ROI of Mobile App Implementation: The Basics

An efficient mobile app can both boost the business growth and become a primary source of income. That’s why app developers are in a huge demand nowadays. It seems that any company has an application now, but most of them are frankly useless.

 

So, how to make sure that the app will be profitable? Aside from the fact that the mobile app has to meet specific needs of your users, it should also have the highest ROI possible.

Why do you need to calculate ROI?

In case you don’t know, Return On Investment is a rate that shows profitability of certain actions aimed at acquiring new users for the application. There are plenty of factors that impact ROI of a mobile app, and you need to consider all of them to ensure maximum efficiency.

 

The mobile app development costs quite a lot, and you don’t want to waste that much money on a useless program that won’t bring you the desired income. Also, remember that even after the launch, you will have to pay employees or the app development studio you’re working with for the maintenance of the application, analysis of user behavior, and constant updates. The promotion of the app requires a large portion of your budget, too.

 

Therefore, you have to estimate ROI in advance to understand if it’s even worth starting the development process. The idea of the app may seem so fascinating that the excitement and anticipation of a cool project can make you forget about its profitability. So, take a step back and calculate. Or, hire someone to do it for you – a third party will offer you a fresh and unbiased look.

 

As simple as it may seem, to get the investment return of your mobile app you need to know its current value (A) and the total spending on its implementation (B).

 

The formula is as follows: (A – B)/B = ROI

 

For a broader picture of your app profitability, some experts advise to take into consideration other metrics such as Lifetime Value, Revenue Per User, and Cost Per Download/Install. However, this is something that might be difficult to calculate right away. So, it’s better to entrust this task to an expert.  

How to gather all the needed data?

Obviously, to calculate the metric you need to know the numbers first. Here is what you should do.

1. Understand the ultimate goal

What is the purpose of the app? Should it bring in new customers? Or, maybe it will simplify the interaction of your clients with your brand? Perhaps, you want a standalone application that will be valuable for users on its own – for example, an educational app (like Duolingo or Headspace), or an entertainment app (like Netflix or Spotify).

 

Understanding this you can highlight the goal action your user is supposed to take. Based on the purpose of the app and the way of its monetization, it can be an in-app purchase of some product, getting a bonus, a conversion to the site, etc. This action will become your ultimate goal that will illustrate the success of your marketing efforts.

2. Create a funnel

The user won’t perform the goal action right away. So, you have to determine the steps the customer has to go through to finally click the needed button. Having a funnel, you can see on which stage of the journey users go away. It will give you some tips on how to increase ROI.

3. Decide how to promote the app

There are many various marketing strategies, and each of them requires a certain budget. Knowing it, you can calculate the investment – and, consequently, ROI more precisely. You also should remember that it is crucial to calculate Return On Investment for each marketing campaign to realize what works best for you.

How to make sure you create an app that will bring you profit?

First of all, you have to remember that you create a product for users, not just because you are excited. The purpose of the app and a set of features have to make sense for the user. Otherwise, you might as well forget about a high ROI.

 

To end up with the product that users love and share with friends you have to study the market and your target audience. Also, while working on the roadmap of the future app, you need to pick out the main perk that will become the reason why users would want to download the program in the first place. This feature must be a solution for a certain pain point the target audience has.

 

All other perks should be built around the main one and create additional value for users to ensure a high ROI. For example, an e-commerce business can offer personalized deals. Restaurants and resorts can attract visitors by not only allowing booking through an app, but offering built-in driving directions and other functions that will make the interaction smooth and pleasing.

 

But, the enhancement of ROI only starts here. After the application is launched, and users start downloading and utilizing it, you need to analyze their behavior meticulously and pay attention to the feedback. You have to improve the app continuously to adjust it to the user needs and desires, because ROI highly relies on the quality of user experience. The more they love your app, the more they are willing to pay.

 

Additionally, always keep an eye on the success of ad campaigns. Measure their effectiveness and highlight the most significant sources of traffic (e.g. social media, organic search, referring blogs, etc.) Then you will understand which marketing channels work best for this particular app, and focus all your efforts and budget on them. Besides, figure out which marketing approaches are the least effective and get rid of them aiming to increase ROI.

Bottom line

There is no one-fits-all solution for both ROI calculation and improvement. All the hints you’ve found above are just a base you should use to build your strategy on. Each application brings a unique journey for its owner.

 

Even though Return On Investment is very important to calculate, you shouldn’t obsess much about it and see it as a measure of your overall success. Consider ROI as a guide that can show you where you should move and how the application should evolve. Then you can establish your own way to prosperity.

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