A Comprehensive Guide to Estimate ROI for Mobile Apps

Most of the marketers have been converting to mobile-optimized websites through responsive designs. There are many brands that are not getting enough revenue on the mobile apps and the tricky question is how to estimate ROI for mobile apps and decide on the right place to invest. Here below we will introduce various aspects of estimating ROI for mobile apps.

Challenges to Marketing Program Measurement

Marketing program measurement is a big challenge nowadays. Here are some of the challenges that need to be taken into consideration while estimating ROI.

  • Where to invest?: The money invested today can have an unexpected impact at any point in the future, so the marketers need to decide where to invest today.
  • Who are the influencers?: There is a great difference in the buying committee of a small and a large company. Each individual is affected differently from each marketing program, so it is important to know the programs that will have the most impact.
  • What are the variables?: There are many factors that can affect the result of the programs outside the control of marketing. It is important to analyze which programs and which variables delivered better ROI.

What is ROI?

ROI or Return on Investment is a measure of all the profit earned from each investment. It is a good idea to calculate the marketing ROI based on the gross profit for the selling product.

ROI calculations are always complex, especially for marketing campaigns. ROI formula is

(Gross Profit – Marketing Investment) / Marketing Investment

This is a simple formula, but it can cause many mistakes.

Marketing campaigns are also investments and they also need to be measured. It is very important to ensure that the money is being spent wisely. Estimate ROI for mobile apps is also necessary in terms of marketing investments. ROI justifies the investment done in marketing.

Hard & Soft Mobile ROI

ROI is important for every mobile app and there are many companies that view the mobility as the internet itself.

Mobile is being used by executives and half of the mobile trendsetters use technology enabled processes to measure ROI. Many of the benefits involve productivity and improved customer satisfaction. Sales teams are the first to introduce with these types of improvements. Even some of the companies provide apps as well for customer presentations to the sales teams.

State of App ROI

There are very few brands that are launching paid apps for the users. Launching a paid app will not be fruitful unless you have powerful brand recognition.

There are many unpaid alternatives for the apps available in the market. A user is more likely to choose the free apps only.

If we look at the overall app revenue, then we can see that the non app store revenue is better than the app store revenue. App stores had not remained the only source of monetization now; there are many other options available in the market. The app store is not considered as the least likely place to generate revenue from the app.

Steps to Measure Mobile ROI

  • Defining the goal: It is important to determine the goal of the mobile app. Every mobile campaign can be measured by the two outcomes only.
    1. Consumer interaction
    2. Workplace efficiency
  • Adding the development costs:The development costs need to be added as well. The development costs can be
    1. Hardware
    2. Support
    3. Integration
    4. Implementation
  • A measurable KPI to each app: There should be a measurable KPI for each app. This can be done by following measures.
    1. User acquisition: It is important to determine the cost you are spending per mobile customer.
    2. Lead acquisition: It is necessary to determine the leads that are the direct result of the mobile campaign. It is important because it will allow you to compare the costs of the leads from the mobile against the cost of the leads from any other channels.
    3. Influence of mobile: It is necessary to determine that your mobile apps are influencing the customers or not. This check matters a lot in order to know if the apps are actually impacting the buyer behavior. Influence rate can be determined by dividing the total number of leads with the app users.
    4. Rate of retention: The mobile campaign should always encourage return customers. This is important as it allows determining the costs of retaining one customer through mobile. Retention rate can be determined by dividing the retained customers with the customers who downloaded the apps.
  • Weighing the KPI measurements against costs: This includes the following measures
    1. Consumer interaction
    2. Workplace efficiency
    3. Development costs
  • Giving KPI to each mobile app will allow you to determine:
    1. Overall value of the app
    2. Rank of the value against other marketing initiatives
    3. Measurement of the value of the app outweighing the development costs
  • The NPV or Net Present Value can be calculated as:
    1. NPV (Benefits) The benefits can be calculated by subtracting the opportunity cost of capital from the business benefits over the lifespan of the app.
    2. NPV (Costs) The costs can be determined by adding the annual maintenance costs over the lifespan of the app and the one time development costs of the app. This value can be used to subtract the opportunity cost of capital, which will ultimately give the NPV (costs).

The ROI of the mobile app can now be calculated by adding both the NPV (Benefits) an NPV (costs). This will give you a measurable mobile ROI.

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After ROI

Understanding ROI will give more power on the investments. Learning & improving the reporting capabilities and using the ROI to improve the campaigns will definitely generate more profit for any brand or company.

Future of App Revenue

MCommerce is the largest growth area of every brand. Consumers are becoming addictive to buying through mobile devices. MCommerce is set to take off in the next few years due to the ease of the mobile app purchasing. The success factors for mCommerce are similar to the success factors of eCommerce.

The mobile app is said to be the virtual version of the brand or the product and need solid campaigns and marketing techniques in order to secure better revenue. At IndianAppDevelopers company we plan and execute the app development and app marketing strategies which increase your organization app ROI, you can always feel free to contact us today to know more about our strategies to increase app ROI.

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Written by
CEO
Juned Ghachi is the CEO of IndianAppDevelopers, a professional mobile app development company in India for full-cycle mobility solutions. Having 10+ years of experience in the digital marketing field, he excels at offering the best technical advice to clients.

“We collaborated with Indian App Developers as they really comprehended our goal. They are incredibly professional, host the best talent, and are excellent at project management. We are very impressed with how the app has turned out to be. I must say their dedication & quality is top-notch. Highly recommend them.”

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Will Ben Simpson

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