Why You're Wasting Your Acquisition Dollars - And What To Do About It

As CEO of Swrve I spend a lot of time in a lot of board rooms, and recently I've been hearing the same thing over again. It doesn't always take this exact form, but you could summarise it like this:

"I'm tired of spending huge amounts on acquisition only to see most o f those potential customers disappear before I've even got talking to them"

What exactly does that mean? Well firstly, 'acquisition' in the mobile app ecosystem is a pretty dumb statistic that really doesn't mean a hell of a lot. Unfortunately it's easy to measure and it's easy to get excited about. But no sooner have you thrown a party to celebrate smashing your acquisition targets than you're waking up he next day wondering where they hell they all went. To put it bluntly: paying someone to download your app isn't something to congratulate yourself about. And here's why:

  • About 20% (1 in 5) of app downloads are used precisely once
  • Typical retention rates suggest that as many as 70% of your 'acquisition' is gone within the month
  • Even in retail focused apps, users who spend within the app only equate to perhaps 10% of the audience

Maybe I'm old fashioned, but I grew up in a world in which 'customer' implied someone giving you money. And whilst it is true that some apps don't have that direct revenue model, many do. Of those that don't, there's certainly an equivalent event (a successful affiliate referral for example) that can stand in its stead. The same logic applies there: if your users aren't getting to that point, they aren't really 'customers' at all, and acquisition is just so much wasted money. That's the situation that causes the frustration I hear every day.

What To Do About It

Which brings us to the second half of the equation. I think the first step is pretty simple: "admit you have a problem". If you prioritize new app users over new customers, there's something wrong and you need to fix it. And when you've done that, you'll soon reach the same conclusion that many Swrve users have: my money is better spent on retention and engagement than thrown into the 'leaky sieve' that is acquisition spend.

The truth is that most mobile apps are merely a service provided free that can potentially turn users into 'revenue'. To do that, you need to invest in the techniques and campaigns that gradually strengthen your relationship with your users and 'sell' them on the whole idea of doing business with you. That's what happens in e-commerce (think email, website personalization, pop-up advertising) and it is why marketing automation is already a multi-billion dollar business. Online businesses have learned that a single dollar spent building the relationship is worth five attempting to attract a new site visitor.

We think of ourselves as marketing automation 2.0. The same good business practice, but with your potential customers wherever they go, and responding to their every action. There's nothing hard about it, and if you'd like to stop wasting acquisition dollars and start investing money where you can really deliver ROI - drop us a line.