In my last blog, I shared about my friend Sarah, who recently took a new job as the Director of Marketing for a large B2B services firm. The company was in trouble after embracing a cost cutting strategy and sales were suffering. Conversely, their competitor had made significant investments in marketing and sales, including purchasing a mobile application. Those investments were paying off, and they were gaining market share.
Sarah’s CEO and Senior Staff demanded that her first priority should be the development of a mobile application. In seeking my help, Sarah and I were in agreement that a marketing foundation should be put in place before a mobile application was considered. That foundation would include:
- Marketing Strategy
- Content Strategy
- Social Strategy
- CMS Driven Website
- Responsive Website
- Marketing Automation
For details about this foundation, read the beginning of Sarah’s story: A B2B Mobile Application Tale – Part I
The Mobile Application Strategy
With a plan laid out to implement a marketing foundation, we finally turned to discuss the mobile application strategy. Based on my past experience I gave Sarah these top considerations for her mobile app roadmap:
#1 - Value
Value is my number one consideration, but you must understand this is not the value your business derives from the app, but the value your customer receives from it. Simply having a mobile application for the sake of having one is not good enough. It must provide value to your customer.
A great example is Sarah’s competitor. Like Sarah’s company, they provide paper products and supplies to businesses. They built a mobile supply ordering application. The application provides value to busy purchasing agents and business owners. It has the added effect of distinguishing them from the competition, increasing sales, and increasing efficiency.
The application was successful because it provided value and that value paid dividends. You must ask the question: If we build this application, what value does it provide our customer? Value is my number one consideration, but you must understand this is not the value your business derives from the app, but the value your customer receives from it. Simply having a mobile application for the sake of having one is not good enough. It must provide value to your customer.
#2 - Purpose
Aligned with value is purpose. Sarah’s company originally wanted to provide an application that showed their locations on the map with address and contact information. This feature does not serve a purpose because their customers rarely visited their offices. The idea behind the application was “just to have a mobile application presence”. This app would never deliver actual value to their customer and would serve zero purpose.
Sarah’s company eventually did build a mobile application. But they took the traditional model, which was supply ordering, and added the unconventional feature by tapping into their customer’s buying history. They provided push notifications to the customer when they might be running low on certain supplies. The app also provided an analysis of products and buying patterns that suggested alternate purchases that would save the customer money. The added effect is that over time the app increased orders and endeared customers to their brand. Everybody likes to save money!
If you don’t consider purpose and value when building a mobile application, you may as well pile up your marketing dollars and set them on fire.
#3 - Marketing
If you build it, they will come! If you saw the movie Field of Dreams with Kevin Costner, there was a supernatural force that drove people to the ballpark once he built it.
There is no supernatural force that will drive customers to your application. You must market. In B2C applications, according to TradeMode the largest app marketing platform in the world, an app must have 80,000 downloads in a 24 hour period to achieve visibility and be listed in the top 100 apps in the iTunes store. That equates to $96,000 dollars of marketing spend or an average cost of $1.20 per download – that is huge for most companies.
Sarah embraced the strategy and created an e-mail campaign as well as a calling campaign to make their current customers aware of the new application. They even conducted webinars to demonstrate the capabilities and features of the app. To get reach and create awareness they included their mobile app as a key differentiator in all of their marketing and advertising.
B2B applications are different from their B2C counterparts. These apps don’t need to be in the top 100 list in the app store, but your customers and potential customers must know about your mobile app. This requires awareness and reach which in turn requires marketing and advertising. And we all know marketing and advertising costs money… now this is where you spend.
#4 - Cost
How much does a mobile application cost? Like most business technology purchases, the answer is: It depends. The cost varies depending on the features and functionality of the application, which platforms you target, and who builds the application.
“Most apps cost $50 - $200,000 to build.” According to the developers of Twitterrific, their moderately simple application that leveraged existing code libraries, took over 1,500 hours to build at a cost of approximately $250,000.
The Twitterrific application was initially built for a single mobile platform, this was short-sighted. You must consider the market: As of April of 2013 according to Kantar World Panel, which compiles global consumer data and analytics: Android (Google), iOS (Apple), and Windows Phone comprise approximately 51%, 41%, and 8% of the US Smartphone Market respectively with Windows Phone growing market share the fastest. Building for more than one platform will add to the cost of your application. However, failure to address all the platforms can have an impact on your customer base.
B2B mobile apps tend to be more sophisticated than B2C apps, and many times require integration with backend systems. If your website is built on an enterprise CMS, it will more than likely have a series of backend web services that can serve content and data to your mobile application. This too will add to the cost of the application, not to mention the costs of maintaining and updating your app over time.
#5 - Break Even
Given that the company was in trouble, my friend Sarah needed to go to her CEO with numbers so he would have realistic expectations and fully understand the investment they were making for this app.
Perhaps the chief mistake companies make when considering building a mobile B2B application is not performing a simple break even calculation. More than likely your company will not charge its customers for their app. Most B2B applications are a value added offering and consumers no longer expect to pay for them. According to Flurry, who provides industry information on app analytics, at the end of 2013 90% of all applications in mobile app stores will be free.
Now, break down all the costs and figure out what kind of increase in sales you will need in order to break even on the cost to build, market, and maintain your app.
This break even analysis does not have to be perfect or exact, but you need to walk through this exercise to understand your investment and what results you expect to achieve. Granted, there are always the intangible benefits such as brand equity. But you must put your assumptions and map it out. This will help you and others understand the full investment and cost. Investments like apps must have a return, whether tangible or intangible.
The Moral of this App Tale
Don’t take the app building world lightly. Apps are a real investment, and they can prove to be profitable or very unprofitable depending on your plan of attack – you must lay a solid foundation.
And what of Sarah’s company? The story ends well. Fixing things took time, but in the 12 months after laying their foundation and building their applications, their business increased sales by 1,250%. Sarah won the trust of her CEO and the Senior Staff, and her department is considered a value driver for the company.