How to Determine Mobile App ROI for Small Businesses


Effective Mobile Apps and Mobile App ROI for Small Businesses

If you have a small business, then you could potentially be going through the difficult process of deciding whether or not to endure the trouble and expense of creating a mobile application. In today’s day and age, it might be a dumb question to ask that since basically every business has a mobile app. However, as with everything, there are pros and there are cons. Some of the biggest downsides are the time, energy, and huge costs that come with preparing the perfect application.

In an effort to outweigh the cons, small businesses need to look to their business development/marketing teams to create a comprehensive marketing campaign. Through this campaign, effective advertising techniques can be utilized in order to make sure the startup app breaks ground and rises above the competition.

Aside from the aesthetics, you want to make sure that in it’s basic form, the application actually works as a useful tool that helps to create a long-term relationship with your target customer base. Small business will also have to pay attention to success factors such as level of consumer engagement, number of downloads, and overall profitability and revenue.

First, The Basics for an Effective Mobile Application

The most important thing to notice about the times we live in is that very few things that need to get done, can be done non-digitally. If you want to play games, you don’t need Scrabble — you’ve got Words with Friends. You need to go to the grocery store? No need. Someone on TaskRabbit can do it for you within the hour and you don’t have to go anywhere. Need to get across town? No need to call a taxi service. Just use Uber and they’ll be by your place in five minutes.

Let’s be honest, consumers have been spending excessive amounts of time shopping, doing work, and being social (how ironic) on their mobile devices. Therefore, it has been the job of business owners across the globe to incorporate something to add some ease and helpfulness into the lives of their customers and potential customers.

The main thing to remember here is that the easier it is for your business to interact with your target audience, the easier it will be for them to keep coming back. And, it might even stir up conversation between them and their friends about your business, all-helpful towards generating revenue. Also, depending on your type of business, you want to make sure that if there is any reason that customers need to order something, they can do it with the utmost amount of ease.

Most applications can increase order frequency by making the ordering process faster and easier. For example, Domino’s Pizza has made ordering pizza such an easier task by simply allowing you to order your favorite pizza by sending the pizza emoji to their customer number if you have a specific pizza type saved on your Domino’s Profile. Not only the emoji feature, but the pizza tracker, and various coupon specials have helped to increase user engagement, build customer loyalty as people create pizza profiles, and moreover, has helped customers receive so much more from their services. Basically, it’s super important to make sure that your app connects with your customers and helps to give you a competitive advantage over competitors in the market.

Next, try to focus on solving a business problem. The apps that can solve a business problem by allowing customers to get more done in less time, use resources efficiently, keep the footprint green, and present a professional image will continuously receive downloads and generate revenue.

You also want to make sure that your app doesn’t get “lost in the sauce” amongst all of the other thousands of apps that are downloaded daily, so it is especially imperative to make sure that your app stands out from the crowd. One of the most unspoken ways of getting more people attracted to your app is making sure that the application is available on all platforms.

If you want the app to operate on different platforms, such as iOS, Windows, and Android, it may be best to also think about getting a Web application instead of a native application. The difference between the two is that a native app is usually an app that can be downloaded on the specific device itself from the application store provided by the mobile service, such as the Google Play Store or the Apple Store.



A Web app, however, is an application that can be used on any device and can be accessed without being downloaded onto the device. This approach allows your app to work on a wealth of platforms — desktops as well as phones and tablets, if it’s designed properly. Of course this is going to cost more money, but if you think that the investment will bring enough return in the long run then by all means go for it.

One piece of advice, it is often best to cover your bases in terms of customer and audience outreach instead of showing favoritism to those customers that can be found using only a few of the different platforms. You do not want to neglect potential Android or Windows customers by only producing an app for Apple based products. This unfortunately is a big problem especially with Windows phone users, as they are even unable to own very popular apps such as Snapchat! As much as the consumer segment is small, the segment still matters!

Finally, Steps in Measuring Mobile App ROI

As much as mobile applications have become such an important part of a business and their marketing strategy, many businesses are still having trouble trying to figure out how to measure the application’s return on investment. This is important, because being able to measure the mobile app ROI will aide the business in increasing numbers with multiple key metrics, such as customer lifetime value, customer retention, cost per acquisition and audience engagement.

Step 1 — Define Your Goals

Most business models show that there are four basic steps in measuring mobile app ROI. The first step is defining your goals. There are always two categories where you want your intentions to lay, and that includes evaluating your workplace efficiency or evaluating consumer interaction.

We have gone a bit in detail about the latter, consumer interaction. But many businesses also neglect to realize that mobile app ROI could be used in evaluating the workplace. If you are noticing that sales are not increasing as they should and as they have the potential to, then maybe it isn’t the lack of response from your reach that you should be looking at, but rather the areas responsible for creating the reach! If they are lacking at what they are supposed to be doing, then subsequently, there will not be an increase in the revenue you see coming in.

And it may not even be the employees in the workplace, but it could also be a lack of proper asset management within the company, therefore you may not be able to place funds into what is the second step — Development Costs.

Step 2 — Developmental Costs

This step is crucial, not only because you may need to make sure you are keeping within the confines of the budget you may have placed aside, but also because you are going to need it to measure it against the third step in order to get your final mobile app ROI.

Development Costs is the bigger subset that includes the cost to design, develop and implement the app. You also need to keep in mind that after the app has been developed, there needs to be a team for maintenance and support which adds to long-term development costs.

Step 3 — Key Performance Indicator Placement

The third step would be KPI (Key Performance Indicator) Placement. The definition given for a Key Performance Indicator is a “business metric used to evaluate factors that are crucial to the success of an organization. KPIs differ per organization; business KPIs may be net revenue or a customer loyalty metric, while government might consider unemployment rates.”

So basically, the foundation of your company will be determinant of the KPI you use. Depending on the first step and whether you are defining customer interaction or workplace efficiency as your goal, the metrics may differ.

For customer interaction, you may want to know if your app is bringing back customers, or if any campaigns you’ve started is the reason for an increase/decrease in leads. For workplace evaluation, you may want to know if there has been an increase in cross selling or upselling in sales, or if there has been an effort to decrease maintenance costs.

The more metrics you analyze from these apps, the better you can estimate of value of success for your business. These metrics help you to look at campaign efforts from different angles, and can help you maximize your results in any way you would like.

It’s up to your marketing team to mix, match, and combine different important factors in order to get the best results. Be sure that you have also done your research on the best analytics engine so that it pulls the most important data for you.

Step 4— Measure Key Performance Indicators Against Developmental Costs

For the last and final step, you want to measure you key performance indicator results against the development costs. It’s better to do this if you have a projected lifespan for your app, or at least the amount of time you would want to keep spending to upgrade and maintain the app.

You basically can do this with a simple calculation: Find the Net Present Value of the Advantages, {(Potential Revenue x LifeSpan) – (Cost of Debt and Equity)} DIVIDED BY {(Development Costs) + (Yearly Maintenance x LifeSpan) – (Cost of Debt and Equity)}. This figure should give you the estimated mobile app ROI.

Conclusion

Remember, success takes time, patience, and unfortunately some money. But if you plan it right, strategically play your cards, and have a great marketing team to help push you forward, success with your new mobile application won’t be too hard to reach.

Mobile Phone Photo via Shutterstock

1 Comment ▼

Andrew Gazdecki


Andrew Gazdecki Andrew Gazdecki is the founder and CEO of Bizness Apps, a do-it-yourself mobile app builder and mobile website creator for small businesses with over 500,000 customers worldwide.

One Reaction

  1. Great Tips to handle ROI at the best.

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