A sound business model is essential for success in any business environment. A business model is a plan that describes how a business intends to generate revenue and profits. A sound business model defines long-term strategy and day-to-day operations. According to the experts, successful businesses operate on models that have the following key elements:
Customer Value Proposition: It is the bold, clearly stated value, benefit or solution that your product delivers to your customers. While some great organizations provide sophisticated solutions, their customer value propositions are clearly simple.
A Niche: This is a narrowly defined customer group seeking a unique mix of benefits. Successful enterprises identify a niche customer segment of early adopters. These folks like experimenting with new things and can provide valuable feedback that improves your offering. They are opinion leaders and trend-setters who will create a buzz about your offering; because it’s often expensive to win customers, especially mainstream ones.
Differentiation: It is developing your offering in a way that sets it apart from the competition. Differentiation can be done on the basis of a number of product dimensions, eg performance, style, size. Some businesses achieve this by adding innovative features and unique functions that set your product or service apart. They help to deliver satisfaction, and helps to increase customer loyalty and reduce the tendency of customers to switch to alternatives.
Achieving customer satisfaction: The ultimate success or failure of a business depends on how much it helps customers achieve their objectives. Happy customers will buy more from you and become your best sales people. Unhappy customers will become your biggest liability. So, your model must enable you to deliver satisfaction to customers.
Business models do evolve over time, as markets and strategies change. However, in order to run a successful business, you need a clear understanding of your current business model.