During my studies at ThePowerMBA I was introduced to the concept of Angles of Analysis, which are the aspects we should consider whenever we analyze a business model.
The main goals of this analysis are:
- Be able to analyze the business model methodically.
- Understand hidden or subtle aspects of the business model.
- Catch problems or missing details in order to plan ahead.
I decided to make a short exercise to check how these Angles are reflected in the business model of my own startup company, KashKlik (an innovative Influencer Marketing platform).
Below you see a short description of each Angle of Analysis and its respective evaluation for the KashKlik business model.
Is the market big enough?
Knowing the market size for your product or service is essential to predict your growth potential.
In the case of KashKlik we researched the market (in 2016) and reached these numbers:
- The Digital Ad Spending (total advertiser budgets for digital advertising) was higher than 150 Billion Dollars (globally), and a growing part of this budget was being invested in Influencer Marketing.
- The total number of micro-influencers in the different Social Networks was higher than 250 million people (globally) including an estimated 75 million at Facebook and 60 million at YouTube.
Can you reach the market in a sustainable way?
The question here is if the company has the right marketing and distribution channels in place to grow, what is also called an “Engine of Growth” (a repeatable, stable way to grow).
In the case of KashKlik, this was our planned Marketing Strategy (in 2016):
- Partnerships with Digital Marketing Agencies to acquire several advertisers through a single contact point.
- Direct contact with potential advertisers through our Regional Managers.
- Participation at professional conferences and meetups.
- Publications of professional reviews about KashKlik on Digital Marketing media outlets.
- Inbound marketing: bring traffic to KashKlik’s site through the publication of professional articles on our blog.
- Creation of marketing material such as infographics and presentations.
- Search Engine Optimization (SEO).
- Marketing campaigns of KashKlik on Google AdWords, Facebook, Twitter and other Social Networks.
- Bootstrap campaigns in which the influencers can promote KashKlik itself.
- Affiliate campaigns in which influencers are paid when they bring new users to the platform.
- Email marketing campaigns, acquiring lists of email addresses of potential customers.
- Active presence on Social Media, sharing useful material about Influencer Marketing.
- Daily reach to thousands of real followers on Facebook, Twitter and other Social Networks.
- Email newsletters to our users and to subscribers of our blog.
Is it important to customers?
Here the question is what is your value proposition and if you are solving a real problem.
In the case of KashKlik, our value proposition is:
- For advertisers: provide a new channel to promote their campaigns.
- For influencers: provide a new source of income (be paid to promote campaigns).
Are you customers happy and returning?
The idea here is to measure if our customers are satisfied and if they are coming back.
In the case of KashKlik we validated our platform by initially running several pilot campaigns and asking about the satisfaction of both our advertisers and our influencers. Later, with a higher volume of campaigns and more active influencers, we also started collecting metrics, such as the average number of campaigns being promoted per influencer.
Is it difficult for customers to leave you or switch?
The question here is if the service you provide has a lock-in effect (switching costs), in the sense that it is difficult for your customer to switch from your service to the competition.
In the case of KashKlik, when the top influencers promote campaigns, they gradually build a history of positive achievements with high performance scores. This success history will give them access to the best campaigns in the future. Thus our top users have a clear and concrete incentive to continue using the platform.
Do you have recurring revenue streams?
Here the question is if the company may benefit from repeat transactions from the same customer.
In the case of KashKlik, we clearly observed that the advertisers that were satisfied with the performance of their campaigns would promote new campaigns, generating recurring revenue.
What kind of margins do you have?
This aspect focuses on the company’s profit margins.
In the case of KashKlilk, we get a 20% commission on top of the budget for each campaign, which is mostly profit because we have low fixed costs.
Are you generating cash flow?
The question here is if the company’s cash flow is stable and predictable.
At KashKlik we adopted a policy in which the advertiser must pay for the campaign before it starts, but we only pay to the influencers after the campaign finishes. This mechanism has created a very positive and safe cash flow.
Is your business model scalable?
Scalability is the ability of a business model to grow considerably, rapidly, and with increasing margins (the revenues grow more than the expenses).
At KashKlik we have created a fully-automated Influencer Marketing platform based on advanced Machine Learning algorithms. This high level of automation assures that we are scalable, with very low fixed costs.
Do you have any barriers of entry?
A barrier to entry is anything that protects you from potential competitors.
In the case of KashKlik, our main protection against the competition are our proprietary Machine Learning algorithms, which were developed based on many years of personal experience in the field of Computational Advertising.
Have you reached product-market fit?
The goal here is to find a clear fit between the market and your value offer.
At KashKlik we were able to validate our product during the several pilots we executed with different types of advertisers. It is clear for us now that there is a real demand for our solution, both on the advertiser side and on the influencer side.
I really enjoyed doing this analysis. As I wrote in a previous post, when I joined ThePowerMBA, I had the goal to apply what I would learn to my own startup company. Now I feel that I’ve started doing that, so I’m already benefiting from what I’m learning.