27 June 2013

Where are Windows Phone users coming from ?

On June 26, Microsoft revealed some interesting information about users of Windows Phone devices: 42 % of WP users were upgrading from feature phones and 23 % were moving from Android.

Is this good or bad result for Microsoft and companies using its mobile platform ?

There are no explicitly right data available to give exactly right numbers, but rough and correct enough figures can be derived by using statistics from e.g. Gartner and Tomi Ahonen.

Let´s look at the table above, where relevant global mobile device statistics have been gathered from sources mentioned earlier. We try to evaluate Microsoft announcement by using installed base at the end of fourth quarter 2012 and end of first quarter 2013. Also available first quarter 2013 total sales numbers will be used. On rows 4 to 7 there are total feature phone and smartphone statistics, and an estimate, how many feature phone users worldwide have upgraded to smartphone. The latter rough figure is derived just by assuming that all feature phone buyers that do not show up in installed base move to smartphones.

Rows 9 to 11 are about Android, with Android retainers derived simply through subtracting from total 1Q sales the growth in installed base during the same period.

On WP rows, 13 to 15, transition numbers are directly taken from the Microsoft announcement.

Number of Symbian detainees is calculated in the same manner as is case of Android.

Then comes the story, how to interpret this ?

Microsoft was happily beating the drum for the 42 % of WP users coming from feature phone, but, according to 1Q 2013 statistics, this means only about 1 % market share of all upgraders (see row 20). By no means this can be considered good or even acceptable. Taking Nokia´s earlier and also current position in the feature phone market, WP should be able to lure many more of the 4 billion users.

Though there might by some dissatisfaction among Android users, as Microsoft says, it does not seem to be walk in the park for WP - only about 3 % of Android users purchasing a new device select a Windows Phone (row 21). This is on a par or only slightly better than current WP market share. Exact Android retention level is not known, but here an estimate from US is extrapolated to global markets.

And finally, as row 22 shows, Symbian users seem to strongly avoid the Microsoft platform, less than 6,6 % - most probably much less - select that. Taking Nokia´s dominating role in Symbian, it looks that loyalty towards both the company and the smartphone platform it is using have close to disappeared.

The bottom line is that although there are some imprecision in numbers presented, it is clear that there is nothing that Microsoft and its licensees could be very proud of.  This does not say that there would not be possibilities to improve market positions, but there is still long way to go.

How to use The Internet and social media to assist in product commercialising

In product commercialisation, understanding customers and generating demand get too little attention. It is also vital that commercialisation process is agile, so that changing customer needs can be responded.

Customer development, originating from startup circles, is running in parallel with product development with close interconnections between the two processes, see picture below. Also small and medium sized enterprises (SME) can greatly benefit from the model by picking up best practises to develop products better matching to customer needs and to bring them more successfully to markets.

The Internet and social media have created new options to effectively develop new products and customers.  It is cost-effective to use these options, so also SME can utilise them. If a company invests significantly in developing a new product, it should also be ready to allocate more money and other resources to commercialisation activities. Traditional approach, where a product is sequentially defined, developed, tested and then brought to market, is not agile and fast enough to match requirements of current market uncertainty and competition.

This post discusses, how to utilise the Internet and social media in product commercialisation.  Of course, traditional tools, such as interviews and panel surveys, should be used in parallel, when feasible. We focus in consumer products and services, in B2B these methods are also partially usable. Furthermore, the discussion is primarily applicable to companies that develop their own products or services and sell them with their own brand. Sales channel strategies and their execution are not detailed here.

Stumbling blocks in commercialisation

Definition of business model and excellent execution of the model are the cornerstones to make a product commercial success. Typically, businesses have challenges e.g. with:
  • deeper understanding of customer needs
  • definition and prioritisation of target customer segments 
  • definition of product features and characteristics 
  • development and testing of communications messages
  • demand creation
As earlier discussed, parallel product and customer development is the way to find answers to the challenges. Work is done iteratively, aiming at continuously improving product and making it more competitive, as well as refining commercialisation plan and execution.

