The Best App Startup Growth Strategy For Each Business Stage

The world is full of great app ideas – unfortunately, very few of them will ever reach the App Store. Even with a great business plan, the vast majority of new apps are bound to fail. And for the very few that do manage to survive the first year after launch, only a small fraction will ever reach financial success. According to Gartner, less than .01% of consumer apps that were available in 2014 were expected to become a ‘financial success’ by 2018. Some apps die because they are simply just a bad product-market fit; but often, app startups fail due to the lack of a sustainable startup growth strategy.

Everyone makes a huge deal about apps that made millions in profit, but we rarely hear about the tech companies that are barely surviving. Ken Delaney of Gartner said, “…of paid applications, about 90 percent are downloaded less than 500 times per day and make less than $1,250 a day. This is only going to get worse in the future when there will be even greater competition, especially in successful markets.” What does this mean for you as an app entrepreneur? It means that to become a dominating app today, you basically need to be a unicorn; and to succeed at all, you must have a strong startup growth strategy that allows you to rise way above the competition.

What Is A Growth Strategy?

Let’s start from the basics. The definition of a growth strategy is a game plan for capturing a wider share of the market. For a more established business, this means diversifying product offerings, expanding into new regions and etc. A new startup however, must take a different approach to growth, first ensuring that they have built the right product and then identifying how to get even the first few users to their app. Another difference is, startups must rely mostly on internal growth strategies while established businesses that have enough resources can tap into external growth strategies for even quicker growth.

  • What is an internal growth strategy? An internal growth strategy refers to techniques that grow your business by relying on resources from within the business. These methods involve activities such as improving staff, optimizing marketing, and further developing the product offering.
  • What is an external growth strategy? An external growth strategy relies on external measures of growth such as acquiring another business or building a strategic alliance with another brand.

External growth strategies can allow businesses to grow rapidly, but in the beginning, startups typically don’t have the resources needed to successfully implement these techniques. Acquiring technology takes money that startups don’t typically have, and strategic alliances often require a strong brand awareness and a highly-defined product – other attributes that startups don’t typically possess. Instead, startups must implement the right growth strategies at the right time to first acquire early adopters; then to establish the business within the market; and finally to scale wide and expand rapidly.

Startup Growth Strategies for Establishment

While you may envision having a million users on your application, the truth is, securing just the first 1,000 users is quite challenging. In your eyes, the app you’re building may seem like the only solution for the customer problem, but it probably isn’t. Today, there are more app solutions on the market than there has ever been, meaning your consumer has options. According to data by Sensor Tower, by 2020, there will be over 5 million apps active in the App Stores.

When implementing a startup growth strategy, start by attracting enough early adopters to test your solution and ensure that you are building the right product for the market.

Identify Your Market

No matter how you choose to market or advertise your application, you will only succeed if you truly identify what market you are serving and who your consumer really is. One customer group may respond to your marketing efforts much differently than another, and the better you understand the customer – the more effectively you will be able to reach and serve them.

Here are a few ways to identify your target market:

  • Consider Your App’s Features: Think about the features that you are developing, and the benefits that relate to each of those features. Then, match them to the type of consumer that needs those benefits most. A productivity app startup for instance, may find that while they can serve a wide range of different businesses, web development teams would be most helped by the specific benefits that their features provide. With this insight, they can optimize their marketing campaign to attract this specific market.
  • Analyze Your Competitors: A thorough competitor analysis can provide great insight into which customer groups you should focus your attention on. On one hand, analyzing other apps with similar features will allow you determine what types of customers they are targeting and attracting. On the other hand, you may be able to find customer types that they aren’t focusing on – which may uncover market gaps that your team can take advantage of.
  • Develop Your Ideal Customer: Draw up a model of your customer. Give them a name. Write everything you know about them – where do they work, what do they read, how many children do they have, what is their annual income, who do they follow on social media, what type of apps do they download, what types of problems they face, and etc. Learn how they think and how they make purchase decisions. Identify what they don’t like about current products. Again – the more you know about your consumer, the better you will be able to reach and serve them.  
  • Justify Your Decision: After you have decided on a customer demographic and/or consumer group to target, perform market research to calculate how big the market really is. You will never penetrate the market by 100% and realistically, a successful app will likely only penetrate a small fraction of the total addressable market. If you were only able to secure 1% of your addressable market, would that be enough to sustain your business? Analyze your market thoroughly and determine whether there is enough value in your target market for you to continue to grow without limiting your ability to scale.

Find Early Adopters with an MVP

Launching your minimal viable product will allow you to test your software with early adopters for proof of concept. What is a minimal viable product? According to Techopedia, a MVP is “a development technique in which a new product or website is developed with sufficient features to satisfy early adopters.” In terms of your app, it means a stripped down software that only includes the features needed to prove that the concept is viable.

Instead of building a full-scale application with a large number of features, launch only the number of features that will allow you to validate your initial assumptions. Then, seek to bring in a handful of users and track how they behave. User behavior will give you the most valuable insight into whether your app solution is meeting the customer need in the way you expected.

How do you find early users? Here are a few tips to help attract early adopters to your solution:

  • Join Communities: The great thing about the internet is that like-consumers seem to find each other and organize themselves into awesome little communities. These communities are spread across different forums and even social media sites like Facebook and Reddit. The caveat is that these groups typically hate marketing spam cluttering up their discussions. Don’t approach these communities as a marketer, but become an engaged member of the group by asking and answering questions, and naturally interacting with other members. Once you become known as a valuable member of the community, it will be much easier to tell individuals about your application without seeming like an unscrupulous salesman.
  • Launch A Video: A great video has the potential to connect with the emotions of consumers and build wide scale anticipation for your app launch. Create an awesome video that showcases the features and benefits of your application and get it in front of potential viewers. In some cases, a video can be used to measure user interest before a single feature is even developed.
  • Social Media Ads: Social platforms like Facebook and Twitter allow you to get your marketing message directly in front of a targeted audience. Since you’ve already listed the demographics of your consumer, choosing the right audience to showcase your ads to should be simple. Continue to optimize your ads for better performance, and it will be much easier to get the ball rolling when you scale later on.

Track Metrics

Now that early adopters are downloading and accomplishing tasks with your application, it is important to track a variety of app metrics to best assess their behavior. Tracking metrics will give you the immediate data you need to determine whether your solution is a good product-market fit or whether it is necessary to pivot your solution. There are many metrics that will come into play at different stages of your business, but here are a few that you should be tracking from day one:

  • Number of Users: Is anyone downloading your app? Knowing how many users are downloading your app is the first measure of how well users are responding to your marketing message. If your marketing message is strong and you are showcasing features that truly serve your market’s need, you should be able to convert a good number of those who view your ads into downloaders. An app that is receiving little downloads (compared to marketing efforts) is typically either offering features that consumers aren’t interested in, or aren’t properly presenting valuable features in their marketing campaigns.
  • User Retention: It’s important that users are downloading your app, but it’s more important that you’re able to keep them around after you’ve acquired them. If you are successfully acquiring new users but they are only using the app once or twice before they delete it; this is a clear sign that an issue exists. This could mean that users aren’t satisfied once they download the app; or that they find it too confusing to navigate; or even that the app is too buggy for them to use effectively. The longer you are able to retain customers, the more value that you will be able to pull out of them in the long run.
  • Cost Per Acquisition (CPA): Acquiring new users doesn’t mean much if you are paying more to acquire them than they are worth. For instance, is it worth spending $50 to acquire a customer for a $2.99 app? Probably not. Tracking your cost per acquisition will keep you informed on what it costs to get a single customer to download your application. Once you have dialed in your marketing strategy and have created a great product-market fit, you should be able to improve marketing conversion; reduce your cost per acquisition; and increase your overall profit margin.

Develop Your Product

App development is never complete; and as you continue to learn more about your consumer, your app will morph to better serve the market. An app that never progresses in functionality will eventually reach a market plateau. Think about this – how many times does your smartphone notify you to update apps on your phone? Some of the most popular apps out there like Facebook and Instagram update regularly with new features and abilities.

Don’t make assumptions – use the data that you’ve collected in the previous steps to decide whether you are on the right path, or whether you should pivot your idea to serve your customer better.

Take Groupon for instance. When they first launched, the model was quite different than what it is today. Initially it was called “The Point”, and was a platform where people could get together to solve problems. After launching a simple WordPress blog and tracking user behavior, the founders realized that what people were really interested in – was grouping together to receive deep discounts on their favorite products and services. A pivot in strategy based on customer behavior data allowed Groupon to grow into the multi-billion dollar mega platform that it is today.

Product development is necessary across every growth stage. As you further develop your product, you will be able to attract more users, retain them longer, and acquire them at a lower cost.

Startup Growth Strategies

After a product has successfully passed through an initial stage of user testing and all immediate assumptions have been validated, startups can begin widening their startup growth strategy to increase user acquisition, consumer spend and internal capability. The following techniques can be used during this stage to bring an app startup to the next level.

Test Monetization Strategies

The only way to become a financial success as an app is to monetize users. Even ‘free’ apps must have some type of revenue model (like advertisements) to sustain and grow. There are several types of monetization strategies, and finding the right app business model is critical to your growth as a business. Here are a few models you can test to generate the most value from each user:

  • Freemium: A basic version of the application is offered for free, but users can access additional features by paying a monthly subscription fee.
  • In-app Purchases: The app can be downloaded for free, but some type of virtual goods can be purchased within the app. Mobile games often use this model, allowing users to purchase additional credits, coins or virtual items.
  • Advertising: Users can access the application for free, but advertisers are charged to display ads to these users.
  • Paid Apps: Users are charged an initial fee to download the application.

Optimize To Convert Better

It’s important to acquire customers, but what’s more important is being able to convert them into paying customers. Unfortunately, startups often don’t pay enough attention to or put enough effort into converting users into customers. According to HubSpot, for every $92 spent acquiring customers, only $1 is spent in converting them. If you can’t convert users into customers, it will be impossible to earn enough revenue to maintain growth. As is the case, it is vital to optimize conversions before scaling your marketing campaign; ensuring that you are growing your revenue potential as you grow your number of users.

