11 Ways To Create New Value And Bring Customers To Your Company or Startup

5 Jul, 2010

I am some how late in posting part II of my review of Business Model Generation book, a book that helps you build business models for your startup, company or even understand your competitors business models as the book describes in details the rationale of how an organization, create, delivers and captures value.

In part one, we wrote an overview of the book mentioning the 9 blocks of how a company will make money: customer segment, value proposition, channels, customer relationship, revenues stream, key resources, key activities, key partnerships, cost structure.

Today we focus on Value Proposition as it is the heart of any successful business. If you offer no value to users, no body will buy from you or use you.

The book describes value proposition as the bundle of products and services that create value for a specific customer segment. It is essentionaly the reason why customer turn to a company or will turn to your company over another!

The book explains that value proposition creates value for a customer segment through distinct mix of elements catering to that segment’s needs. Value may be quantitative ( ex: price, speed of services) or qualitative (ex: design, customer experience.) It also offers a list that can contribute to customer value creation, here the list with my own take.

You’re encouraged to share your  favorite way or all of them by using the “tweet” links next to each one.

1-Newness: Create something new that users did not know they need. [tweet]

A Value proposition that satisfy an entirely new set of needs that customer did not know they need or did not bother to ask for because there was no simlier offering. In most cases this often is technology related: example of Newness:

- headphones innovated by Sony

- Mobile cell phones

- Islamic Banks (Muslims needed it but no one offered it before.)

- Tablet PCs like the iPad.

- Microsoft instaLoad.

However newness is not a grantee of success for any business, headphones lost for MP3 players and MP3 players to now smart phones, Friendster was the first social networking website now not only that market is dominated by Facebook. But with 500 millions members and the vast amount of “likes” warehouse data Facebook has it is poising a great threat to the search leader Google.

2-Performance: Offer Speed and Superior Performance.[tweet]

Increasing a the performance of something has been around since year on PCs and Mobiles as a way to create value. Another example is one of the values Opera browser offers over other browsers is increased performance and faster browsing.

3-Customization: Offer Customers Choice. [tweet]

Which is tailoring a products and services to the specific needs of individual customers or customer segments. examples includes DELL which started by offering customers the option to customize a PC, choose your CPU, your hard drive your RAM etc.

Online zazzle for example allows you to customize in a simple Drag-and-Drop Design Tools t-shirts, business cards, invitations, in addition to a variety of custom gift. Zazzle is used by Millions of people.

4- Getting the job done: I will do it for you, you focus on your core business [tweet]

Here Value can be created simply by helping customers getting the job done. the book mentions Rolls-Royce as the airline industry relay entirely on Rolls-Royoce to manufacture and service jet engines. This way airlines can focus on running their airline business. In the online world web hosting companies might fall into that point too, instead of buying your own servers, the hosting company will take care of that you focus on developing your app and marketing it.

5-Design: Superior design is a weapon of 2 edge. [tweet]

Products may stand out because of superior design, but I do not think it is the only reason why customer would buy from you. Design is more important in the fashion industries. In Mobile there is no doubt the candy like design of iPhone helped sell the product. In the web they say design is 30% the rest is content, in my side i’d say depending in the product, in blogs and news websites content is number one in webapps and or any app design and UI is very important. However web design should aim to achieve the business objectives, It is not about offering artistic full of flash website.

6- Brand/Status: Do not be too much afraid from Big online Brands entering your Market. [tweet]

Customer may use or buy a product simply because it is a brand or satisfy a certain status “needs” wearing Rolex watch signifies wealth. On the other hand, teenagers might wear Mettallica t-shrits simple to show they are “cool”!

Brand is important but alone it is not enough, Nokia is a brand and had a brand equity as the Mobile leader more than Apple which has no single Mobile device. To show how iPhone brand is so strong, I will mention this short story: I went recently to a restaurant downtown Amman, Jordan the waiter saw my Mac Book and told me WoW is that an iPhone?

Online Google is a brand right? Yahoo is a brand right? Google launched Google videos to compete against Youtube, it went no where so Google ended buying Youtube for over 1 billion dollar. Google has Orkut as a social network? is it popular in USA or anywhere? Google launched google wave, do you still use it? Google launched Buzz to compete with Twitter? anyone still using it? google it self was not a brand when it first started, back then the Internet was seen as Yahoo and America Online?

Online, brands have a value you need to build a positive brand but it is not the number one factor for why users would use your product or App. In the offline world “tangible products” brands value is more important. When you want to buy a laptop would you buy Sony or a laptop from a brand you never heard of?

7- Price: Offering Free Services and Products is Not Enough. [tweet]

Offering smilier value at a lower price might be one of the oldest value propositions as a way to satisfy the needs of price sensitive customers. in the US airlines such as Southwest and easy jet has relied on this model. In Jordan Mobile Operator Uminah relied on this model too when it first started few years ago. On the extreme side, Free offers has emerged specifically online: free email started with Hotmail, free search engine: google, free news and blogs (like us.) Even more extreme, instead of just offering free service or products, some startups in the 90s .com bubble offered cash in return for using the service.

competing on price alone might be a great weapon to out maneuver competitors and create value but in many cases it is not enough. If you offer things for free you need to add the other elements of the business model how will you make money?

8- Cost Reduction: Offer something that can reduce the cost of your customers. [tweet]

Helping customers in reducing costs is another way, In online businesses  SaaS based apps, saves customers the trouble of buying, install and manage hardware and software to run  a CRM app or a Project management app. Examples of companies in that field starts from salesforce.com 36signales

9- Risk Reduction: If they Pay, Offer Service Level Guarantees. [tweet]

Customers also value risk reduction when they buy products or services, examples include: one year guarantee when buying a used car, or a 2 years guarantee when buying a mobile, or replacements guarantee in the event of a new version of iPhone hit the market. Service level guarantees also common when outsourcing an IT services.

10- Accessibility: Offer Products to Users Who Were Never Able To Buy Before. [tweet]

Making products and services to a segment of customers who did not have the option to buy them is another way to create value. This can be via new technology innovation or a new business model.

example: Google apps offered free SaaS based business collaboration suite: word-process, spread sheets and so on for users who could not afford it before.

ArabStat Internet Via Satellite is another way of offering accessibility as traditional telcos do not offer their Internet services to remote areas because only few people live at a certain spot ( no economics of scale.)

11- Convenience /Usability: “Just Make it Simple Stupid “& Appealing. [tweet]

In USA there is a saying “just make it simple stupid” but simple might not be enough. Providing Connivance and easy of use can be the main factor for value creation and why would users use your product or services instead of your competitors. iPod offered great customer convenience in making it easy to search, buy, download and listen to Music. iPhone success on the other hand relied in part in the success of iPod, it also offered great usability and design with being the first touch phone with great sets of visual UI.

These were  11 elements of that can help you to create  customer value  as listed in the business Model generation book, but in many cases value can be created by a combination of the above and more.

Feel free to share others points.

You can follow me on Twitter @3GFalcon and ArabCrunch via @ArabCrunch

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