There are business models in which none of the traditional types of customer segmentation are helpful. In these cases, it may be useful to apply the concept of responsiveness from the field of design. These are the responsive business models.
Some businesses cannot afford to target only certain niche markets. To be profitable, they need to reach large groups of customers, while at the same time meeting their different needs.
In these cases, to distinguish between different market segments may not be practical. On one hand, because it requires setting different services, which could imply duplicating structures and increasing costs. On the other hand, because in such a changing economic and social environment there is no guarantee that these segments would maintain their consistency for long enough.
For these situations, in which none of the traditional models is useful, there is an alternative model: the responsive business model.
Responsive means “reacting quickly and positively”, but applied to the context of business models is mainly inspired by the concept of responsiveness from web design.
Briefly, responsive web design appeared from the need to adapt websites, in a fast and easy manner, to the volatile device market. Given the fact that more and more users accessed the Internet through phones and tablets, the first response of the designers was to create different websites for each device. However, the increased variability of devices made this option unviable. Alternatively, it was proposed a new type of design, responsive design, based on fluid grids and proportions. With this type of design is only necessary to create a unique website that identifies the device and adjusts the size and the arrangement of the different elements to optimize the user experience.
Coming to our field, a responsive business model is one that recognizes the user’s characteristics and adapts without creating different services. It doesn’t segment the market based on fixed thresholds. Its structure is fluid, not being a limitation. Simply, at the time a service no longer makes sense, it adapts. Some elements are moved, others modify their size and priorities change.
Let me explain something that happened to me once, that could help us understand the concept of responsiveness.
Some time ago I walked into a tea shop. Although I had already drunk tea on several occasions, I was curious about the whole phenomenon surrounding this drink and I wanted to know if I could acquire a taste for tea. So I needed to taste different types of tea to discover which one I preferred and I didn’t want to buy too much, because if I didn’t like it had to throw it away.
Unfortunately, 100 grams was the minimum amount of tea that could be purchased. Alternatively, I could buy little boxes with a smaller amount of tea, but the value of the package raised the price too much. Obviously, that business wasn’t responsive.
A responsive business model is based on the following principles:
1. It’s about customers, not services. Often, as in the example of the tea shop that we just saw, services don’t meet the customers’ needs, but the company ones. The main goal of responsiveness is to offer the best possible user experience, regardless of the service that the customer requires.
2. Identification of the customer’s characteristics. In order to adapt our services to the customer, we need to know their needs. This may simply mean paying attention to what they ask for, but we could also use a more sophisticated analysis, taking into account several variables.
3. Context of use. Customers access our services with specific needs and goals. When adapting services, we must take into account how, when and why customers use them. What works for a certain type of client doesn’t work for another.
4. Brand consistency. No matter how much we adapt our services, our brand must be always recognizable. It shouldn’t be diluted. Think of the iPod shuffle. Imagine that Apple had considered that, being the smallest and cheapest model, it was not worth maintaining quality and design standards. That could have undermined the entire brand.
5. Responsiveness is not simply offering fewer services. To adapt means understanding that what is relevant in some contexts, in others it isn’t so much. We must prioritize the different functionalities. The priorities of a person who drinks tea only occasionally differ from those of a regular consumer.
6. Do not penalize customers depending on the services they need. Regardless of how we adapt our services, we must ensure that we always offer a solid user experience. We should take into account that there’s a high degree of overlap between the different types of customers. This means that the customer that needs a particular service today, tomorrow may have other priorities. The client who today only consumes a sandwich, may ask a complete meal tomorrow.
7. Be balanced. We must be able to offer a complete user experience without losing agility. We must ensure that adaptation does not affect the service logic.
8. Responsiveness is not always the best option. Finally, a responsive business model has its limitations. A business model doesn’t have to be fully responsive. Fixed elements can be combined with a fluid structure or the model can be responsive to a certain level. The responsiveness neither replaces business models based on the lowest price (such as low cost airlines) or those based on luxury (as some hotels or brands of watches and jewelry).