Monetizing an app with B2B sales?

Listen to the episode

Amma pregnancy tracker is used by 60% of pregnant women of Europe. In our SubHub podcast episode, we talked to Amma COO Stanislav Prodan on how to:

• monetize mobile app with b2b and direct sales;
• mix direct sales, ad and in-app subscriptions;
• build feedback loop and increase app rating.

‍The full transcript of the conversation in English is below (translated automatically).

Vitaly: Hi there. I’m Vitalik Davydov.

Nikita: And I’m Nikita Maidanov.

Vitaly: We do a podcast about SubHub mobile subscriptions. We talk about everything related to mobile subscriptions, monetization and invite prominent guests to join us to hear their stories of mobile app growth. The podcast is created with the support of Adapty. We make this service for analytics and growth of mobile apps with subscriptions. With Adapty, developers completely close the technical issue of connecting subscriptions in hours instead of months, and marketers increase revenue from subscriptions by an average of 25% with A/B tests of paywalls.

Nikita: So we’re starting our fourth episode of the podcast. And today we have our next guest with us, Stas Prodan, COO of the Ama Pregnancy Tracker app. It’s a mobile pregnancy tracking app, and the guys already have over a million and a half very cool pregnant audiences. So, Stas, hi.

Stas: Hi, hi.

Vitaly: Hi.

Team Amma

Nikita: Tell me, what do you do at Amma, what is the COO?

Stas: At Amma, conditionally speaking, everything is divided into two big parts, one part is external, the way our company looks from outside, it’s the work with investments, work with some big key clients, PR activities. This part is the responsibility of our general director and founder, Zhenya Zhikharev. There is the whole internal part of our company, which includes everybody starting from HR to what our product looks like and what value it carries. This whole internal part is my responsibility. In essence, it’s like a general and executive director in Russian reality. Accordingly, we have to understand everything a little bit and make sure that the departments are in sync with each other as well as possible.

Nikita: And how big is your team?

Stas: If you add up the headcount, we probably have about 30 people. There are a very large number of contractors that we work with. I’m doing this exercise, by the way, I recently calculated how many people we have in total, and it comes out to 60 people.

We’ve grown a lot lately, because about a year and a half ago, our company had ten people. And with this growth, you have to change processes very quickly, try different things, how we can do the same things, and change those processes. We are not responsible for constant improvement of these processes.

Nikita: You’re also responsible for the development.

Stas: The story is that we first brought our marketing director Pyotya out and separated our first department, for which Pyotya started to be responsible. That is, everything that concerns marketing and monetization.

Then I stayed in charge of product and development. After a while we brought out the technical director, Vova, and we separated all the developers into a separate department, too. Then we released another editor-in-chief, Olya, and she formed her own department. I manage everything else, where there is no specific person. Now we are very much focused on bringing out the CPO, and then I will be able to give product management to a person in the CPO, too.

2020 and the birth rate

Vitaly: Stas, the main question: did 2020 have an impact on the birth rate?

Stas: The answer is yes, it has.

Vitaly: That’s where the increase came from.

Stas: Yes. But all the conditions are done, and it seems to me that there is such a global problem, on the one hand, in that every year the age of the first child of a mother increases. That is, if before it was 16 years, then 20 years, now in advanced countries it’s 28-30 years.

On the other hand, these people are more aware of their pregnancy. But yes, at the time when there was a pandemic, in general, I think a lot of good things were done, as it seems to me, which influenced that the birth rate also increased.

In our application we probably can’t talk about the whole world, but in the CIS countries we are used by 60% of all pregnant women who are there in principle. And when we do some kind of survey, we can say that we have more than half of all pregnant women, so if there is any movement here, then yes, we can signal that movement.

Vitaly: By the way, it’s interesting, I thought that on the contrary, a time of crisis can decrease the birth rate. It’s, you know, like I was born in 1994, and that was a time when people didn’t really want to have children. It’s interesting that the situation is different now.

Stas: I don’t think there’s the kind of crisis now that there was in the ’90s. Everyone says that there is a crisis, but in reality there is some kind of stagnation, I would call it so.

