New Product Strategy and Tactics
I have talked a lot about developing strategy and tactics and the best process to use in past posts to this blog. I thought it might be useful for you to see some examples of plans put together by some of my students at the University of Houston. The examples that you will see are on fictitious companies that each team of students created for their class project. There were teams that developed strategies for real companies but these plans cannot be released since the information is confidential.
If your company would like to have a team of students develop a marketing strategy to achieve a specific marketing objective for your company please send me a request stating the company and a description of the marketing objective you would like addressed. You can send the request to gary@gwrresearch.com
The process used here is outlined in my new book Developing Successful Marketing Strategies available at Amazon.com, Barnes and Noble.com and other outlets.
Here is the first of a series of example projects:
AppUp designs and develops custom software solutions in the form of
mobile and web applications to increase the efficiency and effectiveness of
small businesses. We plan to
leverage the growing demand for mobile solutions and tap into the $25 billion
app industry by offering three base apps to support fundamental and daily
business tasks: scheduling, document share, and e-commerce. Our customers will
have the ability to customize and tailor the software to meet their specific
needs, have access to training courses and 24 hour customer support. This customization ability, combined
with outstanding customer service, will differentiate AppUp from its
competitors
Our target customers are small businesses with $5-15 million in
revenue, currently lacking but seeking a mobile presence. We plan to grow the business in three
phases. Phase one consists mainly of software development and attracting early
adopters. In phase two, we’ll
establish market credibility and begin to expand to the greater Houston area.
Phase three has rapid growth acceleration and movement to online sales.
The executive team will assume multiple roles early on, hiring
additional staff as the company grows.
We will track company performance with key performance indicators,
customer surveys, and data analytics.
AppUp plans to generate revenue by charging monthly subscription fees
for each app. Pricing is based on the number of users, and discounts are
offered for longer contracts. We
are forecasting profits beginning in year three.
MISSION STATEMENT
AppUp strives to create value for our customers by improving the
efficiency & effectiveness of their business using innovative and cost
effective technology solutions.
VISION STATEMENT
At AppUp, we wish to streamline processes, maximize customer value, and
improve the technological approach to custom mobile business applications
through:
·
Affordable solutions that bring underserved businesses to the forefront
of the mobile technology age
·
A collaborative and productive environment between our customers and
suppliers that fosters growth
·
A cutting edge product developed using the sincere efforts of a
talented team
SITUATION ANALYSIS
The Industry
The mobile platform has been an integral part of everyday life in the
modern age for some time now.
Recently though, usage of cell phones has skyrocketed, easily overtaking
traditional internet-connected devices.
According to the most recent data, smart phones and tablets have outsold
laptops and desktop computers by a comfortable margin and will continue to do
so at an even more rapid pace in the coming years. With such a prominent change in device usage, a change in
consumer usage habits is to be expected.
According to the most available tracking data, the average person now
uses mobile apps as much as he or she uses the internet on his or her phone,
and, in turn, the application industry is growing exponentially. At its current pace, the application
development industry is projected to surpass $25 billion in revenue generated
in 2013. These figures include all
apps developed and sold in the prominent app stores, however, the myriad of
needs these apps serve clouds our analysis of AppUp’s industry focus. AppUp is focused on, and the sector of
the industry most crucial for our purposes, how employees stay connected with
their company and customers. In
addition, we’re focused on employers are streamlining process to stay ahead of
the technology curve and relevant in the eyes of their customers in the face of
changing usage patterns.
This change in how people are accessing the internet and staying
connected to their online world has driven the technology industry to
reconsider how to keep the consumers best informed and in contact with the
businesses that rely on those mediums.
Bearing this in mind, the application development industry has shown
robust growth in supplying this easy connectivity to consumers on behalf of
businesses. The nature of the
industry as a whole revolves around this idea of keeping users engaged and
connected, regardless of the platform they’re using, as efficiently and
conveniently as possible. However,
the app development industry is still a tough market to break into. According to the Wall Street Journal,
the general app development industry only sees 2-3% of newcomers being successful. For this reason in particular, we at AppUp
feel that our business model of marketing our products and services directly to
businesses, rather than directly to the consumer, is the soundest way to tap
into the meteoric growth the app development industry as a whole is
experiencing.
Customer
Segments
In the process of developing our product, we conducted an analysis of
the customer market. We divided the market into three main segments: key
customers, under-potential customers, and non-users. Once our team separated
the market into these three segments, we were able to decide on the focus of
our marketing strategy, as well as locate market niches that would allow for
potential growth. As a start-up looking to acquire a solid client basis, we
will focus a significant chunk of our resources on our key customer market.
After analyzing our product and our objectives as a company, we have
decided to target small to medium sized companies. Our main customers range
from the upper end of the small sized business spectrum to the lower end of the
medium sized business spectrum. We believe that targeting companies with annual
revenues between $5 and $15 million, we will be able to acquire a strong base
of core clients. The AppUp team anticipates that our target clients are lacking
a mobile presence, but have the resources, employee and customer base, and
business needs that are compatible with operating their very own mobile/web
application. Our customizable app templates provide solutions that are
applicable over the entire industry spectrum, and provide equal benefits to
both service-based and manufacturing/product-based companies.
