For businesses to measure success, they should first be able to successfully measure the efficiency of their investments. This is why Return on Investment (ROI) is a key metric for every type of business there is. ROI is how businesses determine what is working for them and what isn’t.
ROI for App Development
This is evidently the age of m-Commerce. People make purchases through their mobile devices conveniently. Businesses with mobile applications can reach out to potential customers directly on their personal devices, and entice them to make purchases. The trend caught the attention of businesses worldwide paving for the enterprise mobility revolution.
But even with this being the case, many businesses are still reluctant to invest in mobile apps. One main reason for this is the uncertainty surrounding the ROI for mobile apps. Not all mobile apps can succeed in a competitive marketplace. Considering the fact that app development can be quite costly, many businesses are unwilling to risk believing in the success of the app they develop.
But that’s a different story. For now, we will explore how a business can determine the ROI of their mobile apps.
Measuring the ROI of Mobile Apps
The first step to doing this is to define the objectives of the app i.e. what your business wants to achieve with the app. The app developers should be aware of the app’s business objectives and the key metrics at all stages of development.
Paying attention to the cost
This is how a business can ensure that it’s keeping within the confines of its app development budget, and not using any additional or unnecessary resources in the development process. Development costs generally include implementation costs, hardware costs, support and integration costs. Auditing these costs is important as it should be measured against the key performance indicators (KPIs) later.
Defining and measuring KPIs
A Key Performance Indicator is a metric that businesses use in order to evaluate factors that they believe would directly impact the organization’s success. As such, KPIs differ from one business to another. When it comes to a mobile app, the KPIs chosen would also be closely tied to the app’s objectives.
For instance, if the objective of the business is to interact with customers more via their mobile app, the interaction is considered a KPI. To measure it, all they need to do is to compare the cost of their mobile efforts with their efforts via other channels. This way, KPIs can give businesses a measure of how effective their campaigns are.
Estimating the app’s overall value
With measurable KPIs in place, a business can measure the value of their app. By weighing their KPI measurements against the development cost, they can determine the app’s value. But the business should keep the app’s lifespan in mind i.e. for how long they intend to maintain and use the app.
Additionally, they will also need to calculate CLV (Customer Lifetime Value) – the revenue expected from customer over the course of his/her association with the mobile app. With a projected CLV, measurable KPIs, and overall development cost, the app’s Return on Investment can be estimated.
Calculating the ROI of a mobile app, which is a worthy investment, would help organizations not only to maximize profitable outcomes but also to grow in the direction they want.
If your business requires a mobile app that delivers high ROI, get in touch with AOT’s app developers who’ve been at it for a long while now.