Thursday May 11, 2017

Are Mobile Apps Worth a Small Business’s Time?

Are Mobile Apps Worth a Small Business’s Time?

Our last blog post spent some time wading through the results of a Clutch survey detailing how 350 small business owners are using digital marketing tactics to grow their business. Specifically, the survey focused on where these small businesses currently allot their digital marketing funds, and where they anticipate increasing their investments in 2017.

You can read our previous blog for a full synopsis on this survey and what you can take away from it by clicking the link above, but today I want to direct your attention to one specific data point. Buried in a chart was one finding that, frankly, surprised me. 

In 2016, 33% of small business owners said they planned on increasing their investment in mobile apps for 2017.

But, why?

On the surface, this seems to me to be a big misstep on the part of these small businesses. Apps just seem so… 2012. The novelty of downloading a new app, for me at least, has long since reached its expiration date. The last app I can remember downloading was Venmo, which is admittedly a great app, I’ll give you that. Otherwise, I tend to avoid apps like the plague. My phone is already clogged up with enough “track location” enabled pieces of seldom used software as it is, and websites in recent years have become much more responsive and mobile friendly. These days you don’t even have to open your phone to find information; all it takes is a “OK Google/Hey Siri/Alexa, search for…” and there you have it. No app required.

Maybe I’m an outlier here, though? Do people really want more mobile apps, and is investing in having one be developed and maintained something small businesses should look into?

To answer this, I looked into the mobile app market as it currently stands. Here’s what I found. 

A Lot of Apps, Not a Ton of New Users

To find some valuable information about the U.S. mobile app market, I turned to a 2016 year-end report published by comScore, a media measurement and analytics company. 

In general, their report found that the usage of mobile apps has continued to grow year after year, in direct correlation with more Americans having access to smartphones. However, this growth is beginning to slow and might actually be plateauing all together.   

Consider, for example, that in June 2014, 95 apps on the market had reached at least 5 million users. In June 2015, just one year later, 123 apps reached 5 million or more users. 

So, what about in June 2016? Turns out only 10 more apps had cleared this barrier. 95 to 123 is a big jump; 123 to 133, not so much.

Now time for the real hammer: 49% of smartphone users download ZERO apps a month. Basically, half of all users are apparently good on the app front. For the remaining 51%, app downloads per month breaks down like this: 

  • 1 app – 13%
  • 2 apps – 11%
  • 3 apps – 8%
  • 4 apps – 6 %
  • 5-7 apps ­– 7%
  • 8+ apps – 6%

 So, if you’re a small business looking to develop an app, you’re likely going to have to hang your hopes on targeting users who regularly download apps – the demographics of which may not match up with your target market. For example, those who download five-plus apps a month are mostly 18-44 year-old males, who are primarily using these apps to play mobile video games. Of course, your app could be enticing enough that it encourages people who do not regularly download apps to download yours, but it may not be that easy. Half the population still refuses to download even one app a month, on average.

Furthermore, as seen in the chart below, the most popular apps – the one’s you’d be competing with for data and space on a mobile phone – are heavy hitters.

 Are Mobile Apps Worth a Small Business’s Time? 

Social media, Google, Amazon… even in the top 25 of apps, you have to go all the way to the bottom before you get to a brick and mortar store – and even then, it’s Walmart.

While you likely aren’t trying to compete with these apps as far as services go, you will be competing with them for time. ComScore notes that out of all the time we spend consuming digital media, almost 60% is viewed on mobile, including mobile apps and general web browsing. While this may seem like good news, smaller apps and companies aren’t benefitting from this rising tide. Instead, people are just spending more time in the apps outlined above, who are all huge internet-based companies with large budgets.

This brings up another question: how much does it cost to have an app developed and maintained? Most small businesses likely don’t have the staff to design and manage an app from scratch, creating the need to rely on an outsourced vendor.

The figures can be a little hard to come by, but depending on what features you’d like your app to have, the median cost can range from $37,913 to $171,450, according to Clutch. It can even top out at $500,000 or more. There is even a tool that can help you calculate a rough estimate of how much your app, with your chosen features, will cost to build; keep in mind this does not include maintenance and the updates you’ll have to make as new operating systems and devices are released. The price for keeping your app alive will continue to grow, long after you finish building it.

