This article provides an introduction to core components of a business model, followed by examples of business models in the space economy..
What is a Business Model?
A business model is a conceptual structure that supports the viability of a business, including its purpose, its goals, and its ongoing plans for achieving them. It serves as a blueprint for how a company creates, delivers, and captures value, both economic and social.
Here are some of the key components of a business model:
| Component | Description |
|---|---|
| Value Proposition | This is the unique offering a company provides to its customers and distinguishes it from competitors. It outlines the problem a business is solving and why its solution is superior to others. This could include innovative products, high-quality services, or overall customer experience. |
| Customer Segments | This defines who the business’s customers are, including their needs and wants. It may be a broad audience or a specific niche. Understanding the customer is critical to delivering a value proposition that resonates with them. |
| Channels | These are the means through which a company delivers its products or services to customers. This could include physical stores, online platforms, direct sales, or third-party distributors. |
| Customer Relationships | This outlines how a company interacts with its customers throughout their ‘customer journey’. This could be personalized service, self-service, automated services, etc. |
| Revenue Streams | This outlines how the business makes money from its value proposition. This could be through direct sales, subscription fees, licensing fees, etc. |
| Key Activities | These are the most important tasks a company must undertake to execute its business model, such as production, problem-solving, or platform/network maintenance. |
| Key Resources | These are the assets necessary for a business to create and deliver its value proposition, reach markets, maintain customer relationships, and earn revenues. These can be physical, financial, intellectual, or human. |
| Key Partnerships | These are the network of suppliers and partners that contribute to the business model, which could involve joint ventures, strategic alliances, or outsourcing arrangements. |
| Cost Structure | This represents all the costs incurred to operate the business model. Understanding costs allows a business to work towards profitability. |
Business models are adaptable and should change as market conditions, technology, and customer preferences evolve. Examples of business models include direct sales, franchising, freemium, subscription, and advertising, among many others. Ultimately, a well-crafted business model will not only articulate how the business works but also enable it to react to market dynamics and steer the company toward its vision.
Channels
In the context of a business model, channels refer to the means through which a company delivers its products or services to its customers. They play a critical role in the customer experience, and their selection and management significantly impact the overall success of a business.
Channels can be divided into two major categories: direct and indirect.
| Channel Type | Description |
|---|---|
| Direct Channels | These are channels where the company sells directly to the customer. Examples of direct channels include a company’s own website, physical stores, or a direct sales team. |
| Indirect Channels | These involve intermediaries between the company and the customer. Examples of indirect channels include third-party retailers, wholesalers, distributors, or online marketplaces like Precious Payloads. |
Channels can also be classified based on their stage in the customer journey:
| Channel Type | Description |
|---|---|
| Communication Channels | These are channels that the company uses to raise awareness about its products or services, communicate its value proposition, and nurture leads. Examples include advertising, social media, email marketing, PR, and content marketing. |
| Distribution Channels | These are channels that the company uses to physically deliver its products or services to customers. For physical goods, this might be via wholesale trade, system integrators, or e-commerce. For digital products or services, this might be via a download or streaming service, a SaaS platform, etc. |
| Sales Channels | These are channels where transactions happen. For many businesses, this might be the same as their distribution channels. For others, like businesses that sell through sales teams, this might be different. |
| After-sales Channels | These are channels that manage post-purchase customer interactions, like customer support or service, maintenance, returns, complaints, or upgrades. These channels can significantly influence customer satisfaction and loyalty. |
When designing and managing channels, businesses need to consider their cost-effectiveness, their ability to reach the target customer segment, and their compatibility with the customer’s expectations and buying behaviors. Channels should also be integrated to provide a consistent experience across all touchpoints with the customer.
In the era of digital transformation, businesses increasingly use omnichannel strategies, which aim to provide a seamless customer experience regardless of the channel or device the customer uses to interact with the business.
Customer Relationships
In the context of a business model, “customer relationships” refer to the types of interactions a company establishes with its specific customer segments. It describes the kind of relationship a company wants to establish and maintain with its customers, and how it plans to do this. Customer relationships are driven by customer needs, customer acquisition and retention strategies, and the company’s overall business strategy.
Here are several types of customer relationships:
| Customer Relationship Type | Description |
|---|---|
| Transactional | This is a one-time exchange between the company and the customer, often without any further relationship or contact. Launch Service Providers typically operate with this type of relationship. |
| Long-term | These are ongoing relationships in which the company continuously provides a valued product or service, often leading to customer loyalty. A subscription service is a good example of a business based on long-term relationships. |
| Personal Assistance | This involves human interaction in the form of customer service, sales support, or any other direct contact. This can be before, during, or after the sale has taken place. A customer may communicate with the company through different means such as phone, email, or in-person. |
| Dedicated Personal Assistance | This involves dedicating a specific customer representative to an individual client. It’s most common in B2B industries, premium segments of B2C, or in personal services, such as banking or personal shopping. |
| Self-Service | Here, a company provides all the necessary means for customers to serve themselves. This includes FAQs, automated services, or user communities. |
| Automated Services | This involves creating a system that can automatically personalize to suit each individual customer. Online recommendation systems used by companies like Amazon or Netflix are examples of automated services. |
| Communities | Some businesses maintain active user communities that help in customer support, ideas for new products or features, and more. This can lead to vibrant user communities that enhance customer engagement and loyalty. |
| Co-creation | In this type of relationship, customers contribute to the value of a company’s products or services. This could be by providing feedback and suggestions, submitting user-generated content, or through more direct forms of product development and innovation. |
Selecting the type of customer relationships depends on the business model, resources, and customer preferences. It’s also important to note that a company can have different types of relationships with different customer segments. For example, a software company might have dedicated personal assistance for its large enterprise clients, communities and self-service for its small business clients, and automated services for individual users.
