Think about the last few retail purchases you made. Were they in-store? Online? For me, they were all via my iPhone. Specifically, using that far too easy one-click buy from Amazon.

I am not in the minority with my preference for mobile purchasing. PYMNTS.COM’s just released new research indicating mobile commerce will reach $250B by 2020. At the crux of that revenue will be mobile apps.

Why? Convenience. Apps get you from point A to point B quickly. They remember who you are, your recent purchase and browsing history, and even your payment and shipping information (who has time to type all of that on the go?). Plus, features like fingerprint scanners and facial recognition ensure a level of security.

The urgency for retailers to venture into the mobile app world has never been stronger, but with every big investment you make, it’s crucial to prove ROI. Mobile apps are no exception to this rule. Developing, hosting, and maintaining a high quality app is costly. So it’s shouldn’t be surprising if at a certain point you boss asks if your investment in a mobile app is paying off.

And while there are absolutely ways to calculate the ROI of your app, there’s a lot of ambiguity to consider, especially when it comes to the retail sector.

Below we take a deep dive in the tangible and intangible things you need to measure in order to calculate the ROI of your retail app.

The Tangibles: ROI
business of apps.jpg

Source: Business of Apps

1. App Investment

Developing an app is not cheap. Analyze the cost of investment you’ve made to create and run your app such as:

  • Cost of initial app development: either the internal resourcing cost or agency fees
  • Cost of app advertising: paid media placements, paid ads across various marketing channels, etc.
  • Cost of app maintenance and optimizations: resources dedicated to fixing bugs and continuing app enhancements
  • Cost of app marketing: human resources dedicated to increasing app engagement via mobile app marketing (push notifications, in-app messages, etc.)
  • Cost of products used to support apps: mobile marketing platform, analytics, attribution, etc.

All of the above factor into the cost of creating and running your app. While all are notable, let’s focus on the last one for a moment: cost of products used to support apps.

Having access to deep insights about your users can greatly improve the effectiveness of your mobile app marketing campaigns, boosting user retention and conversion rates in a big way. This comes from investing in a mobile app marketing platform.

Think of it this way: if you have a CMS for your web and email marketing, why wouldn’t you have the same for your app?

2. Revenue Generated By Your App

Once you have a firm understanding of your overall app investment, it’s time to look at its impact. Obviously, if you are tracking purchases made through your app, you can use your analytics or sales system to generate a revenue number. Another way to do it is to answer the three questions below:

  • How many daily or monthly active users (or customers) do you have?
  • What is their lifetime value?
  • What is the total revenue generated by your mobile app?

The Intangibles: ROI


Source: iMore

While looking at revenue generated is very important to determining the ROI of your retail app, it’s foolish to overlook the intangibles. These are all of the unmeasurable ways having an app is beneficial to your retail company. Below are just a few examples of the intangibles:

  • Influenced purchasers: Your retail app should be a destination for customers where they can fully engage with your brand so that even if they don’t convert during a session, you still remain top of mind. For example, a customer browses your mobile app but then ultimately converts in-store or via your website. While the revenue won’t directly be credited to your app, there’s no question it played a role in the conversion.
  • Participation in loyalty program: I’ve been saying this for years now, apps are the new loyalty cards. Nobody wants to carry around those plastic cards anymore. Having your loyalty card tied directly to your app makes it much easier for customers to see the benefits – and reap the rewards with you – making them much more likely to become a high valued customer.
  • Brand awareness: Let’s face it – mobile is the present and the future. Having an app means you’re tuned into what is quickly becoming the go-to consumer shopping preference – mobile.

Final Thoughts

Just like any other marketing channel, understanding the ROI of you app helps ensure that you not only set benchmarks for success, but that you optimize according to your business’s unique priorities.

As we can see, retail apps are in a unique situation where the market is shifting towards a digital world. But that doesn’t mean you can’t calculate your app’s value. In fact, your investment into the mobile app space could be the the thing that ensures your retail entity is thriving for many years to come.

The above will assist you in getting a much better understanding of your app’s ROI. However, it’s just a starting point. In order to truly calculate the ROI of your app, you need a 360 view of your omni-channel consumer so you can truly understand the impact these “mobile moments” are having on your overall revenue and retention.

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