And the fact that people just stay together in one apartment and that they end up having kids, that’s just biology. So there’s nothing wrong with that.

Vitaly: Did you do anything special during the covid? Maybe some kind of promotion or a sale?

Stas: We started to do something, and our first attempts to do something led to the fact that users just started writing that everywhere covid, eh-moi. It wasn’t here, and it showed up here. We thought, that’s enough talk about covid, we heard our users, and all we did was leave some kind of memo and we never talked about covid as a whole again. Maybe some peak news that comes out, that the vaccine is allowed to be given to pregnant women, for example – we will talk about that.

How Amma came to be

Vitaly: You mentioned that 60% of pregnant women in the CIS use your app. How did you get to this point? How did it all start? In general, tell the story.

Stas: We have to start from the moment Mobile Dimension is a company that does B2B mobile app development for large contractors. And in general since 2013 we’ve been doing custom mobile apps that had 10 or 100 users.

But we did, with deep expertise in understanding business processes and how mobile devices can be built into these business processes. And in 2015, we had an order to develop a mobile application for a forum that was on the web, which was about medicine. This was all without me, it was a company called Mobile Dimension that developed an app in which you could manage the content and manage the color scheme, manage the pictures. And they marketed about five different products about different areas from medicine.

We developed this thing, it was bespoke, we released it, but the company that it was all done for changed vectors, and they came back to us and said, if you want, you can buy back what you developed so you can own it. We said of course not.

But before we gave the final rejection, we looked at the analytics and saw that all of the other apps that we released had organically had some number of downloads that were measured in the hundreds. For some reason, the pregnancy app came organically in the thousands.

And without knowing much about the subject, just some entrepreneurial instinct on the part of our general funder, he said, “Let’s buy this out, we don’t need the rest.

And that’s how a B2B development company got a B2C product that was interesting to develop, simply because the topic is so socially relevant. Everyone goes through the topic of pregnancy. And there’s a motivation in this story to do something even for nothing.

And within our company, Mobile Dimension was all very active in B2B custom development, but this internal product was growing. There was something counter-tributing into it when developers were released. In general, it evolved from the reviews that were done in the Store.

We were the guys who were really reading them and really building the backlog from those reviews.

One of the cool things I like about Mobile Dimension is that if you want to develop into something else and pivot from your profession to another area, they’ll support you and give you all kinds of extra practice to make sure you get the hang of it.

I’m launching B2B products in 2018, very much interested in the whole product movement, going to all sorts of courses, getting scrum org certifications and so on, but at that point in time I was doing a project for a company. We had a thousand users there, and we implemented a system of analytics and looked at how the users were doing.

At the same time, I was taking a GoPractice course, and I realized that for our 1,000 users it wasn’t working very well, and I went to the general director and said that I was very interested in this topic.

He said, well interesting, here you go. We have a pregnancy calendar inside. And I had about twenty percent of my work looking at the pregnancy calendar and trying to apply my initial knowledge. And then within six months I got completely sucked into it, and I didn’t want to do anything else, just this app. Because I think it’s kind of a gamble, when you do a thing and you realize that it can either affect or not affect at all, or affect it for the worse.

You run it, you have such an awe-inspiring moment that it’s basically like snowboarding. All in all, it’s a very exciting thing. You start it up and you’re really waiting to see if it’s going to go in or not. And in the end, when you see feedback from millions of users, either by events, some figure in analytics, or in reviews, or on some depths, show that they need it, don’t need it, that it has somehow changed their lives, it is an unspeakable feeling.

So, of course, it was completely absorbed with the head. And now I want to do exclusively B2C applications. That’s how the pregnancy calendar came about.

Growth

Nikita: Tell me about the growth process. You say you started doing it, everything was so great, you released features, and you already had a million users. Was it all organic or did you attract them? Tell us about that.

Stas: When I came in, there were a little less than half a million MAU in the app. This is already a sufficient audience to apply some kind of product analytics skills. And these half a million MAU were reached organically, just by the fact that the app was in Store and by the fact that people were interested and tweaked our page a little bit to make it appear at the top of Store.