The second customer tier in our analysis represents the under-potential
customers. In the objective portion of our proposal, we note that our product
offers purchasing, scheduling, and document sharing solutions. We recognize
that some of our customers may not have the immediate need for all three app
services. Therefore, we have the potential to expand our company through our
existing clients by demonstrating the value they will recognize by subscribing
to our entire suite. There are also potential clients that may feel too small
or do not have the sufficient customer base to justify an app software investment.
We have the potential to capture this market by providing cost-effective base
model app solutions without unnecessary bells and whistles.
A nonuser market also exists that we do not plan to pursue in our
marketing strategy. In the nonuser market, we include larger companies with
developed application solutions, as well as companies with robust in-house IT
departments capable of their own app development. A main selling point of our
product is that our ready-made app templates are affordable and functional, and
create great value for smaller companies that would have not otherwise pursued
mobile app solutions.
Competitors
As a company, we recognize that we are not creating a product that is
attempting to tap into a blue ocean market. With that being said, we are aware
that we will have competitors, some of whom already have footholds in the
market. The most obvious competitors we will encounter are companies that
provide similar products and services. Our team will have to be both innovative
and creative to cut costs and value for ourselves and our clients. We will also
have to go the extra mile to provide the absolute best customer service
available, displaying to our clients that we are hands down the paramount
service provider. Competition from both pre-existing and new second and third
party applications is also a concern. These apps provide businesses with a
specific service platform to interface with their customers and/or employees.
The AppUp team will have to work hard to prove to our clients that having their
own software application, tailored specifically to their needs, provides them
with a more efficient, cost-effective medium to conduct their business.
Potential
Disruptors
The market that we are entering is also susceptible to disruptors. AppUp
offers solutions for three possible client needs. A disruptor who models their
business around one individual client need, for example scheduling, and
provides a base model template for that one specific necessity may enter the
market. Since this potential disruptor only has one particular solution to
focus on, they may cause problems in our perceived market. Market interruption
may also result from potential clients moving towards an in-house approach to
mobile and web application solutions. As mobile apps become more mainstream,
the cost associated with smaller companies producing apps themselves may become
a more widely accepted investment. AppUp must consider these disruptions in our
business model now, as well as in the future.
SWOT ANALYSIS
Strengths
·
·
·
Upgradability
o Our mobile and web apps
are accessed through a cloud platform, which eliminates the need for companies
to spend time on hardware and software updates. The apps are maintained by our company, which eliminates
significant cost and man hours of maintenance otherwise required by in-house IT
departments.
·
Accessibility for users
o
The cloud platform only needs a browser and internet connection to
work, so it allows employees to access the applications regardless of where
they’re located or what device they’re using, thus boosting productivity and
decision-making.
·
Deployment cost savings
o Our structure of
developing a basic platform that can then be tailored to companies’ needs
allows us to keep costs low by spreading development expenses across multiple
clients.
o Companies pay $50,000 on
average to develop and maintain an application. We are able to offer our customers a low monthly
subscription fee, which makes it an affordable solution for customers.
·
Ability to scale quickly
o AppUp’s mobile
applications live in a cloud. This
allows us to rapidly upgrade our software without accessing our customer’s
server and scale to more users as
needed. This prevents our
customers from having to spend their IT department’s time and resources updating
hardware and software to accommodate the additional users.
Weaknesses
·
·
·
Integration of different software and platforms
o A challenge for app
development is the diversity in the mobile landscape and compatibility with
company’s existing software. Some
companies support multiple operating systems within their organization. Successfully building apps that
integrate with multiple devices and platforms will be key to our success.
·
Security threats
o Offering customers their
own customized mobile enterprise stores will give customers better control over
who can access their apps, but there is still the risk of coders not installing
the proper security and privacy protection that could comprise an organizations
data.
·
Distinguishability in the app market and changing customers app usage
o Competing in an industry
with incumbents like AT&T and Inuit can make it hard for developers to
distinguish themselves. Only 2% of
the top 250 publishers in Apple App Store are newcomers and 3% in Google's Play
store for Android apps, according to research firm Distimo. 50 million mobile apps are downloaded a
day, while 95 percent are abandoned within a month. It’s important to make the apps accessible and engaging so
that customers continue to use our apps.
·
The ability for sensitive data to be compromised
o Security breaches are a
huge concern as we develop these applications. If we do not take the proper precautions to safeguard our
customers data, we could leave ourselves open to litigation down the road.
Opportunities
·
·
·
Growth rate of app industry
o The mobile application
industry has grown considerably in the last 5 years. App sales rose 62% to $25 Billion in 2013. App stores run by Apple and Google
offer more than 700,000 apps each.
According to Flurry Analytics, overall app usage in 2013 posted 115%
year-over-year growth. This growth
shows that there continues to be an opportunity for innovation in the app
industry.
·
Growing mobile workforce
o The rapid adoption of the smartphones and widespread usage of
sophisticated mobile devices, such as tables and smartphones is driving the
need for enterprise mobility.
There have become blurred lines between people checking their personal
email at work and work email at home.
As this trend continues, it opens the opportunity for us to create
solutions that allow customers to balance all of their productivity needs with
one device.
·
Lack of technical expertise in companies to build apps
o Developing custom apps
isn’t feasible for most small and medium business because they do not have the
workforce to support the development.
