Business Model is a vaguely articulated document in the best of enterprises. It is facing a huge challenge during THE GREAT RESET; a termed coined by the world economic forum to describe coronavirus’ political, economic and social discontinuities that have suddenly and fundamentally changed the traditional context for consumer decision-making. All that businesses really need is a pivot; change in strategy without a change in vision.
KNOW YOUR BUSINESS MODEL:
In essence, a business model is about articulating the method by which an enterprise delivers value to its customers, entices the customers to willingly pay for the value and converts those payments into profits. Many traditional MBAs struggle to define the concept of a busines model as it has no established theoretical grounding in business literature. Great business strategy continuously strives to create sustainable value creation, honed to meet consumer needs and being unpalatable by the competition to imitate. Having a differentiated (hard-to-copy) model with an efficient, efficient delivery of value is the heart of long term, sustainable competitive advantage.
Over the years there have been three categories of business models. First is ‘Buy’ where price is directly paid by consumer. Second is ‘advertise’ where end-product to a consumer is partially or fully subsidized by advertiser and finally ‘Freemium’ (very popular on internet) where basic services are given free to acquire consumers at a brisk pace and then offer
premium services for a fee. Business models must morph over time changing markets, technologies and legal structures dictate and/or allow. This is imperative because consumer perception of value delivery is a function of the context; relative efficiency and effectiveness of your business model with reference to your competitors.
Hence, the biggest risk mitigation strategy in a business is about defining a clear business model and continuously measuring the changing value of perceived consumer utility over a changing context.
VALUE POST COVID RESET:
Customers’ willingness to pay for any product or service comes from their own conviction that the monetary price being demanded is (a) competitively the least and (b) equal to or lesser than perceived value being delivered. It is imperative that business have a real time customer experience (CX Track) to measure perception of value being delivered by the business. CX track is the best predictor of future revenues, but also the biggest challenge for any business as perceived value is a dynamic abstraction, which varies from one customer context to another; context is defined as a mix of demographic-psychographic profile of the customer. The great COVID reset is an honest illustration to your business if you really have the customer insights on your competitive advantage. As ways of living transform due to COVID, the perceived value of business to a consumer is impacted. Therefore, a real-time, continuous track of customer value perception is critical for both investors as well as top management in any business. In 2020, real time, two-way, digital accessibility of consumers allows a business to continuously track the perceived value of a business. It continues to remain one of the most under-rated and under-used solution in business.
One of the most popular measures of changing perceived value is net promoter score (NPS). NPS is calculated by seeking the answer to a key question, using a 0-10 scale: How likely is it that you would recommend [brand] to a friend or colleague? Respondents are grouped as follows:
1. Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fuelling growth.
2. Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
3. Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.
Subtracting the percentage of Detractors from the percentage of Promoters yields the Net Promoter Score, which can range from a low of -100 (if every customer is a Detractor) to a high of 100 (if every customer is a Promoter).
Hence, a CX track using any reliable scale like net promoter score is the only solution to dynamically predict how safe is your business in a dynamic context, changing due to COVID’s great reset and/or because of any other discontinuity.
FUTURE SAFE BUSINESS
The capacity of business to sustain post the great reset is severely compromised unless the business models pivot with the changing context. Pivoting is the change in strategy of a business without a change in vision. Note here that strategy refers to the route adopted by business to create a non-replicable competitive advantage, which changes with context.
CX track is a leading indicator that measures customer experience and predicts business growth. It is a proven metric which provides the core measurement for customer experience management programs the world round. It is important to emphasize that business models vary (three types, refer above) and CX track is best done with customers. In advertising led businesses, where customer and consumers vary, it is to be done with customers. Similarly, in multi-channel FMCG and/or durable organisations, it is to be done with your stockists and retailers. Most important is the fact, that a continuous CX track needs to be measured and monitored. And the million-dollar questions are – Does your business have a documented business model and a continuous CX track?
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Intelligent insights (Intin) is a Business Intelligence Platform that combines the power of technology tools with the insightful experience of seasoned consumer marketers and subject matter experts.