Leading companies recognize that complacency is the enemy of success. They also recognize that, to maintain a differentiated advantage over their competitors, they must do more than incrementally fix and improve existing experiences. Companies gunning to capture more market share or create new markets must innovate just like a startup — and this begins with identifying and developing a new business model.
Positioning For The Future Requires A New Value Proposition
The experience that customers want today is often very different from the experience that they wanted in the past — and even great companies can find that they haven’t been innovating fast enough to keep up. Sears used to be the greatest retail innovator of its time, pioneering catalogs, then massive stores with a cataloglike product selection, and then anchor stores in malls as Americans moved to the suburbs. Now, the company has filed for bankruptcy after failing to transform its business model in the new millennium as shoppers continued to evolve around them.
By virtue of their outside-in approach to business — focusing on customers, not internal processes — customer experience professionals are uniquely suited to help their business leaders:
- Identify an unserved or underserved market. In the crowded global marketplace, unserved markets are often discovered by taking a fresh look at customer demographics and segmentation. Women remain a massively underserved market in financial services — causing many of the big brands to take notice of female-focused startups. Northwestern Mutual acquired LearnVest, an online financial advisor targeting women, for a reported $250 million in 2015.
- Pivot away from pressure on the existing business model. Ride-sharing companies find themselves in a price war to acquire customers but struggle to retain drivers and turn a profit. Uber recently made news by launching a subscription model in select cities to help riders avoid paying surge pricing by locking them into flat rates. Uber estimates that riders will save up to 15% on their monthly commute. By pivoting away from their existing pay-for-play business model, Uber has returned value to its customers in the form of flat rates while increasing its stickiness for the user base.
- Pivot toward a favorable market, technology trend, or regulation. Many companies have pivoted toward technology to take advantage of the rich data and analytics capabilities that a cloud-based platform provides for customers. Heineken has embraced the competition of small craft breweries in the form of a new direct-to-consumer venture called Beerwulf. Agnostic to Heineken brands, the for-profit venture aims to capture online data around European consumer beer drinking and purchasing behaviors.
Validate And Refine The Business Model To Square The Product-Market Fit
In the spirit of Agile, the process of new business model innovation follows the pattern of design, prototype, then test. Customer experience professionals need to develop a hypothesis or Agile MVP to begin the process of experimentation and validated learning with customers. By identifying “early-vangelists” to be your organic (internal) marketers, abandoning mystery tactics in favor of open innovation, and proactively proposing metrics that tee the team up for success, executives can mobilize their business model innovation efforts. For more examples, an introduction to Forrester’s business model canvas, and more tactical advice, check out my recent research, “Innovate Your Business Model To Drive A CX Advantage.”