Even large organizations have limited IT resources devoted to building
and maintaining app stores.
·
Capture market share of growing app development industry
o The industry grew 62%
last year, which indicates that the market is ripe with opportunity.
·
Companies encouraging usage of private mobile devices to save on CapEx
o Companies are shifting
from issuing company owned devices. Instead, organizations are allowing users
to bring their own devices to work to access corporate information, email,
data, and apps. Users get to choose the device they like the most and IT
doesn’t incur capital expenses for mobile hardware that depreciates and
obsoletes faster than they can deploy them.
Threats
·
·
·
Accessibility of free apps
o 90% of apps in the Apple
App Store are free, so there could be push back from companies thinking they
could find free versions of the apps that we provide.
·
Large companies currently competing in this industry
o Major companies like
AT&T, Accenture, and SAP are competing in this space with strong brand
loyalty. We will have to overcome
the competition in the market by differentiating ourselves to the consumer.
·
Server reliability
o Outages do happen,
despite the best plans and safeguards ranging from acts of God to human error,
and many points in between. Frequent downtime could hurt our brand and cause
customers to shift to a different service provider.
·
New technology developments potentially replacing the app market
o There’s a potential for
new technology developments down the road, causing users to abandon the mobile
app market as we know it. It will
be important to stay ahead of the trends to ensure that we’re able to keep up
with advances in technology.
OBJECTIVE
Our
Product
We provide our clients with pre-developed base model mobile and web
application templates that support three fundamental aspects of business
operations. Through in-depth collaboration between the client and the AppUp
team, these templates are tailored to meet the client’s exclusive business
approach. The three application models offered by AppUp address popular
workplace tasks that are common in both service-based and manufacturing/product-based
companies. The first application solution AppUp offers is an E-Commerce based
template. This model provides our clients with their very own platform to sell
their goods or services to customers. The next system we aim to simplify is
file access and sharing on both web and mobile devices. There are many apps on
the market that address this need, but the app we create for our clients will
be their own unique file sharing environment, specific to their company. Our
third template provides companies with a web and mobile platform for
scheduling. This application, like AppUp’s other options, offers the company
its own medium for customers and/or employees to schedule appointments,
meetings, reservations, etc. Our app models address operations that are common
across all industries. Also, the AppUp team will work extensively with the
client to customize the application to address the company’s specific desires.
The capabilities and sophistication of the applications are at the discretion
of the client. They can make their app as basic or as intricate as they would
like. By providing our clients with their very own application, we are able to
provide them with many benefits and values that are unique to their company’s
business models.
Performance Targets
In order to gauge the short term performance of the company, we have
set two types of performance targets: customer targets and internal
targets. Customer targets are
focused on our clients, the users of our products. Internal targets focus on revenue generated from product and
service sales/subscriptions. Access to AppUp’s mobile and web applications will
be provided to customers on a subscription basis and revenues will be generated
by charging monthly access fees.
Membership levels will be organized into three tiers and sold to
customers based on number of users.
Additional details can be found later in the Strategy section.
Customer
Target
AppUp exists to increase business efficiency for our clients, therefore
one of the key performance targets will be a measure of this efficiency
improvement. The primary target
for our customers is a 20% increase in efficiency in the specific business task
the app was purchased to enhance.
This will be measured first taking a baseline survey of the company to assess
how much time they are currently spending on each task, and then comparing the
time taken one year later on the same task. For example, if one of our clients is currently spending 10
hours per week scheduling appointments for their customers, we expect this to
be reduced to 8 hours per week.
Internal
Targets
Since our business depends on recurring revenue from
subscriptions, keeping the customer satisfied is top priority. If our customers are pleased and gaining value from our
products, we know that revenue will follow. Our initial revenue goal is to
generate $250,000 after 12 months.
Revenue forecasts and pro-forma financial statements can be found in the
appendix. The first 6 months will
be spent on app development, therefore no revenue is expected during this
period. Customers have the option to purchase one or all of our apps, and will
be charged according to one of three pricing structures, or tiers, based on the
number of users. The second internal target is to find two early adopters
within 6 weeks to help build the three core applications: Purchasing, Document Share, and
Scheduling. Early adopters are key to building successful software
applications. They provide valuable feedback, help define required features,
and will be more patient with development because they have an active role in
building the features. We will use
the feedback from the early adopters to rapidly iterate on the software
designs. Collaborating with these customers will make sure we are meeting their
business needs and prevent wasteful re-work. As an incentive to attract these customers, we’ll likely offer
promotional discounts, such as discounted access for a period of time. Promotions such as this will be further
defined in the strategy section.
STRATEGY
Product
We believe our product strategy should fulfill
three critical obligations: provide a needed service for a wide range of customers,
offer elite customer service to our clients, and deliver our product at an
affordable cost to the subscribers. The AppUp team feels that if our product
strategy can meet these standards, we will be a prosperous organization.
AppUp’s executives analyzed the common
needs of companies over the entire business gamut. As a company, we decided
that providing web and mobile application solutions for purchasing, file
sharing, and scheduling would translate across all industries. By offering
multiple base model solutions, we are able to tap into several business needs.
