Business Frontstage

Your business as a "theatre production"

This is the area of the theatre stage where you interact with your customers, clients and users. The frontstage is what represents value to your customers, clients and users, and what they are willing to pay for this value.

Business Theatre Frontstage

5 Customer Focused Building Blocks

The frontstage of your "business theatre" consists of the following 5 startup building blocks:

  1. Customer segments - who will be using and/or paying for your product or service
  2. Value propositions - the products and services that create value for your customers
  3. Channels - how you will reach customers and offer them your value proposition
  4. Customer relationships - the type of relationship you plan to establish with your customers
  5. Revenue streams - what people will pay for your product and how they will pay for it

Source of information below:  Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers

Who will be using and/or paying for your product or service

Customer Segments

An organization serves one or several Customer Segments

The Customer Segments Building Block defines the different groups of people or organisations an enterprise aims to reach and serve

Customers comprise the heart of any business model. Without (profitable) customers, no company can survive for long.  In order to better satisfy customers, a company may group them into distinct segments with common needs, common behaviors, or other attributes.  A business model may define one or several large or small Customer Segments.  An organisation must make a conscious decision about which segments to serve and which segments to ignore.  Once this decision is made, a business model can be carefully designed around a strong understanding of specific customer needs.

Customer groups represent separate segments if:

  • Their needs require and justify a distinct offer
  • They are reached through different Distribution Channels
  • They require different types of relationships
  • They have substantially different profitabilities
  • They are willing to pay for different aspects of the offer


The products and services that create value for your customer

Value Propositions

An organisation seeks to solve customer problems and satisfy customer needs with value propositions

The Value Propositions Building Block describes the bundle of products and services that create value for a specific Customer Segment

The Value Proposition is the reason why customers turn to one company over another. It solves a customer problem or satisfies a customer need. Each Value Proposition consists of a selected bundle of products and/or services that caters to the requirements of a specific Customer Segment. In this sense, the Value Proposition is an aggregation, or bundle, of benefits that a company offers customers. Some Value Propositions may be innovative and represent a new or disruptive offer. Others may be similar to existing market offers, but with added features and attributes.

A Value Proposition creates value for a Customer Segment through a distinct mix of elements catering to that segment's needs. Values may be quantitative (e.g. price, speed of service) or qualitative (e.g. design, customer experience).


How you will reach customers and offer them your value propositon

Customer Channels

Value propositions are delivered to customers through communication, distribution, and sales Channels

The Channels Building Block 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 interface 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


The type of relationships you plan to establish with your customers

Customer Relationships

Customer relationships are established and maintained with each Customer Segment

The Customer Relationships Building Block describes the types of relationships a company establishes with specific Customer Segments

A company should clarify the type of relationship it wants to establish with each Customer Segment. Relationships can range from personal to automated. Customer relationships may be driven by the following motivations:

  • Customer acquisition
  • Customer retention
  • Boosting sales (upselling)

In the early days, for example, mobile network operator Customer Relationships were driven by aggressive acquisition strategies involving free mobile phones. When the market became saturated, operators switched to focusing on customer retention and increasing average revenue per customer. The Customer Relationships called for by a company's business model deeply influence the overall customer experience.


What people will pay for our products and how they will pay for it

Revenue Streams

Revenue streams result from value propositions successfully offered to customers

The Revenue Streams Building Block represents the cash a company generates from each Customer Segment (costs must be subtracted from revenues to create earnings)

If customers comprise the heart of a business model, Revenue Streams are its arteries. A company must ask itself, for what value is each Customer Segment truly willing to pay? Successfully answering that question allows the firm to generate one or more Revenue Streams from each Customer Segment. Each Revenue Stream may have different pricing mechanisms, such as fixed list prices, bargaining, auctioning, market dependent, volume dependent, or yield management.

A business model can involve two different types of Revenue Streams:

  1. Transaction revenues resulting from one-time customer payments
  2. Recurring revenues resulting from ongoing payments to either deliver a Value Proposition to customers or provide post-purchase customer support


Innovate for growth

Are you able to define how your business functions?  Do you know what the most important parts of your business are that create value?  Are you struggling to start a business?

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