Business Model Canvas: a tool for defining Business Models (part 4)

As I wrote in the first part of this series, the Business Model Canvas tool helps us to define, visualize and reinvent our business model. This tool developed by Alexander Osterwalder and Yves Pigneur, has 9 different building blocks. In my last posts I have written about the first two building blocks: Value Proposition and Customer Segments .

Taking into account that the value propositions of our company are goods or services with a bundle of benefits that will be offered to the different customer segments, we must also define the way in which that proposition is going to be delivered. In this way the Business Model canvas has a building block called channel, which I will describe in this post.

 

Why should we define our channels

When we create a company this might have many objectives – create employment, provide a service to customers, among others- but naturally the most important goal is making money. To achieve this goal we need to have a value proposition that our customers are willing to pay for. Here is where our channels become important. Even though we have clients and a value proposition, a channel through which we are going to deliver our goods and services, must exist. In this vein, we must define the channels which will be the customer touch point and that will play an important role in his experience.

 

What should we take into account when we define our channels?

There are many things we should think before we define our channels. In the first place we must determine if they are going to be our own channels, channels from a partner or a mix of both. Examples of our own channels are our sales force, our stores and our online store. Examples of our partners’ channels are their stores and wholesalers. It is extremely important to determine an excellent mix of channels according to our goals. Normally with our own channels we are going to have better margins but with a partner channel we might be able to reach customers we cannot reach on our own channels.

Secondly we must determine how are channels are going to be structured in the different phases of the purchase cycle. In a first phase the client has just become aware of the existence of our product or service, later he is going to use our channels to purchase our product and at the end of the cycle we must have channels that can deliver our value proposition and provide him after sales support.

 

In my next post I will write about the last building block that completes the service to the customer segments: The relationship we establish with our segments. Expect it in a few days!