And that was actually enough, because really, when you get pregnant, even your obstetrician says, download some app so that it just shows you how far along you are now.

And people go to the Store, they write “pregnancy,” and all you have to do is be at the top for the word “pregnancy” and you’ll have organics.

We looked at then, if you’re in first place, you’ve got about 70 percent of all traffic coming to you. If you’re in second place, another 20 percent of all traffic. If you’re in third place and beyond, there’s already a residual story there.

So it was very important to be in first place for the keyword “pregnancy.” Well, and did ASO to make it work. And in this way was able to keep this audience.

Plus, at Google, it really does matter how long you’ve been on the Store. We were an app that had been on the Store for a really long time about pregnancy. And it allows you to grow organically without even attracting any paid traffic.

Organic growth vs. paid traffic

Vitaly: So the first half million is organic, and then?

Stas: Yes, organically. In 2019 we started working with buying traffic a little bit at a time. We started doing that at a point in time when we realized that ASO, in terms of company capitalization, is not a very stable story. That is, in general, a competitor may come in, may buy out all the positions, pour on the purchase budgets, and your company will be gone at that point in time.

So you always have to understand how much you can buy users for, how much you can buy users for your product, so that it pays off. And you had to understand performance marketing and how attribution works in order to not develop organically.

I mean, in words, organic growth is a very good thing. But from a company’s point of view, organic growth is good in the beginning, it can tell you that your product is really needed, it’s even virally snapped up. But up to a point. When you’re already talking about building some kind of stable business, you need to understand how your economy works even at the point where you can buy users.

In 2019, we started attracting an audience. What you have to understand here is that unit economy convergence is not a Boolean indicator. That is, like, converges, doesn’t converge. It is variable and depends on a large number of factors.

It may converge in some countries, and it may not converge in others. It may fit in some countries, but the margin does not suit you, and so on. So we buy in those countries where the unit economy agrees, or some kind of experiment takes place. We try to keep something like 70% organic and 30% procurement.

Vitaly: And in terms of monetization, what is better to monetize – organic or paid traffic?

Stas: In terms of monetization it depends very much on countries. The question is very complicated. We divide monetization into three big parts. Half of monetization is advertising monetization, some other part is monetization due to our special projects with all kinds of big brands. And then there’s subscriptions.

And all of this history complicates analytics, you can’t say that you have the exact cohort you cited monetizing at any given time. Because whether or not it’s monetized depends more on what direct advertising campaigns you have at the moment, for example, what’s going on with the market in general.

Everybody knows that in November and December it starts to heat up, you have CPMs going up, and overall this story is very much a dynamic story. So we’re looking more with a different story. When we attract users, we don’t pay it off right away, not right on the paywall, we still have to keep it inside our app for a long time, because it’s going to pay off a little bit at a time through advertising. And when we’re buying, we’re not looking at conversion to paywall or conversion to some kind of purchase first, we’re looking at metrics that can predict to us that the user will stay with us for a long time.

And this thing, on the one hand, makes it difficult for us to get the users we bring into our app, but on the other hand, it’s a good competitive advantage for us.

We’ve learned to predict the retention of the seventh and fourteenth-day user from the first user session. And by launching some advertising campaigns, we can understand to what extent the user will stay with us.

Considering that we reach a plateau somewhere around the 14th day, this is enough for us to understand whether this cohort we brought in will pay off or not.

Monetization: advertising vs. subscriptions

Nikita: So subscriptions are not your main monetization channel?

Stas: Subscriptions are not the main monetization channel at the moment in terms of revenue that we get. In terms of the resources we spend, I think subscriptions are half of what we do.

It all depends on the strategy that we choose, and strategically at this point in time we’ve decided to focus on subscriptions. So it’s just about setting up the right analytics, doing the right AB tests and launching some initial experiments, and developing the things that those experiments show us.

