The Business Model Canvas Leveraging the canvas in your classroom as a tool for rethinking

and refining small business models

what is the business model canvas?

why do people use the business model canvas?

The Modified BMC

We also want to share a modified business

canvas (based upon the “Happy Canvas”).

We like this version a lot too.

Pick whichever canvas works

best for you and your students

(might vary by group).

The Modified BMC

Value Proposition

• What value are you delivering to your customer?

• What problem are you helping to solve?

• Which customer needs are you satisfying?

• What bundle of products and services are you offering

to each segment?

Provides shoes to

children in need

Alpargata style of

shoes previously

not sold in North

America

New closed-toe

alternative to

sneakers

High quality and

fashionable

CUSTOMER SEGMENTS

which customers and users are you serving?

which jobs do they really want to get done?

Customer Segments

• For whom are you creating value?

• Who are your most important customers?

• What are the customer archetypes?

National retailer

shoe buyers

Socially

conscious,

fashionable 20-40

year olds

Socially

conscious,

parents of 4-12

year olds

Provides shoes to

children in need

Alpargata style of

shoes previously

not sold in North

America

New closed-toe

alternative to

sneakers

High quality and

fashionable

CHANNELS

how does each customer segment want to be reached?

through which interaction points?

Channels

• How do you get to the customer?

• Where is the customer? Where do they live? Where

do they shop? What do they read?

• Which channels work best? Which are the most cost-

efficient?

• Find the path to the customer and your life gets a lot

easier! Be specific about how you will reach them.

Channels

If you were interested in a product like this, how

would you find out about it?

How do you find out about other new products

like this?

Do you ask others for their opinions before buying? If

so, whom?

Do you or your staff go to trade shows?

What industry-specific magazines or journals do you read? What business

publications?

What general-interest publications, newspapers,

bloggers or websites would best connect with

the consumer?

National retailer

shoe buyers

Socially

conscious,

fashionable 20-40

year olds

Socially

conscious,

parents of 4-12

year olds

Provides shoes to

children in need

Alpargata style of

shoes previously

not sold in North

America

New closed-toe

alternative to

sneakers

High quality and

fashionable

Retail stores

www.toms.com

Word of mouth,

social media,

events and

affiliates

CUSTOMER RELATIONSHIPS

what relationships are you establishing with each segment?

personal? automated? acquisitive? retentive?

Customer Relationships

• How do you get, keep and grow customers?

• Which customer relationships have you established?

• How costly are they?

• How are the customer relationships integrated with the

rest of the business model?

National retailer

shoe buyers

Socially

conscious,

fashionable 20-40

year olds

Socially

conscious,

parents of 4-12

year olds

Provides shoes to

children in need

Alpargata style of

shoes previously

not sold in North

America

New closed-toe

alternative to

sneakers

High quality and

fashionable

Retail stores

www.toms.com

Word of mouth,

social media,

events and

affiliates

Impersonal;

automated

Online

communities

REVENUE STREAMS

what are customers really willing to pay for? how?

are you generating transactional or recurring revenues?

Revenue Streams

• For what value are your customers really willing to

pay?

• For what do they currently pay?

• What is the revenue model?

• What are your pricing tactics?

KEY REVENUE MODEL QUESTIONS

What are my customers paying

for?

What capacity do my customers have to

pay?

How will you package your product? Not

physical packaging, added features.

How will you price the offerings?

How many will you sell?

What’s the market size and estimate of

market share?

How many can your distribution sell?

National retailer

shoe buyers

Socially

conscious,

fashionable 20-40

year olds

Socially

conscious,

parents of 4-12

year olds

Provides shoes to

children in need

Alpargata style of

shoes previously

not sold in North

America

New closed-toe

alternative to

sneakers

High quality and

fashionable

Retail stores

www.toms.com

Word of mouth,

social media,

events and

affiliates

Impersonal;

automated

Online

communities

Sale of shoes and apparel

KEY RESOURCES

which resources underpin your business model? which

assets are essential?

Key Resources

• What key resources does your value proposition

require?

• Distribution channels?

• Revenue streams?

National retailer

shoe buyers

Socially

conscious,

fashionable 20-40

year olds

Socially

conscious,

parents of 4-12

year olds

Provides shoes to

children in need

Alpargata style of

shoes previously

not sold in North

America

New closed-toe

alternative to

sneakers

High quality and

fashionable

Retail stores

www.toms.com

Word of mouth,

social media,

events and

affiliates

Impersonal;

automated

Online

communities

Sale of shoes and apparel

Brand

Designers

Supply chain

Retail network

34

KEY ACTIVITIES

which activities do you need to perform well in your

business model? what is crucial?

Key Activities

• What key activities does your value proposition

require?

• Distribution channels?

• Revenue streams?

• Customer relationships?

National retailer

shoe buyers

Socially

conscious,

fashionable 20-40

year olds

Socially

conscious,

parents of 4-12

year olds

Provides shoes to

children in need

Alpargata style of

shoes previously

not sold in North

America

New closed-toe

alternative to

sneakers

High quality and

fashionable

Retail stores

www.toms.com

Word of mouth,

social media,

events and

affiliates

Impersonal;

automated

Online

communities

Sale of shoes and apparel

Brand

Designers

Supply chain

Retail network

Design

Material R&D

Branding

Marketing

KEY PARTNERS

which partners and suppliers leverage your model?

who do you need to rely on?

