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Krunal Panchal
Krunal Panchal 17 June 2022

What is Mobile App ROI? How to Calculate This ROI and Ways to Improve it

This blog post will provide you with a basic understanding of what Mobile App ROI is. It is essential to understand the importance of calculating the return on investment for your mobile app projects, regardless of the niche.

Because not all apps earn the same amount of money, calculating ROI is essential. The income from Android and iOS apps reached a record $133 billion by the end of last year, representing a 19% annual rise. Only a small percentage of the whole app market benefits from this expansion.

Most apps are primarily concerned with gaining new users and increasing traction within their intended demographic. That is largely warranted. However, they frequently spend a lot of money on user acquisition initiatives without getting the expected results in terms of income.

Measuring return on investment (ROI) is critical for any mobile app project, regardless of the niche. What are the essential elements for estimating and monitoring a mobile app's return on investment? 

Before we can do that, we need to understand what mobile app ROI means in the context of mobile app development. We'll go over how to estimate and measure the return on investment for your mobile app projects in this blog post.

What is Mobile App Return on Investment (ROI)?

Mobile app ROI (return on investment) is the amount you receive from the investment you make in your business. Monitoring and ROI for your business are critical for the appropriate growth of your organization, regardless of the type of business you run. In terms of marketing investments, calculating the return on investment for mobile apps is equally important. It justifies the money spent on marketing efforts.

Every expense incurred during the company process is a business investment, from purchasing raw materials for your firm to expenses incurred on the app development team. And it is critical to spend money intelligently for any firm to expand successfully. It is your responsibility to be fully informed about where and how your money is spent.

How do you Calculate Mobile App ROI?

Building a mobile app for your internet business is a great way to ensure its success. However, any business's ultimate purpose is to earn revenue or return on investment. And, like in the case of a mobile app, the amount of money you make from it.

As a result, measuring mobile app ROI is a necessary step in tracking the success and profitability of your app development efforts. Here's how to calculate return on investment using a simple formula.

ROI = (Final value - Initial value) of the Investment/ Cost of Investment * 100%

Example: If a company spends $2,000 each month on an advertising campaign and receives $6,000 in direct return, the ROI is calculated by dividing 6000 by 2000, which is 3. Apply the above formula final value 6000+2000=8000 - initial value 2000. So we get 6000/2000 (cost of investment) = 3000 total mobile app ROI. This concludes that investing in the mobile app is beneficial for the company.

Mobile App ROI: Key Metrics to Consider While Calculating

This article will go over the main KPIs and formula for calculating mobile app ROI. We must look at these metrics briefly before explaining the various approaches and critical technical abilities for measuring and estimating ROI.

The (CPI) is a (Cost Per Install)

The cost per install (CPI) is a well-known measure that is commonly employed in mobile app digital advertising campaigns. It attempts to quantify the cost of getting a user to download and install the app. The entire campaign budget is divided by the number of new installs to arrive at this figure.

Mobile App ROI Metric LTV (Lifetime Value)

The final criterion for determining the financial worth of an app product is its Lifetime Value or LTV. This indicator is critical for determining the long-term value of a program, regardless of the number of downloads or installs. As long as you're primarily interested in how many users download the app. You can measure retention, monetization, and virality with this metric.

When a user uses an app for a long time and regularly turns business from particular customers while also bringing in new users, the app's LTV is likely to be higher. 

LTV = (1 + K) X ARPU is the easy formula for calculating LTV. 

The number "1" symbolizes the number of users who were brought to the app by the user, and ARPU stands for Average Revenue Per User.

ARPU - Average Revenue Per User: Mobile App ROI Metric

Another important indicator is ARPU, or Average Income Per User, which is determined by dividing the app's total revenue by the number of installs. Also, it has the advantage of mobile apps for startup to calculate ROI.

Total money made during a given time period / (#) active users over that same time period = ($) Per-User Revenue Average. 

The total revenue generated during a certain time period (e.g., week, month, quarter) is calculated by dividing the number of active users during that time period by the total revenue generated. For instance, if you made $300 last month and had 9000 active users, your Average Revenue Per User would be $0.03.

5 Tips to Improve Mobile App ROI

1. Improve the UI and Remove Bottlenecks while Launching and Building a Mobile Application

Launching an app is a significant undertaking, but there is always space for improvement no matter how thoroughly you research and plan to deliver the greatest possible experience. Natural blockages in the user interface prevent users from fully experiencing your program and lead to early abandonment.

Using analytics to understand sticking places, similar to web design, can allow you to construct a lot more fluid, engaging experience. Increasing utilization and key metrics such as session length and time in-app.

2. Increase Ad Spending

While organic users are precious, most apps rely heavily on ad campaigns to boost downloads, acquire new users, and raise visibility. More users equal more usage, but only if you look beyond meaningless measures like downloads to see how engaged those users are over time.

Utilize acquisition management by tracking users who have clicked on paid ads from different sources. Identify the paid channels with the best ROI so that your acquisition efforts can be focused on those channels.

3. Improve App Funnels

Users are led to conversions by your funnels, which effectively attach a value (or even profit) to their use. Screen flow statistics visualize the normal visitor interactions in your app by tracking departures by screen, flow between screens, and widespread occurrences of visits to screens.

You may combine the two by evaluating the screen flow of your defined funnels to determine when, when, and why people abandon a particular funnel.

4. Execute a Targeted Marketing Campaign

Your brand should be actively marketing to attract new users and broaden its reach, but what about marketing to existing customers? Improving app utilization is comparable to increasing web usage, and mobile app marketing strategies to keep your audience interested. 

To increase loyalty and retention, app marketing leverages behavior-based communication. You can keep users engaged by running app marketing initiatives like in-app messaging, push notifications, and A/B testing. In your analytics, you may utilize audience segmentation to establish audience characteristics and develop targeted, customized campaigns that those people will be interested in.

5. Provide Rewards and Offers in Mobile Apps

Users want to feel valued by the brands they connect with and buy from. Offering app users rewards programs, tailored offers, and mobile coupons demonstrate that you value their loyalty and want to encourage them to utilize the app by delivering targeted incentives.

These offers can be performed through in-app and push messaging and offers. Content can be evaluated across different segments to discover the most effective ones.

Conclusion

It is commonly known that there are a few million apps available on both the iOS App Store and the Android Play Store. A significant fraction of these apps does not produce enough money to stay afloat. This is why it is critical to emphasize income generation and ROI-related factors and indicators constantly.

The mobile app development sector will continue to grow in the next few years. Still, app market awareness, audience engagement, business conversion, and income generation will face more competition. These tried-and-true measures will aid many app initiatives in overcoming financial difficulties.

Suppose you are new and want help to increase mobile app ROI. Hire a professional cross-platform mobile app development company from the market. In that case, Groovy Web is a fantastic choice for you. It will also help to improve your app's ROI in the long run. You can begin with a free trial of the app.

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