Developing a mobile app naturally requires a financial investment. As the adage goes, you need to spend money to make money.
Don’t make the mistake of assuming you can only begin monitoring and measuring your ROI after your app is released. Although it is, of course, essential to track revenue, there are steps you can take ahead of time to forecast your revenue before it’s actually generated. This helps you determine how much you should invest in the development phase.
Specifically, before spending too much money on your app, take these key steps:
#1. Decide How You’ll Measure ROI
Measuring your ROI isn’t always as simple as some assume. You need to create a plan determining specifically how you will assess whether your investment is yielding strong returns.
To achieve this goal,
- establish your business goals,
- decide what strategies will help you achieve those goals,
- identify key performance indicators you can monitor as your app attracts users,
- and determine if/how you will segment your data to ensure it’s easy to analyze.
These recommendations actually come straight from Google. The company’s analytics experts suggest taking these general steps early in order to measure your ROI accurately and effectively later.
#2. Determine the Lifetime Value of Your Customers
Customer Lifetime Value (CLV) is one of the most important metrics to focus on if you wish to understand your ROI. There are numerous tools and guides available on the Internet designed to help you calculate CLV.
Essentially, there is a certain amount of money you should typically expect to earn from each customer until they reach the stage where they stop using your app entirely.
Of course, the nature of your app will contribute significantly to CLV. For instance, a subscription app will likely yield revenue from customers over a long period of time. That’s not the case with an app that charges no fees aside from the initial cost of downloading it.
Either way, by estimating CLV, you can track how many users download your app, and what their value is, helping you measure ROI in the process.
#3. Calculate Costs
The above tips explain how you can track revenue and profits. However, it’s also important to determine how much your app will cost.
This doesn’t simply involve calculating expenses over the course of time it takes to develop the app. You also need to account for marketing costs, maintenance, retention efforts, and overall infrastructure.
You may not be able to determine your costs with complete accuracy during the early stages. Sometimes unexpected circumstances result in new expenses you hadn’t predicted.
In general, however, determining how much you will likely invest when creating your app is key to understanding your ROI both now and in the future.
Again, you will have to spend some money to create and promote a strong app. It’s essential that you guard against spending more than you earn. These tips will help you achieve that goal.
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