Retail Apps, Don’t Leave Money on the Table
We saw in our last webinar that growth is only a small piece of the mobile marketing puzzle. For many apps, the real challenge isn’t growth, but retention.
Marketing platform Liftoff recently put together a report on the current state of mobile retail apps. While consumers are spending more time shopping on mobile than ever before, the report makes it clear that acquisition and retention are a world apart. Installs are important for any app, but retailers need to focus on how many of those users convert into paying customers.
We compiled a few of our key takeaways from the report down below. Read on to find out what retail apps can do to turn users into repeat customers.
Key Metrics for Retail Apps: Engagement and Conversions
To begin, let’s take a closer look at how people interact with retail apps.
On the engagement front, the future is bright: Liftoff found that consumers spent over 50 percent more time shopping on mobile devices than on computers in 2015. Furthermore, usage goes hand-in-hand with ad spending. The US retail industry is still increasing their digital ad spend, with a forecasted $15B in 2016. As consumers move to mobile, retailers are increasingly shifting their marketing efforts to our portable devices.
The bigger challenge for retail apps is conversions. Liftoff’s study found that the average cost-per-install (CPI) was only $4.06, but the install-to-purchase funnel only saw a 4.3 percent completion rate. That means the average cost-per-purchase was $113.74. CPI still matters, but a higher retention and conversion rate would likely save retail apps more money than a lower CPI.
Let’s break these metrics down a little bit more.
Retail App Engagement by Gender
The report found that women were more expensive to acquire than men, but their purchase rate was also higher. Women were roughly 10 percent more likely to register for accounts than men, and they were over 25 percent more likely to make a purchase.
Retail App Engagement by Operating System
The metrics for iOS compared to Android are similar to those for women compared to men. iOS users were more expensive to acquire than Android users, with a CPI of $4.79 versus $3.32. However, they were nearly twice as likely to make a purchase than Android users, despite the higher cost-per-purchase.
Retail is arguably more affected by seasonal holidays than other verticals. Overall, Liftoff’s study found two peaks in registration rates: August and November. Those months correspond with back-to-school and the winter holiday season respectively. Unfortunately, increased competition between retailers also led to a higher cost-per-purchase during these months.
The good news is that cost-per-purchase declines sharply in the months after these two holidays. September and March were the lowest, but acquisition costs remained low in January and February as well. Retail apps with good retention rates can inexpensively acquire new users during these troughs.
Why does Retention Matter for Retail Apps?
Customer LTV isn’t only important for enterprise-facing startups. Every business, including consumer-facing retail apps, can benefit from retaining customers over a long period of time.
Liftoff’s report found that the average shopper makes 3.4 purchases within six months of install. The CPI for installs that lead to purchases might be high, but many of these installs pay for themselves within months.
Some of the benefits of retention are less quantitative. For example, a customer who makes several purchases after installing your app may become a fan of your brand. This would make them more likely to visit a brick-and-mortar location or leave a 5-star app review.
Customers who reach key milestones like making their first purchase offer value to your company on top of the purchase revenue. These long-term benefits are the reason why retention is so important.
How Can Retail Apps Improve Their Retention
Marketing automation for ecommerce has already proven its value — great tools are the start of a successful marketing strategy. In addition to our general retention hacking tips, there are a few techniques that we like to suggest for retail apps.
Offer a Rewards System
Rewards programs are an effective tool for increasing retention. With a loyalty program, you can send customers notifications every time they receive points. You can also send updates when they’ve accumulated enough points for a new freebie, or when they’re almost at the next reward.
You can make your loyalty program even more robust by incorporating in-app messages. If you automate your messages with Leanplum’s Lifecycle Engine, you can send messages to congratulate shoppers whenever they earn points. This immediate feedback can improve your in-app experience, encouraging users to continue shopping through your app rather than through a different channel.
Example of a messaging campaign designed in Leanplum’s Lifecycle Engine.
Personalize Your Content
Personalization goes hand-in-hand with messaging, but it’s such a key component that it deserves its own mention.
If you’re on the fence about personalization, consider this: push notifications with personalized content, such as a name or event parameter, see four times the open rate of generic messages.
Furthermore, you can add special parameters to your messaging campaigns which will be converted to user-specific text. With this functionality, you can draft complex messaging campaigns with content that feels almost hand-crafted.
Leverage Geofencing for a Better Brick-and-Mortar Experience
Brick-and-mortar shopping isn’t what it used to be. Many shoppers expect physical retailers to make the most of digital devices, whether through beacon technology or location-based push notifications.
With geofencing, you can encourage passersby to visit your physical store with a timely notification. Consider offering a brick-and-mortar discount exclusively through your app — this will reward your app users for their loyalty while giving them a reason to go shopping.
You can make your message even better by including item inventory with Leanplum’s Linked Data. Try combining user profile data and linked data to alert nearby users that an item in their favorite category is almost out of stock. This type of personalized message is more likely to provide value than a generic solicitation.
For retail apps, it’s crucial to remember that mobile engagement isn’t just driven by social networks and games. Users really do make purchases on mobile.
If you do a good job of retaining your mobile users, you’ll reap the rewards on other channels as well. If you don’t want those valuable (and expensive) app installs to go to waste, it’s worth investing in retention.
Leanplum is the most complete mobile marketing platform, designed for intelligent action. Our integrated solution delivers meaningful engagement across messaging and the in-app experience. We work with top brands such as Expedia, Tesco, and Lyft. Schedule your personalized demo here.