Nov 04, 2014 By Ran Avrahamy

The Truth About App ROI

in Apps, Cloud, Featured, Marketing, Mobile

The truth is, while new tools have made creating quality apps relatively low cost compared to potential profit, not every app is created equal. With so much competition on the mobile app market, you can’t create an app believing it will immediately bring you more engagement and conversions — mobile apps only produce the return on investment they deserve.

However, it’s smart to break into the mobile app market. With a low startup cost and an enormous user base, you have the potential for great ROI. In Q1 of 2012, Apple sold over 400,000 iPhones per day — that’s 100,000 more than the people born every day in the world (via Apptive). Your app can yield significant ROI, but only if you do it right. So what’s the secret?

Viral apps are vital apps

It’s vital to create apps that provide tools your audiences need. No matter the size or sector of your business, when considering what type of app to create, you must focus on providing value that synchronizes with the benefits your company provides. One example of this is airlines that have created apps to ease check-in, check flight times, and more, or food businesses like Domino’s, whose app makes it easy to order from your mobile device, customize your order, and check its status.

It may seem obvious that you must create a valuable tool for your users. But what many don’t realize is in order to really drive attraction, your app must offer something beyond what the web-based desktop version of your site offers.

One great example of a company app that offered unique tools is Home Plus in South Korea. The company's grocery delivery business combined product photos with QR codes in train stations so users could order groceries for delivery on their commute. After three months, the number of registered users for the delivery service increased over 75%, and revenues increased 130%. Now, the app has been downloaded over 1 million times and has helped Home Plus make a comeback against its competitor and close the gap in overall market share (via Harvard Business Review).

How can you maximize ROI?

First, determine your baseline ROI by calculating your user acquisition cost, user retention rate, and the percent of new leads and purchases as a result of the app. Compare this to to the total cost of creating and maintaining your app to understand how much your app is currently bringing you.

The two steps to maximizing ROI are really quite simple:

Increase users: To increase users you must understand your current user base. Don’t just track installations; analyze engagement. Additionally, use the valuable knowledge about how new users and loyal customers are finding your app to track the performance of your other marketing campaigns and increase your effort towards those that are successful.

Increase conversions: Increasing users will increase your total potential ROI, but increasing your actual ROI comes back to increasing conversions. The strategy for doing this will depend on your specific business and what conversions mean in your app. One reliable method is to give time-sensitive discounts or offers regularly to mobile users that they could not get from other means. If you are not selling a product, make it possible for your service to complete tasks users couldn’t from a desktop-based web.

Apps hold an incredible opportunity for great return for your investment; however, you must value your strategy as much as any other marketing method. Remember to continuously track your app analytics so you can improve the necessity of your app to your users.

About the Author

Ran Avrahamy is the Head of Marketing at AppsFlyer and former co-founder of Scringo. Managing a complicated relationship with mobile. (Too) early adopter. Loves being an entrepreneur—hates the word entrepreneur.