BM.10 Generate ideas for the revenue streams block

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OVERVIEW

This activity aims to generate ideas for how to address hotspots or strategic changes related to the revenue streams block.

INPUT

Hotspots or strategic changes related to the customer segments block from the activities ST.7 Do a SWOT Analysis, BM.2 Gather additional data on the business model, and BM.3 Gather additional data on operational performance.

OUTPUT

Specific ideas for how to change the Customer Segments block to address the hotspots or strategic changes, used in the activities BM.4 Generate business model concepts at the big picture level – if taking a ‘Bottom-up’ approach, BM.15 Evaluate the benefits, and BM.16 Evaluate the costs and BM.17 Evaluate the risks.

TEMPLATE

HOW TO GO ABOUT IT

When considering the options for new revenue streams for the company, there are a number of common areas to consider:

  • Maintenance contracts and service fees – performing regular maintenance and service operations can help to ensure optimal performance of a product and that it will reach its design lifetime. As the manufacturer of the product, the Company should have the right skills and knowledge to o er this service (although being able to deliver these services cost-effectively to the customer is likely to involve a new set of threats and so requires careful consideration and planning).
  • Training – helping the customer to get the most value out of their product by providing training courses can lead to higher customer satisfaction and at the same time can provide a useful revenue stream for the company.
  •  Licensing – for companies that hold significant intellectual property, the option to license the use of that intellectual property to a third party can be a low effort way to generate new revenue streams. Careful consideration must be given to the strategic implications of licensing partnerships. For instance, could it lead to new competition within the company’s core customer segments? Could it involve a loss of control of the brand leading to loss of brand value?
  •  Advertising – the communications channels that the company has built with their customers can be valuable to third parties if they can be used for advertising. This is the foundation of the ‘multi-sided platform’ business models discussed in the activity BM.4 Generate business model concepts at the big picture level. Again, careful consideration needs to be given to the impact
    of advertising on the overall business to avoid unintended consequences. For example, will the presence of adverts annoy or alienate the company’s target customer segments?

Tips & Tricks

PRICING STRATEGY FOR ECO-INNOVATIONS

The main challenge of pricing from an eco- innovation perspective is that if you intend to develop a new or significantly different value proposition it can be di cult to get the right pricing strategy. Deciding on a price and pricing strategy for a product is a topic discussed extensively in other literature (e.g. Gregson, 2007), but one tip that is useful when dealing with business to business customers is to ask them how they would make the business case to their management team for purchasing the product.

 

By getting a better understanding of the potential cost savings or increased revenue the customer is likely to benefit from, you can make a more accurate estimate at the price that will be acceptable to them. Similarly, if dealing with business to consumer products you can try asking the consumer what they would be willing to pay for the product. When performing this type of market research make sure to consult both rich and poor, women and men consumers.

— Success story from Peru

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