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Is Your Business Ready to Go Mobile?

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Is Your Business Ready to Go Mobile?
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Everybody talks about how important it is to care about your mobile users for any online business owner. The rush for mobile is so intense that some business owners find it hard to stop and think if a super awesome and expensive mobile app is actually in the best interest of their business.

We at Promodo tried to pause a little bit, step aside from this mobile craze and did some thinking. Let’s consider money first:

  • Mobile/responsive site version development costs around – $7,000
  • iPhone or Android application creation – $15,000

Besides, you should consider expenses on support:

  • Mobile/responsive version of a site – $2,000/month
  • Mobile application – $3,000/month

So how to know for sure whether or not mobile version and applications are necessary?

Mobile is winning the audience by leaps and bounds. However, if you look at statistics, we can see that half of the users still access Internet from traditional devices.

Source: SmartInsightsImage credit: http://www.smartinsights.com/mobile-marketing/mobile-marketing-analytics/mobile-marketing-statistics/

Going further, the share of audience for large e-commerce brands mostly consists of the traditional device users. However, the number of mobile traffic from smartphones and tablets has grown.

Image credit: http://www.smartinsights.com/mobile-marketing/mobile-marketing-analytics/mobile-marketing-statistics/Image credit http://www.smartinsights.com/mobile-marketing/mobile-marketing-analytics/mobile-marketing-statistics/

The mobile audience is expanding and it can’t be ignored. On the other hand, it doesn’t mean you should start immediately investing your money in mobile app development without thorough analysis. So in which cases are mobile sites and applications are required?

fLet’s do some estimation:

Mobile Targets

First of all, let’s define how users access mobile Internet: Around 42.83% use Android, while 38.17% of users are on iOS, followed by 11.84% of users who are on other mobile operating systems. On their heels are Symbian, BlackBerry and Windows.

This data allows us to estimate the ROI of our investments in mobile application development for certain platforms. No less important is to define the reasons why people use mobile Internet.

Image credit: http://www.smartinsights.com/mobile-marketing/mobile-marketing-analytics/mobile-marketing-statistics/Image credit: http://www.smartinsights.com/mobile-marketing/mobile-marketing-analytics/mobile-marketing-statistics/

As we can see, online shopping is not among the top activities on mobile devices. It, of course, does not mean that at this point you should give up the idea to optimize your web shop for mobile, but this is certainly the point where you should start understanding that going mobile is not some kind of panacea for all woes, this is just one more business development decision that you need to take bearing in mind all the trade-offs.

Another way to measure the mobile traffic share and effectiveness for your store is your own Google Analytics reports (Audience section -> Set of reports “Mobile”-> Overview).

On the e-commerce sites  analyzed in the reports below, mobile users don’t convert much, even though these two stores have mobile responsive version of the site.

Screenshot from GA taken on August 13, 2014

Screenshot from GA taken on August 13, 2014Screenshots taken August 2014

This is a situation on one large e-commerce site, a niche leader in the US market.

Screenshot from GA taken on August 13, 2014Screenshot taken August 2014

Despite the well-implemented mobile version of the site, mobile traffic conversion is 69.77% below the average conversion rate.

So What Should E-Commerce Site Do with Mobile Visitors?

There are three options: Create a mobile application, develop a mobile or responsive  website, or leave everything as it is.

Let’s assume, 1.2 million users are accessing the site annually with ~25% or 300,000 visitors on mobile. The site’s average order value is $300, while mobile traffic conversion is 0.2%, and the average conversion rate 0.8%. Hypothetically, with mobile site launch, the conversion could be improved to 0.4% (approximately the half of average conversion rate).

The cost of quality mobile responsive site creation is at least $7,000 while mobile application costs at least $15,000. Expenditures on mobile version support and mobile applications cost around $2,000/month and $3,000/month respectively.

For our mobile application, we plan to use pop-up window with call-to-action to install the app. With current traffic volume around 25,000 of mobile visitors we expect around 40% of users will download the application (10,000 of installations monthly).

No doubt, the advantage of mobile application is an opportunity to grow contact base. In this case you don’t have to pay search engines for paid traffic and worry about ranking algorithm changes, which could lead to traffic drop.

To put all the calculations in our system, you can create the following table:

Chart created at Promodo, August 2014Chart created at Promodo, August 2014

*Forecast for conversion rate for a mobile application is usually higher

**The audience is accumulated gradually during the year, 10, 000 installations per month.

As we can see from the table, your business will likely not see the return on investment from mobile application during the first year (given the same traffic volume). The payback period will be quite long, because you will need to gather your own audience of potential customers as well as compensate the expenditures on application creation and support for Android or iOS. You can estimate the ROI by adding index of popularity of Android or iOS platforms.

According to the estimation, mobile or responsive version of the site will start giving return from the second year, when expenditures on its creation will be covered.

In our opinion, this is exactly how e-commerce site owners could make the decision about the effectiveness of mobile applications or sites for e-commerce stores. Don’t just keep up with the trend; make the estimations for your own case. Investments into mobile don’t give quick return even for a large site; therefore, the smaller your site is, the longer you will have to wait for the revenue from mobile audience. From where we are standing the best option for smaller e-shops seems to be responsive website, as it will cost them less and show the ROI much sooner.

But also bear in mind that mobile applications can have more complicated and advanced functionality, as the app can get access to more resources and information of a user’s device. This means you will be able to make their user story more personalized and smooth. Mobile apps do have a very interesting marketing perspective, but it costs in dollars and slower ROI.

The bottom-line from me is – go mobile, but plan your journey and do it in small steps to test the ground – haste makes waste, don’t you agree?

 

Featured Image: Johan Larsson via Flickr

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Anna Korolekh (Moseva)

Deputy Chief Marketing Officer at PSD2HTML

Anna Korolekh (Moseva), Deputy Chief Marketing Officer at PSD2HTML, a full cycle website development company. Anna started her career in ... [Read full bio]

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