If you’re offering a service in the “real world” and ever wanted to take it online or create an app, this case study is for you. This offline service business is creating an app that can revolutionize its business. How do they launch and make the switch?
Transcript:
Raj: Hi there. I’m Raj Jha, I’m here with Hannah Mears with another case study. Today’s case study is great if you’re offering something in the real world and do you ever want to take it online or create an app? So there’s so much to think about when you’re thinking about a real-world service and transitioning it online. So in this case study, you hear about such a situation, what they’re doing, and some of the questions that they’ve got around that. So Hannah, tell us a little bit about the profile, of this company and what they’re trying to do.
Hannah: Yeah. So for any of you out there who are like me, and their guilty pleasure is binge-watching HDTV. And then thinking you are just like them, it can decorate your own house or office space or dream bathroom and kitchen. This one’s for you because if you’re anything like me, you actually can’t and you need a lot of help. So with that being said, Raj, our profile today says, “We’ve launched a service that can help you decorate your home in a cost-effective way. It works like this first, you choose your budget and decor preferences. What you like and what you don’t like. Then we give you a list of matching items from budget-friendly retailers like Ikea and CB2. The situation is right now, we’re offering this as a service in Portland with the five contract designers. But our real goal is to make an app that does this.”
“Currently we do a fixed design fee, but growing the business has been slow. The idea is to help people on a budget, decorate using the app and collect affiliate commissions from retailers whose products the app recommends.” I think this is great so far. I think it’s something that’s very attractive to people. The app seems to be something like we’ve talked about much before of this virtual reality experience that people are now expecting, but Raj, your first initial thought, when you start hearing about them wanting to create an app for this. What do you think the market is like for this?
Raj: It definitely seems like there is a market for this. So you talked about your HDTV guilty pleasure. I know my older daughter is always on this app called “Design Home,” which she’s like, “Look, I decorated this.” I don’t find that interesting. But then again, here I am, I just paid a decorator to help decorate part of our house. And she’s absolutely fantastic, she’s amazing but the bills certainly do add up. It is not inexpensive to do it. So I think there is definitely a market desire and there’s definitely a price gap that could be arbitraged here between hiring a professional, which can cost thousands and thousands. And someone who wants might want to kind of, sort of do it themselves and maybe even thinks they’re enabled to do it. So I think there’s definitely an opportunity in this.
Hannah: So the question that they have for you is, “So far we’ve done okay. Promoting our service locally on the fixed design fee, mostly by advertising on Yelp and partnering with apartment rental agents to refer us business. When transitioning from a service to an app, will the same promotional approach work or do we need to try something different?” So I think what we’ve talked about when we think apps really can work, but Raj, what they’re asking you and your initial thought on this is when they’re transitioning, will this approach work?
Raj: Yeah, so it might work. I will talk about petty more details as we go on here, but really it’s a different business. And I think that’s something that people have to realize when they’re transitioning from something in the real world. So they’ve got, I guess they said five designers and they’re actually working on a design fee. Let’s pretend it’s a thousand dollars to do your design work there. It’s a very different type of thing. What I’m thinking is, I have a person I could call and they’re going to help me and walk me through this kind of thing. That’s a different experience and a different value proposition than an app where it’s pretty anonymous and there’s just something you download and you’re expecting to do it more yourself. So I think it’s a very, very different business model, with very different price points. The good thing is you can leverage your expertise because I bet they would have a lot better knowledge than I would create, if I was creating that app would be pretty helpless. So they do have some expertise. They do have clients that they can use to help refine this concept. But this is my initial impression. It is a totally different business and you have to call it for what it is
Hannah: Before we get into how they should be promoting this app. Something that you were talking about was maybe the personal connection that they already have with some of the people and clients that they would be bringing in. How important do you think that will be to still be accessible on their app? Because we have talked about this before. People like to feel like they’re going to VIP when they’re coming and subscribing to your app and downloading, and just choosing you as opposed to maybe a big retailer. So how important do you think it is when they’re creating this app to keep in mind that they need to stay as personally connected with their clients as possible through this app?
Raj: I think if they haven’t developed it already, there is this evolution that they can go through, which is essentially enabling their current service with an app. And then just using that as a way to get customers and service their existing customers. And then slowly deciding how we transition that to take some of the heavy lifting done by people and then turn that into algorithms. So in the beginning, it might be just using the app to take a bunch of pictures of your space and it gets sent to the designers that already exist. So they’re using their existing infrastructure without having to develop too much code. And then over time, they can say, “Oh, okay, once you load the colors and what you need, all these other things, then it can start recommending things on an automated basis.” So there is a world in which they slide into it without having to do kind of this wholesale launch of the thing and it’s fully baked for.
