How To Choose an App Business Model: Reach Target Audience & Make an App Profitable

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Posted: December 12, 2016

Marc is a copywriter who, fittingly enough, runs Marc Schenker Copywriter. An expert in business and marketing, he helps businesses of all sizes get the most bang for their ad bucks. Make his day by liking his Facebook page!

This article is part of the Step-By-Step Guide To Validating And Launching Your App Idea post, originally published on Y Media Labs blog.

Coming up with an app idea and then going ahead and building it is definitely a cool process, but there’s also the detail-heavy, business-model side of things that you have to take care of. Put another way: Even if you have a great idea for an app, if you have no workable business model then your idea’s likely going to stay in your head or drawn on a napkin!

Since your app is a product that you want to market to generate continuous, long-term revenue for your company, you need to get a few things clear right from the beginning:

  • The kind of app you want to build
  • Who your target audience or consumer is
  • If your target audience or consumer even wants your app
  • If you’re going to build your app for iOS (I recommend iOS; more on that later) or Android
  • How many people around the world do you want to appeal to (do you want to keep it local or go global)

So how do you go from an initial app idea all the way to design, development and finally debuting the app in the App Store? How do you follow those app dreams and succeed where others have failed?

Once you’re able to answer all of these questions with certainty, then you can move forward into the actual design and development phase. This is far better than wasting your time with what you think is a stellar mobile app idea, only to find out that not too many people on the planet feel the same way!

Market Research Part 1: Primary Research

The best way to find out who your audience is — and therefore what app you want to build — is market research. One of the most cost-effective ways of conducting marketing research is by asking your prospective customers what they think. There are numerous ways of doing this. Some examples include:

  • Distributing surveys to your target audience (in person, by mail, etc.)
  • Asking them directly on social media
  • Conducting focus groups
  • Informally inviting a few people within your target demographic to your office or to lunch, then asking them questions about your app idea directly

App Idea Brainstorming Creative Process

The great thing about this approach, which is called primary research, is that you’re relying on your own research. This is better than using the filter of second-hand reporting, such as reading about other studies done in your industry of interest.

Let’s say you have a great idea for an app for dentists that’ll make their professional lives easier: it will let their patients book their own appointments and cancellations in such a way that all the changes and updates automatically get synced to the dentist office’s system, all without dentists or receptionists getting involved. All the dentists and their staffs have to do is consult their schedules and rest assured that the updated info is 100% accurate.

Well, while you may completely believe that this is a slam-dunk of an app idea, some dentists may disagree. They may be satisfied with the old-school system of patients making and cancelling appointments with receptionists in person or over the phone.

That’s where primary research comes into the picture. It helps determine if your target audience even desires your app concept. This will also help you establish what sort of app to build.

This is the point where you’d distribute surveys to dentists in your community, or invite them to participate in focus groups. Concurrently, you can conduct research digitally by reaching out to them on social media.

You can refine your research more when you move on to the next phase, after you’ve gathered the initial feedback from your prospective target audience.

Market Research Part 2: Secondary Research

Okay, now that you’ve done primary research and heard firsthand from your target audience, it’s time to conduct secondary research. This is composed mainly of published and written reports about the industry you want to target with your app. Secondary research is easier to come by since it’s readily available on the web, and even from your local library.

The purpose of secondary research is to peruse this wealth of info to detect trends in your target industry, find out about your competitors, and analyze your target audience to really understand them. It also lets you tailor your app to their wants and needs with better accuracy.

In my dental practice example above, you’d want to look for data such as:

  • Are dentists dissatisfied with their current, available scheduling systems?
  • Are dentists losing money because of their current systems?
  • Are patients complaining about the process of making appointments at their dentist, or are they switching dentists frequently because of bad service?
  • Are there any companies currently making anything similar to what you envision with your app idea?
  • How do dentists and their patients spend their time?
  • Do some areas of the country have more dentists than others? If so, that would warrant concentrating your marketing efforts.

To help you find these answers efficiently and let you formulate a plan for the business model of your app, there are various tools available on the Internet.

Some come directly from the U.S. federal government, such as the latest U.S. Census Bureau’s Economic Census. This is a huge repository of industry information for statistical and analytical data in the industry you’re targeting. Use this resource to help you find stats about, for example, dentists’ adaption of technology in their offices and revenue data for dentists in different parts of the country (low numbers could mean patient dissatisfaction and a potential market for your app).

Changes in the Population Pyramid

Source Business Insider

With that out of the way, you can now move on to discovering who your competitors are. You’ll want to know if there are any other companies out there that already have something similar to your app, or if there are other products that serve the same target audience you want to.

To do this you’ll have to consult sites like Dun & Bradstreet, a business-data company that provides very detailed information on a plethora of businesses across various industries all over the world. The info you uncover from searching its database can help you decide whether to move forward with your app or to modify it if you feel a competitor’s product offering is a bit too similar.

You can also use sites like this to find prospects. If your app’s intended audience is other businesses, you could peruse databases like Dun & Bradstreet’s.

Once you’ve gathered your statistical data and your info on your competitors, all that’s left is to identify where your customers are and how they live. In my above example that would be dentists, and there’s no better tool than the Esri Tapestry Segmentation for getting this information.

Esri will help you find your best markets based on identifying the characteristics of your target audience. You’ll also be able to find potentially underserved markets for your app!

Armed with all of this research data, you can now confidently move on to your app platform and whether to localize or not.

iOS or Android: Where Exactly Should You Focus?

When you’re fleshing out your great native mobile app idea, you’ll undoubtedly have to ask yourself if you’re going to design and develop for iOS or Android. At this point, if you don’t know anything else, you likely already know that iOS is Apple’s operating system, while Android is Google’s. How do you decide from here?

iOS vs. Android

If you think designing for Google’s platform is the better choice because Google is the Internet and has SEO on its side, while Apple only has their line of iPads, iPhone and iMacs, you should probably reconsider.

Here’s what you need to know: iOS apps will always be more profitable and get more exposure than Android apps. This is because iOS users spend more on apps, and Apple has streamlined the process of making it easy for designers and developers to create iOS apps. It’s just that simple. I even wrote a tutorial on getting your app featured in the App Store— it’s very achievable with the right strategy.

If you’re an app designer or developer, you should definitely focus on iOS; it’s better for your profitability as well as for the efficiency of your development process. A recent Time Magazine article even declared that Apple has already won the App Wars!

Consider also that innovative app ideas are at home on iOS rather than Android. If you think your app is going to change the world, it’d definitely be better to first push it on iOS, and then if it’s a hit there to push it onto Android.

Now that you know that iOS is the platform on which to design, you still have to decide the geographic location of the users to whom you want to appeal.

To Localize or Not to Localize

Localization is when you tailor an app to suit a particular country, region or continent’s sensibilities, whether through its design, language, user interface, user experience, marketing or all of the above. During your app’s initial idea phase you may think twice about localizing your app, and instead only choose to market it in the U.S. or your home country—but that’s a problem.

Smartphone Users by 2018

According to Entrepreneur, there are going to be 2 billion smartphone users all around the world this year. Translating that to marketing connotations, that’s a 2 billion-person market. If you fail to localize your app to the cultural and societal uniqueness of all of the world’s regions, then you’re going to lose out on all of this potential business.

Consider another worrisome stat that will apply to you if you want to keep your app’s appeal domestic: The U.S. only contributes 10% of the overall app market share. You’re missing out on the vast majority of customers for your app if you don’t localize! In particular, growth will come from Asia, with China and India leading the way in app use and consumption.

You now have a solid idea of your app’s business model—congrats. However, now comes the heavy lifting in the prototyping phase.