If you work in software, chances are you’ve experienced having more projects and products to work on than your existing budget would allow. Solidifying budget is a challenge all teams struggle with, but for mobile teams in particular, the challenge is taken to a new level. Mobile is still looked at as a relatively “new or risky channel” for many companies, and as such, tends to suffer the most when it comes to budget distribution.
We recently completed a consumer report on mobile product management, and in it, asked a wide range of mobile professionals about their companies’ mobile apps to better understand the current struggles in securing budget for mobile teams. The apps of our survey respondents fall mainly into the free category (55%), with several offering in-app purchasing options in their free app (24%). Only 13% have both a free and a paid version of their app, while 5% of respondents offer only a paid version of their app. Additionally, the majority of the mobile professionals surveyed work on apps that drive revenue (71%), and 29% have yet to monetize.
Read on for a detailed look around the challenges mobile product teams face when attempting to secure budget for your mobile team, along with tips on how to approach the budget conversation for your own mobile product.
When budget for mobile is hard to come by
One big takeaway from our research is that no matter team size or industry, it’s normal for budget to be difficult to get when it comes to building a mobile product. The majority of our survey respondents say it’s challenging to get more budget for their mobile app (39%), while 33% said it’s not. The remaining 24% said it’s “sort of” challenging.
The more important question, however, is why it’s so challenging. The answers were split.
What’s interesting about these responses is that most of the issues could be solved by driving more revenue. Executives would certainly see more value in mobile apps if they were a top driver of revenue. If an app was generating a solid ARPU (average revenue per user), it’s safe to say it’d be easier to get more budget to launch an acquisition campaign to gain more MAU.
Even still, revenue isn’t always the most important factor when determining the value of a mobile app. If you’re still trying to figure out how to generate more in-app revenue, consider focusing on the other (often overlooked) value propositions apps provide when you’re trying to convince your leadership team to approve a bigger budget. It’s important to communicate, and prove, to your executive team that your mobile app customers are often your most valuable. Mobile apps have the ability to impact all aspects of the business, even if they aren’t driving revenue directly.
To help boost your chance of securing more budget for mobile, consider factoring in the following value propositions.
1. Customer loyalty
Mobile apps can drive huge amounts of customer loyalty, when done right. Since you control the channel, you have the ability to connect with and interact with your customers directly.
Walgreens is a great example. According to SurveyMonkey Intelligence, the Walgreens app is one of the fastest growing apps in terms of MAU (gaining 1,189,482 MAU from July 22 to August 22, 2016). While Walgreens does have in-app purchasing options available to customers, the success of their app doesn’t depend on how much their customers buy in-app. Their app drives foot traffic—and loyalty—by frequently updating coupons, and providing an easy way for customers to request prescriptions refills directly in the app. Their app may not drive a ton of direct revenue (it’s not listed on SurveyMonkey Intelligence’s Top Weekly Revenue app list), but it does encourage customer loyalty. By offering in-store coupons and easy refill options, Walgreens is minimizing the risk that their customers will turn to competitors by making their lives easier and more convenient through its app. Regardless of how much revenue their app drives, they’re fueling in-store traffic while increasing customer loyalty.
When you’re making the case for more budget, it can be helpful to know how other mobile product managers measure customer loyalty in their apps. Here’s what our survey respondents had to say:
2. Brand value
Like it or not, mobile apps impact consumers’ view of brands as a whole. If your app has negative ratings and reviews, the way your customers perceive your entire brand will take a hit. We found that 1-star or 2-star app ratings of a well known brand’s app negatively impacts their view of the brand as a whole. The good news is that the reverse is true as well; 71% of consumers said a 4-star or 5-star app store rating positively impacts their view of the brand as a whole.
The moral of the story is this: If you’re going to launch a mobile app, or have already, it’s important to maintain it; otherwise, you risk damaging your company’s brand, which can result is a loss in revenue. A team that decides to ignore investing in their mobile app because it’s not directly tied to revenue can actually cannibalize themselves without realizing it.
3. Built-in focus groups
Your mobile app customers are basically your own personal focus group, but better. Since they’re actually your customers and not a randomly sampled group of people, the feedback you’re able to extract is trustworthy, relevant, and applicable.
Are customers mysteriously dropping off in the middle of the purchase funnel, but you don’t know why? Ask them directly! Use your mobile app audience to understand how to prioritize your product roadmap, and optimize your app.
For example, we work with one of the most successful coffee retailers in the world who used their mobile app to test and gather feedback on a new feature. Utilizing their app audience instead of a focus group allowed them to gather large amounts of feedback (from the people who will actually use the feature) in a short amount of time, enabling them to quickly iterate on the product. Thanks to the incredible volume of feedback they were able to receive quickly, the company shipped the feature an entire quarter ahead of schedule!
4. Free promotion for other brand channels
Your app isn’t driving revenue, but other channels are? Get creative with your app audience by driving them to the channels that you know results in more dollars.
An international media company we work with was able to do exactly that when they promoted their live television content to their app customers. They sent an in-app message to their customers that an important broadcast was happening in real-time in an effort to encourage app users to tune in. It was a success—70% of viewers clicked “Watch Now.”
5. Customer engagement
Engaged customers are the secret sauce to your mobile app’s success. Not only are engaged customers likely to drive referrals and give your app love in the app stores, they’re likely to be more loyal and more profitable over time. Measuring and tracking the engagement of your mobile customers is far more telling about the health of your app than many metrics app publishers currently look at, like open rates or downloads.
Bonus tip: Engagement is the most popular measurement for customer loyalty in mobile apps.
Increasing customer engagement can be done through myriad ways, but let’s take a lesson from the top three apps that earn the highest weekly revenue: Pokemon Go (over $15 million per week), Mobile Strike (over $11.5 million per week), and Game of War – Fire Age (over $9 million per week). Notice that all three of these apps are games. These three apps make their millions on in-app purchases and ads, but in order to drive this (insane!) amount of weekly revenue, they have to keep their customers highly engaged.
How can you replicate their highly engaging apps, even if your app isn’t a game? Here are a two tips:
- First, don’t expect engagement to come naturally. You need to proactively promote engagement by laying in place all the tools your customers could possibly need to see value in interacting with, and frequently returning to, your app. This comes down to developing your app with customer experience and engagement in mind. Whether encouraging engagement means building in peer-to-peer messaging, incorporating prompts and alerts (that don’t suck), or providing a channel for collecting feedback within the app comes down to the needs of your individual customers.
- Second, frequently step back and look for ways engagement can be improved. What signals are your customers sending? How are they using your app, and how can their experience be improved? For your app, your answer may lie in listening to the voice of the customer.
Budget for your mobile product may be tough to nail down, but there are many steps you can take to help increase your chance for securing more budget for your project and/or team. Through the data and five tips above, hopefully you take away a few new strategies you can implement into your budget planning for the 2017!
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