This is the third lesson in our free business model canvas course. in this lesson, we look at the role of marketing channels in the business model canvas. Marketing channels are how you deliver your value proposition to your customers. This is fairly broad and includes not only all the marketing channels that you can think of but also more prosaic approaches to getting goods in front of customers. These include shops, warehouses and milk delivery floats (if you were a kid in the UK in the 1980s or earlier). What brings all these channels together in the business model canvas together is –
“How do you get the value in front of the customer so that he (or she) will buy?”
So when we talk about channels here we are talking about marketing and distribution channels. Everything is as diverse as a pipeline carrying gas across the Baltic Sea to regular tweeting.
Finding the Pathway to Your Customer
Value propositions are delivered to customers through communication, distribution, and sales. These are known as your Channels.
Finding the right pathway to your customers could be the biggest challenge. Choosing the wrong marketing channel will not attract customers to your product or service. Worse it will means that you waste time and money looking in the wrong place for customers. Getting your channels right is super important. As a business, you have limited resources to invest in developing and building channels. As a result, you need to allocate resources carefully.
This then comes back to understanding your customer. If you have identified her clearly you will have a good idea of where she hangs out. An elderly grandmother will be reached using quite different channels to a male football fan. Both could be reached by magazines – but totally different ones. Which works for the customer you are targeting? What evidence do you have for this before you do anything?
When we look at channels in startup marketing we make educated guesses about the best place to look and the best way to engage with customers. The Bullseye chart below helps you do this quickly and effectively.
Channels in the Business Model Canvas
In the Channel block, ask yourself:
How can my products reach my target customers?Do you use a mobile app, a store, sales staff or do you sell to shops directly?
Select your channels with the Bullseye Framework.
Your product has been proven successful; now it is time to experiment with the best channel for your business using the Bullseye Framework.
In this module, we will discuss options and show how you can pick and track your channels.
Choosing Your Channels in the Business Model Canvas
In this section, we cover how you go about choosing your marketing channels. If you have an existing business this may seem a bit startup focused. However, what you can do is put real data in looking at the customer acquisition cost (CAC) and the ROI of each channel to see how they perform. Then constantly run small experiments in new channels to see if you can find new ways to reach customers that are more cost-effective than the existing ones.
Brainstorm your Marketing Channels
Start brainstorming! Which is the most suitable channel? Why?
Examples,
Viral Marketing, Public Relations, SEO, Social Media etc..
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Ranking the Marketing & Distribution Channels
Rank each channel according to its potential, cost, volume and ease of testing. What I normally do is to start with a table in excel with each of the channels in its own row. You can see a sample here.
When I think about how easy something is I think about the amount of resources, cash and effort it will take to get a test campaign up and running. A speaking engagement normally takes longer to arrange than a Google PPC campaign for example.
The impact is how likely it is that it will drive results. This is a bit of a guesstimate as you don’t have any data and you need to be happy to be proved wrong. You should also take into account how easy it will be to break through the noise of your competitors. If they all have SEO nailed to a T then that’s not going to be a great place to start even if it is the number 1 choice of all marketers where you live.
Finally, the last column is all about cost – or really rather return. At this stage, it’s all a bit intangible. How much is it going to cost to deliver? Then set that against the expected returns because of who you expect to respond to that channel
For each of these aspects, I use a rating of 1-10 and then multiply them all together to give a score out of 1,000. For some, it’s going to be obvious that they are no starters. (they scored 1). Others are going to be nicely spread about.
Thinking About Distribution Channels
Many business model canvases tend to think of Channels as being purely marketing channels. In reality, many are distribution as well as marketing. Think of how Nestle and P&G distribute their products into supermarkets, how Ford distributes its cars to dealers and so on and so forth. Physical distribution is super important because not everything is or should be sold online. Real-world distribution still works for many categories of good.
Distribution Channels are often orders of magnitude more expensive than marketing channels to set up due to the physical plant and space required to make it happen.
Marketing Channels Prioritisation
This lets you prioritise three channels to work on. For a small team that’s plenty. For a big team, 80% of the effort is still likely to go on the top 3. Right now (in 2018) My main focus is blog and email marketing. These are supported by Youtube and Meetups.
Once you have your top three channels I repeat the process again but this time I brainstorm 20 – 30 ideas for EACH channel and rank them the same way. Here I am now explicitly thinking very much about my customer and what sort of content or engagement they will want to consume.
Once you have the campaign ideas prioritised within each channel it is time to head out testing
Testing Which Marketing & Distribution Channels Work Best for You
These decisions are all based on assumptions. Hence, it is important to start learning fast and ensure the cost is as low as possible. Test the top 3 channels and move them away from the centre based on the effectiveness. Remove the least promising result and replace it with one of the channels from the outside circle.
Note for testing: At this stage, it is important to test your assumptions by setting up experiments that will cost you as little as possible. Your idea has many assumptions and is likely to change in the future. Spending months on a website, paying to find your customers is a good lesson but a waste of code effort. There may be alternative ways to test without paying for a website.
Test smart, save your time and money!
Tips:
- Use testing in everything that you do – data is always better than opinion
- Capture the results systematically
- The shorter the experiments the better. Testing the result in a day has more value than creating certainty in 3 months
- Be creative in thinking of the experiments, you will get better and more creative in it over time
