How to Create a Successful App or Get Broke Trying

Thomas Brownlees

Thomas Brownlees

CEO and Founder,
440 Industries

Apps are not a product or a service, they are marketing framework.

Digital companies are adapting to the shifting boundaries of digital technologies by pursuing continuous innovation strategies. Any organisation needs to develop their web presence to foster new channels of customer engagement and product distribution. 

In this context, an app provides an interesting marketing mix. An app
 is both a Product and a Place (or a means to reach our customers). An app has a unique revenue model (Price) and is in itself a Platform for other services (Promotion). An app, therefore is a whole marketing framework, requiring a uniquely oriented mindset. 

In this post, we are going to discuss app development and present some practices that can help you develop a great app. 

Here’s a breakdown of this post’s content:
1. A few quick facts about apps and the app market.
2. When apps are “a solution in search of a problem”, you are off to a rocky start.
3. How to come up with an app idea that people will be willing to purchase.
4. Best design practices, and wireframing elements to put your idea onto paper.
5. Revenue models, and in purchase apps to fund your app development.

app design

1. A few quick facts about Apps.

Before getting too excited, we need to realise that the app business is often seen the new frontier of a get-rich-quick scheme. In the early days, apps have provided great first-mover advantages to those who have dared to enter this market when entrepreneurs had little or no knowledge of its potential.

Now, 10 years down the road, we can’t keep thinking that developing an app is, by all means, a form of innovation. On the contrary, apps are a saturated market, with a threshold to access which is getting lower every day.

By no means we intend to discourage you, but here are some quick facts to put your ambition in check.

  • Customer acquisition cost is high.  There are currently a little less than 2 million apps on the App Store\Android Store. It’s challenging to compete when so much is already being offered. The top 8 out of the top 10 raking apps are owned by Facebook, Google and other tech giants.

  • Retention is very hard to achieve. More than 25% of apps are only used once. It’s very difficult to get your customer to ‘lock in’ into the app. Moreover, 35% of apps are not open more than 10 times. Your app needs to offer something truly unique, in order to make it worthwhile your costumers’ time.

  • It’s a capped market.  Research shows that the average person uses no more than 27 apps on a monthly basis. The majority of people download 0 apps per month. This is because most customers have already decided how many apps and which ones they are going to use. Switching is not simple because of the “soft lock-in” that technology provides. This also explains why gaming is so important: it has a fast obsolescence rate and it appeals to a very young audience.
This list should help us realise that technology is a tool, a mean to a greater purpose. We should not start our app, let alone a business based on the “everybody else is doing it, so why can’t we” principle.  On the contrary, we need to figure out a problem, through Jobs to Be Done, that will help our customers deal with their own problems. Many companies instead start from the technological end and work backwards. This is what we are going to discuss in the next section of our article.
app design

2. When Apps are "a solution in search of a problem".

If this has not made you change your mind you are in the right track. Now think of your business as a boat sailing onto the ocean, sailing away from red oceans and always seeking blue oceans.  Red oceans are highly competitive markets which rely on fierce competition to acquire or maintain market share. This is where we find large and small players alike competing in price, adopting cutthroat techniques. 

What we’re looking for instead are blue oceans or untapped pockets of market potential. In many cases, this can be done “simply” by changing our mindset.

Blue Ocean Strategy
is a management theory which provides many insights and visual tools to help founders create value and reduce costs, by applying a create\eliminate, increase\decrease framework in order to generate demand and maintain a 10 to 15-year early mover advantage into the newly created ocean of value and opportunity. However, this value innovation approach is hardly followed by entrepreneurs, who instead start the race from the finish line and move backwards.

Start with a problem, not with a solution. In my experience as a business angel, I’ve often met teams of founders starting from technological innovation (such as for instance ‘blockchain’) and then moving back towards the provision of an online service. This approach does not lead to understanding what jobs your customers are looking to get done, and therefore does not lead to a persuasive value proposition.

We need to start with understanding human behaviour and customer behaviour before we can understand what kind of technology may help us provide value and reduce costs. 

