Growth Hacking Mobile Apps: A Step-by-Step Guide
Three steps to take in 45 minutes
Sun Tzu, a famous Chinese strategist, said, “The general who wins a battle makes many calculations in his temple before the battle is fought. The general who loses a battle makes but few calculations beforehand. Thus do many calculations lead to victory, and few calculations to defeat; how much more no calculation at all! It is by attention to this point that I can foresee who is likely to win or lose.”
The authors of the article — Dmitry Provotorov, the COO and Product Manager in a mobile development company, with 10 years of experience in e-commerce marketing, and Andrey Esaulov, the Head of the prototyping department within a large German media holding and the CTO of a startup project purchased by the holding.
November 2016. We were faced with a question from the company’s senior management: “Should we really invest in development of this mobile app?” To answer the question, we created our own tool, the KPI Calculator.
It is actually a framework that helps us determine the main points of force application to reach the growth hacking goals. As a result of using it, we not only received the funds for the following year of product development in 2016, but also successfully launched the app in April 2017.
We were able to forecast some of the KPIs to the nearest hundredths. Moreover, we “hacked” some of them, doubling and even tripling the growth, which came as a big surprise to the management.
In this article, we describe the three simple steps that will allow you to model your own KPIs in just 45 minutes. These steps are based on our own extensive experience and insights. We have decided to share our framework with the public so that anyone can download the template and play with numbers: http://mkpicalc.factorymn.com
Step 1. Create a Monetization Formula
First, you need to utilize your math skills (refresh them if they got rusty) and create a formula that will describe how exactly the mobile product contributes to business processes of the company. In most cases, it will be monetary contribution, i.e. revenue.
In the simplest terms, the monthly revenue model looks like this:
Where conversion (to action) could be a click on the ad, an order of the product or a subscription.
For a mass media app that makes money from adds, the formula would be:
For an app where a business model is based on the partner commission from the purchases that users make inside an app (buying either products — books, clothes, or services — hotels, tickets, etc.), the formula is:
For an app with a subscription business model (e.g. online courses or publishing), it is:
The artifact (result) upon finishing the first step is your revenue formula setting the KPIs that play a vital role for your mobile application. As you can see, it’s not rocket science — all you need is a napkin, a pen and some logic.
Step 2. Digitize Potential Growth
In the previous step, you defined the KPIs that drive your app’s success. Now you need to understand within what range these KPIs can change and what impact this may have, i.e. how much they influence the overall success? Here again a napkin might do, but basic knowledge of Excel, Google Tables or Numbers would help you to be more effective in your calculations.
You can start with a simple table consisting of 13 columns: the first one lists all the KPIs, and the rest 12 columns contain their values to be observed on the monthly basis. This way, we can make a forecast for development during the first year of the product lifecycle. If you want to make your predictions even more precise, the amount of rows will increase and the table will become more complex, starting to look like a piece of art or like a “hell of analytics” — depending on your point of view.
Just do not allow yourself to think, “It’s way too complicated for me”, because you only need to start and you will be amazed, how quickly your simple calculations will become elaborate and precise.
Now divide your table in two big blocks. In the first one, you will put the prediction of MAUs (Monthly Active Users). Note that most of the growth calculations have MAUs as their cornerstone. MAUs consist of New Installs and Retention (the amount of those users who return into the app from the previous months). The New Installs depend on the amount of users you are able to get organically through the search in stores (Google Play Store, App Store), through the purchased installs and through virality. In the second block, you will have the calculation of revenues which depends on the size of your monthly active audience. You have this formula already.
You can create your own template for these calculations or apply the ones that one can find in the free access — there are several projects available online. For instance, you can use our mKPI.calc for mobile apps, dashboard of Christoph Janz for startup or ideas collection for dashboard creation made by Klipfolio.
In mKPI.calc, each parameter in the KPI column has a description, recommendations on the range of values and examples for different kinds of products, which could help you a lot at the early stages of planning.
In your table, we advise to highlight the KPIs visually. Their growth (or even “hacking” that would lead to the exponential growth) will be the main goal for your team. Forecast the change of these KPIs from month to month and keep track of how the revenues change accordingly. Your task will be to nurture this growth.
Your sources of information could be:
- The data from the analytics packages integrated into your app (if you have one): native analytics of App Store and Google Play, Fabric, Localytics and others.
- Client’s expert opinion (in case you work for a client) or investor’s expert opinion (in case of a startup).
- Your own experience in other mobile apps as well as other teams’ experience (by collecting the published cases).
- Do not forget about open data providers: AppAnnie, Statista, Similarweb and others.
What if your predictions do not come true once you start receiving the data?
First of all — realize that the situation you are in, is much better compared to where you would have been if you had no objective data-driven predictions in the first place. Now you can find the main causes of error and increase your expertise, making your predictions more precise in the future. This, in turn, will help you adjust the growth strategy at the next stage, which in the end will result in your product’s success!
The artifact upon finishing Step 2 will be the filled-in table with KPIs and the projection of their changes.
Step 3. “Play” with your KPIs
You may have already noticed in the previous step that it is rather difficult to find such a combination of KPIs that shows you a real success. At the same time, you are unlikely to find someone ready to invest in an app that only brings $10,000 of revenue per year. Whereas the number of 1,000,000 could be highly motivating, especially when you know which KPIs you should focus on to reach this order of magnitude.
Step 3 is there for you not only to find the KPIs that will make your app profitable, but also to think about the strategy of changing things — in case you see that the results turn out to be “average” and thus not very attractive for your team, your client or investor.
At this stage, you should be very attentive to the insights you have because they will be help you “hack” the system and find the ways to the exponential growth.
What possible conclusions could you make up while “playing” with KPIs?
- The only way to have the exponential growth in revenues from mobile apps is to create a viral system, i.e. to attract new users.
- You can only reach a high number of MAUs by bringing the product to other markets, countries and languages.
- The focus on retention will increase your revenue by 20%.
- The second platform (iOS and Android) will double your revenue, the third one will triple them, provided you are able to maintain the equivalent number of MAUs for each platform.
Your final goal is the understanding of what exactly you should be focusing on during the development of your mobile application. You need to create a product development roadmap to realize which features to include into the MVP and which features to add to the subsequent releases. The roadmap will help you generate feature requests for your architecture, design, development, and testing. It will also be an objective basis for your dialogue with a client or an investor.
The artifact after finishing Step 3 will be the product development roadmap, which will be based on the revenue formula and its derivatives in the KPIs.
Advantages of this approach
- The fast immersion into a mobile product. After filling out about 15–20 of such tables you will be able to digitize any app idea in approximately 30 minutes, weighing the real opportunities and risks of building this app as a sustainable business model.
- Dispelling the myths that tend to accumulate while nurturing the app idea for a long time. Often, the product that looks perfect in your mind will crash upon the reality of objective KPIs — once you calculate all the options.
- Becoming a numbers geek. After a while, you will see the patterns in the cases you are presented, and your expertise will grow accordingly.
- After mastering this approach and reading a couple of extra books you will be asked where you received your MBA. Even if you didn’t...
We wish you growth and success!
