How does industry development and competitive landscapes shape the decision-mI’m aking process for investing in app development? This fundamental perspective is crucial for businesses considering either the launch of a new app or the enhancement of an existing one.
In the complex and dynamic realm of mobile app development a pivotal question invariably surfaces: Is the investment in enhancing an existing app or creating a new one genuinely worthwhile?
At Framna we regularly encounter and address this question, advocating for a paradigm shift in the conversation. Instead of focusing solely on costs, we emphasize the strategic value a mobile app can add to your business. Our experience indicates that the most successful apps in terms of ROI are not necessarily the least expensive. Rather, they are the ones that command their market, engage users effectively, and establish a solid foundation for value creation through the symbiotic relationship between the user, the app, and the business.
We work with our clients to develop an integrated and ROI-focused perspective, particularly in light of the prevalent ‘winner-takes-all’ nature of many app markets. In these environments, occupying a position lower than the top three can significantly hinder success.
Moreover, we observe substantial shifts in engagement metrics when an app progresses from a mid-market position to a top-tier status with a compelling value proposition.
A clear illustration of this is seen in the disparity between high-rated apps and their lower-rated counterparts. This performance differential spans the entire app lifecycle, from user acquisition to ongoing engagement. Drawing upon research from Apptentive, we can substantiate these insights with specific case numbers and examples, underscoring the significant impact of strategic app investment and development on overall ROI.
| Ratings | **** | ***** |
|
Willingness to download
|
90% | 100% |
|
90 day retention
|
30% | 50% |
|
Engagement
|
80% | 100% |
|
Estimated monthly transactions*
|
43,200 | 100,000 |
* Estimated impact is based applying report number to a fictive case of 100,000 users with avg. 2 transactions per month per user Apptentive 2022 Mobile Consumer Engagement report
Combining the perspective on acquisition and potential for engagement and transactions creates compelling arguments for building apps with market-leading user experiences. These high-ROI apps might not be the cheapest but they will often be worth your investment.
The impact of a high-quality app varies significantly across industries and use cases. While some industries have experienced minimal influence from the mobile app revolution, others have been completely transformed.
To construct a solid case for your business, we suggest starting with a broad analysis of mobile apps' importance and potential within your industry. Examine the influence of apps in your own or similar sectors, considering both their current impact and the anticipated developments over the next five years.
Fully re-defined: Banking and Financial Services, E-Commerce, Entertainment and Media, Fitness and Wellness, Food Delivery and Restaurants, Healthcare, Hospitality and Travel, Real Estate, Transportation and Ride-Sharing, Education and e-Learning
Significant impact: Automotive Manufacturing, Cultural Industries, Environmental Services, Local Government Services, Professional Services (Legal, Accounting), Specialty Healthcare (Dentistry, Chiropractic), Logistics, Public Administration, Utilities (Water, Electricity)
Medium to low impact: Agriculture, Basic Education (Primary/Secondary), Commercial Fishing, Construction, Forestry, Heavy Industry and Manufacturing, Mining, Traditional Retail (Brick and Mortar), Wholesale Trade
The level of impact reflects the extent to which customer interactions are influenced by mobile apps. As industries mature, mobile penetration may become a standard expectation among customers and users. Understanding this trend is vital, as it indicates the direction in which your business should evolve.
As initially discussed, we advocate for app leadership to maximize ROI. Understanding your industry's trajectory helps identify the necessary level of investment. When the time is right, we recommend assuming a leadership position.
While the industry's overall mobile reliance is important long term, the app development strategies of your nearest competitors define your short-term position and help identify current opportunities and threats.
From a customer perspective, evaluate how your app offering compares to alternatives provided by competitors. Customer interviews will be optimal, but ratings in app stores can offer a quick initial way to gauge user perceptions of your and your competitors' apps.
Do you want a comprehensive analysis of your user feedback, aiming to enhance the understanding of user needs and preferences across your app and different app categories?
The quality of your app can give you value, but it's the relative competitive position that truly drives your competitive risk or opportunity. Minimal differences might not significantly sway users, but a noticeable lead by you or a competitor can quickly shift user preferences.
Try to review the relative position to your nearest competitors, focusing on several key areas:
Current Position in App Stores: Evaluate your app's standing in comparison to competitors. Are you leading, keeping pace, or trailing behind?
Customer Feedback: Understand the importance of app quality to your customers. How does this factor into their preferences and choices?
Customer Acquisition and Retention: Assess whether your current app positioning is contributing to customer gain or loss.
Competitive Lead Dynamics: Determine the time frame in which competitive advantages are gained or lost in your market.
Based on our industry and competitive insights, we adopt a high-level view on approaching investments in mobile app development.
We consider two dimensions:
1. Investment urgency
At Framna, we advocate for industry leadership and the early adoption of new features. The rationale is straightforward: over time, new app features become standard, diminishing their value as differentiators. Leading in innovation maximizes the lifetime value of your investment. However, there are scenarios where urgency might not be as critical.
2. Business case perspective
When making an investment decision it is important to understand the value you’re seeking to gain from it. It can be anything: user retention, increased sales, redirection of customer dialogues. Apps can help you with more than just selling your product and driving direct revenue, it could also be seen as a creator of loyalty, brand awareness, or even cost reduction through the optimisation of workflows, i.e. call reduction etc.
These perspectives are intended to underscore the importance of industry and competitive analysis in building a robust case for app investment. The decision-making process should consider both the urgency of action and the value sought from the app.
While this post sets the stage for these considerations, conducting a detailed ROI analysis for your specific app involves targeted competitive analysis, customer lifetime value calculations, and more. Although this falls beyond the scope of our current discussion, we invite you to reach out for further discussion on building a tailored business case for your app venture.