Brands — their working, their strategies, their business models are on the cutting edge of technology. And these overall are transforming the way business operations are being executed.
This process is molding the overall customer experience as well. Technology such as artificial intelligence is surely a game-changer.
AI is behind various applications, including chatbots, which can answer questions for your website visitors. They can even recognize multiple replies to the same query and can be trained to respond instantly in your preferred voice and tone.
An innovation of this type can be part of a digital business model, a standard for creating value by developing customer benefits and implementing new technology.
These digital solutions aim to provide significant advantages that customers are willing to pay for and ultimately improve aspects of your organization. These could range from how your company gathers customers to what products or services it offers.
Most importantly, digital business models rely on technologies that provide better products and services with customized and meaningful customer experiences. A well-defined strategy is essential for the success of your brand.
How do we identify the Good Digital Business Models?
To begin with, digital business models are classified by four distinct characteristics:
- 1. When a service is based on technologies, the model is viewed as digital. For example, Amazon, Google, and Facebook.
- 2. A digital business model is new to the market. An example of this would be when you call-on for transportation from an app (such as Uber or Lyft) and it matches to your request with the closest driver.
- 3. To become a customer, you must use a digital channel. When you search online, digital mediums (such as Amazon) provide advertisements.
- 4. The unique selling proposition (USP) needs to be created digitally. This means a customer may be willing to pay for your products or services online.
Did You Know?
In 2019, Amazon Web Services (AWS) grew by over 36%. AWS is used by many significant sized platforms such as Uber and Netflix.
So, What are the Most Popular kinds of Digital Business Models?
If you want to choose the right technology for your brand, you should first consider your customer profile. There are many things to ponder, including pain points, interests, buying patterns, and demographic attributes.
Following are five of the Most Popular Digital Business Models:
Free Model or Ad-supported
An online business model supported by the ads of platforms such as Google or Facebook allows a company to offer a complimentary service, making the customer the end product. The customer provides the business with valuable information they can use for their business to easily display targeted ads.
Freemium Model
Generally, this model allows users access to a free basic version of a product. The free version may be somewhat limited, but the user may purchase a premium version if they want additional features. One great example of this is Spotify – it is free to use, but if you want an ad-free experience and better quality of music, you need to buy the premium.
On-Demand Model
An example of this model is online video stores like Amazon Prime Video or Apple TV, on which you can watch videos for a specific period. Another example is the freelancer and gig economy platform Fiverr, which lets you book individuals for a specific task and get charged based on the project.
e-Commerce Model
Amazon proved to be one of the most prominent and successful companies to adopt this digital business model to sell physical products on the web. Today, eCommerce is one of the best digital business models in the market.
Marketplace Model
A two-sided marketplace is an arrangement where sellers and buyers interact on a third-party platform to trade goods and services. Examples of this type of business model are service-based Uber and product-based eBay and Etsy.
Bottom-Line
As entrepreneurs begin to determine what types of offers they wish to put forward and where they want to optimize, they should take a look and explore different business models. A two-sided marketplace is complex and requires a long time to grow compared to freemium models, combined with advertising as we saw on Spotify and other digital ecosystems.
When thinking about new business models, it would always be a good idea to focus on the customer and the unique value proposition you want to provide. It is better to keep it straightforward rather than involve too many business models.
If you seek further information about digital business models and how to choose the right one, Schedule a call with us today!
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