To read the first post on the Lean Canvas click here.
This post moves on with the next three building blocks.
Step 4 – Unique Value Proposition
This building block is the hardest to get right but the most critical.
This building block is so important because it’s the message you take to the market to generate leads and sales opportunities. When you launch a business or product the battle is all about getting noticed.
You need to have a distinctly different and compellingly attractive offer, or promise. You will have lots of opportunity to test and refine to find the best proposition. Three rules to craft a Unique Value Proposition
- Think about your customer’s final outcome they get from your product or service
- Avoid empty marketing promises
- Be as specific as possible
A formula is:
- Start with the outcome
- Use a timeframe
- Address any objections
For example…Hot Fresh Pizza, delivered to your door in 30 minutes or it’s free
Also, develop your high concept pitch for your product or service.
This framework can help…it’s like X but for/without Y. An example is YouTube who launched and said…it’s like Flickr but for video. This phrase is useful to use in your Word of Mouth marketing to quickly spread the word.
Step 5 – Revenue Streams
This is how the business creates revenue from delivering value. There are two key questions to consider:
- What is each customer segment prepared to pay?
- Is my value proposition enough to make people pay what I want?
Remember, the amount of revenue you create will be linked to:
- The amount of value
- Your ability to capture a share of the value
Understand that you have have different types of revenue streams for different types of customer segments.
When thinking about the price here are two things to consider:
- Price of the alternatives
- Keep pricing simple
There are seven ways to create revenue:
- Selling services and products
- Useage fee
- Subscription fees
- Renting or leasing
- Brokerage fees
There are two approaches to pricing; fixed and dynamic.
There are four types of fixed prices:
- List price
- Product feature dependent
- Customer segment dependant e.g. Student card
There are three types of dynamic prices:
- Yield management e.g. seats on a plane
- Real-time market
Step 6 – Channels
Channels are the communication and distribution methods – how you allow customer to interact and buy your products and services. This building block can be one of the riskiest so consider building and testing from day one.
To start with you do not need to worry about scale so think about using outbound channels including:
- Networking – in person and first contacts on social media
- Sponsor events
Start to build a list of possible channels that are scaleable as these often take time to build. Inbound channels include:
- Content marketing
- Paid advertising
- Search Engine Optimisation
The two key questions are:
- What channels do our customers prefer?
- How are they integrated into the Customer routine?
Examples are a Website and advertising in a trade magazine.
When considering channels it is useful to keep in mind that there are are five channels and five stages of purchasing. The five channels are split into two types; direct and indirect.
The direct channels are:
- Sales force
Indirect channels are:
- Own store
- Partner store
The five stages of purchasing are:
- After sale
After sales is not a short-term act but a continuous effort to deliver value which can include cross and up-sales.
Image from Flickr by Ben Jeffrey