3. In this inflated marketplace, how do you come up with an app?

So in this crowded market space, what can we do to come up with a successful app?  In order to understand this question, at the most basic level, we need to study consumer behaviour, by delving into human behaviour. While we answer this question we need to realise that we might be discussing two separate tracks: (1) how to start a digital business, and (2) how to design a digital product. In most cases, the two things overlap because many companies are founded in the perspective on launching a product. In this post, we discuss how to start your own digital business and using crowdfunding to test its potential. 

Focusing on the creation of a digital product, we need to consider the following:
1. In order to help our customers, we have to understand their needs.
2. In order to understand their needs, we need to understand their behaviour. 
3. To understand their behaviour we need to understand their culture.

Simple enough, right? Well yes. But here’s the catch: all cultures are different. If you rely too much on the culture dimension you risk developing a hard-to-scale product. This is no small issue, as an app is the perfect packaged item to be downloaded and adopted worldwide. 

This is why the 67 Human Universals are our starting point. These universals relate to needs and habits which are found universally across the globe. This is a good place to start in order to develop an app which potentially appeals to a wide audience: humanity.

You need to start from a wide audience, because as you develop your product, you will need to pick niches and market segments, restricting your market every step of the way. 

But here’s the real challenge…

Not only you need to develop an app which may be interesting for a wide audience of individuals, but you also need to make sure, but the app is also worth paying for.
In order to address this additional challenge, we can rely on
Maslov’s Hierarchy of Needs Theory

According to Maslov’s Hierarchy of Needs, not all of our needs and behaviours are on the same level, there is a very strict hierarchy to follow when we satisfy our needs. Starting from the most urgent, the order goes as follows:

  1. Physiological. This category doesn’t need much explanation as it represents essential physiological needs humans need to fulfil in order to stay alive. Our bodies are self-sufficient organisms, so it’s hard to figure out what kind of app, we ‘really need’ in this category.

     

  2. Safety. This is the category which describes needs which do not only have to do with ‘being alive’ but with ‘staying alive’. This is a category which may be prone to exploitation due to the rising importance of privacy, online security and password management.

  3. Love and Belonging. The Beatles used to sing ‘Love is All You Need’. From an app perspective, this is still accurate: we need friendships and relationships to fill up a big part of our lives. This is a very relevant priority for all of us, and it explains why social media has been such a powerful phenomenon across markets. Social media platforms have empowered us to create and maintain relationships which are part of a very profound existential need.

  4. Self Esteem. This is the category which relates to self-esteem, respect, status, recognition and freedom. These needs relate to more socially-oriented needs when the status is a currency. The fashion and luxury industry fits into this category, as an example of something which can be unnecessary and essential at the same time.

  5. Self Actualisation. This is the ‘being all you can be’ part of the pyramid. This category or needs can be fulfilled only those who have been able to successfully fulfil all over tiers of the pyramid.

Pursuing the satisfaction of needs which are universal and low in the hierarchy of human needs will allow us to develop apps that will help our customers solve urgent needs, and become more willing to pay for our products.

4. Let's get started with wire framing and best design practices

Going through the challenges of the previous paragraph will require a lot of effort, but on the bright side, once you have figured out what problem you are going to devote your time to, you will be able to start creating your unique solution.

The next step is making the intangible, tangible.
How?
With wireframing. 

To approach app design, we don’t need to be developers, “just” creatives. There are a million ways to design an app, and we need to navigate through each option to develop the best app design possible.

Wireframing can help you create the user interface and realise the vast possibilities when it comes to displaying information, images and menus within a very limited ‘screen real estate’. If you’d like to try it out, with Balsamiq.com it’s fairly easy to get started and try it out with your own hands.

Don’t worry you don’t have to start from scratch, Google is here to help you with a list of best practices to follow. Here’s a link to their data-driven guide.

This research analysed 6 areas where design and workflow optimisation impact on the app’s functionality and user experience. Here’s a short summary of what you can find on Google’s guide to UX optimisation. 

