When Apps Turn into Business Easily. Interview with Alex Shevnin.

When Apps Turn into Business Easily. Interview with Alex Shevnin.

When Apps Turn into Business Easily

Up-and-coming app-owners always run into an amount of issues that can’t be solved in full without making mistakes. For instance, how much money they should spend on advertising, how to price mobile in-app subscriptions, how to choose the right region to grow.

Metrics can give you a hand in finding the answers to these questions. But the key point is how to choose metrics that clearly indicate where you are now in relation to your goals. We turned to expert Alexei Shevnin to answer these frequently asked questions. He has been working with apps for 17 years and he definitely knows how to run effective mobile app analytics projects.

Not All Metrics are Equally Useful

Victor S.: Can you elaborate on the idea that not all metrics are created equal in terms of their usefulness and significance?

Alex S.: It is hard for beginners to sort out which metrics are needed for an app released into production. For instance, Google Firebase analytics include more than 20 standard metrics, most of which are useless. It is like a box of chocolates: looks nice, but not all sweets will be to your taste.

Metrics can show how many screens are opened, how many times users tap certain buttons; metrics can also provide heatmap analytics and the number of transitions between screens. This data will generally create an impression that something is going on, or vice versa, nothing is going on. However, it can hardly help app owners to understand how many users their app is likely to attract and how much revenue it will generate.

How to Choose the Right Metrics

Victor S.: Can you explain the process for determining which metrics are the most suitable for a given situation and how to go about choosing the right ones?

Alex S.: The right metrics allow you to gain useful insights into your app’s future performance. For video marketing apps it is crucial to trace average view duration data, for mobile game apps it is helpful to check data about how many levels were passed, whereas data on how many users have logged into the app at least once is useless.

In other words, metrics should show how many paying users we will have next year, the expected number of transactions and what revenue they will bring.

The app owner should clearly understand whether his investment pays off and what profit can be obtained depending on the amount invested.

How to Monetize an App

Victor S.: What are the most common methods and techniques for generating revenue from a mobile app and how to effectively implement them?

Alex S.: Apps can be a source of additional income for your business if you monetize them. The easiest way is to create paid apps, requiring a certain downloading fee. In this case, however, the app is supposed to offer some unique content the user will be ready to pay for. Make sure there are no alternatives available for free.

You can also try to make money from placing banner ads into your apps, but they might be somewhat distracting and ineffective.

A better alternative is subscription monetization. It was discovered long before the mobile phone was invented and methods of its calculation have been perfected over a long time of its existence.

Subscription in the mobile world represents a series of payments stretched over time that have an operational and predictive history.

To calculate the income from subscription you should consider a lot of nuances: how many people maintain their subscription services after the free trial, the amount of discount, the cost of the annual and monthly subscription, the features of the region and many more. And only the right metrics can help you here.

How to Calculate Profitability Index?

Victor S.: How does one determine the profitability index and what is the calculation process involved?

Alex S.: There are four metrics that can help you to predict app revenue by providing forecast projections based on your data.

Customer Acquisition Cost (CAC), measures how much an organization spends to acquire new customers.

LTV (Lifetime value)– estimates how much revenue a customer represents throughout the life of the app.

ROI (Return on investment) – used to evaluate how well an investment has performed.

Conversion to Subscription – allows you to understand how well or badly things are going. This metrics shows the service or product is relevant and in demand. It also reflects well the efficiency of procurement through different channels: it can be used to compare the difference between organic traffic and paid user acquisition.

Using all these metrics, you can understand how narrow the money funnel system is and expand it.

At least 5-10% of extra activities can affect your profit. For instance, refund, grace-period, commissions, taxes, offers, family sharing, custom premium, seasonality, features of long subscriptions and user behavioral data.

Of course, all this data needs to be brought together into a consistent system. You can either do this manually or entrust AI.

Is it Possible to Do the Necessary Calculations Manually?

Victor S.: Can the calculations required to determine the profitability index be performed manually, or is the use of software necessary?

Alex S.: It is possible, but hard enough, because every new set up subscription gives a new data flow for the equation for calculating the efficiency index.

A new region, a new country and subscription type are the unknowns that make our formula more complicated. For instance, your app has two types of subscriptions: monthly and annual and several regions where it works – the USA, Germany and Japan.

For each of the subscriptions you need to calculate the data that the metrics will bring, extract a universe mean and put all the data in the table. You should do it on a regular basis. It is tiresome work, isn’t it? And of course, it is pretty tricky.

Luckily, there are specialists for this job: a requisition manager, a data scientist, a data analyst. You can hire them and provide them with all the necessary information: all payment transactions data, checks during the existence of the application and cohort analysis.

But, who picks up all the data? It is so complicated to do it on your own. To do this work you should hire more professional staff members and these are serious expenses you are unlikely to afford. So, is there a way out? Use predicted.io tool!

What is Predicted.io Capable of?

Victor S.: Can you provide more information on what Predicted.io is capable of doing and what its key functionalities are?

Alex S.: As we noted, the best way for app promotion is advertising. In order to calculate its effectiveness you need specialists, whose services cost a fortune. Is there another way to solve it?

The app predicted.io can help you to handle this problem. This app tracks app revenue and marketing costs and displays the success of your advertisement campaigns.

The application itself replaces a whole department of specialists at every stage of turning a mobile application into a business.

After the advertising has paid off and the first money has come in, the application owner will aim to grow his business. The next step is to divide subscriptions by region, calculate the effectiveness for each channel, and compare them to each other.

Predicted.io can also handle this. The app takes over all the calculations and indicates the most profitable channel where it is worth investing working capital.

It makes your business flourish and allows you to go beyond the mobile world and offer your services on the web. Of course, for this you need to have several apps, because only a diversified business is successful.

Predicted.io is able to calculate the profitability index for each of them and suggest the optimal development experience.

Replacing an entire team of analysts and engineers, predicted.io significantly lowers the threshold of entry into business, making the metrics management process transparent and easy-to-understand.

Written by v.shulga
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