Since the customer determines the sophistication of their mobile and web
solution, our customer market is not limited to a specific revenue tier. Our
applications service companies in all industries, and as a result, a downturn
in one particular market will not detrimentally impact our success. The AppUp
team also recognized that our products’ success would be dependent not only on
the size of our customer base, but also on the quality of our customer service.
The mobile and web application industry is
a booming business. New companies are constantly entering the market with new
products and providing solutions to customers at all industry levels. The AppUp
team recognizes the importance of offering elite customer service to
differentiate ourselves from our competitors. Since our income is based on
client subscriptions, customer retention is of the utmost importance. First-rate
customer service will not only give us an edge in obtaining new clients, it
will also keep us focused on maintaining our established customer base. The AppUp
team will have to constantly evaluate our products and services in order to
maintain the highest level of customer satisfaction. Another crucial aspect of consumer fulfillment is providing
the customer with the most cost-effective applications to meet their business
demands.
AppUp’s income is dependent on our client’s
subscriptions to our application solutions. As a result, we must continuously
deliver competitive subscription fees to provide our consumers with a valuable
product. Our ability to service businesses across all industries, as well as at
multiple revenue levels, allows us the opportunity to acquire and maintain a
large customer core. The immense sales volume generated from an extensive
client base will be a vital component to maintaining low subscription fees. AppUp’s
ability to constantly furnish our clients with efficient, cost-effective
solutions will be an integral element in determining our long term success as a
company.
Price
Our pricing
strategy is based on the value received from the products and services we
offer. In other words, our
customers will choose to buy our products because they know the value gained
will exceed the cost to purchase. Customers will be charged a monthly fee to
use our mobile and web applications. This allows us to reach the target market
of nanocap companies that can’t afford multi-thousand
or million dollar up-front development costs, large one-time purchase prices,
and multiple licenses commonly associated with other software applications.
Optimal
pricing is reached when the value gained by the customer will exceed the
monthly subscription fees they are paying. For example, if our scheduling app saves 10 hours per
month for 5 employees (50 man hours), and we assume a burdened hourly rate of
$50/hour, the scheduling app created $2,500 in value - far less than the
monthly subscription fee.
In order to
encourage users to sign up, no up-front costs will be charged - we want it to
be as easy as possible for customers to subscribe. We expect the application
development costs to be recovered over time as subscriptions increase.
Market Positioning
Market
positioning is another key consideration in our pricing strategy. Pricing too
low could decrease the value perception, ranking us among the non-customizable
apps offered to the general public.
We don’t foresee lower prices increasing volume. Volume will be driven
by other marketing considerations, such as place and promotion, therefore,
sales volume would be expected to remain flat if price decreased. On the other hand, moderate to high
prices will indicate that our products are valuable. However, given that we are
a startup and haven’t established market credibility, pricing too high could drive away potential customers. As our company grows
and our applications become more sophisticated, it’s likely that prices will
increase over time. We’ll make
this clear to our customers up front for two reasons: One, to incentivize
potential customers to lock-in prices and sign longer term contracts, and two,
to manage their expectations. We
want to be honest and up front with no surprises, which could damage our brand.
Pricing Options
Our apps are
designed to increase efficiency and effectiveness for our customers; therefore
it’s reasonable to assume that companies with more employees have more to gain.
Pricing will be offered in multiple tiers, grouped according to the number of active user accounts. Access to the applications will
require a unique account (user ID).
See Table 1 below for a summary of our pricing options. Given the modest
annual revenues of the target market, and therefore small company size, it’s
unlikely that many of our customers will have more than 50 active users.
Table 1:
Pricing Options
Subscription Level
|
Total User Accounts
|
Monthly Subscription Fee
|
Tier 1
|
10
|
$250
|
Tier 2
|
25
|
$500
|
Tier 3
|
50+
|
$1,000
|
Contract Options
As an
incentive to lock-in current prices, we’ll offer discounts to companies
choosing to sign contracts. See Table 2 below for a summary of the discounts.
Table 2:
Contract Discounts
Contract
Length
|
Discount
|
Month-to-month
|
0 %
|
6 Months
|
2 %
|
1 Year
|
5 %
|
3 Years
|
8 %
|
5 Years
|
15%
|
Early Adopters
As stated in the Targets section, early adopters
are key to successfully building and implementing our software applications. In
order to attract early adopters, we’ll offer the first 3 months for free – no
subscription fees will be charged to the first 3 companies that sign up and
agree to participate in the development. We expect these companies to help
build the base applications, and forecast that the value gained from their
collaboration will far exceed any revenues generated during that time period.
Place
AppUp will utilize our website, social media, sales team,
and collaborations with small business resource centers in the community to
reach our target market.
AppUp’s
online website will be the primary way that customers understand our business
and the products that we deliver.
We will have a user friendly, crisp site that is representative of the
cutting edge apps that we will produce for our clients. The online marketplace will eliminate
the need for a physical location, minimizing our cash outlays and allowing us
to offer our customers low monthly subscription fees. We will utilize Search Engine Optimization to ensure that
any midsize business looking for an app development company in the Houston area
finds our company in their online searches.
Social
media will be a critical component for customers to find out about our products
as well. We will ensure that we
have active Facebook, Yelp, Twitter, and Instagram accounts so consumers can
find information about our products and events we host.
