4 – Customer Relationships
A look at the business model from the product manager's point of view
CANVAS 13 - Great guide on the business model, from the product manager's point of view
1 – Customer Problem
2 – Customer Segments
3 – Value Propositions
Value Proposition Formulation Map
You are here ➔ 4 – Customer Relationships
5 – Channels
6 – Revenue Streams
7 – Key Activities
8 – Key Resources
9 – Key Partners
10 – Cost Structure
11 – Eco-Social Costs
12 – Eco-Social Benefits
13 – KPI (Key Performance Indicators)
What types of relationships does each of our customer segments expect us to establish?
It is important to clearly define what relationships we have already built with our customers and how these relationships fit into the overall concept of our business.
It is also necessary to consider the costs associated with maintaining these relationships.
For example, we can offer the following types of relationships with customers:
- Personal Assistance: This is feedback with customers that is carried out on a personal level, for example, through email, phone calls, or personal meetings.
- Dedicated Personal Assistance: This implies having a specific employee or team that constantly works with a specific customer and develops individual solutions for their needs.
- Self-Service: Customers have the opportunity to solve their problems or tasks on their own using the resources we provide, such as FAQs, video tutorials, or interactive instructions.
- Automated Services: These are services that automatically perform certain functions without customer intervention, such as automatic software updates.
- Communities: We can create platforms for exchanging experiences and knowledge among customers, where they can help each other and discuss various issues.
- Co-Creation: Involving customers in the process of creating new products or services to better understand their needs and preferences.
Types of Customer Relationships
Depending on how your customers receive your product or service, relationships can be indirect or direct. Indirect relationships are when customers access your product or service through intermediaries. Direct relationships are when customers interact with you directly to receive your product or service.
Two-Sided Market and Direct and Indirect Customers
A two-sided market is a platform that connects two separate but interdependent groups of users or participants. Both sides benefit from interacting with each other. Examples of such platforms include eBay (buyers and sellers), Uber (drivers and passengers), or Airbnb (hosts and renters).
In the context of a two-sided market:
- Direct Customers are market participants who interact with the platform directly to receive its services. For example, in Uber, direct customers are drivers using the app to get orders and passengers using the app to book rides.
- Indirect Customers are groups that indirectly depend on the platform and interact with other users through it. For example, restaurants offering delivery through Uber Eats are indirect customers, as they use the platform not directly for their core business operations but as an additional sales channel.
Differences between direct and indirect customers in a two-sided market:
- Type of Interaction with the Platform:
- Direct customers actively and directly use the platform for their needs.
- Indirect customers depend on the platform more indirectly; their core activity is not always directly related to the platform, but they benefit from its existence and functioning.
- Dependence on the Platform:
- Direct customers are usually more dependent on the platform for conducting their core activities or generating income.
- Indirect customers may use the platform as an additional tool or channel, but their core activities can be organized without it.
- Interaction with Other Users:
- Direct customers often interact directly with other users through the platform.
- Indirect customers may interact through the platform, but this interaction is often less direct or obvious; they may not have direct contact with other user groups.
An example of a two-sided market where direct and indirect customers can be clearly distinguished is Amazon. Sellers on Amazon are direct customers using the platform to sell goods. Buyers are also direct customers purchasing these goods. However, third-party services offering logistics or marketing services to sellers on Amazon can be considered indirect customers, as they depend on the ecosystem created by Amazon, but their direct interaction with the platform may be less obvious.
Nature of Customer Relationships
Transactional Relationships: This type of relationship is characterized by episodic contacts with the customer, such as a one-time purchase of a product or service. This approach forms relationships that can be easily interrupted by the customer, as there are no barriers that could limit their freedom of choice and retain them.
Long-Term Relationships: This type of relationship implies establishing closer ties with the customer, which may be characteristic of a subscription model or a long-term service contract. In this case, the customer often enters into deeper and more complex relationships that are harder to break. When such relationships are terminated, the customer may lose certain benefits or advantages offered by your company.
Less Transactional, More Long-Term Relationships: This is a hybrid approach that combines elements of both previous types of relationships. In this case, relationships with the customer vary from episodic contacts to more stable, long-term ties, allowing for various needs and expectations of the customer to be met.
Intimacy of Customer Relationships
Automated Relationships: In this case, your customers interact with your product or service through an automated system. This implies minimal personal interaction between your offering and your customers. An example could be a website or mobile app where customers can independently obtain necessary information or place an order.
Personal Relationships: In this case, your customers interact with a specific person when purchasing your product or service. This implies a higher level of personal contact and individual approach. An example could be consultant services or a personal manager who assists the customer in the process of selecting and purchasing a product or service.
Hybrid Relationships: This approach combines elements of automated and personal relationships. For example, a customer can use a website to place an order but also have the opportunity to contact a live operator to discuss specific questions or receive consultation. This allows companies to scale service while maintaining an element of personal interaction when it is important to the customer.
Proactive Relationships: In this case, the company actively analyzes the needs and preferences of customers based on collected data (for example, through purchase history, preferences on social networks, etc.) and preemptively offers solutions or products that may be of interest to the customer. This can enhance the sense of individual approach and improve the overall impression of interacting with the brand.
Emotional Engagement: Special attention is paid to creating an emotional connection with the customer. For example, integrating elements that evoke positive feelings in the customer—thank you letters, holiday greetings, gifts for personal events. Such moments help strengthen relationships and increase loyalty to the brand.
Role of Technology in Personal Relationships: Discussion of how modern technologies, such as CRM systems, AI-based chatbots, and other analytical tools, can be used to maintain personal relationships at a high level, providing employees with useful information about the customer in real-time.
Customer Relationship Lifecycle
Customer Acquisition Strategies: These strategies define how you plan to attract new customers to your project. This may include various marketing and advertising strategies, such as search engine optimization (SEO), search engine marketing (SEM), and the use of Facebook ads manager. It may also include participation in social networks, for example, through a personal blog on Instagram, to attract an audience and increase engagement.
- Personalization of Offers: Using customer data to create personalized marketing campaigns that more accurately meet the needs and preferences of your target audience.
- Affiliate Programs: Collaboration with other companies or influencers to expand outreach and increase trust in your brand.
- Events and Webinars: Organizing educational and entertainment events to attract a new audience and establish personal connections with potential customers.
Customer Retention Strategies: These strategies define how you plan to retain your current customers and maintain their loyalty to your brand or product. This may include creating a community around your product or brand, keeping information up-to-date, and providing continuous updates.
- Loyalty Programs: Developing incentive programs such as bonuses, discounts, and exclusive offers for regular customers.
- Feedback and Surveys: Regularly conducting surveys and collecting feedback to improve products and services according to customer wishes.
- Customer Support Service: Providing high-quality customer service through various channels, including online chats, phone, and email.
Cross-Selling Strategies: These strategies define how you plan to increase revenue from your current customers by offering them additional products or services. This may include individual work with customers or offering additional highly specialized courses that may be of interest to your target audience.
- Customer Data Analysis: Using analytics to identify purchasing patterns and offer additional products or services that may interest customers.
- Personalized Recommendations: Automated recommendation systems based on previous purchases and customer behavior.
- Seasonal and Thematic Promotions: Planning marketing campaigns according to seasonal events or holidays, which can increase interest in additional products or services.