Deciding Whether Your Business Needs a Mobile App

When Canadian pizza chain Pizza Pizza rolled out a mobile marketing strategy and accompanying mobile application in early 2011, they were already a few years behind the competition. In America, Domino’s Pizza had gained considerable press for their Pizza Tracker, which lets you see the progress of your order from the time you place it until it arrives at your door.  So what did Pizza Pizza, who operates 600 chains in Ontario, do? They streamlined both ordering and delivery, and encouraged consumers to use the application via an incentive-based system. After an early April launch, they reported meeting the six-month performance metrics in six weeks and won a Webby Award (honoring innovation in web and mobile) as a smartphone-shopping tool.

 “When we first sat down with Pizza Pizza, they knew very little about mobile apps, because what they really know is pizza,” says Melody Adhami, co-founder of Plastic Mobile, the Toronto-based mobile experience and design agency who created the application. “We wanted to offer a totally immersed mobile experience that didn’t require consumers to leave the app, and to showcase what was already delicious food.”

Success stories like Pizza Pizza, while inspirational for many small businesses, are rather rare in the mobile application world, despite the explosion in the space. Late May stats released by BuySellAds.com state that worldwide app revenue is set to hit $15.1 billion by the end of 2011, a 200% increase over 2010, while July research from Deloitte LLP says that 45% of smartphone users download a new app at least once a week. In the same Deloitte research, however, they found that 80% of the apps they reviewed had less than 1,000 downloads. So while the Apple App Store hit 15 billion downloads last month, it still has over 425,000 apps and growing that you need to set your app apart from.

 “An application is in many ways a piece of software,” Adhami adds. “And to that point, it needs to be only a piece of your overall mobile marketing and advertising strategy to be successful. You need to be different and innovative to be successful.”

Developing a smartphone application can also be costly, so you need to ensure you do it right the first time to get repeat engagement and downloads. In this guide, we’ll explore what questions to ask before deciding to design an app, keys to successfully creating one that appeals to your consumers, how to measure success and some standard costs to consider.

What Questions to Ask Before Designing an App

 “The mobile consumer is on the move, and marketers will have to learn how and where their customers aggregate in this new digital landscape,” writes Chuck Martin, also known as “the mobile evangelist, in his new book The Third Screen: Marketing to Your Customers in a World Gone Mobile. “This new wave of digital mobility is leading to what we call the untethered consumer, who are freed from the constraints of awaiting a broadcast message or any form of traditional online communication from a company.”

As you review your overall mobile marketing strategy, it is important to remember that it’s more than just building an application. An app can be a great engagement medium, but it isn’t necessarily the right solution for each business type and each business need. You need to evaluate those issues, listen to what your customers want, and then as Michael Becker and John Arnold write in Mobile Marketing for Dummies, ask yourself these questions:

• Am I trying to reach the most people possible? According to recent numbers released by Pew Research, only 35% of Americans own a smartphone. While that is rather high and will only increase, that’s still 65% of consumers that can’t use an app. If you’re looking to reach the masses, you need to evaluate how many of your customers are actually using these devices, and if they are, which platforms (iPhone, Android, etc.) they prefer.
• Do you need a mobile app or mobile Web site? “It really comes down to budgets and again, determining where your customers are,” says Adhami. “If you don’t have a budget to build an app, don’t do it just for the sake of having an application. If mobile advertising would work best, go with that. If enhancing your mobile site is easier, do that first, because it works across the many different smartphone platforms. If you’re not targeting or tailoring your solution to your business and your customers, it has very little value.”
• Do you have the time to do the care and feeding of a mobile app? An app is not like a microsite you can take down in a few months. The applications that do best in the market demand your users to come back over and over again, and that requires you to refresh and develop new content. If you can’t do that, you won’t get repeat visitors and your app will end up losing.
• What phones do your customers use? You may need to develop a variety of apps for different platforms, dependent upon where your customers are. Companies that develop their first app for every platform are not recognizing where their customers are and where their business will fit in best.

