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One of the most important metrics that mobile marketers work for is to increase their app’s conversion rates.
Whether that translates to installs or purchases is up to each brand, but the idea is the same: get the prospect through a funnel, get them to complete an action that converts them into a paying customer or a lead. And measure that number assiduously.
This will inevitably lead you and other mobile marketers to ask: “What’s the best conversion rate for mobile app downloads?” And: “What is a good conversion rate vs. an average conversion rate?” Or even: “What are some benchmarks for my app category and industry?”
But what if we told you there’s an even better KPI to track for measuring growth?
What if, instead of mobile app conversion rates that you can find on a dozen other websites, we hand you a unique formula that no one talks about, but which we’ve proved works to predict success?
We’ll give you that unique KPI. Then explain what app conversion rates are, show you industry benchmarks, and explain why these rates aren’t good enough on their own to predict your app’s revenue and growth.
So this is it — the magic formula. We’ve used this unique KPI and seen it lead to success with our customers as well as in our own efforts to grow.
We call it the CAC-to-Conversion Rate.
CAC, as you might recall, is customer acquisition cost, or how much you spend to acquire a new customer.
Typically, when we mobile marketers talk about CAC, we’re talking about CAC-to-Install, or how much it costs to acquire a user who installs our app. Unfortunately, that cost is really controlled by the marketplaces – Google, Facebook, etc. – since you have no direct control over the bidding rates for ad keywords.
But if you can break down CAC into phases that make sense to your business, then you have 2 key metrics that you can influence.
Here are typical acquisition costs per user for B2C apps:
By breaking CAC down into CAC-to-Install, CAC-to-Register, and CAC-to-Conversion phases, you can focus on the last two metrics that you can directly impact and improve.
Why is this so vital?
Because conversions shouldn’t stop once a user installs your app!
Here’s a conversion rate definition so we know exactly what it means.
According to our very own Mobile Marketing Glossary, a conversion rate is the percentage of your mobile app users who accomplish an action that fulfills a desired business objective.
You calculate this rate by taking the number of people who completed the desired action, dividing that by the overall size of your audience, and then expressing that number as a percentage.
Here’s an example: The goal with your shopping app is to increase purchases for the month so you send a “free shipping” promo code via push notification to all 8,000 users. When 400 users use that promo code, you have a conversion rate of 5% for your “free shipping” campaign.
Just know that the sheer number of possible conversion events makes it tricky to discuss conversion rates without first clarifying: “What will this conversion result in, exactly?”
In the most common usage of the term among mobile marketers, it will probably be one of the following:
But, depending on what your app does, it could refer to one of the sample conversion events below:
|App Category||Conversion Events|
Itinerary saved, Flight booked, flight check in, flight schedule checked
Media & Entertainment
Content viewed, content rated, content purchased, user subscribed
Order purchased, food reviewed, restaurant subscribed to
Item viewed, item added to cart, checkout started, checkout completed
Contacts added, content posted, comments made
There are several good reasons you should care about the mobile app conversion rate metric:
Here’s the most common type of conversion rate that marketers monitor: app store page conversion rate. Basically this measures how many people install an app after landing on your app store page. It’s measured by dividing the number of app downloads by the number of app page views or impressions, and expressing it as a percentage.
Below are just a few app categories and their average conversion rates from November 2018.**
|App Category||Avg. App Store Page Conversion Rate (App Units/Impressions)|
Health & Fitness
You’re probably asking: “Is there a single, average conversion rate that can be used as a benchmark for my app?”
The challenge here is that every app and industry will have varying conversion events and thus varying rates. Using a single conversion rate for everyone won’t be realistic because objectives will vary depending on your app category and your target market.
Sifting through the data across marketing websites, analyst studies, and even our own experience with our customers, the majority of marketers agree that most mobile apps have a 1-2% average conversion rate. That means, on average, just 2 people out of every 100 app installs will make a purchase.**
Of course there are exceptions. For example, we’re working with a gaming app whose conversion rate (from install to purchase) is at a healthy 7%. Another customer is a music app with an average conversion rate of 12% (from install to subscription) over the past year.
To get another view of these numbers, consider the average ecommerce conversion rate.
The 2017 ecommerce report by Wolfgang Digital found that the overall ecommerce conversion rate was 1.56%.** And while this number is not about apps or installs, it does offer us very similar numbers.
|Type of eCommerce||Avg. Conversion Rate|
Online only retail
This brings us all the way back to the KPI mentioned at the beginning of the post.
Other websites will offer up their researched numbers and say mobile app conversion rates are essential metrics. And of course we agree with that.
But what we’re saying is that they’re lackluster if you use them alone. Instead, support them with your CAC-to-Conversion rate. Here’s why:
In the end, app conversion rates will always be crucial as mobile marketers and brands work to drive more revenue from their user base.
Just be sure you understand what conversion really means to you, and track the right conversion metrics that match your business goals, including:
Metrics That Matter for Growth: A Handbook for Mobile Marketers