The CRD (Create, Reach, Deliver) Model for Business Model Design and Winning Market Dynamics

In any business, whether you are in product or service; offering it to Consumers or Businesses or hybrid, the three pillars of business mix or business model design are - CREATING a top-notch product/service, REACHING to your consumers and DELIVERING the core value which the consumer needs. It is important to ponder about the three key questions which defines the business model –What do you Sell – Is the value Created benefiting you and your Consumer (Product), How Do You Find Consumers – Are you Reaching your consumers in a targeted and effective way (Marketing) and How Do Make – Are you Delivering the Product in an efficient way (Operations).

So the CRD (Create, Reach and Deliver) Model centers around these three aspects:

  • What Do You Sell – CREATE Value (Product)
  • How Do You Find Consumers – REACH Consumers (Marketing and Communication)
  • How Do you Make – Operations – DELIVER Value (Operations)

Creating Value - While designing a product or service, it is of utmost importance to think of three key aspects – Cost to Consumer (Switching Cost, Perceived Value); Share of Wallet (SoW); and Lifetime Value (LTV). Taking in to account the above three cardinal principles will help in better capturing the consumer needs and the market share.

  • Cost to Consumer (CTC) - CTC refers not only to the price of a product, but it also encompasses the purchase costs, use costs and the post-use costs. The Consumer has to perceive the intrinsic benefit of possessing/utilizing the product/service, thereby realizing that the benefits outweighs the switching cost (in case of transitioning from existing product/service) or purchase cost.
  • Share of Wallet (SoW) - SoW represents the percentage of a consumers' spend that is with a given company over a given amount of time. Customer’s spend for a specific product or service is taken based on their relative spend for various other services. This helps in gauging the quantum of perceived value based on the affordability and willingness to pay for a product or service.
  • Life Time Value (LTV) - LTV is the projected revenue that a consumer will generate during their lifetime which takes in to account the average spend and the frequency of spend. Hence, it is important to think of the price as well as the usage of your product/service over the lifetime of a consumer. LTV is an important metric for determining how much money a company wants to spend on acquiring new customers, and how much repeat business a company can expect from certain consumers.

Reaching Consumers – In Marketing, it is important to measure the Cost of Acquiring Customers (CAC), which means the price you pay to acquire a new customer. The business must define and know their Target audience and Channels of communication to have an effective reach. It is also important to engage the existing customer frequently with value added services and benefits to retain them and avoid them in switching, as retaining and growing customers is cheaper than acquiring new customers.

  • Target Audience – The business must be able to define the consumer segment in terms of Demography, Geography and Psychography based on the perceived adoption of the product/service. The business must understand the consumer persona based on the need/drivers to grasp the felt value of the offering to the consumer.
  • Channels of Communication – The business must evaluate the traditional channels like print, television/radio and outdoor ads, as well as the new-age communication channels like Google ads, Social Media and SMS/push notifications based on the target audience and the reach. The business must weigh different channels of reaching consumers based on the impact of the channels in terms of potential numbers targeted, as well as the relative cost of reaching them. CAC, which is based on the impact of channels for communication, helps to measure the profitability of serving the customer, along with LTV. Hence it is important for any business to optimize the CAC to the maximum extent possible, to reap greater returns.

Delivering Value – It is as important to optimize your operations (manufacturing a product or serving a customer), as it is to develop a right product and reach greater audience. This involves three key aspects which can be termed as the cardinal variables in producing the output (product/service) which has been envisioned by the business - to deliver value to consumers, and creating revenue and growth opportunity.

  • Human resource – The business should choose right people with essential skillsets to run the show, and deliver a superior offering to the consumers. Human resource should be motivated and aligned with the vision of the business to deliver exceptional value to the consumers. Constant training and upskilling is paramount to develop high calibre people to serve evolving needs of the consumers in this new-age.
  • Material/Input Resource – Innovative ways of gaining access to material resource and optimizing based on the quantum of offering, reduces the wastage in the process of developing/delivering the offering. It is also important to provision adequate resource based on varied requirement of different employees/process from time to time.
  • Time – Any business would find it appeasing to constantly deliver value in least possible time. However, it is important to gauge the quality of the offering and course-correct the measures, to deliver the promised quality by optimizing the resources. Business must consider throughput in accordance with the quality of offering to set the standards for the process.

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