Internet and social media tools

The Internet and social media have been strong drivers and enablers to iterative product and customer development model. More and more tools and methods are becoming available. Generating attention through remarkable content, downloadable applications, feedback and testing options are among the most interesting ones.

Just to put brochures and other marketing material to web pages has long been an old-fashioned way to use the web: To be successful, you need to follow the way, how potential customers find and purchase their solutions. Inbound marketing is a great tool for this, using social media tools to build two-way communications with customers.

Inbound marketing earns consumers´ attention through publishing on company Internet pages interesting and relevant information related to their problems and needs. This creates a tight bond to consumers that increases probability of product purchases and helps to build long-lasting customer relationships. In addition, potential customers will provide valuable information that helps e.g. to deepen understanding on customer needs, to select target customer segments and to prioritise product features.

Applications that can be downloaded from application stores, provide various options to build a direct connection to potential customers and to increase demand for a planned product. 

It is fast and cost-effective to get customer feedback from potential customers, thus making it easier to match product and customer development to changing circumstances and to create value to customers. For example, visit statistics of company web pages are a good basis to analyse, how users respond to its content and messages.  To get insights on problematic areas, consumers can be also asked to answer directly , through consumer surveys.

Continuous development is a must to use the Internet and social media effectively - testing,  what kind of content and transactions yield best results, analysing the results and then implementing the improvements. This makes iterative virtuous cycle very fast and gives solid factual basis for decision-making.  Typical areas to test and develop can be found e.g. in product characteristics and consumer argumentation. 

A product commercialisation case

An SME company starts to develop a durable consumer product. This case discusses, how the company can successfully use the Internet and social media to develop the product and customer in parallel and to run the process in an agile manner.

At first, the company decides to position itself as a renown player and expert in the area of the new product, by creating a blog that introduces various viewpoints on customer needs, alternative solutions to satisfy the needs, related research etc. In addition, on the company website there are other materials discussing the topic, e.g. videos that can be shared and commented and links to other relevant articles and web sites. The company also starts to actively participate in discussions handling the topic, both on the own website as well as in other social media. Interest groups are also created to Facebook, Twitter and Linkedin. A downloadable application is developed, to let consumers get relevant, topic -related information in a compelling way.

With above mentioned activities, the company aims to reach consumers, traditional and digital media and social media influencers, that are active in the topic area. The target is to raise their awareness of the company and its offerings and to start dialogue with them.

When discussing with consumers about pain points of the interest area, the company gets deep insights on customer needs, which makes it easier to prioritise product features. As regards to services supporting the product, the company has two difficult questions: What services do customers perceive most valuable, and how do other customers affect on user experience of the product? In the former case, customer feedback on user stories that describe, how the product will be used and how it will fulfil customer need, helps prioritise and select essential support services. In case of the latter, customers seem to value advice given by other customers, thus resulting to implementation of best usage practises pages on the website. In-built survey function in the downloadable application is also used as one of the key instruments to capture users´  voice.

In order to find most promising customer segments for the product, the company carefully analyses visitor statistics of its web pages and social media presence, and makes on company pages focused enquiries to visitors. On the basis of this, most interesting demographic behavioural profiles are defined. By analysing demand potential per country, the company can decide, where to first start sales activities.

The company intends to market its products both online and offline. Web presence learning and tools are heavily used for both of them.

Marketing messages are A/B -tested, resulting to best argumentations and ways to communicate benefits, and in addition, right pictures and videos to resonate to potential customers.

Wide and deep web presence that the company has built early enough, deepens understanding, how customers cope with their problem, what alternatives there are to solve the problem and what are the ways, how solutions to the problem are found. This way the company recognises right channels to reach potential customers, right keywords and web pages for search advertizing, and creates relationships to influencers, who will effectively spread the word about the great new product.

Results and learning of online marketing are also utilised in offline planning. Selected advertising agency is briefed with findings from web world, e.g. on customer needs, target segments and effectiveness of communications messages.

The company and its new product are getting plenty of interest, and this in turn produces contacts and cooperation requests from distributors and retailers. A lucrative value proposal and offering is also available for channel partners. It is based on customer segmentation data, information on customer-valued complementing products and services, and evidence on effectiveness of communications messages. In addition, the company can show through documented preorder willingness, how strong product demand is.