While the technique you use will be specific to your individual business, here are several common ways that app entrepreneurs have effectively improved their conversion rates:

  • Free Subscription Trials: In some cases, freemium users may not upgrade to paid subscriptions because they don’t understand the value of doing so. Maybe they are able to fully satisfy their need just from the free version, or maybe they are just confused as to whether the upgrade is worth their money. Offering a free month of subscription will allow them to try the upgraded package with no risk, and access additional features without any payment. Apps that offer free trials acquire significantly more sign ups to their paid packages and typically have a much higher conversion rate than apps that do not offer a trial period.
  • Discounted In-App Purchases: For apps that sell in-app goods (like mobile games), offering limited time discounts is an extremely effective way of increasing conversions. Games that allow you to buy coins or credits for instance, are known to frequently push notifications to consumers during usage; offering a high number of credits for a discounted price – but only if you capture the deal now. Just like in a convenience store, consumers who engage heavily with mobile games are more likely to buy on impulse when a discount is involved. Furthermore, by offering a discount, you may be able to convert users who would not have purchased otherwise.
  • Pricing Optimization: In some cases, users may not purchase larger subscription packages simply because they don’t like the price. Optimizing your pricing is critical – charge too much and users won’t purchase, but charge too little and you may kill your profit margin. Run A/B tests on your packages, trialing different pricing structures against each other to find the ideal balance between customer value and price.
  • Feature Optimization: If users don’t find enough value in the additional features offered in upgraded packages, they’ll simply continue to use the free version. Consider the features that you are asking them to pay for, and the ones that you are offering for free. Confirm that there is a considerable value added each time the user upgrades to a higher package; and furthermore, verify that each upgrade helps them solve their problem more effectively than the less-costly or free packages.

Generate Referrals

One of the best ways to grow at any stage is to tap into the networks of your existing users through referrals. According to reports by Nielsen, 92% of consumers trust recommendations from family and friends above all other forms of marketing. No matter what your marketing message is, it is exponentially more effective when your consumer hears it from someone that they trust, as opposed to when they hear it from you as a marketer.

In today’s online world, users love to share – that is, if something is worthy of them sharing with their peers. Take advantage of this by offering user incentives for recommending your app to their friends, family and associates. Referral marketing isn’t just one of the most powerful methods of marketing, it is also the most fruitful. This means that by compelling your users to refer your app, you can acquire several new users for the price of one.

Build Your Team

Don’t underestimate the value of an awesome team. Great strategies bring in valuable users, but it’s the team that forms and implements the strategy. Take an objective and subjective look at your current team – and the skills that they possess. Compare existing skills to those that are really needed to push your startup forward. When you find gaps, fill them in with the right people. As a result, you will strengthen your team, build your internal capacity, and leverage the abilities of other specialists to get to the next level of growth.

Startup Expansion Strategies

At this point, you should have a large number of users, a proven product, a winning marketing strategy, an app business model that converts well and a strong founding team. Now, you should be able to access external resources to expand the application or launch it into new markets. Here are a few techniques that can be added to your startup growth strategy in the expansion stage.  

Secure Funding

If you’ve penetrated enough of your initial market with a proven solution – you’ll likely be in a strong position to secure seed funding from an angel investor. Write your app business plan, create an awesome pitch deck and network like crazy. Pitch your idea everywhere you can and to everybody that will listen. You never know who knows who, and ‘six degrees of separation’ is more real than you could ever imagine.  

Joining an app incubator is also an effective avenue to raise funds for your software business. In addition to funding, these entities also typically provide advice, office space and even connections with potential investors and customers within their network.

For more information, check out our article: The Best Ways To Raise Seed Funding For Your App Startup.

Build A Great Marketing Funnel

Unfortunately, not every consumer who needs your app will realize they need it the first time they see your marketing message. At the time they see an ad for your app, they may not yet need the solution; or may not realize that they need the solution; or may not realize that they need your solution. Building a great marketing funnel allows you to capture consumers across all purchasing stages and funnel the most qualified leads into customers.

startup growth strategy - marketing funnel

Fully examine each stage of the marketing funnel and determine whether your funnel best serves the customer at every step. Focus on on strengthening any weaknesses. For example, you may find that you are losing customers in the consideration stage, because when they search your app online they don’t find anyone talking about it. This may mean you need more press or that you need to showcase your app on more online outlets. As another example, you may find that users downloaded the app but often leave at the sign-up stage because the process is too lengthy or difficult. A strong app marketing funnel ensures that you are able to best serve a customer from the time they discover your app until the day they become a customer – and beyond.

Scale Your Business

Finally, you are in the position to really scale your business. With financial backing and a strong marketing funnel in place, your startup can leverage this foundation to grow even further — and even faster. There are several ways to expand an app business once it has been proven and validated, such as:

  • Seek New Audiences: Once you’ve successfully penetrated your initial target audience, start looking other market sectors that may benefit from your technology. Preferably, look for niche markets that your competitors are not serving – which will give you a major competitive and first mover advantage.
  • Penetrate New Locations: Many app startups have realized the extreme advantage in initially targeting one specific location. After you have figured out how to effectively penetrate one particular region, it is highly likely that you can duplicate the same strategy to quickly penetrate new locations. Seek locations that are similar to your launch region – locations where you can reach the same consumer demographic and attract them the same way you did previously.
  • Add New Features: Finally, as you are building your user base, you should also continue to seek opportunities to further monetize your existing users. By adding new features and functions to your technology, you can create new revenue streams and add more product value; enticing users to stay on your app longer, return more often, and spend more over their customer lifetime.

A strong startup growth strategy is integral to your success, and if the optimal strategy is followed, you will be able to set yourself apart from the dozens of competitors that you will likely compete against over your journey.

At ThinkLions, we have worked with hundreds of businesses around the world, helping them develop and implement startup growth strategies that win. If you have an awesome app idea or a soon-to-launch app, we’d love to help you develop a step by step startup growth strategy and business plan. Contact us today to set up a free consultation with one of our app startup experts.

Startup Valuation: What Is Your Pre-Revenue Startup Worth?

For a pre-revenue startup, calculating a startup valuation can be confusing and challenging. From the founder’s point of view, they have an awesome idea, a minimal viable product and some traction – and if you ask them, their app has the potential to serve millions of users and create billions of dollars in revenue. Ask a potential investor to evaluate the same startup, and they may see an unproven revenue model and a startup team that has little to no experience.

In the early stages, a startup’s true value is likely somewhere in the range of: lower than what a founder hopes it to be, and higher than what an investor is hoping to pay for a portion of equity. When revenue is not in play, there are many other factors that become more important to calculating a fair startup valuation, and many of these factors can be quite subjective.

What are these factors? When it comes to a pre-revenue startup valuation, what do investors look for? How do you secure an investment for your startup when you haven’t yet produced any sales? In this post, we want to find the answers to these questions and show you everything you need to know to prepare the best startup valuation when seeking investment.

Why Is Valuing A Startup So Difficult?

Negotiations between an investor and a startup can be tense. On one end, founders approach the situation hoping to raise the largest amount possible while offering the lowest amount of equity. On the other end, investors are looking for the best deal – invest the least amount of money and receive the largest percentage of equity. While these type of startup and investor deals make headlines, really they are no different than any other transaction – a seller wants the highest value for their offering, while a buyer wants the best product or service for the lowest price.

When investors invest in a company however, they are buying into the future value of a company; and using previous and current value to assess how high that future value may be. For an established company, investors can look at financials over several years and use historical data to predict the future performance of a company. Early-stage startups don’t have historical financial data though, and value must be assessed by examining other important factors. Investors have to be especially realistic about the value and potential of a startup; on average, 75% of venture-backed startups don’t make it far enough to return cash back to the investor.

There are many different elements that can be considered for a pre-revenue startup as a proof of potential; but really, which factors are most relevant and which are weighed most heavily is highly dependent upon the type of business itself. A social media app, for example, may be able to garner a high startup valuation solely off of a large user base – while a B2B SaaS solution may need to prove their potential by showcasing long durations of user sessions and a high percentage of conversions to paid subscription packages.

Through our discussions with several investors, CPAs and other financial parties, we’ve narrowed down the three most important factors for a high pre-revenue startup valuation – a strong founding team, proven traction, and a viable future financial projection. In the following sections, we will examine each of these factors, explain how they relate to value, and teach you how to strengthen these factors for a better startup valuation.

The Value of a Founding Team

For a pre-revenue startup, one of the greatest predictors of success is the strength and experience of the founding team. A team of founders that have a history of bringing other startups to success, for instance, would be more highly valued than a team of first-time entrepreneurs with little experience. Furthermore, a team of four people with diverse and focused skills would typically provide more value to a startup than a single founder team.

Mike Raab, investor at Sinai Ventures in San Francisco explained exactly why a strong founding team is so important when he considers investing in a startup. Mr. Raab explained, “At an early-stage company, the most important factor that investors consider is the startup team. Does the team have demonstrated success and experiences that make them uniquely qualified to build a venture-scale business in this sector? Ideas are frankly very common (there are often many different companies building similar products to solve the same problem), and investors look for the team that has the background and knowledge to perform and outlast the rest.

How strong is your founding team? Here are a few attributes of a valuable team:

  • Proven Experience: Investors want to know that a startup team has what it takes to succeed. Startup founders that were previously involved in other successful startups are immediately valued higher than founders with no experience. As an extreme example; if Mark Zuckerberg walked into an investor’s office, his reputation would most likely precede him. His past success with bringing startup ventures to the top would be extremely valuable to any new business he participated in. However, it’s not just those with a successful entrepreneurial background that are valuable to a business. A developer that had a significant position at a well-known software company may have an advantage when developing his own software. A successful financial manager may have an advantage when pitching a financial solution since he has unique experience within the industry. How one’s experience can benefit a specific startup is subjective – but experience plays a major role in the way an investor perceives the associated risk of a startup.
  • Skills Combination: A startup team should consist of several individuals, who each have a different but complementary skill set that can help progress the startup. A programmer with no marketing background may benefit from having another programmer as their partner; but the team could be much more effective if he/she partnered with an experienced marketing expert instead. Identify what skills are necessary to scale your startup and seek to fill in those gaps to increase your team’s overall value.
  • Commitment & Dedication: Having a great founding team means very little if none of the team members are actually available to execute the required work. For example, a developer that is involved in multiple projects may have very little time to allocate to building the software – and while they may be a valuable member, their involvement is devalued by their time limitations. Build your team with highly-motivated individuals who are committed to bringing the startup to success.
  • Advisory Board: It’s not just your founding team that is important, but value can also be found in people who advise the board when making important decisions. Experienced advisors can help startups avoid obstacles, help them make more informed decisions, and can even introduce them to potential investors or clients within their network. Look for mentors you can lean on – successful entrepreneurs, industry leaders, and individuals who have the knowledge to help you in your mission.