Vitaly: Actually, there’s a pretty interesting issue here, that almost all of the mobile apps that I know, especially on iOS, are monetized through subscriptions. And your case is the only one that I know of that is successful and that has subscriptions as not the main monetization channel.

Imagine I have some kind of mobile app. I want to go and do a direct ad contract – what does that take?

Stas: It takes a lot of thinking first, because you probably don’t need to. It’s really very complicated. It’s easier to grow on subscriptions. Because it’s at least scalable.

I think this decision of ours [to monetize not with subscriptions – ed. note] comes more with our desire to do something for a very large audience. We have our friends who only have the app available by subscription, or some small part without a subscription. We want to have a very large audience that we can deliver value to.

And our main value is content. We want that no matter what your income is, whether you have that hundred rubles or not, especially when you’re pregnant, we really want to make all the content free.

It is solely because of this position of our company that we are deep into advertising. But for all this to work well, you have to have a real sales department in your company that will work. If you have a global company, one office is not enough, you have to have a global network of offices which deal with sales. And it’s very complicated.

Vitaly: Wait, I understand correctly that it works like this. Let me have some app, let me have a shitload of traffic in it, let me have a water tracker, for example. And I’m like – let it be free, but I’ll sell Evian ads, for example.

I mean, I just go to Evain as a funder and make a classic B2B sale, and then we somehow host them inside the app. And that works roughly like that?

Stas: Evian is probably already placing their ads through some kind of Facebook ad accounts. And in general Evian’s first question will be: why should I work with you directly? Why can’t I just show my ads inside your app?

You have to do some additional things. It seems to me that the advertising market is already quite mature, and in terms of advertising motivation, there are a lot of good companies. You put an engine and say: here will be a banner, here will be a banner, here will be an interstitial, here will be a rewarded feature, and so on. Go ahead and fill it out, dear friends. The auction goes on. The same Evian can get to you without you even knowing it.

That way you’ll monetize your product pretty well, I think. At the very least, I think you can make the economy work on a product like that. When we talk about direct advertising companies, these are more like special projects; they can be some kind of native stories, with content. It may be some additional things where you brand some section.

And you have to show and prove that this thing will work more effectively than simple advertising.

Vitaly: It’s not obvious, by the way. I mean, you’re always competing with the usual ed mob or some such thing, audience network, which are standard. And you have to really do some deep client integrations within the app.

Stas: Yeah. I mean, we even have this thing, usually this agency does everything, and we won’t even know it, to startget their creatives to show exclusively in our app. But we know that if you do it with us directly, then the conversions will be four times higher than what agencies normally do.

So if the usual conversion rate of an interstitial is 1%, we can make it a 4% conversion rate. This is if we’re just talking about advertising. I’m not talking about direct ad integrations. It’s not even just about conversions. The market is so well developed that bots, and all kinds of people who find these bots, and all kinds of programs that find these guys who block these bots, in short, it’s really easy to drain the budget there. If you’re not very good at it, you can go in and spend a lot of money, you even have a lot of people coming to your site, and even those very many people will do the very right things for you, read content and so forth, but they won’t buy.

In that sense, we’re not just talking about some conversions, we’re talking about a whole funnel that has to work. And that funnel will work if you monitor the effectiveness of the whole advertising campaign.

And you can monitor it if you work directly with publishers, it’s more effective, that’s a fact.

Vitaly: And why in general, the choice of B2B is not the most obvious?

Stas: Basically, we had no choice. We wanted to make a completely free app. So that it would be available to every pregnant woman. And somehow we had to monetize it. I even remember our paywall, three years ago it was like buy a subscription from us, it’s cheaper than a cup of coffee. I think a lot of guys had it.

But users didn’t want to buy at all. It was a very big funnel that we were building, like a million people went to the application, a hundred thousand people clicked on the screen to buy a subscription, ten thousand people clicked on the button, zero bought a subscription. In reality, not one, but zero.

Vitaly: Maybe, they are bots?

Stas: No, they are not bots, I call them zero vortices. And there have been a lot of such zero funnels in my sales practice. And at first you think that something is not working, that there is a bug or some bots somewhere, but actually zero funnels exist. That means you’re not communicating the value correctly. It means that what you’ve been doing, no one just wants it. That’s it.

