Is now the right time to be changing the business model?
Change is usually difficult. If we are responsible for implementing the change, the project will present us with many obstacles, including how stakeholders are likely to react.
We are in challenging times the likes of which many of us have never seen before. Economic downturn may mean we are not as busy as usual. Theoretically, that suggests there may be capacity to work on improving the business model. But how will our customers react and is this the right time?
“Yes” or “No” answers to these questions assume that all customers are the same. All customers are not the same. Different customers value different things associated with our business model, e.g. accessibility, quality, service levels such as turnaround times, the way we share knowledge and our pricing model.
Rusted on customers are likely to be loyal due to a whole range of factors. Many loyal customers will react negatively to any significant change to our business model unless we have first given them adequate notice of and a sound explanation for the change proposed.
Any business model change which is likely to significantly affect a customer such as a change to the pricing model or even simply a change to a pricing structure needs to be undertaken with care.
A customer who is the right fit for our business is likely to respond favourably to news about a business model change providing the customer accepts that the change is being undertaken so as to ultimately improve the customer experience. Customers who push back on a sound explanation might not be a good fit for our business.
A customer base is not static. Some old customers move on for a range of reasons and if our business development efforts are successful, new customers regularly come on board. There is never a perfect time to change a business model. A business model change is unlikely to take effect overnight anyway. A significant business model change such as a change of the pricing model is likely to take many months in anything other than a very small enterprise.
The ideal time to start changing the business model is when a new customer comes on board. A new customer is unlikely to be fixated on the characteristics of our old business model. A new customer is likely to readily embrace the new ways that we do things simply because, from the customer’s point of view, they are not “new” ways but simply “our”ways and the customer wants to do business with us.
In the current climate of global disruption and uncertainty, the temptation is for us to consider that now is the wrong time to implement a business model change. For suitable customers and certainly for new ones, now is the perfect time to take that step.