How much is an awesome team worth, exactly? Well, it’s not quite that clear cut. According to Ken Stalcup, CPA at Houlihan Valuation Advisors; it’s not the team itself that adds the value, but the revenue that those members can generate as a result of their experience. While telling us the process of calculating startup valuation, Ken told us, “We definitely consider the potential for the startup team, their experience, their expertise and so on. [However,] we wouldn’t typically associate a particular value for the startup team; rather, the startup team would be a factor considered when determining the potential growth and quality of future revenues. The better the team – the better the prospect for future revenues.”

Traction is Proof of Concept

When it comes to startup valuation, traction tells the true story of the business – and it doesn’t always come down to revenue. Mike Raab explained, “If a company can organically (without paid marketing) acquire a significant number of users, or demonstrate very low CAC (Customer Acquisition Cost) compared to the potential LTV (Lifetime Value) of the customer, the unit economics are more favorable for venture investors.” In other words, what really brings value to a startup is proof and evidence that an idea is viable and scalable to a large market.

Which metrics you use to prove effective traction will be specific to your startup; however some of the most important app metrics for startup traction include number of users, a proven app marketing strategy and a strong growth rate.

Number of Users

A solution that has acquired a large number of users (compared to the size of it’s addressable market) will have a higher valuation. By securing a large quantity of users, startups can prove that they are able to attract consumers, that users are satisfied with their product, and that there is an existing network that can be monetized.

What does a large number of users look like in solid numbers? Obviously, it’s not that simple. The goal is to penetrate the addressable market, but not all markets are equal in size – and therefore, what seems like “many users” for one app solution, may seem like very few users for another. For example – A solution that serves a large portion of the market, like a social media app, may need 100,000 users to make an impression; while a B2B solution that monetizes consumers with a monthly subscription may be able to show exceptional traction with only 500 paying users.

Having a large user base is a major accomplishment, but what really matters is how those users behave once they have downloaded your application. A million users sounds amazing if that is the only information given – but is it still amazing if 998,000 of those users never returned to the app after using it once? In this situation, having a large user base actually hurts value and shows that a major flaw exists. When considering the number of users during your startup valuation, consider the whole story by analyzing a variety of user metrics such as user retention, daily and monthly active users, session length and more.

In terms of the value of a user base, Ken Stalcup commented, “The value of current users is similar to the overall value of the company. That is, we typically want to see a projection of the revenues associated with the existing users. From there, annual cash flows from current users can be calculated and a present value can be associated with that income stream. Obviously, as [the number of] users grow, there will be more value. If users are anticipated to decline, value will decline.

Effectiveness of Marketing

As Mike Rabb mentioned, a startup that has proven its ability to acquire high value customers at a low cost has a major advantage when seeking investment. Even if current users have not yet been monetized, showing that a strong marketing strategy has been identified and optimized has the potential to increase startup valuation significantly. Taking a small marketing budget and generating a substantial number of users (in comparison to acquisition costs) proves that with a larger budget, the startup would be able to scale its user base exponentially with little risk.

Growth Rate

What makes a large existing user base even more attractive? Knowing that it’s going to keep growing and growing in the near and distant future. A history of incremental scale and growth, even if small, can add considerable value to your startup. If you can grow consistently with a small budget, the potential is great that you will be able to scale larger and at an accelerated pace with the investment of an angel or VC.

Here’s the key to gaining traction. These three concepts are interconnected – a super effective marketing strategy leads to strong growth; and when your growth is strong, your user numbers inevitably increase. Figure out the first things first – build a great solution that is in demand by your market and learn how to get it in front of your consumers at a low cost.

How Valuable Can Your Startup Become?

While there may not be a hard monetary value on each of the factors we explained, all of them fit into the overall value of a startup. Hard metrics like number of users, customer acquisition costs and per customer monthly spend can be directly accounted for in a financial projection – but intangible assets like founders’ experience provide a measure of confidence that the projections can actually be reached, and this is equally as important.

Ken Stalcup gave excellent advice into how his firm typically calculates a startup valuation: “To put a value on a tech startup, we would typically want to see a five-year projection of the company’s future revenues and expenses. Using those projections, we would develop an estimate of the annual cash flows, add all of the estimated annual cash flows together and calculate the present value of that total number. Pre-revenue startup valuation is accomplished by calculating the present value of the estimated future income stream of the company.”

The Perfect Mix For The Best Startup Valuation

What does a valuable pre-revenue startup look like to an angel investor or a venture capital firm? Mr. Raab explained why his firm, Sinai Ventures, recently decided to invest into a startup called Kapwing“In July, Sinai Ventures invested in Kapwing, a free software tool for intuitively creating and editing video content and memes. While the company had some revenue, it wasn’t of material scale. However, the co-founders had a clear product vision and had built an impressive user base completely organically in just a few short months. Their backgrounds, traction, and expertise & excitement about what they were building made it an easy decision for us to invest.”

When a startup gets funded at a high startup valuation, it’s typically because they have the perfect mix of positive elements that prove the likelihood that the startup will succeed and generate a substantial return. When you can easily prove that your startup possesses all the pieces needed to achieve grand success, the value of your company will increase and you will be better able to calculate a fair financial ask and equity offering.  

Mr. Raab gives the following advice for startups that are seeking investment at the highest valuation: “Get your product in front of customers, get their feedback, and iterate until you have customers who love your product. Product-market fit doesn’t necessarily mean revenue – it means demonstrating that there is a core user for your software who loves what you’ve built and is willing to pay for it (in one way or another). If you have customers willing to provide reference calls on your behalf to tell investors why they love your product, why they’re willing to pay for it, and why it’s better than the competition – investors will take notice.”

Need help creating financial projections to better assess your startup valuation? Our experts can help. At ThinkLions, our business plan writers and consultants have worked with hundreds of startups around the world – creating app business plans and pitch decks that have helped raise millions of dollars in investment. Contact us today to discuss how we can help you bring your app startup to life!

How To Come Up With The Right Name For Your App

For most of us, our name existed even before we did. In anticipation of our arrival, our parents went through an ultra stressful process of narrowing down dozens of potential names until they chose the perfect one. Luckily they did, because whatever your name is, it has followed you throughout your entire life; and in some cases, people may have heard of your name before they’ve ever met you. When it comes to how to name an app, it’s of similar importance as naming a child. The name of your app will follow your brand forever, and in many cases, potential users will hear the name before they ever actually use your app.

Naming an app isn’t as easy as it sounds – and knowing how to name an app effectively can separate your app from other competitors. Sure, “Google” sounds cool now, but 20 years ago, who ever would have imagined that it would be a name we use every day? Now, when someone says “Google”, everyone around the world knows exactly what it means. The name overcomes language barriers, age barriers and every other barrier – no matter where you are in the world, “Google” is a name that everyone knows.

But how do you come up with such a clever name for your interesting app? How do you choose a name that sticks like Google, Facebook, Twitter or Evernote? To inspire you to create a name that really represents your app, we talked to several app developers and entrepreneurs, and asked how they came up with their app names. If you’re wondering how to name an app, here are the tips you need.

1) Reflect Your App’s Core Features

Many successful apps choose a name that describe what the app does. Just by hearing the name, you know that WeChat is a messaging app or that Netflix has something to do with video on the net. Sometimes, users will judge your app immediately based off of a first impression and without reading your app description – having a name that explains the features of your app can give you a major advantage in these cases.

Brian Swanson, co-founder of Inspironto, told us the story about how his founding team came up with the name for their app, QuestionAir:

“We were talking about how fast the app sends questions from the poll manager’s iOS device to the respondent’s smartphones (because it doesn’t depend on backend servers). Someone said it felt like we were sending questions through the air – and that’s how we came up with the idea to call it: QuestionAir.”

The name of your app doesn’t have to be extremely clever. Sometimes, clever can be complicated. A simple name is easy to remember, and makes it easy for consumers to understand what the app is all about. Ionuț Mănășturean, the founder of Mini Games told us, “The name of our app, Mini Games, is simple and easy to remember. I picked this name because I wanted to express that our app has many mini games to play. When we looked at our competition, we realized that the first ranking app for the ‘mini games’ keyword was an app that was only in Russian. I saw this as an opportunity, so I began working on an English mini games app. As a result of choosing the right name, our app is now ranked first for the ‘mini games’ keyword in the app store.

2) Differentiate Your Name With A Play On Words

Sometimes, a play on words can provide you with the perfect app name. Take the app, Free Map Israel. This crowdsourced map application changed their name to Waze in 2008; a play on the word ways, which was perfect since the app represents the vast number of ways that an individual can get to a specific location.

Aggrey Ellis, Director of Customer Experience at Gopher Leads, shared with us the backstory of how their app name was created. He said, “We created a simple mobile app that allows employees to earn extra rewards by referring sales and other opportunities to their company. Gopher Leads, sounds like ‘Go For Leads’, as we try to convince employees to rally around and ‘go for’ sales.

Maybe you can’t get the exact word that describes your app, but differentiating slightly can give you a memorable twist and open you up to more options. There’s a caveat here though, if you get too creative, you may make it harder for users to find your app. If users are searching for Ways, it may be difficult to find Waze if they don’t remember that the spelling is different.

3) Keep It Short and Memorable

A long name with several words and many characters is an surefire way to ensure that users forget the name of your app. Ideally, you want a short name with a minimal number of characters that is unique and memorable. Skype, SnapChat and Tinder are all billion dollar apps that have short and memorable names. Not only are these names easy to remember, but they are also easy for users to communicate when recommending them to their peers.