Clearly, this is a difficult market to break into. When you consider the competition, plateauing of mobile app usage and the high cost of having an app developed and maintained, one obvious question arises: Why do small business owners feel like they need to develop mobile apps in the first place?

Hype and Media

Luckily, another Clutch study dug a little bit deeper into why small businesses are investing in apps. Their results didn’t exactly answer the question, however.

After reviewing these previously mentioned results, Clutch concluded that small businesses are building apps to improve customer service and provide ROI. Their words – well, more accurately the words of the small business owners they surveyed – not mine.  

I feel this vague, pretty unhelpful conclusion is representative of the whole “small businesses building apps craze” itself. How will having an app improve customer service or ROI? Most people don’t actually have concrete answers to this question.  

In place of building an app, you could take a variety of other, more cost-effective steps to enhance your digital marketing. Update your website by making your navigation easier; homing in on the path your customers are taking to obtain your services and streamline it. Refresh the design just because it’s been a couple years and you look slightly outdated. If you sell a product, you can partner with a bigger retailer (like Amazon) which already has their own very popular app to sell products. Create a series of workflow emails which helps interested customers find the services that are beneficial to them. With so many ways to effectively drive the same type of user behavior, why is anyone investing in developing apps, other than feeling like it is what they should do?

I think the simple answer is apps are often dangled in front of small businesses as a solution to their concerns; the next step for their business to take and ensure further growth. 

When Pokémon Go was breaking download records for apps last year, I can’t tell you how many articles I saw pop up on my LinkedIn feed detailing what I could “learn” from its success, marketing-wise. Here’s one article actually called “What Small Businesses Can Learn From The Pokémon Go Craze.” This type of stuff is dangerous and spreads false equivalencies. It makes it seem that by following a few key steps, anyone can recreate the success of this app. 

Now, most people know articles like this aren’t really true or beneficial. What can you learn from Pokémon Go? Well, you should first have a huge, pre-viral hit in the mid-90’s, let it grow for two decades then, after years of people begging to play a product like Pokémon on something other than a Nintendo device, release it as an app. 

Really, the success of Pokémon Go says nothing about it being an app – it could have been released in any form and still be a huge success. It just happened to come in app form. 

While it may seem like Pokémon Go might have little to do with your potential app, things like this end up fueling bad ideas. First comes the success, then the immediate hype, then people are writing articles about why you need to invest in an app like crazy. It creates the illusion that apps are necessary to compete. This is simply not the case. 

Now, that’s not to say that you 100% should not invest in an app. Maybe your business is tailor-made for an app. Maybe it would make your customers’ lives a lot easier. Maybe they’re clamoring for an app all the time.

But before you go headfirst into developing one, do a simple exercise. Would your main services or products being housed in an app make life easier for your customers? Think of a place like Walgreens, who’s app allows you to refill prescriptions, have photos printed from your smart phone and much more. Bank apps are another good comparison, which allow you to easily manage your finances. The services these apps provide are valuable, and make interacting with the businesses infinitely easier.

If your business’s services don’t nicely fit into the app structure as these examples do, then you run the risk of ending up just storing some content and information on your app which people can get easier elsewhere. Like, your website, or on another, more popular app (Facebook).

So, what’s the final verdict? More than likely, you shouldn’t invest in an app. For all these reasons above and, for a very existential one as well. Apps aren’t built to last. As this Verge article reports, Google is already working on a feature for Android devices called “Instant Apps” which allows users to pull up an app by clicking on a link, no download required. The market is just pushing apps toward being websites anyway. 

It’s not much of a leap to see Apple eventually taking this step as well, even though they’re the ones who really created the idea of an app in the first place.

Instead, focus on more permanent methods of marketing. Refresh your website; try out new social strategies; personalize as much as you can. It’ll be worth so much more than sinking money into a soon-to-be outdated app.  

Written by Scott Rogers |

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