Mobile is still one of the hottest investing trends going. But how can mobile companies flourish when so many users don’t generate any revenue?
Last week at the VentureBeat GrowthBeat conference in San Francisco, Battery Ventures Executive in Residence Jonathan Sills sat down with Chris Erickson, the chief operating officer at Apartment List, and Kahuna CEO Adam Marchick to discuss this conundrum, and offer ideas for driving mobile business growth.
As the moderator, Sills kicked off the session by inquiring about its title: “The Dirty Secret of Mobile: When 90 percent of user acquisition is generating $0, what’s to be done?” Marchick, whose company Kahuna works with hundreds of mobile companies in a variety of verticals, confirmed the seriousness of the problem: While Kahuna’s customers have been experiencing explosive user acquisition growth, many discovered their number of engaged users was actually much lower than they had originally thought. In fact, 90 percent of user installs at many of these companies were doing nothing, Marchick noted, with eight to nine percent being semi-active users. Only one to two percent were very active, valuable users.
So what’s to be done? Marchick suggested relevant and timely mobile messaging to inspire engagement throughout the lifecycle of a user’s interaction with a mobile app. Apartment List, a Kahuna customer, adopted this marketing strategy and has seen user engagement skyrocket, Erickson said.
Erickson highlighted how Apartment List—which helps people find apartments online, mainly through mobile devices—worked with Kahuna to develop a series of behavioral-based push notifications to guide users through the Apartment List on-boarding process, from searching through Apartment List’s inventory on their mobile device, to saving apartments to their list of favorites and contacting a broker to see the listing.
“If users are stuck at any point in this process, they are not getting the value of Apartment List,” Marchick pointed out. This is where timely, personalized messaging comes in, he said. If a user saves an apartment to their list of favorites, but never takes action to go visit the site, Apartment List can send a push notification inviting them to contact a broker.
But part of the strategy is knowing when, and exactly how, to engage with users, according to Marchick. “In the first seven days, users need relevant, timely messaging based on what they do or don’t do with the application. But it is the first or second push notification when a user is deciding whether or not to believe in the app. If you send a generic message that says, ‘welcome’ or ‘we miss you,’ the user is not going to turn off notifications, they are going to uninstall your application,” he warned.
Erickson echoed this sentiment, noting that early on, Apartment List learned it could not leverage the same email marketing strategy that works on the Web, as executives realized it would exhaust mobile users who are less tolerant of receiving multiple push notifications. Instead, mobile requires its own unique strategy. With this approach, Apartment List has been able to transform its engagement curve and is now experiencing conversions from more than 50 percent of its user base, Erickson said.
VentureBeat’s GrowthBeat conference was held in San Francisco on August 5-6 and drew about 500 attendees. Speakers included Amanda Kahlow from 6Sense; Justin Merickel from Adobe; Alex Shultz from Facebook; Loren Simon from Walmart; and Lisa Archambault from Zappos, among others.
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