  • App Exploration.
    With Apps, our number one priority is making the best of the screen space we have available. In this sense, it’s mandatory to show the value of the app upfront making it very clear what are the uses of the app, and what functionalities it provides. We also need to connect with our customers by creating user-friendly categories, with clear distinctions and no overlap between them. People don’t necessarily know what they are looking for when they navigate an App and we need to make it easy for them to go back when they make mistakes Also, consider that apps need to provide location-sensitive results and provide seamless transitions when moving from a native app to the mobile web.

  • In-App Search.
    The search bar is very important for our customers as it’s often times their guiding light through the app itself. The in-app search, therefore, needs to be very clear and use effective indexing with filtering and sort options. Filtering is very important, especially when it comes to comments and reviews.
  • Commerce and Conversions. 
    Ecommerce conversions follow Pareto’s law, whereby 80% of our revenue comes from 20% of our customers. In this sense, it’s very important to nurture our customer’s experience by providing their search and purchase history and previously recorded information. Also, enabling comparative shopping features is an essential part of the “customer online journey”. When thinking about transactions, the customer’s “perception of security” is essential. In order to optimise conversion, apps need to provide multiple third-party payment options to support the checkout process.
  • Registration.
    Getting users to sing up to a newsletter requires the delivery of an effective and persuasive risk-reward balance. Users need to be provided with high utility in order to interact with an application through their email address. This also entails for a well-designed application when it comes to password management, making sure that password insertion becomes a frictionless experience.
  • Form design.
    If getting your customers to enter one email address in one empty field is a challenge, then entering more than one piece of data at once, can prove much harder. It’s important to make sure apps create user-friendly forms, which communicate errors in real time. When it comes to data entry, also, matching keyboard layout with the form required input goes is advisable. 
  • Usability and Comprehension.
    Remember that language needs to fit your customers’ profile, and you need to speak the same language than your users. Also providing text labels to clarify visual information is necessary to clarify the balance between form and content. Moreover, customers need to be provided with visual feedback anytime they perform any significant action, to reinforce the responsiveness of the application. 

4. And what about revenue models?

As we’ve seen in the article on the Business Model Canvasas we try to give our best answers to our start-up questions we need to take into account revenue streams.

In the case of digital apps, there are three revenue models which can be applied, aside from the vast variety of hybrid models.

Here are the most notorious revenue models:

  • Free (Brand Building). In this case, companies allow users to download brand-building apps, in the same way, the company creates brand-building websites. The focus is to support the brand and developing an omnichannel distribution strategy for the consumers.

  • Freemium, free to download, pay to access advanced features. In this model – one of the most adopted – companies allow users to download apps and access basic functions. If users enjoy the app and want to use advanced functionalities, they will be asked to pay a price to access premium features.

  • Premium  – In this case, the app will be downloaded at a cost, either in a one-time payment or through a subscription format.
  • In-App purchases create the premises for a mixed revenue model. This is particularly common with gaming apps, as the developers are able to monetise the community they have developed around their app by creating bottlenecks. These bottlenecks require users to pay a fee in order to speed up unnecessary waiting time. In many cases, customers pay real money to access digital currencies. If you pay close attention you will notice that it’s really hard to find out how much of a digital currency actually convert to real money.

5. Conclusions

As the AC\DC used to say, “it’s a long way to the top if you wanna rock and roll“. Coming up with an App is not a technological challenge, as much as anthropological one. In a market that is growing more and more ‘red’  because of competition (in the words of Blue Ocean Strategy), we need to find new mindsets to innovate the way we serve our customers.

Readings for Further Research

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How to Create a Successful App or Get Broke Trying Create an app, make it viral and spend the rest of your life worry-free. That's something that many people tried, but few succeeded at. Let's see why.
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Thomas Brownlees

Thomas Brownlees

I am an Anglo-Italian business lecturer and consultant based in Florence, Italy. In 2017 I started 440 Industries, an education and training company focused on fashion, music, and technology. Our mission is to help students, entrepreneurs and managers in overcoming the challenges of starting, developing and scaling their business in the creative industries. When there's a will, there's a way!

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