It is not enough to just build a product or service and hope that the customer will buy it.
Now, let me explain why I make this statement with a product that everybody has their hands on - iPhone!
People love this Apple product!
True! Some companies do have, what we call in business design, a love mark embedded into their Customer Relationships.
So while we think that people buy the iPhone because they love the phone, the truth is they buy it for 3 reasons:
STATUS - what it represents and the need to feel like part of an exclusive club (due to price and brand)
USER EXPERIENCE - being accustomed to how they use it
HIGH SWITCHING COSTS - voiding the hassle, especially if they use other Apple products
How can you get closer to Apple’s business excellence (and I use the word excellence very consciously from my business competence angle because a company that can create a recurring revenue stream - normally attached to a service/software offer - from a product is pretty genius to me)?
My recommendation is to start analysing and understanding your Customer insights versus collecting Customer information.
What’s the difference? Similar to collecting facts versus opinions.
Which option (opinion or fact) enables you to make informed and business impactful decisions?
Understanding the real motivations and drivers behind your customers' needs and aspirations and building a product with a value proposition that ticks all those boxes is the winning formula. And it really applies equally in B2C and B2B models because there is always a human touchpoint in your sales cycle.
All you need to do is study this human factor and bring that early into your value proposition design. Once you have this methodology become a part of your DNA, you embed it into your business model - this is rule number 1 if you want to grow your revenue!
Remember the Kodak example from my previous article?
As I mentioned they participated in the invention of the digital camera and had a good value proposition for it that led them to sell many digital cameras but they went out of business because they did not have a great business model for it.
On the opposite spectrum, we have a story of Nintendo Wii. It was designed and built in early 2000 around the time when Nintendo’s sales were declining.
Competitors were focusing on impeccable graphics and devouring Nintendo’s market share. Nintendo created games with a full-body experience which was totally new. But apart from launching an innovative product (body-experience) in the game console market, they built a business model with lower costs (graphics costs were cut), more customers (non-hardcore gamers, all families were suddenly into gaming), and superior profit margins. They outcompeted their competitors on the business model.
If you want to build your business on the right foundation, do the following:
Start collecting Customer Insights
Design value propositions that address the most valuable needs extracted from Customer insights (and create products/services/solutions based on that)
Embed them into business models to ensure scalability, profitability, and design of a business model view allowing you to validate any internal or external influences’ impact on your Customer or Value Proposition quickly
Repeat. Repeat. Repeat.