Nowadays, digital offerings are valuable for businesses to have. With consumers spending so much of their time online and on digital devices, a business that leverages digital tools to create value for their customers will be more successful than those who do not. We reached out to some business we know of who provide digital services to their customers, including a London-based IT provider; the outsourced IT support London based organisation TechQuarters provides features many digital services. They discussed how businesses can provide digital services via a range of different digital business models.
Digital Business Models
Any business model that relies on digital technology to conceive of the service they provide, as well as to deliver it, and to acquire customers, may be called a Small Business Digital Marketing model. If a business model can be maintained in the real world, and without the use of digital tools, it cannot be called a true digital business model; this is what delineates them from a standard business that incorporates digital offerings. For instance, a business that provides IT support services in London would be able to call itself a digital business is the majority of their services, and their primary method of customer acquisition was reliant on digital technologies.
This is perhaps the easiest digital business model for a business to implement. E-commerce is the practice of selling one’s product via digital channels. There are a range of platforms that businesses can use to sell their own products – such as Etsy. But businesses can also setup their own e-commerce channels, usually by building their own website that enable visitors to place orders and fulfil transactions. There are many tools to help businesses set this up, such as Shopify.
This business model is one of the ways in which an organisation can offer their services for free. It relies on the company itself generating revenue through advertising partnerships. Take companies like Google and Facebook. Their platforms are designed so that companies can pay to display adverts to the users of the platform; what is more, many websites (including Google and Facebook), also generate revenue from selling user data to advertising partners.
The freemium business model is most frequently used by software developers. The idea is that a digital service has two tiers: Free and Premium. Customers are welcome to use only the free version, but if they pay for the premium service, they will get access to additional features and benefits. A successful freemium service will generate enough revenue from paying customers to continue offering the service to non-paying customers. Many apps nowadays are designed according to a freemium business model.
Most people will be familiar with the on-demand business model, whether they realise it or not. Netflix, Amazon Prime, Apple TV – these are all perfect examples of an on-demand digital business model. The company relies on digital tools to deliver their product and/or services to the customer; and the customer can access that product or service whenever they like, provided they continue paying for the service. This is a very reliable business model which will ensure the business has a consistent revenue stream, provided the product or service they offer is in high-demand.
This business model is similar to the e-commerce model, but is much more complicated. Some examples of the digital marketplace business model include eBay, Amazon, and Etsy. The idea of this type of business is that the platform in question does not sell products created by the company itself. Instead, the platform connects buyers and sellers, so the business model relies on there being a constant – and balanced – demand.