Ii) Developing The Basic Business Model Using An App As An Example

1. Identifying business opportunities
a) find problems that people want solved in a large market by developing innovative solutions that are hard to replicate
b) define and design a business model with suitable products and/or services that solve the people's problems
c) appreciate the importance of timing and luck; people's attention is a limited commodity
2. Conduct pilot run on target market to test idea(s)
a) check product-market fit, assumptions, etc
b) develop the "wow" factor for users, ie determine an excellent product-market fit
c) importance of first impressions*i, eg domain name, taglines, icons, logos, names, etc
d) developing awareness*v via multi-interfaces/channels/media, etc eg
- press kit (information on company/app, photos, logos, screenshots, videos, etc)
- mobile (smart phone), tablet, desktop, webpage, etc
- social media like Twitter, You Tube, Facebook, Blogs, LinkedIn, Pinterest, Google, etc
- e-mail contact list, etc
- professional societies
- educational markets
NB focus on high-volume, high conversion and low-cost channels
e) test every step so that it is solution-and-user-friendly plus simple, efficient, effective, cheap, convenient, quick, findable*iv, etc
NB Don't build something clever - build what people want, ie user-centric/solution-centric; give people what they want, when they need it, ie instant gratification; around 26% users only visit once
3. Based on the results of the pilot run, develop and implement strategies that build and market products/services; users find convenient, solution-centric and are willing to pay a price for that is less than the benefits to them but greater than your costs by
a) understanding the target audience and who the early adopters are in this group
b) focusing on customer's retention & referral with appropriate rewards
c) differentiating plus adapting faster than any competitor
d) growing the business to first gain, and then maintain, a sustainable and profitable market position
e) developing a suitable company/organisational structure
f) develop suitable name, brand, style and design*ii
g) developing data-driven decision-making from appropriate, automatic, performance-related feedback from analytics*iii, ie trends, users' behaviours like why and how people use the app, who is using, where users originate (country, organisation, profession, job title, etc) etc
h) establishing suitable payment systems like currencies, PayPal, credit cards, bank deposits, etc
i) some important questions
- what products/services are you building?
- are the products/services solving the right problem?
- who are target users and is it delivering value to them?
- what is the app going to look like?
- what percentage of users are repeat users (aim for greater than 40%)?
- what is the rate of referral, ie would you recommend it to a friend?
j) keep away from "cookie cutters"
k) start B testing
4. Recruit a good team of people with complementary management, execution and technical skills that fit the strategy and organisational structure; skills to cover
a) product(s)/service(s), eg change management, etc
b) industry expertise
c) technology (software, research and development, etc)
d) marketing (promotion, advertising, social media, market surveys, collection and analyses of performance analytics, understanding trends, understanding target audience, etc)
e) finance (raising money, etc)
f) accountancy (accounts, tax, debtors/creditors, etc)
g) management (HR, people handling, communications, delegation, training, etc)
h) customer service (handling complaints, exceed expectations, etc),
i) business development (products/services, technical, analytics, etc)
NB This team is flexible and learns as it goes but has a shared vision and members are passionate about what they are doing; a culture of experimentation dominates and encourage people to innovate, create and disrupt; invest in people, not infrastructure; 80% of time on improvements and 20% on innovation
5. Continually improve business models/products/services
a) use regular feedback (including analytics, etc) as basis for data-driven decision-making
b) need to follow sequence of build (prototypes, etc), measure (feedback, etc) and improve (change, modify, etc)
c) review relevant literature like journals, etc
d) consider the effect of removing features
NB don't chase perfection; chase speed
6. Developing exit and acquisition strategies
a) value determined by
- users and their activity, eg download-to-user-acquisition rate, ie greater than 80%
- revenue*vii/profitability/cash flow/balance sheet, etc
- product-market fit*viii, etc
- risks, etc
- future directions, etc
b) sources of finance
- Angels (percentage of ownership for investment, invest in people and idea, etc)
- Venture Capital (percentage of ownership for investment; risk-takers*vi, possess privileged insights, eg knowledge of markets, industry, etc)
- Bankers (lend money for interest, amount depends upon security, are risk averse, etc)
- Accelerate (incubators who invest for a fixed duration, ie to get the start up going, etc)
c) organisation needs to be incorporated with a bank account
d) legal documents include non-disclosure agreements, secure source codes (software), founder vesting (hang around for a time, eg 4 years), etc
e) use advisers who are experienced in the industry and technology
f) collaboration with others, eg partnerships, joint ventures, franchising, licensing, bartering, etc
Notes
i) The importance of first impressions, so the name needs to be short, catchy, memorable, distinctive, clever, become a verb, etc. Linked with the name is the domain name, tagline, icon, logo, etc.
ii) A good design is functional, simple but detailed, environmentally friendly, thorough, long-lasting, honest, unobtrusive, understandable, aesthetically pleasing, useful, innovative, etc; it should educate, entice, excite and exhilarate users
iii) Analytics are required to be valuable, measurable, relevant and actionable, ie acquisition, activation, retention, referral and revenue (ARR); so as to drive decisions. Acquisition (how often visited, ie get users to stay more than 10 seconds; multi-channels); activation (convenient, satisfying experience, amount of money spent, etc); retention (users come back, ie number of visits/purchases); referral (use "freebies" to encourage new users); revenue (sales over time and/or per user, discounts, users life cycle, etc).
iv) Find-ability depends upon title (html), brief description, eg what it's it doing (1 to 2 sentences describing the app that include keywords that are relevant, high-volume, unique, don't repeat words, uncluttered, no phrases, etc), more detailed description (including reviews), etc
v) Awareness includes protecting domain name, monitor traffic ranking, importance of keywords, back-link, create a site map, minimal clicks, image description, fixed content with regular updates, etc
vi) on average venture, capital expects to double its investment but what generally happens from 10 venture capital investment experiences
- 1 gives a return of 10 times
- 3 give a return of 5 times
- 4 break even
- 2 lose money
vii) in 2012 a revenue in excess of US$ 2.75m. was rerquiredfor investors to show interest
viii) rule of thumb question - what would happen if you are unable to use the app? Need 40% of users would be upset.

