Author: Soumajit Bhowmik, Director of E-commerce at Capillary Technologies
Even if you’re a beginner, you’ll know that there are a few terms the eCommerce industry swears by – RoI or CIR, Conversion Rate, Customer Acquisition Cost, Customer Lifetime Value are some of them. Everything was nice and simple with the Desktop and Mobile Web was it not? You had organic channels which grow month on month and you have inorganic channels which yield revenue as per spends with improved RoI per channel (If you are optimizing the channel that is).
But then came across that monstrosity called “App”, with no respect for its behemoth predecessors. It shot up the chart for highest conversion rate, could generate more revenue than its parent website, and when its marketing could reach its highest scales, lead to easier customer retention or reactivations. Some players went App Only, some reduced discounts on the website to promote apps, and an insane rush began to overtake the world of online retail.
Now that you’ve been indoctrinated into the game of app marketing, there are a few issues that you should know everyone faces, all solvable, but only with a bit of a push:
Scaled up eCommerce companies:-
- High uninstall rates for apps
- App Store Optimization – when your competitor gets paid reviews and incentivized download to top the charts.
- App Attribution Tool and CRM
Companies starting off with App marketing:-
- App installs – where and how to scale?
- App activation – how to get installed customers to make the first transaction?
- App Install, Traffic and Revenue Attribution – well this is common for both!
- Cost Split – how much should go to App vs Desktop?
- Poor RoI at initial stage
Let’s dwell upon 2 major pointers here for the sake of your time and my space. How does app RoI grow exponentially, and what are the best practices to effectively scale app downloads.
An an example, If your cost per download is 100 INR, the average order value is 800 INR and your app activation rate is 5%, let’s see how the math works out.
Month 1 – 100 installs, 10000 INR cost, 5 Activations, 4000 INR Revenue – Loss!
Month 2 – Another 100 Installs, 10000 INR cost, 5 new activations + 2 activations from previous month, 5600 INR Revenue -Loss!
Month 3 – Another 100 Installs, 10000 INR Cost, 5 new activations + 3 Old install Activations + 1 Repeat purchase, 7200 INR Revenue – Loss!
Month 4 – Another 100 Installs, 10000 INR Cost, 5 new activations + 5 Old install Activations + 3 Repeat purchase, 10400 INR Revenue – Break Even for the month!
By Month 10 – Another 100 Installs, 10000 INR Cost, 5 New activations + 20 Old install Activations + 40 Repeat purchase, 52000 INR Revenue – 5X RoI
And it keeps growing. By Month 10, you have 1000 unit install base, 100+ active customers, who would give you repeat transactions through effective CRM without spending on downloads anymore. Now put the whole model on scale, where you spend 50 Lac INR a month. Imagine the RoI (sustainable) that you can achieve.
Best practices for app install scaling? Use social media app installs, use SEM for app installs, use display boards and affiliates. The only real scalable channel beyond a point here is affiliates, and with that channel comes junk traffic, junk installs, high uninstall rates, and lower CLTV. My first 2 pointers for optimizing affiliate channels – do not go for incentivized downloads of app, and give the affiliate channel activation percentage benchmarks for the CPD that they will be paid. Do not pay if activation rate (Day 30) is below a certain percentage.