A quick overview of the topics:
- Customer segments and relationships
- Value propositions
- Revenue streams and cost structures
- Key activities, resources and partnerships
- Cost structures
Part one: customer segments
Identify your customers. Do you have advertisers, too? Your revenue comes from many different places.
Demographics and psychographics : Demographics are factors such as age, education, income and where your customers live. Psychographics refers to psychological elements like attitudes, needs and interests.
Use these to analyze your target audience and describe them in your business plan.
Here’s an example of a quick analysis:
Your customers are generally middle-income, female Albertans age 20 to 50. They have post-secondary education. They care about fashion and beauty. They have free time and disposable income to pay for your hair and makeup services.
List the people who buy and use your product. If you sell products like food, or offer a cleaning service, buyers are also users. If you sell to buyers who offer your product elsewhere, you have separate buyers and users.
Which customers are most important to you? Prioritize them.
Part two: value propositions
Outline the needs of your customers. What problem are you solving for them?
Think about why they’d choose your business over the competition. What makes your products or services unique? List your top competitors and their pros and cons compared to yours. Form a strategy to make your business different and better.
For example: Maybe you own a diner. There is a fast food place down the road, and a coffee shop next to you. To compete, you might add new menu items or weekly live music.
Draw connections between your customer segments and value propositions. Which needs does each segment have?
Part three: channels
Channels are how you communicate with customers or sell to them, including advertisements, website or third-party companies. Map out your sales channels so you know all the potential sources of revenue.
For example: Perhaps you own a restaurant. You make sales there, but you also partner with a delivery service, also a source of income. People also order online and if you have ads on your website, that can earn money, too.
AIDA-OR: Cowan suggests using this acronym to break down the customer journey through each channel:
A- Attention: how do you make customers notice you?
I- Interest: what makes them want to know more?
D- Desire: what solution or comfort are you offering them?
A- Action: is it easy for them to buy your product/service?
O- Onboarding: how do you satisfy the consumer?
R- Retention: How do you keep customer satisfaction afterward?
Part four: customer relationships
How do customers interact with your business? Work out potential problems. Where do customers start? Do they use your website, or connect with your salespeople? How can you ensure an excellent experience for them, with one-on-one support if needed?
For example: You own an online marketplace. You need a user-friendly website and employees to keep it running smoothly. If you have a tutoring business, you'll need to hire enthusastic and knowledgeable tutors who will help customers achieve their goals.
Part five: revenue streams
Jot down the streams through which you make money, including advertising revenue, customer sales or donations.
Consider which customers spend the most on your business. How much value do they get for their money and how could you increase that value to drive more revenue?
Draw links between your value propositions, your customer segments and the revenue streams.
For example: As someone who owns a fitness company, you have a few sources of revenue. One might be from trainers who pay to use your facilities and equipment for their own clients. Another could be participants who sign up for an aerobics class. Maybe you lease part of your building to a health food shop and if you're partnered with them on a promotion, that might be a source of revenue.
Part six: key activities
Outline the most important things your business must do to deliver on its promises and run successfully. Write down areas you need to stay knowledgeable about, like the fashion industry or the latest assistive technology. Be an expert in your area of business.
Link the activities to your propositions. What do you need to do to make sure your customers’ needs are met? Be specific about delivering on your goals and promises.
For example: If you sell hand-made clothing, ensure that it's high quality. Maybe you have a signature incentive gift that comes with the purchase, like a box of tea or a sample of body lotion. One key activity would be consistently tracking sample count and quality.
Part seven: key resources
These are the main resources linked to your key activities. There are three types of businesses: product-driven, scope-driven and infrastructure. Decide which category yours falls under and analyze from there.
- Product-driven business focuses on selling a specific product, like a special kind of razor. A key resource is staff expertise and talent. What do they need to excel at to keep your product at peak performance and to make it different from the competition?
For example: You sell a special razor that lasts longer and doesn't rust. You need developers who can improve the design and test it.
- Scope-driven business is all about the customer segment. If you offer your services to a particular group, this is probably you.
For example: You might have a translation business that serves French and English websites. Knowledge of your particular segment (ESL and FSL students) is a key resource. So are experienced translators to operate the site.
- Infrastructure business is centred on the facilities and supplies that make it function.
For example: You might own a technology-based company, which operates out of a service centre. There is a heavy focus on the facility and power which are crucial to running your business.
Part eight: key partnerships
Decide who you will partner with and link them to your key activities. That gives your business more time to focus on other things.
For example: If you own an app, try partnering with a phone company that will endorse it and include it in their products. Strike deals with other companies to make your load lighter and benefit them, too.
Another note: Are you currently partnered with anyone who isn’t serving your business well? Consider cutting ties.
Part nine: cost structure
This is one of the most important steps.
Map out your costs and where they come from. How are they linked to your key activities? Are there unnecessary expenses?
Do your costs match up with your value propositions?
For example: Let’s say you own a flower shop. Your costs might include stock, shipping, rent, payroll and marketing. In winter, cut some expenses by reducing your stock. Is an advertising method proving ineffective? Pull the ad and try a Facebook page instead.
Once you’ve mapped out all nine parts onto the canvas, you should have a clear, focused plan for your business.