Assisted by the Internet and social media, the company is able to have faster and more agile commercialisation process. This in turn, facilitated by rigorous testing, makes continuous learning and changes to right direction possible. 

10 June 2013

Application store discovery - business model and marketing are vital

Getting found in application store space is becoming increasingly difficult, your application is like a needle in a haystack. This post discusses how to improve your chances to succeed in your application business.

Application stores give you visibility - or not

Today, Apple App Store has over 900000 applications and 850 new ones are released every day. Google Play for Android devices can show similar figures, and following these two, there are several other stores expanding their footprint. At least seemingly similar type of applications are fighting to get your attention. As as example, there are over 2400 racing games and over 850 notes & todo applications in App Store.

Application stores seem to be good examples of the long tail concept, and store revenues are very heavily accumulating to the most popular items, see also the picture below. This has intensified the race for top positions and launching of an application has become more expensive, even millions of dollars has been put to market one single item.

When you aim to succeed with your application business, the target is thus to get plenty of attention or secure monetising by some other means.

In doing that, you cannot escape the basic premises of the business, i.e. you need to well understand, what customer job you try to solve, how your solution does the job, and then create an application with great implementation, user experience and usability. We shall discuss, how to improve your odds to succeed in application world from three interlinked perspectives: What options and opportunities are business model choices, effective marketing activities and application store optimisation giving to you.

Business models and applications

Finetuning a business model or creating a totally new innovative one is probably the best way 
to save time, money and other resources in boosting your application business performance. User purchasing an application is a baseline, but here are some examples of other options.

Sharper focus on needs to be served and consequently on customer segments to be targeted may be a good option, because product functionality will probably be more limited and thus also development costs lower. It also helps in targeting marketing messages to right, more receptive audience and makes it easier to optimise store presence for increased attention and conversion in selected niches.

You may select to let a publisher to take care of most of launch and marketing related activities, in return of possible revenues. Publisher business model resembles that of a venture capitalist: he bets on multiple cases and hopes that at least some of them will hit the home run and bring in significant returns to cover losses caused by majority of the cases. For an application developer, publisher can contribute its connections to customer base, money for promotional activities and generic expertize in launching applications.

It is difficult to compete against something free - like 56.2 % of all Apple store applications are.

Freemium model that allows users for free download an application and to experience capabilities and features, removes a barrier to pay for something not tried and tested before. Customers will be charged for being able to unlock new features, remove use constraints or advertisements (in-application purchasing). In games extra game levels or virtual game content need to be purchased. Games have been leading the pack in freemium utilisation, but it is becoming more and more popular in other areas, such as utility and business applications, too.

Bait and hook model is a variation of freemium model, where something is given for free or very lower price in anticipation to get future purchases. Beyond freemium model above, it can be used by giving a customer some digital content or service (or even low-cost physical product) as a bait, hoping that this would generate future revenues to cover the costs.  Or this could be turned around, an application could be a bait to get customers hooked to something a company actually wants to sell.

Free application based, monetising through advertising is well developed, with conventions and ad networks well in place.

Subscription model can be far-fetched for most of application developers, but at least for digital publishers and content providers subscriptions make a lot of sense.

You can also look for sponsoring companies that would either want to create goodwill among their customers or create some other benefit by offering your application, with very low or no price. 

Linking application to wider offering is a good way to unlock other monetising options. If your company has other products or services that can use an application to create tighter relationships with customers or offer them some new service elements, you do not need to sell the application, you just monetise it through existing offerings. An application developer, missing this kind of internal backing option, can look for companies, whose existing businesses could improve their competitiveness or add value to their customer offerings through your application.

In cases, where application is part of total offering, consisting of also a physical product element, there is a possibility to boost application discovery through visibility and promotion of the physical  part. Customers can be charged via physical product, application, possible service part of the total offering or combination of these. Also freemium can be combined with this monetising model.

Beyond some pre-arranged promotion options, using solutions to build cross-platform mobile applications helps very little in attracting customers. The upside of the solutions is getting wider possible audience with less effort.