AppUp’s
main competitors offering template app solutions are online and out of
state. Our business model allows
us to capture the cost savings of not having to have a physical location, but
also allows us to give superior customer service. We offer the appeal of a Houston-based small business and providing
onsite education and support.
We
plan to utilize co-working space in the Houston area when collaboration is
needed with our contractors or partners, but we plan to manage the business
virtually. As the business grows,
we’ll evaluate the need to establish a physical location to meet the needs of
our employees and customers.
Our executive staff will build strategic partnerships with
the various Small Business Development organizations in the community such as
SCORE, University of Houston Small Business Development Center, and the Greater
Houston Partnership. This
partnership will allow us to tap into their current base of small business
owners and educate them on our services.
We will send out tailored communication to their networks and offer
incentives to try out our products. Our sales team will ensure that AppUp is
represented and has booths at the key small business events hosted in the
community, to ensure our brand is known in the Houston small business
community.
Promotion
AppUp strives to create value for customers and
shareholders alike. We believe
that by building a promotional strategy that keeps these two goals in mind, we
can enjoy significant growth within the application development market. Our goals dictate building a promotional
strategy that centers on highlighting the price, place, and product benefits
our company brings to the table.
These pillars of the AppUp promotional strategy will allow us to bring
to the marketplace a fresh and competitive edge which will drive sales for
years to come. The real test,
though, is determining where and how to promote our products and services so
that they reach our target audience and are adopted in the marketplace. In this vein, we have decided on a
three stage process that we believe will build a significant interest in our
business.
Phase I
The first step is to find early adopters. As mentioned before, the value of
finding early adopters to our products and services is incalculable in value to
developing our products and building credibility in the marketplace. Because these first users are so
important to our company, the promotional strategy for these customers will be
much more targeted. By enlisting
the help of data researchers, we’ll find businesses in the Houston area that are
in the greatest need for a customized app. These businesses will be narrowed to fit our nanocap size
criteria, and lacking current in-house marketing or information technology
department. The capital
expenditure in this stage will be minimal as the research will be contracted as
one project and shouldn’t be overly demanding. However, once these potential early adopters are identified,
we will personally see to selling them on our product. The Chief Marketing Officer, Brian Roe,
along with the technical experts on our team, will be enlisted to sell our
first customers on the financial and logistical benefits of our product. Once these early adopters are enlisted,
we’ll move into the second phase of our promotional strategy.
Phase II
The value of
targeting customer-specific groups highlights the second step of our
promotional campaign. In this step
we’ll reach out to Houston area small business groups to promote our products
and services. These groups are
fairly easy to find and bring together the exact customer segment we are
looking for. By scheduling
presentation times during the meetings of these groups, we can target a larger
audience without spending a significant amount of money. In fact, because our CMO will be in
charge of making these presentations, the cost of contacting these potential
customers is quite minimal.
Furthermore, by presenting ourselves to these companies face-to-face, we’ll
build relationships with potential customers, grow our credibility and promote
the goal of excellent customer service.
This step in our campaign will continue until we’ve signed up enough
users to cover development costs and daily operating expenses. After this point has been reached, AppUp
will begin to branch out of the Houston area by taking our promotional campaign
virtual.
Phase III
Up until this
point, AppUp will be focused on face-to-face promotion to educate potential
customers on the concept of our revolutionary products. We’ll then shift our efforts to the
online world in order to capture the largest audience possible. In the initial rollout of our business,
we plan on developing a well-designed and user-friendly website so that
potential clients can have a place to explore our company, products and
services in their own time. The
third phase of our promotional plan will utilize this website to its fullest
potential. As a technology company,
it behooves us to market ourselves in a technological sense so that potential
and current clients can feel comfortable with our credibility in the
industry. With this in mind, AppUp
will develop an online marketing scheme to utilize the value of social media,
industry-specific blogs, and online news resources so that we can expand our
target audience to include those companies with technological roots. Our marketing will be most effective by
targeting these high-potential customers through a medium they’re most
comfortable with – technology. Also,
this stage of our promotional campaign continues to reduce costs. We plan to
hire someone, on staff, to maintain our online presence. This person will be able to keep our customers
up to date on current project statuses, advertise our business success, and
promote the business.
In
summation, AppUp is a tech startup selling products and services that are
fairly unique to the marketplace.
For this reason, we’ve chosen a promotional strategy that allows us to find
early adopters, target the largest local audience, and then expand nationally
and globally through our familiarity with the technological world. Each phase will involve promoting our
products using the ideal price & place.
TACTICS
Product
AppUp provides pre-developed base model mobile and web application
templates that support three fundamental aspects of business operations. The three templates are E-commerce,
file sharing, and scheduling. The
E-commerce template provides clients a platform to sell their goods or services
to customers. The file sharing
template aims to simplify file sharing access on both web and mobile
devices. The apps we create for
our clients will be on their own unique file sharing environment, specific to
their company. This file sharing templates also offers the ability to edit
files between users simultaneously.
The scheduling template provides the company with a web and mobile
platform for scheduling. This application, like AppUp’s other options, offers
the company its own medium for customers and/or employees to schedule
appointments, meetings, reservations, and also keep track of employees’ time
sheets. Our app models address
operations that are common across all industries. Clients have the ability to add all three templates into one
app for easy access and to track everything in one place. These templates can be tailored to meet
the client’s exclusive business approach.
