How to Measure Mobile App ROI for Ecommerce

Mobile app ROI ecommerce is the difference between an app that prints revenue and one that gets cut from your budget. Most ecommerce brands launch apps expecting instant returns and fail to prove value when it doesn’t happen. The result? Stakeholders see the app as a cost center, not a growth engine.

Introduction

Are you utilizing the full revenue opportunities that come with a mobile app? Or, is it just another financial burden with no impact? In today’s competitive ecommerce world, the ability to accurately assess and communicate the level of ROI your mobile app generates is of critical importance. Without the right data, your board members may see the investment as a sunk cost, instead of a potential profit making opportunity.

Most brands expect to achieve positive financial returns shortly after launching their mobile app. However, that is rarely the case. Yet, what if your mobile app could be one that generates significant sales, improves customer retention and creates lasting profitability? This is achievable when you master convincing ROI metrics that change the mindset from skepticism to investment.

Why ROI Measurement Will Change the Ecommerce Game?

In a world where mobile sales account for 50% of total online sales, your mobile app is a critical component of the overall revenue stream, yet, countless ecommerce executives fail to recognize this.

According to McKinsey, data-based decision making can lead to profit increases of up to 20%. However, app download numbers remain metrics that many executives rely upon to calculate revenue, overlooking the bigger picture. The key is having app attributed revenue, revenue lift, and customer lifetime value as metrics.

Not measuring ROI can mean that you have incorrectly allocated your marketing resources, and poorly captured the potential stories that will impact your stakeholders with certainty.

Important Metrics To Understand The True Worth Of A Mobile Application

User Engagement & Frequency: The Foundation of Loyalty

High engagement may seem to suggest “more time spent” but it is so much more than that. It shows loyalty and retention that impacts revenue positively. User retention and session length is very critical to app revenue. McKinsey found that a DAU (Daily Active Users) growth of 25% is often accompanied by a significant growth of in-app purchases.

You can use Twinr’s built-in analytics to see user retention, as well as identify features that were responsible for retention. Make use of high-value cohorts to demonstrate revenue contribution to board members.

Customer Lifetime Value (LTV): The Ultimate Metric of Profitability

LTV tells how much revenue a typical user generates in his/her lifetime. It is the most significant metric for determining the app’s ultimate success. Twinr’s analytics enables tracking of:

• Repeat purchase rates
• Average order value (AOV)
• The impacts of referral and loyalty programs

You may use the above numbers to compare with Customer Acquisition Cost (CAC). A positive difference shows that the app is self-sustaining, or even profitable.

Conversion Rate & Revenue Incremental Lift

Conversion metrics are very important. They include how many visitors on mobile web end up converting through the app. Imagine the revenue difference that a 15% increase in conversion rates from app loyalists generates in a year.

While doing the above, consider revenue attribution. This means associating app driven transactions to advertising campaigns, and in-app push notifications. Use Twinr’s analytics to track and show the revenue increase.

Tracking Retention & Churn: The Fuel for Long-Term ROI

Retention rates are a great predictor of ROI as retaining customers is 5-25 times cheaper than acquiring new customers. For example, measure 30-day retention, 60-day retention, 90-day retention, and then demonstrate how your app’s loyalty features are cultivating a fonder customer base, resulting in increased lifetime value.

Churn reduction 10% improvement in retention has been proven by Bain & Company to potentially double your ROI in the future.

Revenue from Engagement Campaigns & Push Notifications

With in-app messaging and personalized push notifications, you can expect a 10-20% increase in repeat purchases. Utilizing Twinr’s analytics, you can demonstrate revenue spikes resulting from particular campaigns, underlining that your app is a cost, but rather a revenue-generating asset.

The Tools That Make ROI Quantification Actionable

Twinr’s Analytics Dashboard: Insights into user engagement, conversion, revenue, and real-time results.

Third-party Integrations: Access your app’s data with Shopify, WooCommerce, Google Analytics, and more.

Attribution Models: With multi-touch attribution, determine how engagement with the app impacts the customer’s journey from the first to repeat purchases.

Customer Data Platforms (CDPs): Linking your app’s analytics with your CRM data will help you analyze lifetime value more deeply.

How to Build a Data-Driven ROI Pitch for Your Board?

Collect Quantitative Data

Aggregate the most vital metrics: engagement, lifetime value, revenue lift, retention, and normalize them over various timeline intervals. Twinr assists in simplifying the process of exporting and visualizing data – transforming the analytics into a compelling narrative.

Create Meaningful Visuals

Design dashboards and slide presentations that emphasize percent increase in growth, the impact of revenue, and retention of customers. Utilize succinct and legible charts to reveal measurable ROI with a focus on before and after analyses instead of engagement metrics.

Craft a Strategic Story

Transform numbers into a story:

The result of our app development was a 25% increase in repeat orders, and a $X million annual uplift. With this, we not only retain customers for a longer period, but they also increase their revenue per visit which makes this a clear ROI.

Putting narrative and numbers together will present a compelling story. Use customer success stories or case studies for instance, a retailer who before implementing loyalty features, was doing a one-time sale, and post the loyalty features, was doing a repeat and tripled sales. It makes the story emotionally convincing.

Predict Future Returns

Given the current trajectory of growth, increased customer retention, and expanded LTV you should be able to forecast revenue for a longer period of time.

If we can scale these initiatives, we can expect a 50% uplift in customer lifetime value over the period of 12 months. This will pivot our ROI from break-even to a strong profit contribution.

Address Stakeholder Concerns in Advance

Be ready to speak on uncertainty: “There are metrics that depend on seasonality, but our data shows a consistent uplift in engagement and revenue. More investments will drive increased further from this.”

Best Practices for your ROI Presentation:

Tell the story behind the data

Use customer feedback, and show data using a chart

Talk about ROI this is a positive metric

Stay Positive

Back your claims with data

Your App’s ROI is a Story that needs to be Told

Under the current boom in mobile commerce, it is no more an option to track your app’s ROI, it is rapidly becoming essential. Twinr’s analytics and insight allows you to track growth, retention and profitability. Convincing your board to invest further and succeed, you can track the app’s ROI.

Begin today by utilizing Twinr’s complete analytics dashboard and develop stories on ROI that give stakeholders new confidence and increased ecommerce profits.

FAQs:

What metrics should I have to make a strong case on ROI for a pitch?
The best indicators are retention rate, customer lifetime value (LTV), and revenue and engagement rates.

How do I answer the question: What metrics do I use to report revenue directly related to the app?
With the use of Twinr analytics and your sales platform, along with multi-touch attribution, you should be able to link app usage to revenue very effectively.

How often should I report the ROI of the app to the Strategy Board?
Ongoing monthly metrics reporting is a good way to keep stakeholders aware, and quarterly reporting is a good way to report on metrics that are in line with your strategy.

How do I go about telling a good story on the ROI of the app?
A combination of Twinr’s dashboard and BI tools such as Tableau, Google Data Studio, and Power BI should answer your question.

How do I report that I want to invest more in the app?
Show that there is ROI, project that there will a significant change with new features, and use reports from Statista and other industry sources to support your statements that show apps increase revenue related to ecommerce.