This article is an excerpt from the Shortform book guide to "Business Model Generation" by Alexander Osterwalder and Yves Pigneur. Shortform has the world's best summaries and analyses of books you should be reading.
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How do you communicate with your customers? Does your business have a customer relationship strategy?
Customers expect businesses to understand the relationships they want and to respond appropriately. However, despite spending billions trying to understand customer relationships, businesses often don’t understand these expectations and end up undermining their interaction efforts. There are two steps to designing your customer relationships strategy: 1) define your touchpoints, and 2) define your interactions.
We’ll discuss both of these concepts below.
1. Define Your Touchpoints
The first step in designing your customer relationship strategy is to define your touchpoints—the channels through which you’ll communicate with your customers and deliver your products and services. For your communication, sales, and distribution touchpoints, you have the option of using your own touchpoints (assets under your direct control such as your website or your store), or partner-owned touchpoints (external touchpoints that result from cooperation with marketing agencies or distribution partners), or a mix of both. In addition, the authors also make a distinction between direct touchpoints (communication you control such as your blog), and indirect touchpoints (communication you can’t control such as user reviews).
The authors state that there are five distinct stages to consider when defining your touchpoints:
- Advertise your products and services to customers
- Differentiate the value your products and services offer to customers
- Enable transaction processes so customers can buy your products and services
- Distribute your products and services to your customers
- Support customers after they’ve bought your products and services
Touchpoints and Interactions (Element 3) are closely linked—consider the level of interaction you want to have with your customers when defining your touchpoints.
|Businesses tend to assume that more touchpoints will lead to more customers, so they work hard to create multiple interaction points across the five stages. However, research indicates that too many touchpoints can reduce the quality of service that you deliver and damage customer experience. Customers care more about the quality of service you provide than what touchpoints you use—you’re more likely to create successful channels if you prioritize the development and integration of fewer interaction points.|
2. Define Your Interactions
Define the type of interactions you want to establish for each of your customer groups—Osterwalder and Pigneur refer to this element as “Customer Relationships.” The authors advise that you consider what your motivations are for communicating with your customers as your approach will differ depending on whether you intend to acquire new customers, retain existing customers, or upsell to existing customers.
It’s important to note that the interactions customers have with your business deeply influence how they experience your products and services, so you need to carefully consider how you can meet their needs and create the right balance. The authors provide a list of ways to interact with your customers:
- Dedicated customer representatives for specific customers
- Customer representatives
- Automated services
- Communities and Forums
- Content co-creation
|Customers expect businesses to understand the relationships they want and to respond appropriately. However, despite spending billions trying to understand customer relationships, businesses often don’t understand these expectations and end up undermining their interaction efforts. |
Brand relationship experts have identified 29 different types of interactions that customers expect from a business—they use relationship metaphors such as “one-night stand” or “marriage” to clearly define each interaction. These experts argue that businesses can’t understand or leverage customer relationships unless they collect and analyze the relationship signals their customers send.
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Here's what you'll find in our full Business Model Generation summary :
- The nine elements that make up any successful business model
- Different ways you can combine these elements to create business model patterns
- Techniques you can use to generate innovative ideas