Phase 05: Business Modeling

Business Model Canvas

This past week, we had the privilege of having a presentation from William Kaigler, who taught us about the power of using a business model canvas to help us wrap our heads around how to begin understanding a business model for our project. Here’s a summary of what we did.

Customer Segments
(Identify each potential customer segment for your product)

1. Students with a loan balance, little to no income, and low financial literacy or awareness of how student loans work.
2. College financial aid offices that aim to educate students on how to manage their loans
3. Banks and financial institutions that have saving products
4. Parents of students who have loans
5. Government offices and non-profits dedicated to financial literacy.
6. Department of Education (in charge of federal student loans)

Value Propositions

(What is the value for each above customer segment?)

1. Students: can save money, learn more about the mechanics of managing their loans, and to build healthier daily practices. There’s also a value prop in owning a cute physical product that can hold sentimentality.
2. Financial institutions can gain potential life-long customers through engaging with customers and opening savings accounts to pair with our product
3. Colleges can gain a robust tool to help educate their students to ensure financial success, which will help colleges in the long run.

Revenue Streams

(Current revenue streams that exist in the market, as well as projected revenue streams). We learned that revenue isn’t necessarily money, but also includes value.

1. Most students currently pay $0 for financial management tools.
2. Financial institutions currently spend money on providing educational resources to customers to add value to their overall banking experience. These often take the form of videos, newsletters, calculators, articles, etc.
3. Colleges also probably spend money on third-party or first-party educational resources, but the scope and cost is unknown.
4. There’s value to be created in minimizing post-grad debt/saving in interest for our target audience (students), but this must be communicated. It also may be at odds with the business model of the bank (to gain interest thru loans).

Key Activities
What key activities do our value propositions require?

1. Students need to feel reassured that the steps they’re taking are greatly benefitting their financial future.
2. There should be very consistent daily/weekly engagement with our product to build trust and a relationship

Key Resources

What resources do we need to make this product a reality?

1. Human resources we need are software engineers, hardware engineers, business people, sales/marketing. Some of these roles can be outsourced. We also need service strategists and product/experience designers

Key Partners

1. Banks, who can help us distribute or promote our product in exchange for possible service integration.
2. Retail partners/distribution chain partners
3. We would need to partner with hardware manufacturers and providers of raw material.
4. We would need some sort of backend server/software system, through a vendor like Amazon or Microsoft.
5. We would need to partner with tech companies who offer APIs to integrate with bank accounts.
6. Potential other partners to be identified.

Cost Structure

1. The most costly part of our business model is manufacturing the physical piggy bank.
2. Also costly is developing and maintaining our mobile app and backend system. (this could be more costly than manufacturing).

Customer Relationships

What customer relationships factor into our business model?
1. We have to build trust, because people are sensitive about their finances. It’s important to establish trust via tone/visual design/user experience.

2. It’s important that our product can grow and adapt with our audience as they grow and their financial needs change. The lifespan of our product should be longer than the limited duration of a college education.

Channels

How will we reach the customer?

1. Retail presence through pop-up shops and events
2. Partnerships with banks to help advertise our product during key customer engagement (opening an account for example)
3. College financial aid offices and representatives
4. Through digital media (advertising and social presences)

Feedback + Questions

Our main question for William was about our primary business model: how could we find funding for a physical product or encourage students to spend money on this product?
He stated that we should refocus on the value we want to provide and the key problem, and use those factors to come to a resolved solution, versus deciding on a concrete solution right now.