November 25, 2013, 4:28 PM

The metrics that matter in mobile marketing

A TapSense executive highlights the key data points, and industry averages.

Businesses use key performance indicators (KPIs) to create measurable goals and strategies for future success. Setting meaningful KPIs is important to every business, and helps keep teams focused on doing work that has real impact.

Even within the mobile app world, different apps require different KPIs depending on their function, target audience, and market position. Knowing which KPIs to target is ultimately a decision unique to each app and each project, but some fundamental understanding can go a long way in helping to make that decision.

Determine how your mobile marketing presence fits within your overall business goals. Identify the criteria that are both most important to the business and numerically measurable. Set a specific goal for improvement that extends beyond “increase downloads.” And finally, set a frequency to assess this KPI. If your goal is to increase conversions by 30% by the end of the year, it might be better to check in monthly or quarterly, rather than weekly.

The KPIs listed here are a starting point to help you determine how to assess your project based on what is most useful to you.

App Downloads—A very broad and commonly understood metric for apps, in which more is certainly better. Increasing the number of downloads from 25,000 to 100,000 is an excellent target KPI. Focusing on number of app downloads alone, however, can create incentives to generate low-quality downloads that have no real monetary value.

App Store Rank—Increasing your app’s ranking, such as going from #50 to #25 in the Lifestyle section, is a great KPI, and one which will have a strong effect on your total number of downloads. Increases in your app’s ranking can validate your marketing strategy and the cleverness of your app description copy.

Revenue Per User (RPU)— Adding up all the revenue generated and dividing it across your user base is a simple way to calculate your RPU. If your business allows users to make purchases, it’s possible to add up all the revenue they generate and segment users into high-value and low-value groups. Increasing revenue per user is a popular business metric. Improvements in the product, marketing or merchandising can all greatly impact it. Some businesses with very long user lifecycles prefer to use the RPU metric instead of user Lifetime Value.

Lifetime Value (LTV)—User LTV is a KPI that gets more attention than almost any other because it’s a very good way to understand the relative health of a mobile business. Most LTV formulas add up the total amount of revenue generated from different streams, such as advertising and purchases, and divide it by the total number of users. The revenue-per-user number is then multiplied over the lifetime of a user. Understanding LTV is critical for optimizing marketing channels to focus on finding the customers that create long-term value for the company.

Conversion Rates—Making a purchase, completing a survey, registering for an account: converting a visitor into a customer is the end goal for many apps, and improving the rate at which this happens is a common KPI that can also be used to offer insight into other aspects of your mobile strategy. A change in user interface or marketing that directly precedes an increase in conversion rates should prompt you to look at other instances in which your app’s user experience may be streamlined to produce better results.

Session Length—The importance of Session Length as a KPI varies from app to app. In some cases, a long average session length coupled with a low conversion rate is a red flag requiring further experimentation with your user interface. In most cases, though, a greater session length means greater engagement with users. Use this KPI to understand the mindset of your users, and set goals accordingly.

Industry Averages to Compare your Marketing to

Marketers always are looking for benchmarks to compare their marketing to an industry average. On the TapSense platform we’ve seen the following averages over the past year:

  • Cost Per Download (CPD): $2.52
  • Click to Conversion Rate: 3.25%
  • Cost Per Visit (CPV): $0.13
  • Cost Per Acquisition (CPA): $5.16
  • Lifetime Value (LTV): $16.07.

Session length and app store rank are two metrics that TapSense doesn’t collect.

Putting It All Together

Access to data is only the first step; Insightful interpretation of data is where real value is found. However, this can be a challenge. For example, if conversion rates increase, but revenue per user drops, are you now attracting too many low-quality users? Can you make up the revenue gap through remarketing by e-mail? Or is the revenue drop a seasonal trend that has reduced your RPU only for a specific period of time?

Having a deep understanding of your business, customers and the market that you’re in is essential. There are also advanced data visualization systems and other analytical techniques that can provide an even deeper level of understanding. Cohort analysis is one popular approach. A cohort view is done for a specific group of users over a specific period of time. This helps remove some of the confusion that can be caused by seasonal trends or the impact of ongoing marketing efforts.

While understanding the uses of these common mobile KPIs is important for any business, ultimately choosing which KPI goals to set must be tailored to your particular business. Set clear, measurable goals and reassess at definite intervals. Success requires sustained effort, so take it one step at a time. Good luck.

TapSense, founded in 2011, is a mobile marketing platform that measures mobile campaigns across hundreds of publishers, and free and paid channels. Online retailers make up about 40% of its client base of more than 100.

 

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