If you have a solution that can create hype and desirability, through crowdfunding you can  get publicity, pull in pre-orders and start to generate positive word-of-mouth.

Application marketing

Marketing bridges your offering and business model to user discovery in application store by driving  potential customer awareness and interest in your application. Decisions on business model, and of course, depth of your pockets, will affect what activities will be feasible and possible. Most of the tools have been widely used in other businesses, but for application context there are also some very focused ones.

Most important thing is to start creating attraction towards your application early enough. Social media activities with targeted customer groups are the tool to make this happen, with plenty of relevant forums, review sites and industry influencers available. Inbound marketing activities, where you are using your own web and mobile properties with compelling and useful content, provide a lower-cost alternative to put a strong watermark to selected potential customer communities. And do not forget continuous testing and optimisation of your web presence, that will help you to make a quantum leap in your results.

If you know or are able to connect to someone who has extensive following (emphasise quality more than quantity) in your target groups, consider using him. Send these influencers an early copy of your application and try get them engaged and involved in your other marketing activities. In-application messaging can also be used to identify your possible evangelists. In case that you have more money available, celebrities can be used as lighthouses to give you more publicity and visibility.

Promoting a future game (or widely speaking an application) inside a game that is already widely in the market, is an excellent way to reach people that are definitively interested in these kind of products. If your company has proper games in house, great, for others there is a possibility to use 3rd parties and pay them. 

There are special application promotion companies that are willing to promote you - to what extent depends on your budget.

Events that promote also your application serve you well, assuming that you reach big enough footprint with a potential partner. Selection of partners depends on type of your application, e.g. conference organisers and physical retailers like fast food businesses can be lucrative.  Also look for opportunities to participate in online events.

Creating merchandising around your application, e.g. T-shirts, plush toys or other giveaways, will cost you money, but if you have good ideas, how to use them in connection with other marketing, go ahead. If you are able to gather plenty of following in your application business, you might be able to turn money flows in merchandising around.

Even more money is needed to advertise in mass media, but larger companies have already began to use TV, movie theatres etc. Look also for cross-promotional partnership opportunities with media companies.

Application store optimisation

When you have a great business model in place for your application and you have been able to drive visitors to desire and download your application, you have a good basis for application store optimisation (ASO).

Because application store search is the number one source for people to discover new applications, optimisation process that aims to improve visibility of an application in a store can reward handsomely. Specifically, ASO is targeting to ranking higher in search results and to reach relevant top chart rankings.

From optimisation perspective, all application stores are a little bit different. As an example, in Apple store it is important to find right keywords without spamming with too many variations, in Google Play optimising the name of an application is vital and in Amazon you can apply to be featured on storefront.

ASO relies on many of the same tactics as apply to successful search engine optimisation, too. The starting point is to understand your users, how and when they interact with your application and what competitors´  applications are competing on their attention and time. Mobile analytics tools are rapidly developing to give you actionable information on that.

Based on gathered insights, you need to pick up a good name for your application, keywords describing it and right category for an application. For this, there are also some tools available. Do not forget your icon, first screen shot or application description, either.

Your key success indicators (such as downloads or getting 5-star ratings) make basis for continuous improvement, where you make changes to your in-store presence (your metawords, description, application category etc.), test them e.g. through A/B testing and take best new things into use. Best luck!

8 June 2013

8 ways to get first customers to a new product

Money that you get from real customers is the best money you can have. No investment, grant or loan is worth it. Besides enabling product development, marketing and other operations, it also brings many other benefits. When customer needs drive product development, only necessary features, that add value to customers, will be implemented. Marketing will get valuable references and customer feedback, giving strong factual basis for product positoning, segmentation and planning of marketing activities. And lastly, money from customers is real and forces to focus on essential in all company development activities.

This post discusses some of the proven ways, how to find first paying customers. All customers are not necessarily optimal for building future success, but this will be not detailed here further. Product (or service, here we use product as a generic term that can refer also to services or product business having strong service dimension), customer, sales channel and other product and company specific conditions create a context, where decisions on customer development need to be made. Thus look at the list below from your own business perspective. For promoting and finding first customers for digital consumer products, there are some more specific tools, but they are not discussed here.