NB concentrate on software, not the hardware, as the latter is too expensive
Some challenges involve the compatibility of web with mobiles, and anticipating future trends that are coming quickly like better integrated interfaces (desk top, laptop, tablets, mobile, watch, glasses, etc), miniaturisation (smart watches), etc

As it is a long journey, understand that there are sacrifices to be made if you want to be successful

System, ie Android (Google, etc) v iOS (Apple)
- Android is open/public, free, collaborative (sharing), etc which allows developers to build on the work of others and has lower barriers to entry, ie third-party development; has 1.9b. users v APPLE 700 m (2014); in 2012, 4k devices using Android, in 2013, around 12k devices and 600 manufacturers. While iOS it is close.

In summary
Need to shift to focusing on convenience, usability and utility to solve a big universal problem by using a disruptive approach so that the solution is novel.

Ways to make money from apps:
- transactional income
- in-app purchases
- advertising

5 business models

i) Gaming (user pays)
ii) E-commerce ( user pays for "real" goods and services) eg Uber, Square, etc
iii) Consumer audience/Advertising (it has a downside as it tends to corrupt), eg Instragram, Snapchat, Flipboard, etc
iv) Software as a Service (SaaS) (subscription model), eg WhatsApp, Dropbox, etc
v) Enterprise (pay for software), eg big data companies

Software
- mybilliondollarapp.com (general)
- Apple (App Store, etc)
- Google (Google Play, Google analytics, AdMob (awareness), AdSense (awareness), etc)
- MixPanel (provides a detailed profile of each user, ie , lifetime value (LTV))
- Localytics (analytics)
- Flurry (analytics)
- mobileapptracking.com (analytics)
- Kissmetrics (analytics-cum-dynamic notification platform)
- Dribble.com (design)
- behance.com (design)
- www.pttrns.com (design?)
- proto.io (?)
- Moqup.com (test blue-print)
- Bootstrap (social media awareness)
- Hoosuite (social media)
- PRWeb (press release)
- Business Wire (press release)
- AngelList (investors)
- Techstars.seriesseed.com (investor)
- Desk.com (customer)
- usertesting.com (customer)
- CrunchBase (customer)
- Fiksu (customer)
- FreeMyApps.com (customer)
- Launchrock (B-testing)
- Yelp (advertising)
- Groupon (advertising)
- Tumbir (advertising)
- QlikView (big data)
- Zynga (viral app)
- Flipboard (viral app)
- WebTranslattelt (words)
- Smartling (words)
- BelugaLinguistics (words)
- Lingo24 (words)

How are apps found?
- 63% from AppStores & Google Play (50% searching the new apps weekly)
- 61% from search box
- 50% from family/friend
- 39% from social media
- 30% from else where

 

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