So a pitch of “buy a subscription from us, it’s cheaper than a cup of coffee” is a pitch that carries no value.

Nikita: You said that you still want to go into subscriptions and develop this direction further. Then what’s not going to be in freemium?

Vitaly: What has changed? Why, if it used to be B2B, why do you believe more in subscriptions now?

Stas: First of all, what has changed is that we’ve gone the venture capital route. And in that sense, in terms of evaluating your company, it’s more predictable if your business is growing through subscriptions.

Because the same advertising contracts may be there now and may not be there tomorrow. Your ads work now and may not work tomorrow. And if you have an audience that’s not paying you to advertise other products, but paying you for your product, it’s more interesting in terms of capitalizing the company.

And right now, we’re not working on having everything solely from subscriptions. We’re working on just increasing our revenue share of subscriptions. Because this channel is projected very well, and you realize that you have such-and-such an army, it pays monthly, and it means that in a month or two or three you’re going to have such-and-such revenue.

And that’s a very big argument in your evaluation, especially if you’re going with the venture capital model. So that’s why we decided to go into subscriptions. Well, overall, nothing will change in terms of the free nature of our content, we have all the content that we have now, it’s free, it will continue to be free.

Thanks to the subscription, we are doing new things: you can get in-app midwife consultations, for example, we are testing this story right now. And midwife consultations, they already cost money of some kind. In this sense, we can agree with the companies that will do these consultations; we will pay for these consultations ourselves, and we will make money on the margin, but on the whole, this will be our internal subscription.

The B2B component of Amma’s business

Vitaly: You can do the B2B story again.

Stas: Yes. By the way, you can’t probably just cross that out, the fact that our roots are still mobile B2B development. And that’s the part where we probably have two strengths, not one. On the one hand, it’s a very strong development that’s turned out. On the other hand, it’s very strong connectivity in general, in terms of the connections that are there. You can find any person you want to find. At any given time.

It’s really great, not just in terms of monetization, but in general. You want to run some kind of test – somebody got the idea, and let’s sell diapers under our brand. We’re like – so, how would we sweat that out. It’s not like you’re going to charge your plant.

You can reach out to anybody and say, here’s a test we want to run. And that’s it, in a week you already have an experiment about selling diapers by subscription, roughly speaking.

The medicine vs. fitness category.

Nikita: I also noticed that you’re in the medicine category, not health&fitness. And that category is mostly pharmacies or telemedicine. I don’t think there are a lot of consumer offers like that. Content, I mean, like yours.

What does it do for you? Does it help you in organics? Why this category?

Stas: Yes, it helps in organics, this category is not as competitive, so it’s easier to be at the top there. And as far as I remember we were the first in the medicine category, and after that our competitors started to come in too.

But now I saw that there is a new category called Parenting, I am looking at it from afar, maybe we should try it. But in general, yes, it’s purely such a seo motivation to be in this category.

Negative feedback

Nikita: How do you deal with negative feedback from users? I assume there are quite a few users who complain about ads?

Stas: Of course. Last year I created a small support department and we integrated a tool in our app that allows users to leave feedback inside the app. And we try to build the user flow in such a way that if a user has something wrong, so that they don’t have a desire to go to the Store and complain about it, but to have a desire to go to our internal tool and complain about it.

We had a lot of negativity related to advertising and some other parts of it, now as soon as we hooked this thing up, it was like a burst, like users had wanted to say something for a long time, and now they had this opportunity. We started getting a thousand messages a day from users who wanted to share something.

And we structured the process in such a way that in positive moments we would prompt the user to leave a positive feedback in the Store, and in negative moments we would have them go complain to our tool. But in any case, it doesn’t keep us completely away from the negativity that’s in the Store. We just agreed that we look at the volume of these negative comments about advertising to the total mass, and if it grows, then we do something about it. If it’s not growing, we don’t do anything about it.

