3 Reasons Retail Apps Outperform Web-Stores in Driving Conversion Rates

For years, online retailers have been besting traditional brick-and-mortar stores in the fight for customer purchases. E-retailers were able to benefit from lower overhead costs and the convenience that shopping from home could bring their customers. In no time webshops were able to assert their dominance in the new retail landscape. But no one who sits on the throne can go unchallenged for long. Apps are increasingly being used as the new retail channels of the future and are already showing signs of outperforming the old web-based channels.

Apps are easily surpassing traditional webstores in terms of sales performance. Indeed, one of the most important key performance indicator in the retail industry is the conversion rate. This metric indicates what percentage of your total visitors, whether it be in-store or on a website, that are actually ‘converted’ toward a sale. Conversion rates are important as they indicate the effectiveness of marketing and sales efforts within a channel. It is precisely on this metric that apps have been found to vastly outperform webstores. According to Criteo’s 2016 State of Mobile Commerce Report, mobile apps have conversion rates that are 3× higher than mobile browser channels. Mobile browsers are outperformed in all stages of a purchase, from product views, to add-to-cart and purchase rates. But how can such a seemingly small change in the choice of sales channel have such a large effect? There are three explanations why apps outperform webstores.

Psychological incentives such as in-app rewards and collectibles can be used to encourage users to return to the app again and again

1 Increased customer engagement

One area where brick-and-mortar stores continued to be competitive despite the dominance of online retailers was in delivering customer experiences. Online stores have, for the most part, been rather impersonal and passive electronic catalogues, but apps are changing this dynamic. Apps offer the chance to deliver a personalized experience by logging past uses and tracking behaviour in more detail.

Apps allow for more interactive communication through targeted push notifications which can be made to display personalized messages, offers, and reminders. Messages such as “You still have 2 items in your cart” can help remind a distracted customer to complete their purchase, while offers based on previous purchases and real-time location can introduce customers to interesting products they were not aware of. This is the great advantage as opposed to a mobile website; apps can offer the tool to help retailers create an experience tailored to each customer.

Moreover, retailers have the opportunity to get more creative in their delivery of customer experience. Retailers can use elements of gamification and social media integration to increase the time users spend interacting with the app and by extension the brand. Psychological incentives such as in-app rewards and collectibles can be used to encourage users to return to the app again and again.

Occupying space on a phone’s home screen is equivalent to occupying space in the mind of the customer

2 Leveraging the brand

Apps are as much a branding tool as any other public activity of a company. Because of their unique format and placement, apps can become an essential part of the overall branding strategy. Apps will often be an addition to existing sales channels, whether it be brick-and-mortar stores or online webshops. What is important to understand is that each channel can have a different approach to its marketing and branding, as each channel reaches a different slice of the target audience. Having multiple sales channels gives a company the space to experiment in their messaging and promotion while minimizing the risk of adversely affecting their entire operation.

Apps offer the opportunity for greater control over the presentation of a brand than mobile browsers. Apps do not have the same design limitations that browsers have, such as inconveniently placed address bars, back buttons, etc. Steering these design details allows the retailer to be in full control of the way a brand is displayed and perceived.

However, the most important benefit to an app is that it allows your brand icon and name to present on the customer’s screen. An app icon essentially works as a micro-ad; subconsciously reminding the customer of your brand every time the user interacts with his screen. This keeps the brand top-of-mind, determining whether your brand will even be considered by the customer next time they are thinking of making a purchase. In today’s digitized world occupying space on a phone’s home screen is equivalent to occupying space in the mind of the customer.

The fast feedback loop inherent to apps helps optimize sales conversion.

3 Clearer customer Insight

Lastly, apps provide an important tool in gaining insight into customers’ behaviour, from each individual customer to the entire set of users.

Not every offer or style of communication works as good on every person. As mentioned previously, in an app users can be identified in every session, either by their login or anonymously by a device identifier. This allows a company to better track an individual’s behaviour and preferences, allows personalized targeting and to learn from what works.

Apps are of course also useful as a marketing analytics tool for entire customer segments. Due to the flexible nature of apps it is very simple to optimize your online store by trying out different design options and gaining an instant view of the results. The fast feedback loop inherent to apps helps optimize sales conversion.

Appification of Retail

Considering the remarkable ability of retail apps to drive conversion rates up compared to mobile browser, it is no wonder that an increasing number of retailers are opting for this additional sales channel. Brick-and-mortar stores are using apps to augment their customers in-store retail experience. Consider the Dutch supermarket chain Albert Heijn whose “Appie” application, since 2014, offers customers the possibility to make grocery lists and will plan the most efficient in-store route to find these items. Online retailers are also taking advantage of the added functionalities of apps to drive sales. For example, online retailer Bol.com has been increasing sales by allowing customers to scan physical barcodes and check for price and availability within their own store.

Although these are examples of large retailers showing-off their digital prowess, the great thing about apps is that it offers all retailers, great and small, a chance to compete. As long as you are able to get creative.