The AppUp team will work extensively with the client to customize the
application to address the company’s specific needs. The capabilities and
sophistication of the applications are at the discretion of the client. The
client can design their app as basic or as intricate as they would like. By
providing our clients with their very own application, we are able to provide
them with numerous benefits unique to their company’s business models.
Services
We offer personnel training, 24-hour support, and measurement of the
app’s efficiency. We believe that
our success is derived from our clients’ success. Therefore, we are committed in providing our clients with not
only a great product, but also 100% satisfaction with customer service.
Our personnel training to both client’s employees and customers
consists of an initial setup on users’ mobile devices, initial training on how
to use the app, and continued training on any updates to the app.
·
Initial setup is conducted by our
staff on the users’ mobile and/or desktop device. We will make sure all the components of the app run
correctly and effectively on all any software operating system (e.g. IOS,
Windows, or Android). We also
provide this service should a user decide to change devices after the initial
setup.
·
Initial training is conducted in a
workshop format by our technical team.
We will cover all the features of the app in an easy and user-friendly
manner. We also offer this
workshop for any new group of users from clients.
·
Continual training is also conducted in a
workshop format should clients need to make major changes to the app.
Our support team is available 24 hours a day to troubleshoot or help
users with any technical needs. We
want to ensure that our clients’ app run efficiently 24/7.
We will also keep track of all usage data to provide clients with a
measurement of the app’s performance.
We’ll monitor user feedback for feature additions / modifications.
Brand
AppUp
differentiates from its competitors by offering exclusive features such as
multiple services in one app, the ability to edit files between users
simultaneously, and scheduling and timesheet reporting in the same platform. The app is designed uniquely to the
clients’ industry and tailored to the client’s exclusive business approach.
Our clients get additional value post app development from the extra
services we provide after the app is up and running. We develop and service our app products. We strive to be with our clients every
step of the way. As mentioned in
Service Tactic, we offer device setup, personnel training, and continual
training. We evaluate both the
clients’ app and our exclusive features.
Our brand does not stop there.
As we work with each individual industry and learn more about each
industry’s needs, we will able to develop more effective features. Our continuing development will provide
additional value to our current and future clients.
Pricing
Initial development of an app for an industry is very crucial to
us. We need the capital from this
sale to recover our initial development cost. We need these early adopters to help us understand their
business and how to better tailor the app to fit their needs. Therefore, we are offering the first
three clients in any industry three months free of any subscription charges
after the app is up and running. For our subscription charge, we offer three
tiers depending on the volume of end users (see Pricing Strategy for more
detail). In addition to subscriptions, we also encourage clients to sign
contracts. The contract will
provide substantial discounts and private training to their end users.
Incentive
By using AppUp for technology improvement, clients receive many
incentives. The most important is
the time value cost. Our app can
be accessed both via mobile or desktop web, providing one source. Additional
benefits include 24 hour support and training, volume discounts based on total
users and contract length. Clients
pay less for each user as the number of users increase. Clients may choose to sign a contract
to receive a discount.
Communication
AppUp’s goal for communication is to get as much exposure as
possible. We want to educate the
end users of the unlimited opportunities we can provide through development of
an app for their companies. For a
small monthly fee, clients can have their own apps tailored to their industry
and business needs.
AppUp will utilize online media such as search engines and social media
to get the most web exposure. We
will ensure that search engines such as Google, Yahoo, and Bing have AppUp
listed first in their search for app development in the Houston area. We will also maintain Facebook, Yelp,
Twitter and Instagram accounts for AppUp.
We utilize all of the advertising features offered by these social media
outlets to get as much exposure as possible.
AppUp will train the sales team of each base app’s features. They will have the knowledge to set up
devices and provide initial training for end users. By having a well-trained technical sales team, we show our
clients that we care for our products and clients. They will also attend and
sponsor small business networking events such as Chamber of Commerce, SCORE,
University of Houston Small Business Development Center, and the Greater
Houston Partnership.
AppUp will also track which sources of
communication delivered the clients.
We will have quarterly evaluations to evaluate which medium to focus on,
and which we should eliminate.
Distribution
Since AppUp will have our own sales team, we are distributing our
product through the direct channel structure. We are working with all types of industries that have the
need for mobile and web apps.
However, we will limit our clients to businesses with gross revenue
above five million dollars per year.
EXECUTION
Workforce
There are four
main components of the execution stage.
Each of these components, Planning Organizing, Directing and
Controlling, serve to bring together one unified method of implementing each
aspect of our business. In the
following we will focus upon the Workforce of AppUp, and how each of our
components of execution play into keeping this very important sector of our
company in the highest working order throughout our company’s development.
AppUp will initially
employ an executive team including CEO, COO, CFO, CTO, and CMO. In addition to
our executive team, we will employ a core developer that will oversee all the
aspects of developing our core suites of applications as well as stay with us
full-time through the growth of our company to see to any modifications that
need to be made to the basic programming if problems are pointed out by our
customers. We will also hire two
supporting developers that will assist our core developer in the first stage of
our growth. This supporting staff
will be hired on a contractual basis, the term of which will last until the
base platforms have been developed.