That is, we’ve agreed on a bar that we don’t go over in terms of feedback. And you have to understand that even if you have 10,000 reviews in the Store – we have 30,000 right now, I think, in the five years our app has existed – you have to understand that in a month you may even have 10,000 reviews in the store.

But even these users who wrote something in the Store are not a significant entity in general. I mean, we conduct surveys, grocery surveys for example, or surveys that we conduct with Sechenovka, for example, or surveys that we conduct in our PR activities are conducted for tens of thousands of people. And there we already build the survey in such a way that we actually find something that’s important to our product, that will actually affect its development further.

Feedback on the Store is such a litmus test that shows that something is actually wrong, and you need to pay attention to that, in case you have the number of negative reviews going off the charts.

There’s always going to be negative reviews, anyway. What they can definitely have a negative impact on is the psychological state of the fans and the people who are responsible for that, because we’ve all been through that mistake where you can download the Crow app to your phone and it defaults to giving you fluff if someone suddenly gives you a 1 or a D.

And if you’re very passionate about your product, you’re going to be very frustrated in a week. Because you seem to be trying, you seem to be doing, and you seem to be getting scolded and scolded.  

The first part I did was to get not only ones, but fives as well. And that way I’d get a little frustrated, and then I’d read some positive feedback and think: oh, great, so I’m doing a useful thing. And the third stage is that I just turned off all feedback from the Store about ratings and set up the process in such a way that I understand that absolutely every feedback will be answered, will be answered by someone who is really very good at handling this situation, and we in general are constantly developing the support department, learning from something. And I think that maybe in six months we’ll have very cool expertise, because in general to build all communication with the user in terms of negativity, how to handle them properly, what tools are there for that, and so on. I think when we get to some kind of first comma, we’ll probably write some kind of article on this topic, too.

How to implement subscription model

Nikita: Great. And one last question, as useful as possible for our audience. So you’ve decided to do subscriptions. Where do you start? Tell us your vision approach.

Stas: Before we started to introduce subscriptions we said a lot that we can reach anyone, and this whole networking thing helps us a lot.

We talked to guys who have already implemented them and who have already gone down this road, what kind of bumps they had and what they had done. All of them told us that it is very important to build very good analytics.  Cross-cutting. That starts with the moment when the user sees a banner and finishes at the moment when the user cancels everything he cancels.

That’s all the analytics that’s very important to build. We heard that from everybody, there was even a company we talked to. They were saying that they had been trying to improve their product for several years, and now we realize that we should have given up on everything and only improved onboarding. Like, that’s the biggest growth point that there is. That’s even the kind of feedback we’ve had.

And we actually the first thing we did was set up the analytics to make it work well. We set it up including from Adapty, because Adapty has a cool value – it’s very easy to set up integrations. That way we could really make it end-to-end. Now the user sees the banner and it works in our application, we see it in Mixpanel.

What we’ve done next is we’ve made all the things we have in our paywall and not only in Adapty customizable, thanks to this test engine. I mean, there’s texts, pictures, where the button is located, the product, and so on. All of this is done by customization.

And then you have this automaton of just a huge number of different variations of the paywall that you can make up at any given time. And you just take and run a large number of experiments, and they can all already be taken at a given point in time simply from other paywalls that you see and think, oh, cool topic, I’ll try it out for myself.

You take it, set it up, test it, run the experiment, and after a while you understand if it worked for your users or not. In general, all the cool mechanics have already been invented on paywalls and already made by some great guys.

If you’re starting the whole story from scratch, you can try out the mechanics that already exist.

The next stage that’s waiting for us now, and we strategically set goals for the quarter and realize that now we need to work on that, then we need to work on that.

Right now we’re working on first-time purchase conversions. The next thing we are going to work on is that users do not cancel subscriptions. This, I think, is such an interesting part of product development – to understand how to tell the user about your value that you do, to make sure that they are not angry when they get charged the next month, but on the contrary, are happy, because I really feel the benefit of this product, so it is good that I pay for it. Or it’s good that it’s so convenient.

Nikita: Do you consider the r