STEP THREE: DEVELOP THE RIGHT BUSINESS MODEL
There are two paths to business growth: 1) continuously chase customers; or 2) build relationships with your community of loyal customers.
How well your organisation performs has a lot to do with the business model you use to run it. The business model is the structure of the organisation that determines where money should be invested and the potential sources of revenue. Your business model is the means through which you develop your competitive advantage.
While most organisations think they have thought about their business model. they usually have only thought about their business plan. the description of how the business model will be implemented. Most businesses simply follow a standard model and end up as a cookie cutter version of most of their competitors.
Today's customers - facilitated by the internet - have been conditioned to expect exactly the product or service they want. They know that a comparison. if not an alternative. is only as far away as the nearest computer or mobile device. The problem is not only that you may not compare favourably with others. but simply being so similar can leave your potential customers unable to decide and frustrated with the effort of trying to work out what aLL the features mean for them. Your business model can be generally described in one of two ways.
A transactional model
The transactional model means you focus on the tangible offering: product. service. price. variety. quality and other features. The transactional model is easy because it is common - you know exactly how it works and how to run it. It is a fast-to-market model as anything you need is practically available off-the-shelf. However because your customers’ attention is directed towards 'what they get', you are totally reliant on making that next sale. Even if your offering is better or cheaper than the competition you are constantly at the mercy of someone else's promotion, discount or claim. Traditional retail is a typical example of a transactional model. The major retailers with market power are using cheap prices to shore up their sales in a race to the bottom.
Regardless of your industry or whether you are selling B2B (business to business) or B2C (business to consumer), if you focus on tangible offerings your customers are usually only as loyal as your latest discount, promotion or novel idea.
An experiential model
An experiential model is one that focuses on the intangible offering: value (as in values. not price) and the emotions with which you want your customers to connect. Because your customers' attention is direct towards 'how they feel' you can engage them on a deeper level and develop a longer relationship based on common values. This model requires at least some custom building meaning you have to test your own waters rather than follow the well-trodden path before you. However, because your customers' attention is direct towards 'how they feel' you can engage them on a deeper level and develop a longer relationship based on common values.
Organisations built on an experiential model do not always look different – at least not at first – it is usually a deeper response, a personal connection that moves customers to becoming not just happy customers but loyal fans. Because of your unique approach it is difficult to compare your offering with others meaning you