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Business Rx: Working out a way to get more market exposure

The entrepreneur

Ben Young was very fit during college, but his lifestyle changed after graduation. Between balancing work, school and children, Young said he quickly became out of shape. He decided he needed to get control of his body, so he and a classmate created an iPhone app that rewards people for exercising and choosing to lead healthy lifestyles. They launched their app, Nexercise, earlier this year hoping to inspire others to get and stay fit.

“You don’t get obese overnight — it’s incremental,” Young said. “Someone always has a birthday with cake at work and you have less and less time to get to the gym. So, the game platform and mechanics of Nexercise help you make positive incremental changes so you can hopefully live healthier and reach your ideal state of fitness.”

The pitch

Young

“At Nexercise, we believe that exercise doesn’t have to be boring and that you don’t have to drastically change your lifestyle to be healthy. Being healthy is a mindset that’s 99 percent mental, not physical, so we decided to make physical activity more fun and rewarding through our mobile iPhone app. Nexercise is a free app that rewards users with virtual medals, discounts, and even free merchandise for just being physically active. The app uses the motion of the iPhone to determine that the physical activity was actually completed.

“We are starting to see some product traction and we have a great retention rate of people who engage with the app — more than double the average retention of other exercise programs.

“Our challenge right now is gaining market exposure. We have a free app with an average of 4.5 stars in Apple’s App Store and close to 350 user ratings. When we tell people about the app, they get excited, download it, and love it. The barriers to use are low and we have a community of passionate users. All it takes is 15 minutes of any physical activity to qualify to win a reward. Our challenge is figuring out how to tell hundreds of thousands of people at once, when we are a bootstrapped company with no real marketing budget.”

The advice

Asher Epstein, Managing Director, the University of Maryland’s Dingman Center for Entrepreneurship

“I would be very focused on reuse rates before spending money on marketing, design or any other aspect of the business. The long-term success of this venture is going to be based largely upon whether people find the experience to be compelling enough to come back again and again. So what I would do as far as analytics is get focused on what these retentions are: How long does an average customer stay with you? How many times a week do they engage with the app? What are the ticklers that you can initiate to encourage interaction with the game? Who are the heavy users and what is unique about their characteristics? Really dig into understanding your customer and their usage patterns as much as possible. Until you have a very robust understanding of that retention rate, I wouldn’t spend money on any sort of outreach.

“Fortunately, you can determine what it costs to attain a new customer. That will help you determine if it is even worthwhile to expand in the way you are expanding. If you are spending $1 to get a customer, that customer better be generating $1.50. If they are only generating 84 cents, then there is no point in generating new customers.”

Young

“We know who our heavy users are and we have started to reach out to them. Are you suggesting that we really understand our retention rates or that we improve our retention rates?”

Epstein

“It is really a little bit of both. If you can improve the actual retention rate at all, that would only benefit your app.

“On the other hand, when you go out to get investors there’s no stronger pitch than if you can say, ‘I’ve acquired 50,000 customers for $1 a piece and they each generate $5 of revenue for me. Give me $2 million dollars so I can acquire 2 million customers who will go to generate $10 million.’ That pitch comes from understanding the retention rates and what it takes to acquire new customers more so than improving the rates.

“What it comes down to is selling the sizzle versus selling the steak. Your app has the sizzle — you are getting people to exercise in a fun way. The steak is: Are people actually using this app to change their habits and lose weight? The way you know that is if they keep coming back. That is the steak.”

The reaction

Young

“This has been really helpful and I’ve gotten a lot of good stuff out of our meeting. It has really validated a lot of what we thought we needed to do.”

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