Yusuf Motiwala, founder and CEO of Mesibo, told us about how he came up with the name for his app. He told us, “We were trying to come up with a name for our new messaging startup, the requirements being – it should be unique, easy to pronounce and spell, have association with messaging, be one word and less than eight characters. As simple as that sounds, finding a name with those criteria became an almost impossible exercise. Despite extensive days of brainstorming, we were unable to come up with a name that was convincing and that met our criteria. One day, one of us suggested that since we have both voice and video as core features; we should think ‘beyond messaging’ to search for a name. This became the tipping point in our search for the right app name. The name ‘Mesibo’ was derived from picking letters from the phrase ‘Messaging and Beyond’.”

4) Make Your App Name An Action Word

While these words may not be in the dictionary, we all know what it means when someone says “Google it” or “Skype me”. In many cases, you know you’ve reached success when the name of your app becomes an action word. One major tip when learning how to name an app – consider how your app sounds in everyday speech and how it flows with normal language.

Lori Cheek, founder and CEO of dating app, Cheekd, has a funny story about how she came up with her app name. Lori told us, “Growing up with the last name Cheek was kind of a pain in the butt (excuse the pun), but it finally came in handy. For weeks, I was racking my brain about the verb that was going to finish the statement, ‘You’ve Been ______.’ and then one day it hit me. You’ve been ‘Cheekd!’ The word is now in Wikipedia and the funnier thing is that a few years ago, I was on ABC’s Shark Tank… my epic episode re-airs all over the world all the time and I recently got this random email: “Did you ever wonder how different your life would have been if your last name was Smith… or Johnson… or Bennett?’ and yes, I have!

5) Choose A Name That Is Searchable

Sometimes, a name can be chosen because it fits the entrepreneur’s goals for marketing and customer acquisition. Consider the fact that 63% of smartphone users discover apps through the app store; searching specific keywords to find an app that solves their customer problem. Since such a large portion of downloads are a result of searching, it is a wise decision to choose a name that aligns with the keywords that are being searched. For example, the app LiveAuctions aligns perfectly to what consumers are likely searching for – live auctions. Not only will they likely rank higher than other auction sites that have less-aligned names, but customers will know exactly what the app is about as soon as they read the name.

Newaz Chowdhury, the Marketing Manager at Powerphrase, recently told us how they came up with the name for their mobile game – Trump’s Great Wall of America. Newaz said, “When you pick a name for an app, you want to make sure it has keywords that people are searching for in search engines and the mobile app stores. For us, we looked at our competition to see what apps were showing up when you searched particular keywords. We found that the words ‘Trump’, ‘Great Wall’ and ‘America’ all had significant search volume. As a result, we chose our name. This was also around the time when Matt Damon’s movie, ‘The Great Wall’ released – and as an additional benefit, ‘Great Wall’ is also an extremely popular search term in China. As a result, we received a spike in downloads from China and elsewhere – leading to consistent traffic and downloads.”

6) Align It With A Domain

Most likely, you will want to have a landing page that corresponds with your mobile app. Try to choose a name that is available, but that also has the same name available as a web domain.

Saurabh Jindal, founder of Talk Travel, told us about how domain availability factored into his decision for an app name. He told us, “TalkTravel is a voice mobile application that enables travellers to speak, in their own preferred language, to destination experts. For us, we wanted to convey the idea of travel and talk to make travel simple. We also wanted something seemingly easy to remember and that sticks in people’s mind. It came down to a choice between Travel Talk and Talk Travel; but, the Travel Talk website domain wasn’t available. Hence, we decided to go with TalkTravel.

Patrick van der Mijl, co-founder of Speakap also chose their name as a result of domain availability. Patrick told us, “It was a rainy Sunday when we did our research for a business name eight years ago. The choice for ‘Speakap’ boiled down to domain availability; our criteria was that the name had to be short, simple, and related to communication. Speakap made sense, because we enable employees to be heard.

7) Pick The Obvious Name

Sometimes you don’t need to choose a name, because the right name may just choose you. Tasker, for instance, probably didn’t put a whole lot of thought into creating a unique name – Tasker made sense and is a pretty obvious choice for an app that helps you manage tasks. Likewise, theScore is a pretty obvious app name for a sports score app. In many cases, the obvious choice fits the criteria of many of the previous tips – it will likely reflect your core features, it’ll likely be searchable, and if it truly the obvious choice, it’ll also be memorable.

Cody Swann, CEO of Gunner Technology, told us the story of how the name of his app uConsent came to be. He told us, “uConsent is an app that acts as a digital handshake between two people and is designed to foster interpersonal communication around sexual intimacy while creating an anonymous and secure record of that communication, including location, time and specifics of the request. In this case, uConsent was an obvious choice. In fact, most of the time the name is obvious if you think about it long enough, but it’s important to let the name produce itself naturally.

8) Connect With Your Consumer’s Emotions

There’s something about a name that pulls on our heartstrings or evokes a certain emotion from us – and when it comes to how to name an app, an emotional name may give you the edge that you need. Take MyFitnessPal, for instance – it’s not just another fitness tracking app but it’s also your pal; someone you can depend on to hold you accountable to your fitness goals. Family Locator, is another app name that immediately pulls on the emotions of users. It immediately makes you think of the possibility of not being able to locate your family and gives you immediate incentive to download.

Zach Hendrix, co-founder of GreenPal told us a similar story of how they came up with their app name. Zach told us, “We wanted our mobile app’s name to invoke a personal response from our users. When you are looking for a lawn care service, you usually ask a friend or family member for a recommendation. So we decided to combine the color of green grass with the feeling of getting a recommendation from your friend, or family, or your pal. After brainstorming for weeks, we landed on GreenPal and it has stuck.

The Most Important App Naming Tip

While all of these tips are extremely important in learning how to name an app, here’s one tip that’s more critical than all the rest – make sure your app is as good as your app name. There’s nothing worse than clicking upon some really awesome sounding app, only to be disappointed by a not-so-awesome software solution. When you choose your great app name, make sure it truly represents a great app.

As always, we’re here to help you build awesome apps. We’ve helped dozens of startups around the world to develop innovative and market leading technology – and we’d love to help you introduce your app idea to the world too! Contact us for a free consultation with one of our app startup consultants to learn about how we can help you bring your app idea to life.

11 Ways To Ensure
A Successful App Launch

To the masses, it may seem like successful apps just pop up one day and achieve magnificent success without much effort. However, anyone who has ever launched an app before knows the truth – a successful app launch takes serious work and getting people to your app is not easy.

While a great app idea may start at a hackathon, most apps aren’t built overnight… or in a week… or within a month. According to a study by Goodfirms, it takes an average of 3-5 months to fully build out and launch a mobile app. Why does it take so long? An app launch doesn’t just rely on how quickly your app developers can code it – but also includes many other steps like customer research, concept validation, pre-launch marketing, and more.

To build a successful startup and experience a strong app launch, there are many factors that need to be in place before, during and after you push your app to the app stores. If you’re just starting development today, you’ve got at least 90 days to get everything together before launching. In this guide, we’ll guide you through each step that you need to take as you approach the day of your app launch.

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Phase I – 90 Days Before Your App Launch

Three months before the official day of your app launch, you should already be setting the foundation for a strong launch. More specifically, you should be focused on validating your app idea and laying the groundwork for your marketing and branding.

Validate Your Assumptions

Before taking on the expensive journey of building a new piece of software, it is critical to validate your concept; proving that there is actually a market experiencing a specific problem, and that your product is the solution that the market is looking for to solve that problem. Not every app startup will change the world like Facebook or Uber, but there are thousands of highly successful apps that simply solve a small problem for a large number of users.

True market disruption comes when a founding team creates an app that solves a problem that no other solution exists for. However, you don’t have to be the first to market to succeed as an app startup, you just need to solve the problem better or more effectively than other competing solutions. Consider how some of our favorite apps solve our largest problems:

  • Uber solved transportation problems for citizens, making it easier to procure a ride without waiting on a taxi. Furthermore, Uber made it simple for the average person to earn extra income by monetizing their automobile and free time.  
  • AirBnb simplified the property booking process by giving easy access to short-term rental options outside of the traditional hotel. Furthermore, it made it easy for property owners to earn an income without a long-term tenant, by monetizing their property through the platform.
  • Tinder didn’t solve a new problem. Online sites like Match were already leading the market – but they were expensive to use and was a huge commitment for the average person looking to casually date. Tinder made it easy for singles to mingle with other singles by literally bringing dating right to their fingertips. A simple swipe of the screen can generate a new dating relationship without the huge monthly commitment of other dating solutions.

Believing that your concept is the best solution for your market isn’t enough. Your ‘belief’ can quickly lead you to blowing through your development budget only to find that your audience doesn’t believe in your solution as much as you do. There’s something that’s better than great assumptions – validation through real data. No matter what, you will validate your app – you’ll either validate it early on, or you’ll use all of your resources to build it and then validate that there is a major flaw when no one downloads it. Successful apps are able to validate their assumptions early on and pivot where necessary to ensure that they are building the type of solution that is truly in demand by users experiencing a specific problem.

There are several ways to validate an app idea, including:

  1. Smoke Tests – The purpose of a smoke test is to determine buyer intent as cheaply as possible. In practice, a smoke test gives the impression that there is a product to be purchased, even when the product hasn’t actually been built yet. An example of a smoke test could be a landing page that explains the functionality of an app, displays several design screens and allows users to ‘purchase’ a subscription. The ‘smoke’ part of the test is that there is no product to be purchased, because it doesn’t yet exist. This allows startups to test how many people would be interested in the application if it already existed; giving them immediate clarity on whether it is worth it to go forward in building out their app concept. Smoke tests can be built and executed rather inexpensively, but can provide an incredible amount of insight to make your app launch more successful.
  2. Crowdfunding – Platforms like Kickstarter and Indiegogo give startups the opportunity to pre-sell their product or service and raise the funds to build it. Pre-selling is a great way to prove demand for your app before it’s official launch. App startups that are able to crowdfund successfully have an additional advantage since they are usually able to generate enough capital to build at least an initial minimal viable product (see below), are able to build strong brand awareness, and are able to sign up thousands of customers months before their app launch.
  3. Minimal Viable Product (MVP) – Launching a minimal viable product is another excellent method for proving your concept and validating your assumptions on all aspects of your application. A minimal viable product is a stripped down version of the product that only includes enough features to satisfy early users. In terms of apps, a MVP will be a real and launched application, but stripped down to only its core features. This allows developers and app startups to launch their software quicker and with a smaller budget, but be able to attract early adopters in order to generate insights and feedback. Instead of spending tens or hundreds of thousands of dollars to build a full-featured app that may or may not succeed in the market, an MVP only includes very few features to test interest and usage behavior before developing further features.

