The Highly Targeted Mobile App

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Mobile apps have mass appeal. Regardless of business type or size, a mobile app can also have an incredible ROI. The key word there of course, is can. While the marketing aficionados and business book gurus out there preach a certain lesson all the time, it is difficult to apply it to your own business when, quite frankly, you want all the customers you can get.

As it stands, the gurus and aficionados are right. The best way generate a positive ROI for your app is focus.

Now, there is obviously some built-in targeting for your app. The individuals most likely to download a mobile app are tech savvy. They are likely on Twitter and Facebook. They play Angry Birds and have a positive attitude towards businesses that go mobile. You can definitely cater to that audience.

But even then, the focus is not tight enough. Putting aside the fact that all of the above behaviors can be just as easily applied to both a hip college kid and his parents, the fact is that the “tech nerd” is dying. We are all tech nerds now to some extent, and so the term is increasingly ineffective as a differentiator.

So how do you focus your mobile app? Get ready for a frustrating answer.

It really depends on you.

Truthfully, mobile apps provide a framework for you to pursue your existing targeted marketing efforts (and you do have a target consumer, right?). Certain modules work well for certain businesses, but the effectiveness of those modules relies on the power of the business itself to identify and speak to a certain audience.

Identify your target audience, demonstrate the fact that you know what they want and are able to give it to them, and your mobile app will let you cut through the clutter of a customer’s inbox and Facebook feed. Mobile apps are highly flexible. They are as remarkable as you.

ROI of Mobile Apps for Business

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Why would my clients want to spend money on a mobile app? What is the return on investment (ROI) for a business mobile app? This blog post draws upon a white paper we wrote a little while back helping Value Added Resellers and end businesses understand why gaining a mobile presence with an app has a positive impact all the way to the bottom line.

As with any new product or service a business is considering, mobile app ROI is important. Let’s estimate the ROI for a representative small businesses to give you a more concrete idea of what it might be for your clients.

For this example we’ll look at a hypothetical day spa. Let’s set up some assumptions first. Our assumptions are:

  • – Day Spa paid $300 upfront and $29.99/month fee for their app.
  • – Average spa treatment is priced at $100
  • – Average Profit Margin for a spa treatment is 50%
  • – Day Spa has 500 customers who have downloaded app
  • – Day Spa sends one push Deal per week, or 4 per month
  • – Each Deal is for 25% off regular price
  • – Open Rate for “Deal” push notifications sent by Day Spa to customers is 30%
  • – Conversion or redemption rate for a Deal sent by Day Spa is 2.5%

So, taking all of these numbers into consideration let’s calculate the ROI of Day Spa’s mobile app in the first year.

  • – First, based on the numbers above, we’re saying that 4 push Deals were sent in the month and that 150 customers opened the Deal each time for a total of 600 Deal opens.
  • – Based on a Deal conversion rate of 5% that means we sell 15 incremental treatments during the month with the push of Deals.
  • – Based on assumption laid out, the normal profit margin of a $100 treatment is 50%, or $50.
  • – In this instance the Deal is for 25% off, so average treatment is priced at $75. This means profit margin in dollar terms is $25 per treatment sold from the push of the Deals.
  • – 15 incremental treatments sold X $25 profit per treatment equals $325, multiplied by 12 months equals $3,900.

So we calculate Return on Investment with the following formula:
((Return-Investment)/Investment ) x 100

In our case then, ROI would be:
(($3900-($300+(12*$29.99))/($300+(12*$29.99)) x 100 = 491% Return on Investment

Obviously a 491% return on investment is a nice result for any business. When taking into account the fact that it will be so much easier for customers to interact with a business from their smartphones for calling, booking appointments and sharing with friends, and that they’re likely to see your brand multiple times per day if your app icon is on their smartphone screen then it’s easy to imagine actual ROI is much, much higher.

Having a mobile app and mobile optimized presence is becoming table stakes for businesses as web sites were in the late 90’s and 2000 era. Combined with their high ROI potential, getting a mobile app makes sense for almost all small and medium sized businesses, organizations and non-profits.

How Do You Measure the Success of an App

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How do you measure the success of a mobile app? There are several common metrics that should be examined when considering the success of an app. I’ve laid out a few of them here:

Metric

Definition

Number of downloads Number of people who have downloaded the app
Number of daily or monthly active users People who have downloaded the app and use it for its intended purpose
Number of loyal users Number of people who open an app a designated number of times
Average time on an app Can include average time in a section of an app
Number of items users engaged with For publishers: number of items readFor  video distributors: number of videos viewedFor e-commerce apps: number of products viewed,  put in shopping cart
Transactions Number of items purchased, subscriptions, or registrations
Retention rate Percentage of users who installed an app during a specific time period and are still active users of the app for a designated time period

We built the EasyApp platform from the beginning with analytics in mind. We give easy access to the data outlined above so you can always objectively evaluate the performance of an app and how to use it to grow your or your client’s business!