Business Model Canvas: All about Channels
In our last post, we discussed the Value Proposition portion of a Business Model Canvas. The Business Model Canvas allows you to describe and think through the business model of your small business, your competitors, or any other company. This concept has been applied and tested around the world and used in large organizations, as well as hundreds of thousands of small businesses.
Today, let’s talk about Channels.
What are Channels in the Business Model Canvas?
The Channels Building Block of the Business Model Canvas describes how a company communicates with and reaches its Customer Segments to deliver a Value Proposition.
Communication, distribution, and sales channels comprise a company’s interaction with customers. Channels are customer touch points that play an important role in the customer experience. Channels serve several functions, including:
- Raising awareness among customers about a company’s products and services
- Helping customers evaluate a company’s Value Proposition
- Allowing customers to purchase specific products and services
- Delivering a Value Proposition to customers
- Providing post-purchase customer support
Ask yourself questions like:
- Through which channels do our Customer Segments want to be reached?
- How are we reaching them now?
- How are our Channels integrated?
- Which ones work best?
- Which ones are most cost-efficient?
- How are we integrating them with customer routines?
How to find the best Channels for your small business
Finding the right mix of channels to satisfy how customers want to be reached is crucial to bring a Value Proposition to market. A business can choose between reaching customers through its own channels, through partner Channels, or a mix of both.
Owned Channels can be direct, like an in-house sales force, social media, or a website, or they can be indirect, such as retail stores owned or operated by the organization. Partner Channels are indirect and span a whole range of options, like wholesale distribution, retail, or partner-owned websites.
Partner Channels lead to lower margins, but they let a brand expand its reach and benefit from partner strengths. Owned Channels, and particularly direct ones, have higher margins but can be costly to put in place and to operate. The trick is to find the right balance between the different types of channels, to integrate them in a way to create a great customer experience, and to maximize revenues.