Lay The Groundwork for Branding & Marketing

Marketing is critical to the success of any startup, and you don’t actually need a launched product to start communicating with your audience and building brand awareness. If your plan is to wait until your app is already on the market before you decide to begin building the foundation for your branding and marketing, you will be seriously behind the ball on the day of your app launch.

Ninety days before your app launch, take the following steps to build a strong branding and marketing foundation:

  • Buy a domain and launch your website: At some point, your app will need a website, and the sooner you launch a site that explains the features of your upcoming app, the quicker you can start building up anticipation from potential users. A website for your app gives you many benefits – you can offer pre-registration, showcase demos of your application, generate feedback and use it to launch a content marketing campaign. Furthermore, setting it up early ensures that you align your app name and website domain.
  • Create all your social media handles: Marketing through social media is one of the most effective ways for app startups to reach their audiences. Lay the foundation by creating all of your social media handles on the various social platforms such as Facebook, Twitter, Instagram, Pinterest, Reddit, and others. Even if you don’t think you’ll use a certain platform, having your app’s handle there ensures that if you ever change your mind, you will already own the appropriate handles.
  • Become part of the community: If you know exactly who your target audience is, it isn’t hard to find them. In many cases, your audience has probably already organized itself into a community on a platform like Facebook, LinkedIn or Reddit. Become active in these communities and groups; but don’t start immediately advertising your app and annoying everyone. Instead, engage with them – answer their questions, get in on the action, learn about their likes and dislikes, and identify their complaints about your competitors. These groups are a highly valuable source of market research, and after you establish yourself as an expert; advertising your solution will be perceived as an expert recommendation instead of an annoyance.

Phase II – 30 Days Before Your App Launch

If you’ve been building your app according to lean startup principles, you should have some core product built for testing with early adopters – even before the full app that will be launched to the public is completely developed. Thirty days before your initial launch, you want to start testing your software to validate your assumptions and kicking off your marketing plan. Here are several steps that should be taken a month before your app launch date.

Submit MVP To The App Store

Even though your full-version app may not be ready, you should still submit your minimal viable product (core-features only) to the appropriate app stores. Be sure to take a look at all the guidelines for both the Google Play Store and the Apple App Store to make sure your app meets their submission guidelines.

Why submit your app 30 days in advance? There’s a chance that your app may get rejected by either store. If this happens, you’ll have a 30 day buffer to make the necessary changes and get it resubmitted before your app launch date arrives.

Invite Beta Users For Testing

After your app has been successfully submitted to the appropriate app stores, launch it in beta – an initial private launch that allows only invited guests to access, download and use the application. Fortunately, both app stores (Google and Apple) allow developers to invite users to test their apps before officially launching it.

Don’t launch your app without beta testing it first. A beta test is basically a dry run that allows you to test each feature, discover any bugs, and gain valuable feedback from your users. Furthermore, it will help you identify any final improvements you need to make before the official launch and will help you earn some initial reviews.

How do you find initial beta users to invite? If you’ve completed the previous steps, you’ll already be in the right position – you will have a list of pre-registered users from your website, as well as an expert presence in several communities and groups. People who need your solution will be more than happy to be invited as a beta user, you just have to let them know that the opportunity exists.

Kickstart Marketing Activities

What does a failed app launch look like? It’s when you’re anticipating your launch for a whole month, and then on the day you launch, not a single user downloads your app. It can be a depressing day for those who are not prepared. Due to this, it is essential that you kick off your app marketing activities early on to start building up brand awareness and anticipation throughout your market. Here are three marketing activities you can focus on thirty days before your app launch:

  1. Create Marketing Materials: Ideally, you want to have strong marketing assets ready to go on the day of your app launch. It takes time and effort to optimize a marketing campaign for ideal conversion, and time will be wasted if you wait until the day of your app launch to start producing your marketing materials. Focus on high converting assets like the content for your app’s website landing page and creating engaging promotional or explainer videos that will draw interest from consumers.
  2. Develop and Market Your Content: Many app startups fail to take advantage of one of the most effective marketing strategies out there – content marketing. Developing great content has two major advantages. First, it allows you to establish your brand as a leading industry expert. Second, if optimized correctly, content can help you rank for important keywords on search engines like Google, which can drive organic and free traffic directly to your application.
  3. Optimize Your App Store Listing: According to Forrester, 63% of apps are discovered through app store searches. Just like ranking on Google, ranking highly in the app store can bring significant traffic at no cost. Optimize your app listing using ASO best practices to ensure that potential users can find your app when they are looking for a great solution.

Phase III: 7 Days Before Your App Launch

A week before your app launch, you want to start building anticipation amongst your audience. When users are excited about a new app release, they will rush to download it as soon as they are able to. Facebook, for example, first launched to a single university, and slowly spread university to university. Each university knew when it was coming and students anticipated the day that they could join in on the platform that all of their friends at other universities were talking about. As soon as Facebook opened up to a university, it was quickly adopted by a large portion of that school’s student population.

Likewise, you want to build anticipation for your application and get the word out that your app launch is coming soon. Here are a few ways to start spreading the buzz about your upcoming app launch:

Build Strong Media Relationships

One of the quickest and most effective ways to gain the trust of an audience is to gain the trust of people that they trust. Sure, you can acquire customers by persuading them one-by-one; but media and influencer relationships allow you to immediately reach pre-existing networks with the backing of a credible source. Building strong media relationships can be a difficult task, and it takes some practice to learn how to reach out to influencers and journalists successfully. Many businesses choose to hire Public Relations agencies who already have contacts so they can gain coverage sooner. Whether you hire a PR agency or choose to do it yourself, here are a few tips to getting your app mentioned by the right people, shortly before the day of your app launch:

  • Contact Influencers –Look for individuals that influence your market; whether they are on Twitter, YouTube, Instagram, or anywhere else. An influencer is someone who possesses enough power to sway the purchase decisions of individuals who follow them. ‘The Oprah Effect’ for example, is a phrase that was coined to explain the influence that Oprah Winfrey had over her viewers for the last couple of decades. A simple mention on her show immediately transformed never-before-heard-of businesses into multi-million dollar brands. Maybe you can’t reach Oprah, but there are thousands of influencers out there from social media influencers to published industry leaders. Identify who these influencers are in your industry. They may not have millions of followers, but even someone that can influence several dozen people to try out your app may be valuable to your mission. Contact them and introduce them to your software. Offer them a free trial or invite them to your beta, and ask them for their feedback. If they like it, they may mention your app on their blog, podcast, youtube video, or even just share it with their social media following – providing you with valuable exposure.
  • Pitch Your Brand Story To Journalists – Brands need their stories exposed, and journalists are always looking for great stories to write about. This creates a mutually beneficial relationship between entrepreneurs and the media. However, a great story has to really be extraordinary – nobody really cares about a new app that no one has ever heard of. Instead, find the parts of your story that really matters. Do you have a fantastic founder story or some never-before-seen industry data that would be interesting to those in your industry? Find the angles that give the most light to your business and pitch it to journalists that write for the publications that your audience read. The amount of exposure you can get a week before your app launch will directly relate to the number of downloads you can expect on the day you launch.
  • Showcase Your Expertise With Guest Posts – Many blogs also often look for new and interesting content that they can expose to their audiences. Identify which blogs are most popular among your market, and offer to provide an expert article to that blog. By guest posting articles on popular blog sites, you can directly reach large established networks that may have been impossible to reach previously.

Setup Analytics and Tracking Software

The day of your app launch, you’ll need to start measuring KPIs and tracking app metrics to analyze how your software is performing. Without the right software in place, you will be unable to collect the metrics needed to optimize your strategy and progress the success of your application. There are many metrics that can be tracked, and here are some awesome analytical tools that you can use to measure your app’s performance:

  1. Flurry is an analytics tool that allows you to measure how many users you have, what actions they are taking when using your app, and what pages they are dropping off at. Furthermore, Flurry provides a report any time there is an error or crash; and allows you to track revenue, sales, events and other important metrics.
  2. Apple App Analytics is Apple’s developer analytics tool. This tool offers in-depth reports on the performance of your app store listing, gives you an overview of your user engagement metrics and provides detailed reports on crashes and bugs.
  3. App Annie allows you to easily access an in-depth analysis about your app’s performance over any period. You can measure unique metrics like the performance of your keywords, your position on store charts, cross-app usage and much more.

In addition to your app tracking software, it’s also a good idea to make sure you are subscribed to and setup with all relevant marketing software as well. If you’re using apps like Mailchimp, Squarespace, Buffer, Unbounce, ActiveCampaign or another marketing software, ensure that your subscriptions are up to date and that your marketing materials (like email marketing scripts) are already put together and ready to send.

Decide On A Monetization Strategy

Apps can be expensive to grow over the long run. While some app startups turn to investors for funding, many successful app startups are able to sustain their initial growth through earned revenue. How much you charge for your product or service – and how you charge – depends on what your app is, how it works, and how much your audience is willing to pay. For example:

  • Minecraft and Afterlight are successful apps that charge up-front for full access to the application.
  • Headspace and Evernote rely on a subscription model, requiring users to pay a monthly fee to access and operate the software.
  • Fortnite and Pokemon Go rely on in-app purchases to earn revenue and monetize their users.
  • Social media sites like Facebook don’t charge anything to users, but instead, charge advertisers to promote ads directly to their users.

According to statistics however, the most successful model for most apps is the freemium model. With this monetization approach, users are able to access a basic version of the application for free; but if they want to access additional features, they must upgrade to a premium monthly subscription. This model allows developers and app entrepreneurs to capture a broad audience and transform a handful of these free users into paid customers.

For more information about monetizing your mobile app, check out the article, “How To Identify The Most Profitable App Business Model”.

Phase IV: The Day Of Your App Launch

One of the most important days as an app entrepreneur is the day of your app launch. If you’ve taken the proper steps so far, you will start receiving downloads immediately. The day of your app launch, there are two major steps you should take – announcing your launch and measuring your app metrics.

