Data Capability Lavon

Executive Summary of Digital Business Models

As we are nearing the end of the year, it is more important than ever for small businesses to consider the digital transformation story. Statistics show  70% of companies either have a digital transformation strategy in place or working on one. While 21% of companies think they’ve already completed the digital transformation. 

Digital is penetrating every area of business, and the business models we are used to are not what they used to be as they are evolving in different ways. Companies now have to look out for what digital models are available to adopt, understand how they operate and see how best to apply them to achieve their goals.

A digital business model involves the use of digital technologies to create value based on the development of customer benefits. The goal of the digital solution is to create additional values customers are willing to pay for moving towards a significant competitive advantage. 

Ideal Characteristics for Digital Business Models

  1. Value generation through digital technological, or as we like to call them technological enhancers.
  2. Acquisitions & Distributions based on digital channels
  3. Customers are reached through digital platforms

Three Types of Digital Business Models

Freemium Model

  1. Customers receive parts of a digitised service or products at no cost as an entry to purchase add-ons for their original purchase.
  2. Great examples of how to achieve success with a freemium model is looking at how you can gamify your services and add-ons in a way which provides just enough value to find out the benefits of your paid services and the need to upgrade. 

Marketplace Model

  1. The marketplace model is very common for businesses who can attract both sellers and buyers within the existing model. For e.g. Amazon started as an eCommerce platform for books and ended up moving to remove the idea of them selling products, and invited other sellers of books to use the platform to gain the benefit of their eCommerce platform. 

Service as a Software Platforms

Digital business model allows customers to use an asset without the need for purchasing. Most commonly, the business models are businesses who able to digitised their service in a platform which allows anyone to subscribe to the service. For example, if you are purchasing service by subscribing to the company, this is considered service as software (SaaS) application bringing you a digitised product.

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