The Business Model (How to Make Profit)

Chapter 1, 'Finding a Gap in the Market', examined the first three steps of the start-up. The third step - finding a solution to a problem - is broken down into a brief description of Nocturnal's functionalities. However, there hasn't yet been any emphasis on one key word: monetisation. This chapter will discuss the services Nocturnal can offer and their versatility. Above anything, it will estimate, or predict, the potential for financial sustainability and growth.

As opposed to a product based business, Nocturnal couldn't sell one physical item through Meta and simply retarget the ads to sell a second, third, fourth, etc. In a sense, these businesses can start with a much smaller budget - so long as they have enough to cover their expenditure (manufacturing, shipping or marketing). Despite the E-Commerce model having little maintenance to cover (an Excel spreadsheet of recurring costs can be found below), there is one catch: the value of the platform will ultimately be dictated by the size of the warm audiences the venues and artists are able to tap into. This detail makes a huge difference: Nocturnal practically has to be successful from the beginning. If this is achieved, charging users for their access to the network can become common practice. Below are the considerations of how this could happen. Each plan is tailored to a specific type of user. These users identify themselves through the profile creation process upon downloading the app - ticking boxes such as 'I'm a musician', 'I'm here to discover the local nightlife', or 'I work in the music industry'. Their answers then automatically group them in the author's Goodbarber backoffice. (Goodbarber is the name of the service provider that enables app development without coding. It's similar to Wix - only specific to mobile apps).

1. Music Supporters (type 1) are the driving force of the app's inherent value. Their numbers will dictate and justify the fees that the two user types below get charged. Their activity on the app will also enable more creative or custom-made marketing campaigns for the artists. All of this considered, the business should strive to count as many of them as possible. Growing in this way can only be achieved by keeping each one happy: that means updating the events pages at least once a week and ensuring users don't get spammed with notifications. The latter can be done by geo-fencing announcements or simply charging more for them to be sent out. For the early stages of the business, these users should have access to the app for free. With nothing to lose, they're more likely to download it in bigger numbers. This being said, the author may consider introducing some premium features further down the line: possibly enabling early access to tickets or discounts in selected venues.

2. Artists and DJs (type 2) use the app as a freemium service. They can find nearby fans or musicians to elevate their network, but accessing the local scene as a whole comes at set prices. These prices are determined by the number of type 1 users. Understanding the data laid out in previous chapters is important: most of these individuals are in early-career stages, ages 18 to 34 and unlikely to spend any more than £50 to promote their music to 1'000 or so people. Consequently, they will be offered one-time fees - planned in accordance with releases and shows in the area. They could also be given the added security of a refund policy: if they feel unsatisfied with the results of the campaign, they can apply for a 100% refund within three days (for example). These are 'marketing tactics you can use to give the buyer confidence in their decision and help nudge them across the finish line' (Will Russell, 'Launch in 5', page 68). Eventually, Instagram ads could be run directly to type 2 users, promising them only the promotion tools - without even needing to create a profile within the app. Only three of these £50 payments, or six £25 payments per month would be needed to break even on current maintenance costs (see 'Financial Report' Excel).

3. Venues and Promoters (type 3) are the high-ticket customers. Acting within the B2B framework, these businesses can set up automatic lead-generation systems within the app. Nocturnal can then charge them commission fees or set monthly prices for the traffic. For example, if a grassroots venue in Camden sends out 5'000 notifications a month through Nocturnal, and 100 of these attend an event, then Nocturnal could justifiably charge £2.50 per converted customer. The success of the geo-fencing tools can easily be measured from the Goodbarber back-office, which displays click-through-rates and watch-time. (Note:) As this is a more complex and costly relationship, these prospects might be better reached through LinkedIn. The tactics for approaching high-ticket leads are outlined in Daniel Disney's 'The Ultimate LinkedIn Sales Guide'. Disney is an expert in social selling to businesses, and writes that 'For me, LinkedIn messaging has been a gamechanger. I went from (...) cold calls to building a multi-touch cadence resulting in a huge increase in conversions. A big part of that was down to (...) LinkedIn messages' (pages 109-110).

See below an explanatory PDF, detailing each of these plans.

HBAMBU004 - KIB22083120 - Nocturnal App Ltd

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