Digital business models are the heart and kidney of companies that create value on the internet. The best-known revenue models include
- the statistical analysis of user data
- "Software as a Service" (SaaS)
- Platforms for transactions
But how can digital business models be implemented?
There are basically two options. Either you take an existing, non-digital business model and digitize part of it, for example sales. After all, you can easily supplement your local store with an online store - or even replace it completely. And you can reach customers worldwide and around the clock.
The second option: you take a purely digital business model and implement it on a greenfield site. This option requires better planning and more resources than the partial digitalization of an already established business model. However, it opens up the opportunity to leave the beaten track and realize innovative revenue models.
The following steps relate to this second option. In practice, you should of course be guided by the specifics of your company or business model.
In my opinion, however, the steps make it clear what is important for operational implementation.
1. Define your target group and your value proposition.
In which market segment do you want to operate?
Before you can implement a digital business model, you need to identify your target customers. Conduct market research and create prototypical customer personas that represent the needs, preferences and behaviors of your target audience.
You should also have a very clear idea of your value proposition. Define your value proposition based on the information you have already gathered:
- What problems do you solve for your customers?
- What benefits does your product have for them?
- How do you deliver added value that your customers can't get elsewhere?
You should always expect that customers will recognize a different benefit in a product than the one that initiated its development in the first place. Otherwise, you will be defining the value proposition without your target group in mind.
2. Develop your marketing strategy.
Based on the fictitious customer personalities, you can start to design a marketing strategy.
Which goals and measures it includes in detail depends on the following factors, among others:
- Zielgruppe
- Wertversprechen
- Produkt,
- technical framework
- personality of your organization
But it is certain, that the effectiveness of the strategy is measured by how effectively it reaches the target group and persuades them to make a purchase decision.
3. Select suitable digital channels.
Which digital channels you use for your marketing depends heavily on the age, interests and habits of your target group:
- You can reach end consumers via search engines such as Google and Bing when they are looking for information.
- You can target companies and company representatives in a professional social network such as LinkedIn or Xing.
- The vast majority of Instagram users are between 20 and 29 years old. Facebook users, on the other hand, are on average ten years older.
- Video platforms such as YouTube or TikTok allow you to reach the group of 14 to 29-year-olds in particular, although unlike YouTube, TikTok has hardly any users older than 24.
- Blog platforms such as Substack serve the information needs of very specific niche groups.
The marketing channel determines the format you give your message. For example, you cannot place videos on a blog platform.
4. Develop your digital assets.
Use the digital assets to convey the value proposition via the various marketing channels. To do this, you need to map your value proposition to the individual phases of the purchasing process - from the information search to the evaluation phase to the purchase decision.
You can then adapt these statements to the various customer personalities and sales channels and cast them in forms such as email marketing campaigns, social media posts or content marketing assets.
5. Build the necessary infrastructure
Build the infrastructure you need to support your digital business model. This includes, for example, analysis tools, customer relationship management software or an e-commerce platform. There are a large number of providers for all components, which unfortunately makes a profound evaluation difficult. I would always keep the following three aspects in mind when making a selection:
- Preis
- Verlässlichkeit
- Service
The latter in particular - i.e. the possibility of to get quick support if difficulties should arise - is by no means self-evident.
6. Optimize your business model
With completely digitalized business models, the performance of business processes is particularly easy to measure. You can obtain appropriate solutions from your digital infrastructure provider, but it is also worth evaluating the offerings of providers specializing in such solutions.
You can use the performance data for two things:
- as a basis for decision-making
- to improve your business processes
The prerequisite for this is KPIs from which relevant statements can be derived. To do this, you not only need to have identified the right KPIs, but also ask the right questions. And that requires very good domain knowledge.
Conclusion: implementing digital business models requires its own strategy
The implementation of a digital business model is sometimes no different from the implementation of a conventional revenue model and sometimes very different. The following factors are particularly important:
- Zielgruppendefinition
- Identifizierung der virtuellen Räume, in which your target group spends time
- appropriate marketing strategy
- technology,
- very good domain knowledge
Digital business models, just like conventional models, can only be implemented with good market knowledge. In contrast to non-digital revenue models, you also need a very good understanding of technologies and virtual spaces for digital business models.
