Repositioning ExplainiT in the market : possibilities to increase the turnover per customer

Research problem: The reason for this research is the fact that ExplainiT in Hengelo faces a dilemma. Management has intentions to offer, besides the current personal development (management-, communication- and ICT skill training courses), also organizational development (in combination with consultancy) and wants to see the possibilities regarding offering Intermediate Vocational Education (Dutch MBO studies). The eventual goal is to increase the turnover per customer. Although ExplainiT has more than 1,000 customers, the total turnover per customer is still too low. The training- and education market has much more to offer and this research should reveal the possibilities and the feasibility of offering the services mentioned above. Research question: The research question is as follows: How can the current business model (and value proposition) of ExplainiT be reshaped, to increase the turnover per customer? Research model: The research starts with an internal - and external analysis, after which we describe the current situation or business model of ExplainiT and its value proposition. A business model consists out of the elements that, taken together, create and deliver value to the market. This is also outlined in a Business Model Canvas. After that, the potential future value propositions (organizational development and education) are described. Subsequently the future business model and the Business Model Canvas have been taken care of. We end up with the main results, conclusions and with recommendations. Research method: The research itself consists of a desk research, where ExplainiT and her services are described. Also a theoretical framework has been drafted with the help of scientific literature and books. Besides the desk research, a field research has taken place that consists out of interviews and phone conversations. Eventually, the so-called Business Model Canvas (the central model in this report) of Osterwalder & Pigneur (2010) is used to perform a delta analysis. This Business Model Canvas outlines the business model of an organization and is subdivided into 9 parts: value propositions, key partners, key activities, key resources, cost structure, customer relationships, customer segments, channels and revenue streams. Because we performed a delta analysis, this canvas has been outlined twice: first for the current business model and second for the potential future business model of ExplainiT. Results & conclusions: Implementing both potential value propositions is feasible, but they are quite different when it comes to implementing them. Organizational development means that ExplainiT will stick close to their business model. They offer their current service in a different way, in combination with consultancy. In this case, ExplainiT can maintain their image, whereby customization and the “personal touch” are so important. Consultancy will be added at the start of the channel phase: the professional advice of consultants should lead to selling more training courses. In case of organizational development, the business model will not change a lot. Key activities will largely stay the same and ExplainiT doesn’t need new partners (if they employ consultants). Also the key resources, customer relationships and segments all remain almost unchanged. ExplainiT will offer their current service in a different wrapping, what can lead to a higher turnover per customer. Implementing Intermediate Vocational Education is harder. In this case, ExplainiT will have to deal with a lot of rules, guidelines and restrictions. It is not feasible for ExplainiT to employ all teachers and assessors, make their own quality exams and offer the EVC procedure by themselves. Therefore, partnerships are needed. The interference from the government is big, because they monitor the quality of the offered education and the belonging exams. All the above will result in a change in key partners, key activities and key resources. Also the channel, to reach the customer, changes because of the partnerships needed. When offering education, ExplainiT will focus on just two segments: secretary & support and marketing & sales. ExplainiT will, when offering education, not just reshape their current business model, but really change it. But this can also be seen as a management challenge for the long-term and can lead towards a higher turnover per customer. These facts lead to the recommendations below. Recommendations: Expand the current value proposition with organizational development, in combination with consultancy (for management - and communication training courses) as soon as possible. Consultancy for ICT training courses is not needed, because organizations can decide for themselves whether an employee is able to use a certain computer program efficiently and effectively, or not. Use the unique aspects of the current value proposition (customization and “personal touch”) to reach competitive advantage. Hereby the account manager is very important. He should know that the customer relationships are the most important resource of ExplainiT and should do about anything to please that customer. That account manager is the only contact person of the customer and is the direct link between this customer and management of ExplainiT. In that way, communication lines will remain short. Organizational development is for ExplainiT actually nothing more than offering the current service in a different wrapping. Only consultancy can be added at the start of the sales process. This consultancy should lead to more sales. It is relatively cheap to implement this “new service”. ExplainiT should realize that when they implement educations as a new value proposition, that their current business model will definitely change. Expanding the value proposition with educations means much interference and inspections from the government. You also need partnerships (for teachers, exams, EVC, etcetera). The right balance between partnerships and employing new people should be found. ExplainiT cannot create partnerships for all parts of the value chain, but they cannot employ all the people either. In case ExplainiT does consider a real business model change, they should not start with all six educations, but with (for example) just one to explore the market (this also means less costs and risks). Plan the implementation of the educations strategically and decide in how many years you want to offer this new service. There is definitely more money and turnover involved in this value proposition than when we look at training courses. However the risk to lose money is also higher. Implementing educations is feasible, but hard. The biggest obstacle is determining which parts of the value chain ExplainiT should execute by itself and which persons they should employ. But this can also be considered a management challenge. The choice is up to ExplainiT…