Author: Soumajit Bhowmik, Director of E-commerce at Capillary Technologies
Ecommerce industry understands a few terms like the back of one’s hand – RoI or CIR, Conversion Rate, Customer Acquisition Cost, Customer Lifetime Value to name a few. Everything was nice and simple with the Desktop and Mobile Web was it not? You have 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 a monster called App. With no respect for the elders, it shot up the chart for highest conversion rate, increased revenue than website when App marketing reaches scale, and easier customer retention or reactivations. Some players went App Only, some reduced discounts on web to promote app, and a mad rush began to become the domain leader in App.
Now when you are into the game of app marketing, there are a few issues that everyone faces, all solvable with a bit of push (not the incessant push notifications for sure):
Scaled up e-commerce companies –
1. High uninstall rate for app
2. App Store Optimization when your competitor gets paid reviews and incentivized download to top the charts.
3. App Attribution Tool and CRM
Companies starting off with App marketing-
1. App installs – Where and How to scale?
2. App activation – How to get installed customers to make the first transaction?
3. App Install, Traffic and Revenue Attribution – Well this is common for both!
4. Cost Split – How much should go on App vs Desktop?
5. Poor RoI at the beginning
Let’s dwell upon 2 pointers here for the sake of this website real estate and time to read – How does App RoI grow exponentially, and best practices to effectively scale app downloads.
If your Cost per download is 100 INR, Average order value is 800 INR and App activation Rate is 5%, let’s see how the math works out (Indicative example).
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 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 and Use 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 channel – Do not go for incentivized downloads of app, and give the Affiliate channel Activation % benchmarks for the CPD that they will be paid. Do not pay if activation rate (Day 30) is below a certain %.