Announce The Launch of Your App

Remember a month ago when you started interacting in different social communities and built a widespread email list of interested consumers? Today is the day you can finally take advantage of the relationships you have built. Announce the launch of your app on your social media pages and send an email out to your list. Remind them of the benefits of your application and provide them with a link where they can access your software immediately.

Furthermore, send out a press release and a link to your app to reporters and influencers that you have built relationships with. Invite them to download the application and encourage them to share it with their audience. Influencers have power, and this power can give you a major advantage. Offer influencers an incentive to check out your app; maybe consider giving them free access to a premium package or some initial credits for in-app purchases.

There is much benefit in driving traffic on day one. Apps with promising traction can end up in the “New and Noteworthy” or “Trending Apps” categories; making it quickly visible to millions of users.

Start Analyzing Your App Metrics

Since you have already decided which metrics you need to track and have setup the right software to do so; now you need to start actually analyzing these metrics. At minimum, on day one you should begin measuring your number of downloads, active users and engagement metrics like Daily Active Users, Monthly Active Users and Number of Sessions Per Day.

Furthermore, stay in tune with customer feedback and seek to quickly identify any bugs, crashes or weaknesses on your app. Users can be unforgiving towards an inconsistent app that is heavy with bugs. Software isn’t always perfect, but quickly identifying and fixing any bugs will be critical to establishing an exceptional user experience.

Phase V: App Success For The Long-Term

Assuming you’ve accomplished each of the previous steps, you will now have a strong foundation for a successful mobile app. The final step is to grow your user base and scale frequently; converting users into paying customers and earning a substantial profit. But how do you get there? Here’s a couple tips:

  1. Analytics Tell The Real Story – Your app metrics will always give you the real story on how well your app is performing. Just having downloads isn’t enough – over time, it’s also important that you know how well you are converting these users into customers, how much each customer is worth, what your Net Promoter Score is, cost per acquisition and more. The more that you understand your app metrics, the better you will understand your users; and the more you understand your users, the better you will be able to deliver them the most effective solution.
  2. Keep Your Users Happy– Always pay attention to what users are saying about your app in your reviews, on social media, and online. Sometimes you will have an unhappy customer (or ‘detractor’) that may say negative things about your solution. Every app has a few dissatisfied customers, but if you see a pattern of many users complaining about the same thing then it may be a sign that you need to quickly make changes to better serve them.
  3. Never Stop Promoting – Always continue to improve and optimize your marketing campaigns. Continue building strong relationships with influencers and media; continue to interact with consumers on social media; and continue to optimize each technique for better performance. As you scale, your marketing strategy will become even more important.

The day of your app launch will either be a major success or a major failure, but if you follow these tips effectively, you can almost ensure that you will receive at least some positive traction on your first day of app launch.

The first step to launching an app is actually building one, and we’d love to help! Our team of startup experts and app developers know exactly what it takes to bring your idea to life. Contact us to setup a free consultation today!

Want To Learn More About Building A Successful App Startup? Check out these articles:

The Most Important App Metrics
To Track For Startup Success

The great baseball legend Yogi Berra once said, “If you don’t know where you are going, you’ll end up someplace else.” While this lesson is applicable across almost any area of life – it’s especially critical in app development. Here’s the caveat; while an end goal is of critical importance, what is equally as important is being able to track the performance of this goal so that you clearly understand whether you are actually moving closer to that goal or pushing further away from it. While tracking performance for most businesses can be challenging for many businesses, app startups have an advantage – tracking app metrics is quite simple if you know what to track and what to look for. 

Unfortunately, many apps fail and there are definitely more failures than successes. Successful startups heavily assess the metrics associated with their application so that if something isn’t performing as expected, they can catch it quickly and bring it up to par. For many ‘failed’ apps, only a few numbers are given consideration – especially traffic and revenue. While these factors can give some insight into an app’s performance, high traffic and revenue alone doesn’t mean your app is succeeding. Consider these scenarios and whether they truly identify a successful startup situation:

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  • App “A” receives 50,000 new downloads every month, but only 1% of them visit the app a second time.
  • App “B” earns $100,000/month in revenue; more than most app startups. However, they spend $110,000/month on advertising.
  • App “C” has a download rate of 20,000 users per month to it’s free version, but almost no subscriptions to it’s premium versions.

Are these apps successful? They are if you only consider traffic and/or revenue, but when considering other variables, it is obvious that neither of these examples are sustainable over the long term – and maybe not even over the short term.

The key to ensuring that your app is performing successfully is to track the right KPIs; constantly checking them to make sure that you are reaching the right objectives. Why are app metrics important, specifically?

  1. They can help you identify opportunities to improve your software or strategy.
  2. They can help you identify when your strategy is not performing up to par.
  3. They give you a historical representation of whether you are experiencing growth over a specified period of time.

In the following article, we will take a look at which app metrics are most important over each stage of the software development and launch process.

When Should You Track App Metrics?

There are many different types of app metrics that can be tracked, but knowing when to track each metric is as important as knowing which metrics to track. Some metrics are better tracked during the launch stage, while others are more important during the growth and scale stages.

  1. Launch: This stage is the beginning of the app journey when an app is just released to the market. In this phase, metrics can help you prove your concept, identify new opportunities, and catch potential weaknesses in your application.
  2. Growth: This stage represents the time when an app concept has already been proven and the developer is seeking to retain and monetize their users. Metrics here can help you improve engagement and improve the lifetime value of each customer.
  3. Scale: In this stage, metrics allow the developer to improve their brand image and compete better in the marketplace.

Launching With The Right App Metrics

Once your minimal viable app has been created and launched to the app store, there are three app metrics you should be especially focused on to make sure that you are on track with your marketing and executional assumptions:

Number of Downloads

The number of downloads or installs you receive provides immediate feedback on how well your app is performing in the market. If you are receiving many downloads, or many downloads relative to your marketing efforts, then you know you are on the right track. Very few (or zero) downloads likely suggests that something is flawed in your marketing strategy, your app description, or your assumption of the customer problem.

According to CBInsights, approximately 14% of apps that fail do so as a result of poor marketing. Knowing how to advertise an app is key to achieving a high number of downloads. If a lack of marketing is holding you back from reaching users, here are a few techniques you can implement to improve your number of downloads:

  • App Listing Optimization: In many cases, apps can fail because they don’t express the benefits of the solution well enough to users. While marketing an app is critical to its growth and success, statistics show that 63% of users discover a new app through the app store. Consistently optimizing and A/B testing your app listing will allow you to slowly perfect your listing for best performance.
  • Paid Advertising: Paying for ads through platforms like Facebook is an easy way to drive targeted traffic directly to your application. With millions of users, these advertising platforms allow you to reach consumers from your exact demographic and generate new downloads. The caveat is, ads can be expensive for a startup – especially if they aren’t optimized for best performance. Like app listings, it is critical to constantly test, optimize and improve your ads for best performance and lowest cost.
  • Referral Marketing: An extremely effective method for getting new users to your application is to tap into the network of any current users. Dropbox, for instance, offered extra storage to users that invited their associates to sign up. By employing similar referral strategies, you can acquire more users faster and for a fraction of the cost. Furthermore, this type of marketing adds in an extra layer of buyer confidence – since the referral is coming directly from someone they know and trust, they are more likely to respond positively.

User Retention

App downloads relate to how well you are able to attract users to your application, but does not measure how successful you are in engaging those users. The level of user retention on the other hand, will give you a better understanding as to whether the users you attracted actually return to the app after their first use. According to Loyalytics, across every industry, the average app only retains 20% of its users after a period of 90 days.

How is user retention defined? Usually, it is defined as the number of users that return the app at least one time within 30 days or one month.

If user retention is low, this means that while people are downloading your app, something is causing them to abandon it. Statistically, 1 in 4 users abandon an app after only opening it once. This can be for one of many reasons – maybe the app was too difficult for them to navigate; maybe they simply forgot about it; or maybe, the app just doesn’t solve their problem the way they expected.

The first step to improving this app metric is to identify why users aren’t returning. Furthermore, these steps will help you improve your user retention:

  1. Improve The Onboarding Experience: Consider the process that a user will experience as they download, install and use your app. Is it simple to understand? Does it have a familiar navigation? App users have very limited patience – if they don’t understand your software right away, it’s very likely that they will abandon it. Make sure that users understand exactly how to use your app – whether it be through user videos, an initial tutorial, or a strong FAQ section that answers their usage questions.
  2. Implement Push Notifications: App users don’t just use a single app, and in some cases, they may use several apps to accomplish the same goal. Even if your app perfectly suits their need, they may not have realized its effectiveness at first exposure. They may have even forgotten that they downloaded the app – or may have planned to come back, but never did. In any case, push notifications can remind users to come back and give your app another chance. However, push notifications can become annoying to users if they are overused; and if misused, can be a surefire way to ensure that a visitor deletes your app immediately. Use push notifications only on rare occasion, and consider how receptive your users may be to these notifications before launching them.
  3. Retarget With Ads: A less intrusive way to regain the attention of users that have abandoned your application is to use retargeting ads – ads through Google and Facebook (among other platforms) that allow you to directly reach individuals who have downloaded your app, but have not returned since their initial visit.

Cost Per Acquisition (CPA)

Outside of making an app go viral to receive organic traffic, it is likely that any long term customer acquisition strategy will come at some cost. Likely, you will need to engage in a combination of paid marketing techniques to promote your app and draw in new users.

Cost Per Acquisition (CPA) refers to the amount that must be spent to acquire a single user.

CPA is an extremely important app metric – if the cost to acquire a customer is higher than the value of that customer, you may quickly find your startup falling into the financial red zone. By tracking cost per acquisition per marketing channel, it is simple to identify which of your marketing efforts are performing well, and which ones are too costly for the business to sustain.

There is no quick fix to improving your CPA; however, every marketing channel needs to be optimized for best performance. As you optimize your marketing strategy to perform more effectively, you will slowly begin to reduce your CPA until it is optimal for your specific business. The optimal CPA for any business is one that is lower than the value of the customer that has been acquired. A business that earns a revenue of $1 per customer cannot sustain a CPA of $5, while a business that makes $1,000 per customer would find a $5 CPA to be more than ideal for the growth of their startup.

