As the Cofounder & former CEO of ShopSavvy, one of the most popular mobile shopping apps, I regularly get approached by recruiters and investors conducting CEO searches for mobile app companies. Most of the time their mobile app company has hit a plateau and they’re looking for someone with experience to come in and ‘fix it’. While I find it inconceivable that I’d actually be offered a CEO position, the idea of accepting a CEO position I didn’t create in the first place is unbelievable. At the end of the day I suspect that 99.9% of the companies that approach me have no intention of hiring me, instead I think they want the benefit of my experience for free. So here is what you’d get for FREE if you called me:
How can we get more users? There is a inherent level of users and usage for every application – i.e. a certain percentage of the population who is aware of each application will download and use your app. The sad truth is that most people who hear about an app won’t download it and even fewer will actually use it even if they do. Companies need to figure out what percentage of the total population they’ve exposed their app to and then determine it’s ‘inherent level’ of adoption. This won’t be an easy effort, but definitely worth the effort as it will help the company understand how to proceed. Here are some of the most common methods for getting more users:
- Buying Downloads. Some developers have had success manipulating the App store by paying for downloads, but these strategies rarely work and even if they do for a time they won’t work for long as Apple actively seeks to prevent abuse.
- Paid Media. Companies can simply buy digital, print, radio and television spots to drive awareness of their application. This method has worked for many developers, but is a very expensive option. The apps ARPU and user retention needs to be HIGH for this method to work out economically.
- Earned Media. This was the method we used at ShopSavvy. Working with our PR firm, we spent all of our time helping reporters build print and television stories about our application. We held reporter’s hands, building sample video content of all aspects of our app, helping them tell a compelling story to consumers. As a direct result, each year we have HUNDREDS of television stations running 30 second news segments all over the country. Working with partners we also managed to get BIG celebrities, like Jimmy Kimmel, Oprah, Anderson Cooper and Martha Stewart, to use our application on their television shows. Through polling, we believe that more than 50% of American smartphone owners have heard of ShopSavvy (have you?). Earned media is a great way to find users.
The real problem with most applications is that they lack an inherent mechanism for user growth. Most companies that approach me about a job have well designed and very useful mobile apps – the problem is that I’ve never heard about most of them. There are simply too many apps vying for too few users. Even BIG brands have a hard time attracting users. The solution is actually very simple: design applications so that they become more useful when a user’s friends use the app as well.
Consider the photo creation app Instagram. Not only does Instagram allow you to add unique and fun filters to your photos it makes it easy to share them with your friends and family. Instagram is a FAR better app when you get your friends to download the app. Instagram found an inherent mechanism that led to amazing user adoption. There are scores of similar apps that have better filters and photo editing capabilities, but they don’t get better when you get your friends to use them.
Inherent mechanisms are best, but artificial incentives such as leaderboards, sweepstakes and premium features can be used to encourage users to invite their friends to download the application. App stores are constantly changing the rules around artificial mechanisms to drive downloads – companies need to make certain they aren’t violating the rules.
How can we get our users to use our app? Once a company has figured out how to drive downloads, they invariably discover that it is a far more difficult task to keep those users engaged in the application. I know from personal experience how heartbreaking it is to acquire a user only to realize that they have forgotten that you exist a month later. Most apps are only opened a single time so companies must create COMPELLING reasons to keep in touch with their users. Facebook and LinkedIn have mastered the art of notifying users of activity via email, text and push – resulting in simply AMAZING cohort numbers. Driving user engagement is not terribly hard, but most companies don’t think about it until its too late.
How do we make money? There are many ways to generate revenue with your application; however, for purposes of this post I’ll focus on in-app advertising. Unless a company’s application is a rocket ship, it is important to incorporate advertising units from the very start. In fact, companies should seriously consider making advertising seem like a feature rather than a toll. When we built ShopSavvy we decided to tightly integrate the advertising unit to the actions of our user. Specifically, when a user scanned a barcode we knew what product they were holding in their hands, we knew they were likely going to purchase that item and we also knew which store they were in. We created highly functional advertising units based on this information that didn’t seem like ads. Here is a early presentation explaining how they worked:
Companies who find ways to incorporate ‘feature based advertising’ into their applications can generate MUCH higher CPM rates than applications that simply ‘display’ advertisements. To leverage these higher CPM rates, companies must create scarcity and exclusivity when marketing their advertising units. To start, stop selling ads from networks like Google. The best and most lucrative ad units are sold and not bought – companies need to sell their own ad units (or at least engage an agency to sell them on their behalf). Sometime the ads a company DOESN’T sell are more valuable than the ones it does sell. For example, at ShopSavvy we were regularly approached by advertisers that were willing to pay our rate, but their product (hotels, airlines, cars) weren’t relevant to our users activity. We elected not to run advertisements that were unrelated to our user’s activities and as a result we created exclusivity – not just anyone could buy our ad units. We also sold various location and product filters to single advertisers creating real scarcity. By focusing on feature based ads that were both exclusive and scarce ShopSavvy was able to demand a $500 CPM (yes, five hundred dollars).
How can we tell whats working and whats not working? EVERY single company that reaches out to me focuses almost exclusively on ‘vanity metrics’ like downloads, total sessions and total first time users. If I press them for real discovery analytics like: cohort-based analysis: quantifying exactly how specific groups of users continue to use and engage with their app and which groups generate revenue over time; user-centric funnel analysis: understanding how distinct user segments convert on specific goals and ARPU, they simply don’t have the data. The companies that are really measuring inside of their applications don’t call me. How can a company understand what is working and what is not if they’re not leveraging the data their users provide them each day? Users tell you everything you need to know. Companies who fail to listen fail generally. Start measuring NOW.
Hopefully this post will save us both a lot of time. It is terribly unlikely you’d want me as your CEO and even more unlikely that I’d actually want the job. Truthfully? I’m better at starting things than finishing them. If you want more help, I offer a full day of mobile consulting for $10,000+T&E. Shoot me an email if you’d like to get together: firstname.lastname@example.org.