Customer relationships (CR) are the fourth of the nine Business Model Canvas modules once suggested by Alexander Osterwalder in his work on business model ontology. A template is a strategic tool used to describe and analyze the company’s existing business model and develop the most optimal one.
And customer relationships describe how an organization interacts with its clients, builds and maintains connections with its clientele, and creates value for them.
In this article, we are going to consider the position and role of Customer Relationships in the Business Model Canvas and how they impact its development.
The Place of Customer Relationships in the Business Model Canvas
In a model’s structure, CR are directly present in two blocks. The Customer Segments block discloses an idea of different client groups and categories that are in the company’s focus.
Meanwhile, a similarly named block outlines specific strategies that organizations use to establish and maintain bonds and connections with those clients.
Relying on the first block, the CR module identifies the nature of relationships pertaining to each category, thus, influencing the customer experience and satisfaction level. As a result, this impacts brand loyalty as well.
Expressly dependent on client segments, customer relationships are closely connected to channels, value propositions, partners, cost structure, and revenues. A proper CR tactic promotes strong trust-based connections with clientele and contributes to a solid brand reputation.
Customer Relationships Drivers
Different customer segments and categories call for different approaches and strategies. This determines how companies should interact with their clients to acquire and retain the clientele and boost their sales. So, let’s look at the three major drivers or goals of CR in more detail.
Gaining a new client is about convincing them to pick your product and prefer your brand over others in your niche. Organizations known for establishing strong ties with their customers and maintaining positive relations with them have no difficulties in attracting new clients.
Techniques that proved to be efficient at this step are as follows:
- Creating valuable content: Organizations should outline their online presence and set up a quality corporate website filled with niche-relevant content that will match the needs and interests of their target audience;
- Likewise, blogs, forums, and webinars allow for sharing information, opinions, and ideas that speak to clients and draw their attention. This way, they can also communicate with their audiences and create a dedicated community;
- Reaching customers via emails: While a bit less popular than it used to be, email marketing is still effective for engaging clients and building a solid consumer base. By making customers sign up for their updates and newsletters, organizations can get their clients hooked or push them to the purchasing decision, thus, building strong relationships;
- Social media marketing: Social media has already outgrown its entertainment format and is currently a powerful marketing tool for businesses. Not only is it good for your products or services promotion but also it’s a place to engage with clients, win new connections, and gain valuable insights via feedback, observations, and direct communication;
- Analyzing customer acquisition efforts: Analyzing how customer acquisition tactics work is highly important for ensuring they are effective and making any modifications or adjustments if necessary.
The cost of engaging new customers is usually noticeably higher than the cost of retaining the clientele you already have. Hence, this step in the CR cycle shouldn’t be underestimated or disregarded. Solid customer connections are about client loyalty and long-term ties with a product or brand.
This stage relies on strategies inducing clients to make more than one purchase or bring other consumers.
- Maintaining a distinct brand idea: Each brand should convey some message or idea to stand out from the crowd. Besides, it will work to win over the clientele’s loyalty. Customers tend to stay with brands whose visions and concepts speak to them and align with their own points of view;
- Utilizing social proof: It’s an effective tool for building trust and credibility with both new and existing clients. Showcasing positive reviews, ratings, and testimonials will reinforce customer beliefs, decisions, and choices;
- Staying in touch: In most industries, customers are trendsetters since they dictate the demand for some product or service. Hence, it’s vital to consistently communicate and engage with the clientele to stay ahead of interest shifts, changing preferences, and emerging issues or tendencies;
- Matching customer needs: This is where customer segmentation comes into play. All consumers are different and approach purchases differently. Yet, basically, people favor products and services that help them improve and meet their prime needs and interests. So, it’s crucial to discover the clients’ desires to be able to match them with your products;
- Giving a helper-outer: The products that resolve customer problems to the full will hold consumers for longer. Above that, they will eagerly promote the brand to others and bring more clients;
- Offering add-ons: Customer loyalty should be consistently nurtured with discounts, gifts, bonuses, and any other perks that will please clients and make them want to stay with a brand for longer;
- Ensuring quality: Quality remains the major buying factor for customers. So, by maintaining the sustainable quality of their products and services, companies will keep clients on their side;
- Appreciating customers: If consumers feel valued and appreciated, they are more likely to stay loyal to the brand. Personalized service and anything that will make clients feel special will greatly contribute to their strong bonds with the brand.
Organizations should work not only to incite clients to make recurring purchases from time to time but also to push them to buy more products at a time. This aspect also largely depends on good knowledge of customer segmentation, including needs, preferences, demands, and aspirations pertaining to each category.
Besides, effective sales growth is impossible without market knowledge. It’s crucial to stay on top of the market trends and constantly analyze the market size to understand the potential for sales increase.
Notably, each technique and activity related to attracting, engaging, and growing clients implies a variety of choices on how to establish customer relationships. Organizations will juggle with them to find a unique mix appropriate for their business scenarios.
Types of Customer Relationships
To survive, grow, and succeed in tough modern business environments, organizations should determine the type of relationships they seek to build with their clients to cover the three drivers mentioned above.
The key to choosing the way how you’ll interact with your clientele is understanding your customer’s needs and expectations and striving to cater to them in the best manner possible.
A Business Model Canvas embraces six major types of CR, including:
- Personal assistance is when real people help clients with their specific needs either in person or by phone. This might include personalized advice, training, or support;
- Dedicated personal assistance is similar to personal assistance, yet, it involves a dedicated team or individual who provides exclusive help to a particular client or a group of customers;
- Self-service empowers clients to serve themselves with minimum business-to-client interaction. Consumers are given tools and resources that enable them to solve their own issues, such as online informational bases, detailed instructions, or FAQ sections;
- Automated services rely on automated systems to communicate with clients, such as chatbots and automated phone systems. The process often entails the creation of customer profiles based on their interests and purchase behavior to better match their expectations and needs;
- Communities bring customers together to share experiences, opinions, and information. This can be achieved through online forums, social media groups, and other similar platforms and online activities;
- Co-creation gives clients an opportunity to closely work with a company on a product or service to create value together. This might involve either welcoming customer feedback and input or even engaging a consumer in the designing and development process.
It’s worth noting, though, that there is no one-size-fits-all client relationships formula. While some businesses excel in one of the relationship types, others might integrate a few types in an exclusive system that allows for acquiring, retaining, and growing their customer pools.
To Sum Up
A Customer Relationships module is one of the key blocks in a Business Model Canvas. Depending on the approach, it can either lead a company to success or throw it back into a sales funnel. So, work on this block with due diligence to get prepared and develop the next blocks with ease.