David Blakeslee | BUSINESS | 10.31.2012 @ 5:00 pm
Let’s talk about return on investment, or ROI. In any other industry, ROI is one of the tools used in calculating the potential success of a venture. Not so much in my field: it’s impossible to calculate in the app industry! Why? It’s simple: the numbers are not released. Apple and Google hold onto those numbers. Because of this, the only time you ever hear the specifics of a ROI in the mobile app world is when a company is highly successful. Only then will the records be made public. Many of my clients ask me what their ROI is going to be and I usually can’t supply them with a direct response. It’s almost impossible to determine, but that doesn’t mean we can’t try!
Know Your Industry (And Don’t Be Cheap)
The best we can do is to do everything in our power to shoot for a healthy ROI, even if we’re not sure exactly what it will look like. There’s one conversation I always have with my clients that ties right into this: we know what it takes to be successful and we know what all of the successful apps have, but what do they know about their industry? This is key to the success of their app. Are you a dermatologist making a dermatology app? Great! You know a lot about your industry. Are you a soccer mom making a dermatology app? What do you know about that industry?
In the end, we’ll always build the app that you want and while we’ll offer suggestions and help you find areas of opportunity, the app is ultimately yours. We’re going to design it the way you want it. We can create great UX and UI and develop it beautifully, but if the app doesn’t directly address the needs of a particular industry, what’s your chance of a ROI? The opposite is also true: a great app idea with a specific and needed purpose is only as good as its UX, UI and development. That’s why it’s important to weigh your offers carefully. If you’ve gotten development quotes for your app of $100,000 or $125,000, should you really take that $40,000 quote? If you go that 40K route, don’t expect a good ROI (or good UX, UI or development!).
There are many variables, but it boils down to two factors: isolate a need in an industry you know and spend the proper amount of money to create an app that fills that need.
When I was in the real estate industry, we always used to say that the numbers need to add up in the beginning or they’ll never add up in the end. We don’t have those starting numbers in the app industry, which presents us with a problem…or another area of opportunity, if you look at it the right way. There are numerous ways to increase your chance of success, but there’s never going to be a guarantee, at least not while Google and Apple hoard their numbers. Increase your odds by paying for quality and understanding the needs of your industry — that’s the only way to put yourself on the road to a great ROI!
Looking to the Future
There is still that one big roadblock preventing all of this from being an easier experience for both myself and my clients: Apple and Google. It’s a huge mistake for them to keep this information under wraps and it would vastly improve their industry if they made the numbers public. Do you want to attract more investors? More money? Put the numbers out. Showcase every success, even the modest ones! Not every app is Angry Birds, but there are countless successful apps. Knowing the grosses of massively successful apps is helpful and being able to examine what they did right and wrong allows us to troubleshoot our own work and create an amazing product, but there is still one piece of the puzzle missing: budget. We still don’t know how much it cost to produce Angry Birds (although we can certainly guess). We know that it’s successful, but how successful? What was their exact ROI? We don’t know.
Any business needs investors and investors like having a ROI before they write you a check. Knowing all of this would bring significantly more cash into the world of mobile apps, but the ball is in Apple and Google’s court on this one.
The Client Relationship
The funny thing is that you never realize which clients you’ve lost because of the ROI question. For some traditional business people, the ROI is very important, but for many modern entrepreneurs, they’ve decided to make an app no matter what. Those people who decide to make an app only to make a profit may be in the wrong industry. Don’t get me wrong: there are apps out there that have made amazing amounts of money, but the lack of a secure ROI has to be supplemented by a client’s passion.
I haven’t lost too many clients due to the lack of a solid ROI. Part of it is the incredible work Rocksauce has created in the past swaying them and part of it is just me being completely honest with them about all of this. What’s more important: some abstract number crunching that suggets you may a 60% return on your investment (and may not even be true) or an honest, passionate team that will build a successful app based on what we know, not on a formula composed of fictitious numbers pulled out of thin air? I’m biased, but always shoot for the latter.
In Conclusion…
Be honest with yourself and be willing to things right. If you’re not willing to do things right, save your money.
(Do you have are a great app idea? Curious about the Rocksauce Studios process? Check out some more over here!)