Tracking The Growth Of Your App

Once you’re able to acquire new customers at an acceptable cost, and are able to retain those customers over several months; it is important to track how users are using your app so that you when you acquire a customer, they stay around for the long term. As you grow your application, several other important app metrics come into play, such as Stickiness Ratio, Average Session Time and Screen Views Per Session.

Stickiness Ratio

While user retention (or how many people visit the app multiple times per month) is important, an app’s Stickiness Ratio takes it a step further. Specifically, the Stickiness Ratio is formulated by first tracking two other metrics – DAU and MAU:

  • Daily Active Users (DAU) refers to the number of users who visit your app over a 24-hour period.
  • Monthly Active Users (MAU) refers to the number of users who visit your app over a 30-day or one month period.

Stickiness Ratio is calculated as the ratio of users per day in comparison to users per month – or DAU/MAU.

If an app’s stickiness ratio is at 10%, this would mean that on average, a user visits the app 3 out of 30 days. Likewise, a stickiness ratio of 90% would mean that on average, a user visits an app 27 out of 30 days.

Increasing the ‘stickiness’ of your app means transitioning users who use the app a few times a month into those who use an app multiple times per month. This can be done by improving the in-app experience, reducing bugs, offering new features, or by incentivizing users for using the app continuously throughout the month.

Average Session Time

It’s a great thing if people are signing into your app often, but the true test of how engaged your users are is how long they stay on your app when they visit. Consider an app like Snapchat, where users not only sign in often, but spend hours engaging with the application and it’s network. Popular mobile games also have long average session times – engaging the user so that they stay on for long periods of time.

There are some ways to minimally improve average session time like gamifying the experience or regularly updating with fresh content – but people stay on apps that solve their problems and command their attention. Focus on improving your solution to truly meet the need of your users and it will automatically entice them to stay on your app for a longer period of time.

Screen Views Per Session

As its name implies, this app metric refers to the average number of screens viewed during a single session. In general, the more screens that a user interacts with during each session; the more engaged they are with your application. Typically, an app with a high number of average screen views per session, will also have a high average session time and a high stickiness level.

Since screen views per session relate directly to engagement, improving this metric often comes down to delivering the features and abilities that your audience is looking for. When users find a great solution to their problem, they tend to engage more thoroughly with that solution, visit it more often, and view more screens each time they visit your app.

Bonus Tip: It’s not just about how many screens a user views, but also how they engage with those screens. Use a great heat mapping or screen recording software to gauge the user’s experience as they use your app. This type of software will give you major insight into what pages, features and screen areas are most important to your audience – and on which screens they are dropping off. Use these insights to improve on areas that are not performing well, or to create a more desirable feature list that better reflects what the user is looking for. Furthermore, this type of software can help you identify issues and bugs within your application such as app crashes, latency issues and loading speed.

Using Metrics To Scale Your App

There are also some subjective app metrics that aren’t necessarily ‘hard data’, but that can still be used to effectively improve your app software. While many metrics require you to analyze the data deeply to pull out valuable insights, these metrics provide you with the feedback you need – right from the customer’s point of view. While there are many metrics that are important in this stage, two subjective metrics that are extremely critical are App Reviews and Net Promoter Score.

App Store Reviews

There’s an old saying that goes, “The customer is always right.” Whether this is 100% true or not, there is one thing that is a definite fact – reviews from previous users will weigh heavily on a potential user’s decision to choose to download or not download your application. According to studies by Apptentive, 59% of people check an app’s reviews before downloading it. With a majority of positive reviews, customers become excited about downloading an app so that they can experience the same level of benefit as previous users. Likewise, even a single negative review can turn off a potential user if it is powerful enough to make them believe that they will meet the same fate of dissatisfaction – and if they still download and eventually realize the same fate, it is likely that they will leave an equally negative review.

As an app startup or developer, you have little direct influence on this metric. However, by paying attention to what users are saying about your app (whether positive or negative), you can get a better grasp on what is working with your application, and what needs to be fixed to suit your customer’s needs more effectively.

Even without reading reviews, your app’s star rating can equally persuade users to download or not download your app. A rating under 4 stars may have the ability to instantly convince a potential user that the app is not worth their time. Welcome all feedback about your app, whether positive or negative. The first step to optimizing your app for best performance is to know what aspects of your software are helping your users and which are hindering them from a successful and positive experience.  

Net Promoter Score (NPS)

Net Promoter Score helps businesses measure customer experience and better predict potential growth. This metric isn’t just centered around software, but is used by all types of businesses over various industries to better understand customer satisfaction.  

NPS is calculated by comparing the difference in the number of users that are considered ‘detractors’ and those considered ‘promoters’. Specifically, Net Promoter Score is calculated through the following steps:

  1. Customers are asked to rate your app/product/brand on a 10 point scale; with 1 being the lowest satisfaction score and 10 being the highest.
  2. These customers are then categorized into three groups – detractors, passives and promoters. Those who rate between 1-6 are considered detractors, or unhappy customers that can hurt your app or product through negative word of mouth. Those who rate between 7-8 are considered passives, or individuals who are relatively satisfied, but can easily be swayed to a competitive solution. Those who rate a 9 or 10 are the most loyal customers who will continue to use your app and may even refer others to download it.
  3. Calculate the percentage of those in each category. For example, if 100 users are surveyed and there are 20 detractors, 30 passives and 50 promoters; then this would calculate to 20% detractors, 30% passives and 50% promoters.
  4. Finally, NPS can be calculated by subtracting the percentage of detractors from the percentage of promoters (% of promoters – % of detractors). NPS is not expressed as a percentage however, but as an absolute number. In the above example from #3, the formula would look like this: 50% promoters – 20% detractors = +30 NPS

Net Promoter Score can range anywhere from -100 to +100. Any score over 0 is considered a good score; over 50 is considered an excellent score; and over 70 is considered as the best of the best. A score under 0 means that there are more people dissatisfied with your app than those that are satisfied; and more research needs to go into figuring out what your customer is really looking for to increase their satisfaction while using your application.

Making App Metrics Work For You

Having knowledge of how your app is performing is critical – however, metrics are useless if you just occasionally look at them and do nothing to improve them. Every app metric has a purpose, and understanding the purpose behind each can help you continuously improve your app for better acquisition, longer retention, longer per-session usage, more referrals and a higher satisfaction.

It’s not only important for you to understand how these metrics relate to your product, but it’s also important that you’re able to gather the right insights and deliver them to your app developers so they can translate them into code and create the features that will really drive the success of your app.

If you need help choosing the right metrics for your app or analyzing the tremendous amount of data you collect, we’d love to help! Contact us to discuss your app with one of our startup consultants to find out how to use app metrics to take your startup to the next level.

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How To Start A Tech
Company Using Lean Startup

Launching a tech company of any type is an intimidating process. First-time entrepreneurs often have no idea how to start a tech company, they just have a great idea and a desire to win. Unfortunately, a great idea isn’t enough. There are many steps between the idea stage and the rapid expansion stage; and if you aren’t clear on what those steps are, you can quickly become overwhelmed with the process and give up.

While not making it to launch sounds like the worst thing that can happen when developing your startup, there’s actually something worse that can happen. You can spend tens of thousands (or more) on app development, only to launch your tech and find out that nobody wants it. A tech startup can be a major success, but if launched without covering the right bases, it can also be a major waste of time, money and effort.

Fortunately, there is a process for building a great tech company, and it follows the principles of Lean Startup. Ready to launch your software business? Here’s what you need to know about how to create a tech company using lean startup.

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What Is Lean Startup?

Lean startup allows a tech company to constantly advance the development of their software, while radidly learning more and more about their customers, their challenges and their desires

If you thought the only steps to creating a successful software solution was to build it and launch it, your strategy is hugely flawed. There are many really cool and interesting apps in every app store that no one ever downloads and no one ever uses. Those who know how to start a tech company know that a company isn’t successful because they have a cool product; they are successful because they have the right product for the right audience, and are backed by the right people.

When you launch a full-scale software solution, you inherently make several assumptions. Even with secondary industry and customer research, you are still only making an educated guess as to:

  • Who your consumers really are.
  • What problems your consumers are actually facing.
  • What type of solution your consumers are searching for.
  • How much your consumer is willing to pay to solve their problem.
  • Whether enough people experience the problem to make a successful business.

The true intentions of a startup is to answer these questions using real consumer data, and to validate each and every assumption as you build your product. Instead of figuring out that you built the wrong thing after you built it, the right strategy will help you identify weaknesses and errors in your startup plan before making serious investments into the wrong areas.

This is the value of adopting a lean startup process, and why those who know how to start a tech company often adopt this strategy. Lean startup incorporates a build-measure-learn feedback loop – launching software in small iterations, testing it with real consumers, analyzing the data and proving the concept at every turn. What’s the major advantage? If at some point during the measuring process you learn that consumers aren’t responding as you assumed they would – you can pivot immediately instead of continuing to develop something that they don’t want.

As much as we’d like to think that our idea is the perfect idea, this is often not the case. Facebook in 2018 is incredibly different than it was in 2006. If they built the perfect product, why would they continue to change; adding new features, changing features, and deleting others? Because people change, the market changes, the competition changes, needs change – and when they do, your startup better change with it if you plan to stay in business. When you know how to start a tech company using lean startup, you can adapt and remain flexible with the market – using data to lead you. Lean startup allows a tech company to constantly advance the development of their software, while rapidly learning more and more about their customers, their challenges and their desires. As you learn exactly what your customers want, you can more accurately serve them and always ensure that you are delivering the software product that they are most likely to adopt.

 

How To Start A Tech Company In 6 Steps

Launching your first-version software doesn’t have to be a long and difficult process. Sure, developing technology can be challenging and there are many variables; but with an agile development and lean startup process, you can minimize the time and risk associated with launching a startup. Here are six steps to launching your tech company the right way.

 

1. Minimize It To The Core Features

Rome wasn’t built in a day, and the whole city didn’t have to be built for a few families to make it their home. Likewise, your software doesn’t have to include every feature under the sun before you launch it. In fact, launching a feature-filled software solution is the most risky approach to software development. Instead, minimize your concept to just one or two core features – the features that you believe will help users solve their specific problem most effectively. Typically, users aren’t going to adopt every feature a software offers – the ones that they don’t use will ultimately become a waste of the effort it took to build it. The better approach is to test the market with only a few features, prove the concept, and then build the next set of features after validating exactly what the market is demanding.