Their addition to the team will allow for the speediest development of
our applications, yet, being contractual, their employment will save us money
by allowing us to trim our expenditures for manpower once their purpose has
been served.
In our second
stage of company growth, which embodies an expansion of our marketing to a
wider clientele base, AppUp will hire the first customer service
representatives. In addition to
our executive team, these employees will assist customers with technical problems
and facilitate communication between customers and developers so that any
issues can be promptly addressed.
The third
phase of our company’s growth plan, moving outside the Houston market and
becoming more reliant on web-based sales, will necessitate the addition of a
training team to our workforce as well as a team of sales representatives. Sales reps will allow our executive
team to focus on running the company while still maintaining a face-to-face
marketing presence. Their pay will
be commission based, so no extra capital will be needed for their
employment. However, the training
team will be paid according to industry standards for salaries, and their main
focus will be to help develop and execute training seminars for new customers
so that every client understands how to use the apps. For each new position
created, AppUp will develop job descriptions so that every employee has a clear
understanding of their role within the company, eliminating ambiguity among the
workforce.
The next
aspect of our workforce execution focuses on organization to maximize the
effectiveness of our business. The
goal is to grow the staff in accordance with our growth plan. During the first phase, AppUp will rely
heavily on the executive team to carry out marketing and sales to our early
adopters. In this stage, the other
employees (software developers and programmers) will report to the Chief
Technology Officer, who will oversee their work and ensure the apps being
developed align with the company’s mission and vision. In the second stage of growth, the
additions of customer service representatives will be organized under our Chief
Marketing Officer and will be located in our corporate headquarters. In the final, and most dramatic of
growth stages, we will install mid-level managers. Their role is to ensure even
workload distribution among all employees and relieve the executive team of
day-to-day operations. By
following this organizational plan, we believe AppUp can generate the most
business possible with the smallest workforce needed, allowing the executive
team to run the business with a
focus on the company’s mission and vision
We’ve
established number of growth metrics that will allow us to ensure employees are
being hired on only as needed within a specific department. For example, we plan to add one customer
service representatives for every fourth customer in order to ensure that each employee
has an appropriate workload to provide exceptional customer service. The main
purpose of a directing element is to ensure all employees are maximizing their
job efficiency. For that purpose,
AppUp has developed job descriptions for each prospective position that will
explicitly state the roles and responsibilities of each employee. This will accomplish two goals. First, each employee will be aware of
the overall mission and vision of the company so they will not feel as if they
are just a number in a faceless machine of a company. Instead, we want each future employee to know that
directions given from the executive team have purpose and align with our
company’s goals so that everyone may prosper from AppUp’s success. Second, these job descriptions will
outline exactly what is expected of each employee. This allows management to fairly evaluate the performance of
each employee.
We have put
together three metrics for maintaining performance standards within our
workforce. Like most companies,
AppUp believes that a well incentivized employee makes for a more industrious
employee, therefore, our metrics revolve around pay and the administration of bonuses
for all employees. The pay for
most employees will be comparable to industry standards. The developer and programmer positions will
have base pays higher than industry averages in order to attract the best and
brightest to AppUp. Second,
bonuses for every employee will be tied to customer satisfaction and quarterly
work reviews. For trainers this will
translate into having an average of 95% of clients responding as being very
pleased with the training provided. Customer service compensation will be tied
to a similar customer satisfaction rating based on responses from a short
survey offered to every caller.
For all other employees, performance metrics have been created to
determine the percentage of target bonus received. For programmers, work reviews based upon the amount of work
done, the quality of work done, and the amount of problems stemming from their
programming will be their guidelines.
Sales representatives will be paid and given bonuses based on the amount
of business generated, in terms of new clients added, and the number of users
tied to those accounts. In this
way our sales reps will have the incentive to sell our applications to larger
companies and push the boundaries of our clientele base.
Cash
Planning
AppUp expects three stages for growth in
the next three years, resulting in three stages of cash flow planning for the
company. The executive team,
consisting of the company’s owners, is committed to investing in the
company. Therefore, during the
first stage, the executive team will not receive any compensation. As the company grows, executive salary
increases to $35,000 and $55,000 for the following two years,
respectively.
AppUp will invest in upfront resources for
the initial development of the basic three modules. During the first year, AppUp will employ one core Senior
Developer, two Junior Developers, and two Contract Developers. During subsequent growth stages, the
company will eliminate the Core-Senior Developer position. Retaining the two Junior Developers
ensures AppUp at least one developer onsite at the same expense of one
Core-Senior Developer.
During the second stage, AppUp establishes
a 24-hours customer service team to service the increasing number of clients
and end-users. The budget for this
team consists of $132,000 for six employees divided into three equal shifts.
To save money during the first two growth
stages, AppUp rents server space from Rackspace. The company plans to acquire its own servers during the
final growth stage. By renting
servers, the company reduces maintenance costs and saves capital investments. By the third stage, AppUp expects to
hire three additional technicians for both server maintenance and
training. In addition, the company
also expects to hire three sale representatives.