Creating and maintaining good customer relationships is key to customer retention, and it’s usually more cost-effective to retain current customers than to acquire new ones.
Customer Journey
The customer journey is a concept that describes the process that a customer goes through when interacting with a company or brand, from the initial awareness or discovery of the brand, all the way through to purchase and beyond. It is often depicted as a sort of map that outlines the customer’s experience step-by-step, across multiple touchpoints, and over time.
Understanding the customer journey is critical for businesses as it can provide valuable insights into customer behavior, preferences, and motivations, helping businesses to improve customer experiences, build stronger relationships, and ultimately drive growth and profitability.
Here are the typical stages of a customer journey:
| Customer Journey Stage | Description |
|---|---|
| Awareness | This is the stage where a potential customer first learns about a business, product, or service. They may become aware through advertising, word-of-mouth, social media, a search on the internet, or any other form of outreach that the company has established. |
| Consideration | At this stage, the potential customer is actively considering the product or service as a solution to their needs or problems. They might conduct more in-depth research about the product or service, read reviews, or compare it with alternatives in the market. |
| Decision | This is the stage where the customer makes the purchase decision. This decision is based on the information they’ve gathered in the awareness and consideration stages. Factors influencing this decision could be price, product features, brand reputation, customer service, and more. |
| Purchase | This is where the transaction takes place. The customer buys the product or service. The ease of this process, including factors such as the buying experience, payment options, and delivery, can greatly affect customer satisfaction. |
| Post-Purchase Experience | After purchasing, the customer uses the product or service. Their satisfaction during this stage can impact their future decisions to repurchase or recommend the product or service to others. Companies often follow up with customers during this stage, asking for reviews or providing customer support. |
| Loyalty/Advocacy | When customers have a positive post-purchase experience, they may become repeat customers, leading to customer loyalty. They might also advocate for the brand, recommending the product or service to others, writing positive reviews, or promoting the brand on social media. |
Understanding and mapping out the customer journey can help a business identify opportunities for engagement, identify and resolve pain points, and improve the overall customer experience. It’s also important to note that customer journeys can vary greatly depending on the business model, the specific product or service, the customer segment, and many other factors.
Space Economy Business Models
The space economy represents the wide array of activities related to space exploration and utilization, satellite services, and the growing commercial potential of space beyond these traditional areas. This includes activities related to research, development, manufacturing, services, and the application of space technologies on Earth.
Several different types of business models are emerging in the space economy. Here are a few examples:
| Business Model | Description |
|---|---|
| Satellite Communications Providers | This model involves launching satellites to provide communication services. Companies like SpaceX, OneWeb, and Amazon’s Project Kuiper are investing in the creation of satellite constellations to provide global broadband internet coverage. The revenue stream is subscription-based, coming from individual consumers, businesses, and government entities who pay for access to the service. |
| Earth Observation Services | Companies like Planet Labs and BlackSky operate constellations of small satellites that capture imagery of the Earth. They sell this data to various sectors including agriculture, real estate, insurance, and defense, who use the data for various applications like monitoring crop health, assessing property values, managing risk, or intelligence gathering. The revenue stream is transactional, or subscription-based |
| Launch Services Providers | Companies like SpaceX, Blue Origin, and Rocket Lab provide launch services to carry satellites and other payloads to space. Their customers are satellite operators, space agencies, research institutions, and other commercial companies who pay per launch. Some of these companies are also developing reusable rockets to reduce the cost of access to space. |
| Space Tourism | Companies like Virgin Galactic and Blue Origin are developing vehicles to take tourists to the edge of space, providing a few minutes of weightlessness and the view of Earth from space. The revenue stream is transactional. |
| On-orbit Servicing, Assembly, and Manufacturing | Companies like Northrop Grumman are working on technologies to service, repair, and refuel satellites in space, or assemble structures in orbit. The customers could be satellite operators who need to extend the life of their satellites, space agencies building infrastructure in space, or companies interested in novel products that can only be manufactured in space. |
| Space Resources Extraction | Companies like Planetary Resources (now defunct) and Deep Space Industries (acquired by Bradford Space) were planning to mine asteroids for resources like water and precious metals. The business model is speculative and long-term, as the technology, regulations, and market for space resources are still being developed. |
| Data and Analytics Providers | This model involves using data from satellites to provide actionable insights for industries. Companies such as Ursa Space Systems and Orbital Insight use satellite imagery and other data sources, combined with artificial intelligence and machine learning, to provide analytics for various sectors. |
These business models are all challenging due to the high cost of space activities, technological and regulatory complexity, and market uncertainty. However, they represent the commercialization of space that is driving the growth of the space economy.