Hannah: Yeah. And I think what Raj was also saying was whatever you have already incorporated into your app, like you were saying, I’m sure they would be sending pictures to designers would then be putting the space together for them, but maybe even have some sort of Avenue on this app where someone could take a picture of their space that they’re looking to design and physically placed items in it that they like and see what they come up with as well. That way they felt like they designed the space themselves in a cost-effective way and have physically already seen the items that they like in that space before they purchase them. That gives those people that personal feeling that they already have. They make them become attached to those items that they physically see and be more likely to go ahead and purchase them straight from your app. So keep these virtual reality experiences in your mind. They’re very attractive to people. And I think it’s a great way to then generate new clients to your business, knowing that there’s already been some success. But you’ve got to figure out a way to first get your app out there before people use it. So Raj, in general, before we get into some specifics, will the same things work for an app as a local business?
Raj: Yeah. The answer is only sometimes. So for a local business apps can enable certain things. So if you’re a truly local business and you’re dealing with things like coupons and reward points and things like that, apps can certainly work. In this particular case, there’s not a lot that is locally relevant. It so happens, they’re important. And it so happens that they’re doing service there because most businesses kind of start somewhere geography-wise and they continue there. But there’s nothing particularly tying them to that area. So in terms of, “Will things work?” Some of them might, and some of them might not. I guess we can go more into detail about Yelp versus the apartment listing agents versus doing paid media, et cetera. But the answer is not always, it really depends on the kind of app and what it’s doing that is relevant to the local geography.
Hannah: So let’s start then by comparing some of those things that you were talking about in terms of promotions they’re using Yelp. That doesn’t sound like a good match for an app-based business, I suppose. But what are your thoughts on that?
Raj: Yeah, not really. With one exception, I suppose that if they were to give this app and it’s a platform and I talked about the kind of evolution concept if you haven’t baked the full-on decision engine and helped people decide on the furniture. If it’s still people based on the backend, you can still do a hybrid situation where a local business in another geography could use your app and get on your platform. It’s almost kind of like a franchising style of the model where you’ve got a brand and it pops up in multiple locations and you do have a local designer who helps you and it’s enabled by an app. There is a world in which that could be relevant, but if you’re really talking about going truly into the app world, then no, that’s not really that relevant.
Hannah: So talk to me then about these apartment rental agents. And does that translate into an app? What are some of the ways that they would be utilized with this promotion of this app?
Raj: We talk about this sometimes, the old school going out there and pounding the pavement and making relationships. So if you do have rental agencies that are of a reasonable size and major cities, it sounds like they’ve had some success locally doing that. So repeat that formula because you can take the pick off the top 10 major cities in the United States and all of a sudden you’ve covered thousands and thousands of units turning over. That’s certainly something that you can do to try and jump-start the app. Now, I don’t know if that’s going to lead to enough adoption. But if you think about college towns, there’s a lot of turnover and people want to decorate or apartment rentals in large cities, some major metros. So definitely, that’s a way to jumpstart it. I think it’s an underappreciated way of doing things in the real world versus jumping straight to paid advertising.
Hannah: Yeah. Login to colleges as well for some of your clients, once you may expand because I know a lot of sororities out there when they do recruitment, they have these big gathering spaces that they decorate like crazy. And if there was a cost-effective way that they could sit there and maybe all come together on this app and decorate it the way that they want to, that may be something that’s really attractive, that if you’re ever looking to expand your audience a bit, that would be the route I would think of going as well. But in terms of promoting this app online, Raj, I think one concern would be, you don’t want this to look like just a game. As you said, your daughter plays, you don’t want this to pop up on someone’s feed and say, decorate your dream home because people aren’t going to want the right audience that you’re trying to attract and do not want to just download an app that seems like a game. So how do they go about, I guess, in the smartest way possible promoting this online?
Raj: Well, I suppose that you have to look at what the audience desires. So the desire of the audiences to have a beautiful home and for times, as we just had, when people have been trapped at home for long periods of time that’s certainly something that they want to do. So if you have to look at that audience and ask the existing customers that you have, why did you retain us, for this personal service that they’re selling right now? So what, why did you come to us? Is it because we’re a better value than hiring expensive designers? Is it because you just wanted to really decorate your home for entertaining, whether it’s because I’m living at home and I need multifunction areas of my own, like, I need the areas to work. And I used to live in areas where the kids were. I think through that, and then think through who are these people, are they college students, are they young newlyweds? Are they people with kids who are these people? And then you can start to triangulate. Well, what’s the messaging that needs to happen around that. So I think that that’s the beginning point for any online marketing or any kind of marketing release, understanding your customer and their used case.