For other office expenditures, AppUp will
rent a small, 500 square-foot office in a Class B building. This provides ample space for three
workspaces for the employed developers, plus a conference room to meet with
clients. The company will buy
minimal computer equipment for the developers and the executive team.
In additional to managing staff for the
company, the executive team is expected to sell the products, resulting in a low
advertising budget.
Organizing
The
executive team needs $325,000 in order to start AppUp. The company’s capital plan consists of owner-contributed
capital and loans. Each executive
team member contributes $25,000, totaling $125,000 for the company. The remaining $200,000 is borrowed from
a bank through the SBA or Small Business Administration guaranty. Loan terms are estimated at six percent
interest rate for five years, with $3,866.56 monthly payments.
Directing
AppUp’s executive team will assume multiple roles early on to reduce
costs. Each team member will be
both a sale representative and a department manager, responsible for
developing, training, accounting, and customer services. As the company grows, middle management
will be hired.
Control
AppUp’s
revenue goals are $250,000, $500,000 and $1,100,000 for 2015, 2016, and 2017,
respectively. The company plans to
control expenses by renting small office space, expanding only when necessary,
renting servers, implementing a deferred executive compensation schedule,
reducing workforce when unnecessary, and reducing advertising budget when
additional staff is hired. AppUp
aims to maintain lower costs to benefit clients and end users.
Operating Procedures
In order for AppUp to maintain a strong presence in the mobile and web
application industry, we must create and implement effective operating
procedures. These procedures will provide our team with the necessary means and
methods to set ourselves apart from the competition. Also, properly
implementing effective operating processes will allow our company to
continuously improve and provide value to our customers, our collaborators, and
our company. We must analyze our operating approach from four key perspectives:
planning, organizing, directing, and controlling.
First, our executive team must develop organized, advantageous methods
for planning our business operations. We will implement best practices,
procedures, and guidelines for ourselves and our employees to utilize
throughout all stages of business. These procedures will assure that the AppUp
team is providing the utmost in quality and customer service. The use of these
standards will also assist in maintaining a proficient, active work force. In
addition, we will conduct employee and client surveys to ensure our procedures
are meeting the needs of both groups.
Our firm will maintain an organized and efficient company structure.
The organization of this structure will evolve as our firm progresses. Each
member of our executive team will head the department of their respected
expertise. In order to maintain coordination and reduce uncertainties in
responsibility, we will provide occupation flowcharts. These flowcharts will
allow our employees to recognize their role in the broader picture, as well as
provide them with a career path reference.
The AppUp executive team must constantly evaluate company procedures
and confirm they are aligned with the overall goals and direction of the
company. Primarily, our goals must be well defined and realistic. We will hold
weekly progress meetings for each ongoing project to ensure our methods are
meeting the needs of the client as well as the project team. Also, the
executive team will hold monthly management meetings to confirm our company is
moving in the right direction in each aspect of our business.
Our company must also maintain controlled work processes and systems.
We will develop and continuously refine our self-evaluation metrics to ensure
our work processes continue to provide value to our customers, our
collaborators, and our company. The team will conduct internal audits
throughout each project, as well as a more detailed audit at the end of the
project to recognize improvements and lessons learned. These developments will
result in a more effective and efficient product delivery. We will also conduct
employee and client surveys to gain knowledge and insight about potential enhancements
at each stage of the project.
Assets
AppUp will
utilize its website, application solutions, and online servers to deliver a
cutting edge product to the customer.
We plan on hosting our products with Shopify, which will allow us to
increase the functionality of our site as we expand our services across the US
and abroad. Our server will be
hosted by Rackspace – a cloud-based server solution. They have a four-tier
pricing structure that will allow us to scale as our business grows.
We will not
have a physical location in the beginning. We plan on utilizing co-working space during startup to
develop our website, applications, and online server with our
collaborators. Once the framework
is built, we will utilize the co-working space as needed. Most of our employees will work
remotely, which will enable us to keep overhead low. As the business grows, we will evaluate securing a physical
location.
Our Chief
Technology Officer will monitor our assets daily to ensure that they are
meeting our customer’s needs. We
will generate weekly reports to ensure that our server capacity, applications,
and websites are running efficiently.
During the
development phase, our products will be required to go through various test
phases to work out any issues prior to release. The developers will be required to warrant their work for
one year after final version of our app is complete. We will keep key personnel on board to maintain the
apps. Copyrights of graphics,
source code, and computer programs will be owned by AppUp. Developers will agree to our terms
prior to working for us.
AppUp will
control the number of users that access our applications by issuing unique user
IDs to each user at each company.
We will perform periodic active log-in checks and ensure that our
applications can only be used on one device at a time. These controls will ensure that
companies are not duplicating user IDs amongst their employees. It will also help us to proactively
upsell to our customers when it is time to increase their offerings.
Appendices
Financial Proformas
REFERENCES
International
Data Corporation: http://www.idc.com/getdoc.jsp?containerId=prUS24314413
Forbes:
http://www.forbes.com/sites/louiscolumbus/2013/09/12/idc-87-of-connected-devices-by-2017-will-be-tablets-and-smartphones/
Gartner:
http://www.gartner.com/newsroom/id/2592315
Wall
Street Journal: http://online.wsj.com/news/articles/SB10001424127887323293704578334401534217878
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http://sixteenventures.com/sell-itself
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