, speed of service) or
qualitative (e.g. design, customer experience).
 Newness
 Performance
 Customisation
 Getting the job done
 Design
 Brand status
 Cost reduction
 Price
 Risk reduction
 Accessibility
 Convenience and usability

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 What value do we deliver to the customer?
 Which one of our customer’s problems are we
helping to solve?
 Which customer needs are we satisfying?
 What bundles of products and services are we
offering to each Customer Segment?

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Channels

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How a company communicates with and
reaches its Customer Segments to deliver a
Value Proposition
• The companies interface with customers.
• Touch points that play an important role in the customer
experience.

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a company’s interface with customers.
Channels are customer touch points that play an important
role in the customer experience.
They serve several functions, including:
• Raising awareness among customers about a company’s
products and services
• Helping customers evaluate a company’s Value
Proposition • Allowing customers to purchase specific
products and services
• Delivering a Value Proposition to customers
• Providing post-purchase customer support

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 Through which Channels do our Customer Segments
want to be reached?
 How are we reaching them now?
 How are our Channels integrated?
 Which ones work best?
 Which ones are most cost-efficient?
 How are we integrating them with customer routines?

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Customer relationship

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The relationships a company establishes with specific
Customer Segments
 A company needs to understand the type of relationship it
wants to establish with each Customer Segment.
 Relationships can range from personal to automated.
 Customer relationships will be driven by one of three
motivations:
• Customer acquisition
• Customer retention
• Boosting sales (upselling)

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 What type of relationship does each of our Customer
want
 Segments expect us to establish and maintain with
them? Which ones have we established?
 How costly are they?
 How are they integrated with the rest of our business
model?
• Personal assistance
• Dedicated personal assistance
• Self service
• Automated services
• Communities (on-line etc)
• Co-creation (write reviews,
co design, create content)

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Revenue streams

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The cash generates from each Customer Segment
Two different types of Revenue Streams:
1. Transaction revenues resulting from one-time
customer payments
2. Recurring revenues resulting from ongoing
payments to either deliver a Value Proposition to
customers or provide post-purchase customer
support

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 For what value are our customers really willing to pay?
 For what do they currently pay?
 How are they currently paying?
 How would they prefer to pay?
 How much does each Revenue Stream contribute to
overall revenues?
Several ways to generate revenue streams:
• Asset sale
• Usage fee
• Subscription fee
• Lending/renting/leasing
• Licensing
• Brokerage fee
• Advertising

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Each Revenue Stream might have different pricing mechanisms.
There are two main types of pricing mechanism:
fixed and dynamic
• List price
• Negotiations
• Price per feature
• Yield management (hotel rooms, flight seats)
• Customer segment (NHS discount, trade prices)
• Real time market
• Volume dependant
• Auction price

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Key resources

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Key Resources are the most important assets
required to make a business model work

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 What Key Resources do our Value Propositions require?
 Our Distribution Channels?
 Customer Relationships?
 Revenue Streams?
Key Resources can be categorised as:
• Physical
• Intellectual
• Human
• Financial

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Key activities

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Key Activities describe the most important things a
company must do to make its business model work

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 What Key Activities do our Value Propositions require?
 Our Distribution Channels?
 Customer Relationships?
 Revenue Streams?

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Key partnerships

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Key Partnerships describe the network of suppliers and
partners that make the business model work

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Companies create alliances to optimise their business
models, reduce risk, or acquire resources.
Four different types of partnerships:
1. Strategic alliances between non-competitors
2. Co-opetition: strategic partnerships between
competitors
3. Joint ventures to develop new businesses
4. Buyer-supplier relationships to assure reliable
supplies

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 Who are our Key Partners?
 Who are our key suppliers?
 Which Key Resources are we acquiring from partners?
 Which Key Activities do partners perform?

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Cost structure

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The Cost Structure describes all costs
incurred to operate a business model

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 What are the most important costs inherent in our
business model?
 Which Key Resources are most expensive?
 Which Key Activities are most expensive?

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Cost Structures characteristics:
Fixed costs
Variable costs
Economies of scale
Economies of scope
Two broad classes of business model Cost Structures:
• cost-driven and
• value-driven
• (many business models fall in between these
two extremes):

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Contact us to find out more:
Phone: 0161 359 3050
Email: info@businessgrowthhub.com
www.businessgrowthhub.com
@bizgrowthhub
Business Growth Hub
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