However, when you have your mind set on what you want your software to look like, it can be challenging to decide which features are actually “core”, and which ones are additional frills that aren’t necessarily critical to the functionality of the software. Follow these three steps when seeking to minimize your technology to its core features:

  1. Define your target market: Your technology might serve multiple customer types, but initially, it’s best to focus on just a single target market. Selecting a narrow audience will allow you to intensify your focus on a specific consumer sector and penetrate that particular niche – instead of going head on against more established solutions. Draw out your ideal user – How old are they? What do they do for a living? What do they read and watch on television? Where do they live? What is their income? Most importantly, what problem are they facing?
  2. Create a storyboard: Plot out how individuals will use your technology; each step that they will take as they journey through your solution. Think of how they will use each feature, and how each feature will help them solve their problem. Consider the primary goal of your technology, then write out the user flow – this will help you determine all the features of your tech concept. Prioritize these features – which are truly necessary to meet the primary goal and which could be eliminated without really affecting the user’s end goal?
  3. Remove non core features: Once you’ve determined which features are low priority, remove them. Your solution should now only include a few features that make up the entire user flow; but if it still has too many, create a new storyboard and prioritize again to see if there are additional steps that can be eliminated to create a true minimal and viable product.

 

2. Get To Market With An MVP

Now that you have a first-version software concept that is minimized to only it’s core features, it’s time to prove your concept. Getting to market quickly is key, and it’s not always necessary to even build the technology fully before launching it. There are several different types of Minimal Viable Products that you can consider, but the one you choose should be based upon the goal of your test. Here are the most popular minimal viable product types:  

  • Smoke Test: Build a landing page, send traffic via ads, and measure how many people sign up.
    • Goal: To test user interest.
  • Pre-sell: Launch a crowdfunding campaign and measure how many people donate.
    • Goal: To gauge user interest and raise funds.
  • Concierge: Perform services manually; giving clients a hands on service before automating it with technology.
    • Goal: To create new ideas, generate feedback and collect data about consumers.
  • Wizard of Oz MVP: Make it look as if the features are automated, when really they are manually performed behind the scenes.
    • Goal: To test assumptions about product and customer behavior.
  • Piecemeal MVP: Take a pre-built technology and customize it to perform the necessary functions.
    • Goal: Prove concept before making a larger investment into product development.
  • Single-Feature MVP: Develop solution with one or a few core features and launch it to the market.
    • Goal: Gain traction and validate feature assumptions   

 

3. Attract Early Adopters

Once your minimal viable product has been launched, it’s time to start attracting users. You don’t have to go all out and spend tens of thousands of dollars on advertising your app – but instead, send a limited number of users to the application in testible numbers. A couple hundred users can give you incredible insight into whether you are on the right path, or whether you are building something that the market doesn’t want. Even a small amount of users can give you humongous amounts of information. There is no point in sending tens of thousands of people to your solution if you haven’t even proven that you have built the solution that they want.

  • Self Promotion: You’d be surprised how many startups gained the first handful of users because the founder simply just put in the necessary hands-on work to acquire them. Tinder’s founders for example, posted flyers around campuses and told people about the app at local campus bars. If you can identify individuals that would benefit from your technology, contact them – tell them about your solution and explain to them how your solution would solve their specific problems. One hundred handshakes could be the first domino in locking in your first one thousand, one hundred thousand or even one million users.
  • Communities: Becoming active within online communities can provide great access to early adopters and industry influencers. Platforms like Reddit offer categorized sub-channels where you can communicate with other individuals that are interested in a specific subject. The key to succeeding in any online community or forum is to not go in with an attitude of selling something. Instead, be helpful and showcase your expertise about the subject to assist others with their questions. Become an active part of the community. That way, when you do post about your software, people will know who you are and you won’t seem like a greedy self-serving startup that is spamming the network.
  • Influencers: You don’t always have to convince a million people to try your software. Sometimes, you can convince one person who has a large audience, and let them do the persuading for you. Part of knowing who your consumers are is knowing who they follow – authors, blog writers, YouTubers, industry experts and etc. Try to build relationships with these individuals. Allow them to test your software for free, and ask them to review it. Keep in mind however, your competitors are probably also contacting them asking them for the same thing. Just like when dealing with communities, figure out how you can offer something that benefits the influencer – before asking them to do something that solely benefits you.

 

4. Evaluate Data

There is nothing that will tell more about your solution, strategy and user than cold hard data. Everyone pays attention to the number of downloads and the amount of revenue the sofware is generating, but these aren’t the only app metrics that matter. There are many other metrics that should be analyzed frequently, including but not limited to:

  • Active Users: It doesn’t really matter if you have 1,000 users if zero are actively using it. Both Daily Active Users (DAU) and Monthly Active Users (MAU) are important to analyze. DAU tracks how many users actually open up and use the software in a single day while MAU tracks how many use the software over the period of a month. Unlike total sessions, each user is only considered a single time, as opposed to counting the same users over and over if they sign in multiple times throughout the day or month.
  • Average Visit & User Behavior: These metrics allow you to analyze how long users are staying on your software and what they are doing while they are there. Average Visit gives an average of how long a user session lasts, while user behavior tracks what pages they visit and how long they stay on each of those pages. To learn more about user behavior, it is a great idea to use heatmaps and screen recordings. These tools allow you to see exactly what users are looking at, focusing on and clicking on while using your software.
  • Retention Rate: Just because you’re able to get people to your app, doesn’t mean that they’ll continue to use it. Retention rate lets you know how many users you’re able to retain over a set period of time and how many you lose or ‘churn’. Retention rate helps you identify the relationship between your marketing initiatives (how well you are attracting people to your software) and your engagement strategy (how effectively you are getting people to engage with your software).
  • Ratings & Reviews: Solutions that are able to sustain over the long-term are those can maintain great ratings and reviews. Software and app solutions operate in a very competitive space, and no matter what great things a company says about their products; it will never have the same effect as what other users say about it. Ratings and reviews are subjective metrics that can have a major influence on how successful a software solution becomes. You may be getting a great deal of traction today, but if you aren’t receiving a bad rating average – you may find it extremely difficult to get even a single new user in the future.
  • Cost Per Acquisition: Attracting customers to your app may not be worth it if it’s costs an insane amount to acquire them. If your per customer acquisition cost is more than your customer spend; you’ll operate at a loss and may find it extremely difficult to continue to sustain your business.

The numbers tell the true story of your business. If you don’t know the statistics, then you definitely don’t know how your business is actually performing. One could assume that they are on track because they see new downloads coming in each day, but they may miss other numbers that tell the real story – like a high customer acquisition cost or an extremely low retention rate. Most of all, the numbers behind your business tell you whether you’re on the right path, or whether you’ve made a mistake in your assessment.

 

5. Pivot Or Persevere 

In the optimal and ideal situation, you will look at the data and everything will be going as expected – acquisition costs will be low, everybody that downloads the app will use it for months and months, you’ll get fantastic reviews, and your tech startup will become the best solution in your industry within a month’s time.

Does this sound too good to be true? It is.

What will most likely happen is that some of your assumptions will be validated by the data, and it will be proven that some of your assumptions are flawed. Discovering that some of your initial assumptions are incorrect is to be expected, and it’s not a bad thing. Each time you are unable to validate your assumption, you are given an opportunity to make a shift and find exactly what your consumers are looking for. Each time you prove or disprove an assumption, you have the opportunity to do one of two things – pivot or persevere.

When the data shows that your assumption was correct, the only move that makes sense is to persevere or stay on course with what you are doing. To know whether your data proves your assumption, you should have goals set in place – what conversion rate you expect your marketing campaigns to convert at, which features you believe users will use the most, how long you believe users will use your app during each session, how many weeks or months you believe they will continue to use your software before they churn, and etc.

On the other hand, when the data shows that users aren’t responding to your software the way you assumed they would, a pivot is likely in order. A pivot simply means to adjust to a new path, and hopefully, a more successful path. Let’s say for example, you find that you many users download or trial your software, but that they only stay on the software for a minute or two before exiting. In a case like this, there is likely a reason for this behavior. Some possible causes of this could include:

  • Users were interested in the marketing message, but the solution did not meet their expectations.
    • What can you do to fix it? Change the marketing message to better reflect the actual solution, or change the solution to match the marketing message (which may reflect what users really want).
  • Users found it too difficult to use or navigate the software and left in frustration.
    • What can you do to fix it? Work on a better user experience or provide better education on how to use your software.
  • Users ran into a bug and weren’t able to perform the intended actions.
    • What can you do to fix it? Identify the bug and fix it.

The whole idea of a startup is to find out what solution your consumer is really looking for. By running tests and choosing to pivot or persevere based on real data – you can ensure that you are building software that really has the potential to succeed.

 

6. Scale Everything

After testing and testing, using data to make the right pivot/persevere decisions, and building a solution that is a hit among early adopters; it’s now time to scale it to the masses. Since your marketing plan has already been tested and validated, you should be able to amp up your campaign and draw in more and more users.

In many cases, it’s at this stage where startups will begin seeking initial seed funding. With user data in hand, startups with a validated solution have a much stronger investing position than startups that are only coming to the table with ‘cool tech’. These startups not only prove that they know how to create innovative technology, but also that they know how to start a tech company with a strategic and well-planned approach.

 

The Most Important Step in Launching Your Startup

In essence, these six steps will help you build the perfect product with an agile and lean approach. Putting them all in action however, can be much more difficult in practice. Actually, building a lean tech startup is much tougher than simply just writing a list of features and having a developer build out. Launching a lean tech startup means slowing down the development process, releasing in small iterations, testing each iteration along the way, and bringing on customers in small increments. The upside is, at each iteration, you strengthen the potential for success of your concept and decrease the risk of failure.

The most important step – is taking a step. You can research how to start a tech company, and come up with an awesome software concept; but if you never commit yourself to taking the first step, you’ll never see it through to fruition.

We’d love to help you bring your tech company to life. Our startup consultants have worked with hundreds of app startups around the world. Ready to take the first step in bringing your app idea to life? Contact us today to schedule a consultation with one of our tech startup experts!

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