How to optimize a mobile app for brick and mortar businesses: Part 1
Building a good mobile app is a challenge. Maintaining it and continuing to improve it is even more challenging. You have to stay on top of new features users expect, troubleshoot emerging issues and support changes in multiple operating systems and devices. But of course more is needed to deliver an app that works well. In the end, it is all about driving your business goals. And here is where the extra challenge comes in for B&M organizations.
The standard playbook for accomplishing business goals relies on tracking key metrics. After all, how do you know where to improve if you cannot measure success? But the standard industry metrics are often irrelevant or misleading for brick and mortar companies' apps. That is because their goals diverge from typical apps offered by digital first companies in gaming, payment, social media or communications.
The three standard mobile app goals and their metrics are:
User Acquisition – measured by downloads and registrations
Engagement – measured by active users and time in an app
Monetization – measured by in-app purchases, ad revenue and subscriptions
Different roles, different goals
In contrast, B&M apps often focus on retaining their existing customers, decreasing operational costs and increasing the adoption of their products and services outside of the app. These goals come with a completely different set of metrics to optimize for. But many analysts and product owners lack this awareness because of the industry focus on the standard metrics.
To make matters worse, because mobile analytics solutions are designed to capture and analyze these metrics, B&M apps face a double challenge. First, they need to understand the metrics that work for them and then they need to buy/build an analytics solution that works for them.
So, why are mobile analytics biased toward digital first companies?
Digital first companies dominate mobile apps
What would we do on our mobile phones if we didn’t have apps? Hard to imagine but in 2007 when Apple introduced the first iPhone, it did not have an app store. Steve Jobs originally opposed allowing 3rd party developers to create native apps.
But the app store arrived the year after and in three days, users performed over 10 million app installs. In the first year the number of apps in the store grew from 500 past 10 million. Android released Google Play in the same year. Today over 100 billion native mobile apps are downloaded each year by the more than 6 billion smartphone users in the world.
From the very beginning the most downloaded apps were by digital first companies. The most frequently downloaded categories are messaging and other communication tools, navigation, social media, streaming media, e-commerce and, of course, gaming. In fact, of the top 50 most downloaded apps in 2021 only one was published by a brick and mortar store. Walmart’s app came in at 43. In the history of mobile devices there have been 150 apps that achieved over 500 million downloads. Not a single one of these was for a brick and mortar store.
In light of the dominance of digital first companies, best practices and software analytics vendors evolved towards their specific use cases, needs and goals. Let's go through the three industry goals–user acquisition, engagement and monetization–and see how B&M organizations differ on each one.
The holy grail for gaming, fintech, social media and other digital first companies is user acquisition. The more users on their app the more opportunities there are to monetize them, gain more users with network effects and thereby grow the business. The key metrics are downloads and registrations.
But now let's look at a B&M businesses such as a bank or travel company. The customer journey is the exact opposite. First a person becomes a customer - they open an account or purchase a ticket. Then they download the app to manage their account or itinerary. The company might want to increase the percentage of their customer base that has the app, but their primary goal is to acquire more customers through all channels, not to drive downloads.
The second goal for digital first companies is engagement. After all, if a user signs up but then never returns there is no opportunity to monetize them. They want customers to return often using as many features as possible because this is how the company provides value and generates their revenue. The app is the product.
Now let's look at a B&M organization. The company's offering determines how often a user logs in, be it once a day for their morning coffee or once a month to pay their credit card bill. If a coffee shop chain expects their customers to order one coffee a day then why should the customer go into the app more than once a day? In fact logging in more often might be a sign they are not accomplishing their goal the first time around.
Another key factor to keep in mind is a B&M business might have similar functionality on their website. From their perspective a customer is welcome to move from one digital channel to another. This would count as abandonment by many digital first companies who only offer their services via their app.
Let's end with monetization. An app can get its revenue from ads or they might have paid subscriptions and in-app purchases. Or these can be combined together. Some apps simply take a slice of each transaction be it a reservation or product purchase. In all these cases the model is to sign up users for free and then lead customers to spending money by upgrading to get additional features or making more purchases. You can see how acquisition and engagement are necessary precursors to monetization.
But how do B&M organizations make their money? Often the transaction is completely offline such as healthcare premiums and banking fees. And even if the purchase is on the app it's not because of the app. Did you decide to go on vacation because you were browsing the app or were you planning a vacation and went to the app to choose the right hotel? The bottom line is the app is a means of getting to what you want and not the destination itself.
So if the purpose of the app is not to acquire more users, get them hooked and then tempt them into spending more, what is the purpose?
While every B&M organization has different goals for their mobile app, there are three that almost all share:
1. Ensure loyalty by satisfying customers with a high level of service.
2. Reduce costs of servicing customers by moving activities to digital channels.
3. Increase the adoption of offerings by making them prominent and easy to access.
In part 2 of this blog series, we cover which metrics are needed to optimize for these goals and how mobile analytics solutions should track them.