Hannah: What about if they started to try to use some sort of PR to get customers? Do you have an opinion on that?
Raj: I always have an opinion on PR and I think I’ve said before that PR is a great way to burn a huge amount of money. It just lights it on fire and a bonfire. I suppose that people are impressed by being in a magazine. You might want to hire a PR agent and well, what if we get an architectural digest? Wouldn’t that be amazing? Well, guess what, that’s not the right audience for an architectural digest. Well, what if we got into an XYZ magazine or newspaper, the best-case scenario, even if that works, which usually it doesn’t usually have some crummy online placements, but if it works, the best-case scenario is you get a little pop and that’s it, and then it’s done. And then you’re starting from ground zero again, versus having something that’s much more controllable, which is what whenever we talk about demand generation. We talked about understanding your audience and where they are and the ways to get to those a year in control and really going direct to the consumer either on online advertising or having channel partners who already have those relationships. And you can just go directly that way.
Hannah: I think a really smart thing they could do too, is we can talk about, I want your opinion, I guess, on influencers. But if they were going to use any influencers, if you go to YouTube and you look up any type of HDTV type of people, you will get thousands of really popular designers online. They have millions of followers and they’re constantly promoting different types of things to make a cost-effective transformation of your home and ways to get products. I think it could be very smart, but you have to be very strategic about the influencers that you use because they can be very costly as well. Raj, what are your thoughts on the influencer route?
Raj: I think it’s great that you brought that up because I think that influencers are really a good way to do this. Look on Instagram, look on YouTube, find the folks who are doing that “Decorate for Less” silo stuff. There are countless channels dedicated to that and really do outreach. And see, you’d probably have to have the app before you do this, but can you partner with them and have them promote your app? Because I think that this is definitely an underappreciated way of doing things in the app space, but when you’ve got an app space that’s connected with something that people are already interested in the physical real world, it’s a great way to bridge it. And don’t necessarily look for those top-tier influencers. And I think we’ve mentioned this before. Don’t look for the ones with millions and millions of followers. Look for those micro-influencers. Maybe they only have a group of 10,000, 20,000, 50,000 followers, but those followers are highly engaged. That can actually be a really, really good yield in terms of being able to rent their influence in order to get in front of another audience.
Hannah: And they may be very helpful and willing to help you because they’re looking to be one of these big influencers one day. And this is how you start getting different types of people reaching out to you to promote things it’s exciting for them. It’s what they do. They want recognition as well. But Raj, I know we’ve covered a lot of ways that are pros and cons of how they can promote this app in some. Give them just a good starting point of what they can take away from this.
Raj: Well, I think that the big starting point is to realize this is a completely different business and decide, are you going to jump both feet into, “I really want this to be a standalone app that does it something, it is a different business”, or are you going to evolve into it and use the app as enabling what you’re already doing and growing it that way because those are two different business models. One is backed by people and the other one is backed by technology and in terms of how it’s delivered. So I think that that decision is a very important one. We didn’t have enough information on the original profile that they gave us to know which direction they were thinking, but very often people think, “Oh, I’m going to do this app and it’s going to be great.” And that’s fantastic because the app has a huge scalability potential in order to get thousands and thousands of people.
But of course, your revenue is probably going to be small and it’s a different marketing process to get to those people. Or do you want it to just blow up your existing business and use that as an enabler? I think that’s the first decision. And then that decision will drive how you get to market. Whether or not it’s getting more online advertising because it’s an app and that’s really how you’re going to drive it. Or if it’s enabling your person to service, that might just be a different route, might be partnering with other designers locally. It might be those rental agencies, et cetera. So first decide where you’re going and then have a disciplined way of getting there. So I think that at this highest level would be my take on it.
Hannah: Well, hopefully, we’ve answered some of your questions today. If you have more, please feel free to submit them to us, but also go check out our recent videos before this, because we have talked a lot about virtual reality experiences, app generation. So maybe some of your questions have already been answered in some of our earlier videos. Raj, thank you so much for your insight into our client. Best of luck to you as you move forward in this home decor experience.
Raj: Thanks, everyone. And see you in the next case study.
