Strategy for a Product Launch – Learning Management System – Part 2

In the Part 1 of this series we asked six key questions that should be answered to establish a strategic framework for a product launch, the product in our case study is a Learning Management System to be used in a Higher Education institution, so with that audience in mind we then proceeded to look at the different channels which can be used in our channel mix to acquire customers and raise product awareness amongst the desired audience and create the revenue stream.
Part 2 of the series will entail a comprehensive look at different distribution models including technology framework that is related to each model.

Part 2

Distribution Models:

1. Software as a Product (SaaP)

In the context of our product:

  • Our LMS Platform’s licenses can be sold to individual schools in a university system who may want to develop integrations or further customize the application or want to access data securely and locally hence these institutions can use this licensing model to brand/modify and develop further capabilities of our basic LMS platform and operate the platform on their own terms.

Financial implications pertaining to Software as a product:

  • In this distribution model, the cost of development may be higher but the variable cost of customer acquisition (Sale) will be lower.
  • The method to optimize the margins generated from product oriented distribution model is to align the price to the features that buyers generate value from.
  • So a multi- axis and dimensional product pricing totally based on features can be implemented.
  • This type of distribution model won’t be able to produce a steady income revenue stream but instead generate large amounts of revenue from one-off clients.
  • However, services like implementation, consulting, maintenance, support and solution customizations can be provided at a additional price.
  • Moreover, we can also charge for each additional upgrade it will provide to an institution to keep the software up to date.
  • So a multi- axis and dimensional product pricing totally based on features can be implemented.

Distribution and update Mechanism:

  • Under this model, our product, the LMS will be installed and run on the customer’s local server where it can be instantiated on as many endpoint devices that have the URL Address pointing to the application. This will allow communication to happen only between an institution’s server and its user’s client, securely.
  • An API and Developer Kit will be provided to the client institutions under this model to allow for custom plugins and integration.
  • Upgrade Patches or Monkey Patches for fixes can be deployed to the local server over TCP/IP.
  • As updates become available, a request can be sent from our server to an Institution’s server with patch file that can be deployed by the institution’s IT department when they deem fit.

2. Software as a Service (SaaS)

In the context of our product:

  • In a multi-tenant environment, clients will access the application via internet-connected browser, the difference here is that our LMS application will be hosted on our own servers rather than local servers at any institution.
  • The onboarding process will have users (any perm_role) sign up for free. Based on their (Perm_role) they can start interacting with the application and the features they are allowed to use.
  • The access to full feature set will be granted through paid subscriptions. The model of subscriptions is described in further detail under the Multi-axis pricing headline.

Financial implications pertaining to Application as a Service:

  • Cost of Customer Acquisition will be higher as this model demands application should be up all the time, thereby increasing hosting fees. Moreover, since customers can sign up for free, there is always a chance that they terminate their free account without making the purchase.
  • The upfront price paid for the subscription in this model is low, henceforth generating lower first-time revenue, which can result in cash flow problems.
  • Customer Lifetime value has to be longer than the payback period in order for the profits to emerge
  • Churn rate has to be decreased as it impacts customers lifetime value negatively.
  • Regardless of the above implications, Software as a Service approach represents a recurring income source for our product line and is more financially manageable for the customer as well.

Financial implications pertaining to Application as a Service:

System Administrator – This role represents the system and is responsible for maintaining the application environment coherently, It can access and configure the LMS’ services, as well as control possible subordinate users and their privileges.

User –This role is the generic human role. It represents any registered or non-registered users, and LMS users.

Visitor –The Visitor represents a school or a student from a school which might be an LMS user, but is not yet authenticated in the system. This user is only allowed to register/authenticate and to perform other basic interactions with the system.

Institution User –The Institution User role represents the subordinate users (Teacher, Master Teacher, Students) of an organization. These users can only access a subgroup of the services the institution has subscribed to in LMS’ platform. Note that Institutions Admins also exist to administer institution service subscriptions and maintenance, but based on the context can function as an Institution user role.

CSR –This actor represents a Customer Service Representative who is able to administer the LMS platform and its intricacies.

Customer/Client Institution –This actor represents the subscriber to LMS’ platform. It will usually be the system administrator for a particular application instance.

Use Cases

Change of Services –The system administrator can change the information related to a service’s instance and access and manage its set of subscriptions and subscribers.

Change Level Of Service –Customers can alter their service’s Level Of Service on the run. For this, they may have to pay for the changes.

Consult Subscription –A system administrator can access a running service’s subscription and renew or cancel it, change its Level Of Service, consult other subscription information or manage the set of users with service permissions.

Access Service –Any subscriber (Customer or Institution User) can access a service, on the condition that it has permission to access that service.

Terminate Subscription –The LMS’ Admin will be able terminate subscriptions when the conditions for that are met.

This ends the Part 2 of our series, in the next Part we will look at an important challenge of turning free subscription based account holders to paid-subscription based accounts and we will also ponder over how to generate in-app engagement that can lead to increased user retention. We will also be listing the steps to implement the strategy for both of these goals.