“Even if you think you have a great idea for an application, that’s such a small part of the equation,” says Professor Rahul Mangharam, the chair of Electric & Systems Engineering at the University of Pennsylvania School of Engineering and Applied Science, which has a Masters and Undergraduate program focused on developing businesses and applications. “Whether it’s a student or company, it’s easy to forget about what you’re really trying to achieve with the app because you become so focused on the actual look and feel. The best applications don’t just look good, they actually solve a problem or simplify life for the mobile consumer.”

Keys to Designing a Useful App for Consumers

 “A movie is like a full-course meal, surfing the web is lunch, and mobile is snacking—constantly, constantly snacking,” Martin writes in The Third Screen. “Mobile content consumption is continuous, with no beginning, middle or end.”

What types of apps tend to perform best? According to a study released in early July by Nielsen, among consumers willing to pay for an app, 93 percent would spend money on a game, 87 percent would buy an entertainment app, and 84 percent would purchase both a productivity app and a maps/navigation/search app. Therefore, the most successful apps tend to fall into these categories, As Adhimi states:

1. Entertainment (namely gaming)
2. Content (news, sports scores, etc.)
3. Utility (something that simplifies a typically difficult task)
4. Transactional (ability to purchase directly on the app, like Groupon)

The key to creating a successful app certainly differs by business and goals, but at the end of the day, the goal is to appeal to the consumer in at least one of three ways (according to Martin):

• Make life easier. People are increasingly busier as they work more hours and are constantly connected with technology. Further, many are often overwhelmed by the amount of tasks that they have to accomplish in a single day. An application that eases some of that burden by making a regular task simpler or more efficient typically wins in terms of downloads.
• Make life cheaper. It’s all about discounts and deals. Just as many used to clip coupons, pushing a mobile consumer deals based on geo-location, time of day or interests can be a simple way to provide value and drive purchase.
• Make life fun. With the always-on nature of today’s workplace and the constant connectedness, people appreciate a break from serious and work-related material. Enter gaming.  As an example, Angry Birds was purchased 12 million times on the Apple App Store and has been downloaded over 250 million times if you factor in additional platforms.

Setting Reasonable Goals for Your Application’s Success

Properly analyzing a mobile app’s success is really based on what sort of analytics you set up ahead of time. While measuring total number of downloads is a common way to measure success of an application, it doesn’t tell the whole story about whether people are actually finding and using your app. Particularly because some users may download your app, use it once and never come back if they have a bad experience. Additional metrics that make sense to measure are number of unique app users over a specific time period and an active user rate (number of users versus download rate).

You also need to measure engagement periods and loyalty, in terms of coming back to your app. The four ways to do that are:

1. Frequency of Visit: shows how often your app is being by comparing number of visits to number of users over a given time.
2. Duration of Visit: looks at how much time is a user spending on your app, by comparing how many pages are they viewing versus number of visits.
3. Depth of Visit: quite simply the amount of time spent in your app.
4. Bounce Rate: how many users have come to your app just once?

There are plenty of mobile app analytics products out there, so when you decide on your developer to help with the app, talk to them about setting a measurement strategy.

Measuring the Cost

As with most business functions, the decision to build an app or not comes down to cost. Whatever you do, don’t hire someone and train them in app development. The best approach is to talk with up to three different app developers about what you want and have them build out some cost estimates. The more complex you get, the more it will cost. App developers in the U.S. can charge upwards of $100 per hour, and an article from OS X Daily that the development cost range for “small apps” is $3,000 to $8,000 and that “more complex or recognized brand apps” can cost $50,000 to $150,000.

To get a real quote, talk to experienced app developers who have success stories in the space.

 “Ask yourself why you need an app,” says Adhami. “There’s this app frenzy going on and everyone is excited, but figure out do you need it, and why do you need it? Is an app something you know would benefit your business from a cost or cost-savings perspective? If you ask the right business questions and the answer is yes, we need an app, then by all means go for it.”