Key Partners

• Who are your key partners?

• Who are your key suppliers?

• Which key resources are you acquiring from which

partner?

• Which key activities do partners perform?

National retailer

shoe buyers

Socially

conscious,

fashionable 20-40

year olds

Socially

conscious,

parents of 4-12

year olds

Provides shoes to

children in need

Alpargata style of

shoes previously

not sold in North

America

New closed-toe

alternative to

sneakers

High quality and

fashionable

Retail stores

www.toms.com

Word of mouth,

social media,

events and

affiliates

Impersonal;

automated

Online

communities

Sale of shoes and apparel

MarComm

Designers

Supply chain

Retail network

Design

Material R&D

Branding

Marketing

Material suppliers

Production

factories

Retail stores

COST STRUCTURE

what is the resulting cost structure?

which key elements drive your costs?

Cost Structure

• What are the most important costs inherent to your

business model?

• Which key resources are the most expensive?

• Which key activities are the most expensive?

National retailer

shoe buyers

Socially

conscious,

fashionable 20-40

year olds

Socially

conscious,

parents of 4-12

year olds

Provides shoes to

children in need

Alpargata style of

shoes previously

not sold in North

America

New closed-toe

alternative to

sneakers

High quality and

fashionable

Retail stores

www.toms.com

Word of mouth,

social media,

events and

affiliates

Impersonal;

automated

Online

communities

Sale of shoes and apparel

MarComm

Designers

Supply chain

Retail network

Design

Material R&D

Branding

Marketing

Material suppliers

Production

factories

Retail stores

Sale and distribution costs

Production costs Giveaway costs

Now, it’s your turn to try your own. Using

the information you gathered from your

interviews yesterday, create a business

model canvas for your small business

partner.

The Modified BMC

Our Top Picks

Thank You

putting it all together…

Customer Archetypes

Customer Archetypes • Helps visualize who will buy or use the product &

crystalize product strategy, customer acquisition,

etc.

• Identify many hypotheses about the buyer’s

demographic and psychographic profile

Is the buyer affluent, fashion-conscious, healthy and active?

Married with pets and toddlers or

teens?

In a house, an apartment, or a

trailer park?

Why Archetypes Matter Archetype Highlights Customer Acquisition Guidance

Two working professionals Don’t advertise/promote during the workday, inefficient

Buy fresh gourmet produce Reach bloggers, co-promote with gourmet food sites

Drive luxury cars Consider co-promotion offers from high-end auto sites

Frequent business travelers Send press releases to travel websites, bloggers

Cooks only on weekends Don’t run AdWords during the week to save dollars, send email blasts, Tweets, texts Thurs/Fri

Entertain friends at home often

Co-promote with home, entertainment sites, blogs

UNDERSTANDING “A DAY IN THE LIFE”

How much time do your customers spend online in a

typical 24-hour day?

Is it at their desk, on a laptop, or on a handheld while

driving?

What’s the source of the “newfound”

time they’ll spend on your new site or

using your new app?

Will they sleep less? Will they spend less time on Facebook or

eBay?

Will they spend less time goofing off at work to spend time

at the new site?

Your success depends on becoming a regular part of the customer’s day:

HOW TO USE “A DAY IN THE LIFE”

“Day in the Life” Highlights Customer Acquisition Guidance

Under 15 min/day on social networks Facebook, social media a low marketing priority

3 texts daily, mostly with spouse Forget twitter for this audience

Read cooking magazines, sites Big PR push in this arena: recipes, press releases

Watch celebrity chefs 2-3x/week Try to get founders as guests on show; co-promote

House a day reading news sites Reach food/lifestyle editors at news publications

20 min/day online not for work Tests before spending on email blasts, online ads

45 min/day listening to NPR Consider weekend sponsorship, press releases, call

Talk/email 15-20 same friends Provide recipes, discounts to circulate to friends

• What do customers want to be, do, or have?

• Speak to emotions

• Usually conscious (but aspirational) thoughts

• Can seem like daydreams but are powerful

motivators

• Rational things that need to get done

• Speak to rational motivations

• Latent needs

– Not always conscious

– Example: No one knew they needed an iPod

until they saw the iPod

• Strong driver of purchasing

behavior

• Hidden source of wants and needs

• Every purchase comes with a

secret “pain of switching”

• People may be afraid even if your

product is better than the

competition

• Not necessarily obvious competitors

• Could be existing behaviors

• Customers have made it this far in their lives without

your product, you have to be better than their existing

solution

• How does your product work?

• Factual descriptions of how a product works

• Includes functioning attributes of the product

• Provide the ‘reasons to believe’

• What does your product do?

• The ways features make your customer’s life easier

by increasing pleasure or decreasing pain

• Core of value proposition

• Imagine all the ways your product will make

customer’s lives better

• What does it feel like to use your product?

• Sum total of combined features and benefits

• Emotional reasons why people buy your product

• Helps identify market positioning and brand essence