The ROI represents the financial ratio between the money gained/lost compared to the money invested initially.
Measuring ROI for your mobile app development projects is as crucial as hiring skilled mobile app developers to turn your idea into reality. Though there are several tools available out there to collect data regarding smartphone usage, most publishers don't leverage them adequately to get precise metrics.
And calculating the ROI of a mobile app is pretty easy for paid applications because the income yield by the purchase represents a concrete and quickly usable indicator.
The situation is more complicated when it comes to free or freemium mobile applications (free download with in-app purchases). In this case, it is not a question of relying solely on the number of downloads; installations or openings.
The company must come up with a strategy that will take into account a set of steps that are distinct as well as complimentary.
Thus, Forrester Research center proposed a 5-point methodology intended to specify these strategic steps; from the definition of goals to the consistent and quantified measurement of ROI.
Let’s have a look!
1. Determine the benefits associated with mobile app
The first and foremost step is to ask yourself why to invest in a mobile app, and for what purpose(s).
This may seem pretty obvious. However, the ROI of a mobile application will rely in part on the objectives that the company will set according to its business and strategy.
For example; direct and indirect revenue generation, development of the CRM database, customer acquisition, improvement of the brand image, enhanced average basket size, order time reduction, cross-channel sales opportunities, enhanced customer experience, generation of point-of-sale traffic, cost reduction or simplification of internal processes or operations.
2. Quantify these benefits
Once the objectives have been defined, it is a matter of prioritizing and quantifying them using consumer data, forecasts and figures from market research that will allow the company to accurately visualize how to reach the target audience and drive them consumers to act the way they want. The challenge is to forecast the gains relating to these goals.
For instance, if the primary goal of the app is to minimize costs. Then, the app can provide comprehensive service offerings so that the users don't find a need to connect with a call center or customer support service. This significant time saving can then minimize the expenses of the organization.
3. Evaluate the total cost of the application
To have a true estimate of the cost of the investment, it’s crucial to blend all the costs committed to the app launch.
Beyond design and technical development, we must take into consideration the commitment of the developers and testers involved in the project, the complete creation process, maintenance operations, deployment, integration, marketing, advertising, etc.
4. Come up with a business model
After the total cost evaluation, the true costs and benefits are modeled.
For this, it is crucial to have a global vision in order to curate the business model adapted to the company and its goals. Given that a large part of these elements is of the order of estimation; the solution may be to demonstrate their feasibility by quickly materializing the idea in order to determine the actual gain or loss.
5. Use analytics
Last important step of this methodology: data collection. Although this is the most trendy topic in the digital world, it will allow the company to build its business model and adjust the application if required.
Analytical tools are essential in order to comprehend how applications are used (number of downloads, interactions, time spent, etc.). But correctly used, they provide an overview of geographic and behavioral segmentation, to comprehend how the target audiences browse, and what are the bottlenecks or how to address them (graphic redesign, etc.).
Many companies don’t take much time to come up with a crystal clear strategy; nor the means to exploit in-depth analytics, which is nevertheless essential for measuring the ROI of a mobile application.
Among the most used tools, MobileAppTracking allows determining the sources of traffic and the origin of the users.
Flurry, on the other side, measures engagement, retention (customers retained over a monthly period), conversion or turnover. The tool also provides user data (name, gender, geographic location, etc.) allowing the organization to know its customers precisely and to refine its segmentation.
Depending on the data collected by the tool (contact information in particular); it is possible to get in touch with users and notify them of the correction of problems occurring during their sessions.
Final Thoughts
At the beginning of 2017, 83% of the applications published on the App Store were “zombie apps”.
Such apps don't appear in the store rankings or recommendations. This figure currently constitutes under a million apps out of the 1.20M in the Apple app store.
Thus, it's crystal clear that if you don’t desire to publish your app in this climate of disengagement, then strategic development - especially the definition of your goals - becomes extremely important.
Marketing will also play a crucial role since it promotes the application as a product; by ensuring that it is packaged to be attractive, well-referenced to be seen, and then widely used.
Finally, following the key steps of the methodology will empower you to offer an application adapted to your target users and develop it to finally obtain your return on investment. This ROI is nevertheless specific and can be challenging to measure depending on the company and the app type.
Author InfoStride:
InfoStride is a global IT company headquartered in San Jose, California with an offshore development facility in India. We help startups, SMBs and enterprise-level clients accelerate time to market by providing them with a pre-vetted pool of highly skilled WordPress and many more.