1. Existing customers

Existing customers know you and your products, so it is much easier to sell them new ones. In case of an existing customer, barriers to making a purchase decision, such as knowing the company and its key personnel, competitiveness of its products and depth of relationship with the company, have been mostly overcome.

In B2B space the key is to create trust in business relationship by exceeding customer´s expectations and as early as possible to identify abd develop need for a new product. In B2C the focus is in utlizing trust towards company and its product brand, and if a company has been able to create conversation with its customers, in using this channel effectively to launch a new product.

2. Customers through your network

If a company does not have customers yet (startups) or if existing customers do not need a new product, it is worth going through various company stakeholders, whether they could help you.

Though existing customers would not be benefitting from purchasing a new product, especially business customers can have good connections to potential customer candidates. This kind of indirect reference opportunities need to be utilized. Also key persons in your company, based on their earlier career, might have direct connections to potential customers - a great opportunity to utilize earned trust capital.

Other possible stakeholders that can assist in building a customer relationship are the most important suppliers and service providers. Startups, on the other hand, need to set capabilities in assisting new customer acquisition as a key criterium in selecting investors in early phases. The same applies to board members and other advisors, also beyond startups.

3. Cooperation with other companies

Very often company capabilities and resources are not enough to be trusted by a customer. In B2B sales it is good solution to join forces with a company or alliance of companies that complement own offering with their products or services. Especially in consumer sales distributors and retailers have traditionally provided the channel and resources to reach customers - the challenge is to secure good enough distribution agreements and execution with them.
Digital applications, e.g. mobile games, have found application stores as a shorcut and means to reach consumers, but attention overflow of new applications is restarting the business for publishers, who will assist e.g. in marketing.

4. Web content marketing to acquire customers

Publishing on own site and wider in the web compelling content that relates to potential customers´ needs , can be an efficient way to start dialogue with them and lower their barriers to accept a new offering. Besides that, content marketing can be done very cost-effectively. The most important thing is to first win customer interest, then their trust, and only after that start full-blown selling of the actual product.

5. Start with a spearhead

A company, trying to sell a new service (or product), can use spearhead tactics to pave way to successful sales. Instead of trying to sell actual full service offering, the gimmick is to first push a customer to purchase a lower valued subset of an offering. It is assumed that a customer has less barriers to accept this kind of offering, and the offering company is competitive with its subset service. After a customer has accepted a spearhead offering, ice is broken and it will be then easier to sell the full service.  As an example, companies that are targeting wider scale consulting assignments, offer seminars and market studies to create initial business relationships with potential customers.

6. Crowdfunding to acquire customers

Crowdfunding is a collective effort of individuals to join together and pool their money, usually via the Internet. Through launching a crowdfunding case, a company and its new product will get publicity, and if consumers consider the project and product that it creates worth supporting and desirable, they are also willing to invest in it. In this case it is possible to attach to investments an opportunity to make a preorder of a new product - a great opportunity to get first reference customers, who are also very willing to spread positive word-of-mouth.

7. Sponsored customers

If a company has a product that can be considered to bring something very good for users and community, there might be other companies that would like to sponsor acquisition costs of potential customers. The sponsors would benefit by getting positive attention by being connected to good things that your product brings and would use this publicity to reach their own targets. Because a sponsor is usually much bigger in size than the one sponsored, costs vs. benefits would be acceptable from sponsor point of view. A possible downside is a possibility of new product price image being distorted to non-acceptable low level.

8. Freemium model

In freemium model a product or service (typically a digital offering) is provided free of charge, but money is charged for advanced features or functionalities. Advertizing based models, with monetization through advertisements attached to a basic product or service, are close relatives to freemium. There are many questionmarks related to use of freemium, but in some areas, like in mobile applications and games, it is very widely used. If prerequisites to use the model do exist, it can be even a pre-condition to enter the markets; Sometimes freemium provides a tool to disrupt established and stagnant industry conventions.