IBM Thought Leadership Paper_From Good to Great Apps

A Forrester Consulting

Thought Leadership Paper

Commissioned By IBM

October 2015

Why Good Apps Are Not

Good Enough Measure And Move Your Mobile App

To Greatness

Table Of Contents

Executive Summary ........................................................................................... 1

The Mobile App Journey: From Bad To Good To Great ............................... 2

Opportunity Is Beating At The Door For Great Apps .................................... 5

Enterprises Must Tackle Persistent Challenges .......................................... 10

Understanding App Performance And Impact ............................................. 13

Key Recommendations ................................................................................... 14

Appendix A: Methodology .............................................................................. 15

Appendix B: Supplemental Material .............................................................. 15

Appendix C: Endnotes ..................................................................................... 15

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1

Executive Summary

There’s nothing wrong with a good mobile app, except that it isn’t great. On the surface, a good mobile app may appear to

satisfy customers and generate revenue. But separating the great apps from the good reveals significant, long-term

differences in customer loyalty and spend. With companies competing for customers’ precious mobile moments, the

opportunity is ripe to meet and exceed their expectations and reap the financial rewards.

In August 2015, IBM commissioned Forrester Consulting to evaluate what turns consumers and other users both off and

onto a mobile app (and its authoring brand), focusing on the following questions: What elevates a good, serviceable, and

even profitable app into the realm of great? And if a mobile app achieves greatness, what is the impact?

Forrester Consulting conducted a survey of 1,000 consumers in the US, UK, Canada, and India who use mobile devices, a

survey of 200 technology and business professionals in the US, UK, Canada, and India responsible for mobile apps, and six

qualitative interviews with mobile app initiative leaders in enterprises of 500+ employees. Forrester found that companies

that produced mobile applications they defined as great achieved remarkable results, even over those who produced mobile

apps they defined as good.

KEY FINDINGS

Forrester’s study yielded four key findings:

3

Firms mustinvest to creategreat apps.

2

Great appsincreaserevenue,reduce cost,and engagecustomersexponentiallymore thangood apps.

1

A great app notonly worksflawlessly, italso providesimmediate andrelevant mobilemoments.

4

Firms mustmeasure thethings that willlead them tocreate greatmobile apps..

2

The Mobile App Journey: From Bad To Good To Great

In August 2014, IBM commissioned Forrester Consulting to

examine the impact of “good” or “bad” mobile applications

on a company’s brand, revenue, and cost structure. The

study found that bad apps cost the business a great deal of

revenue opportunity and were, at best, a waste of

development time and resources; at worst, they were

damaging to brand reputation. But good apps generated

revenue and operational efficiencies. While enterprises and

consumers agree a bad app is a waste of time, what about

the difference between a good app and a truly great one?

GOOD TO GREAT: THE SUM OF THE PARTS DOES

NOT EQUAL THE WHOLE

The 2015 Forrester Consulting study commissioned by IBM

followed up on the 2014 surveys and focused on finding the

difference between good and great apps. If a mobile app

achieves greatness, what is the impact on the business? Is

it worth going from good to great?

There is no magic definition of a “great app.” What makes a

mobile banking app truly great might not work for a mobile

ride-share app. But on a higher level, there are basic

attributes of mobile apps that must be present for a mobile

app to be good — and must be flawless for a mobile app to

be great. In this study, consumers and enterprises appear

aligned on what they value in the app’s qualities. A mobile

app must master the basics (Figure 1):

• It should not crash.

• It should not use too much power.

• It should save time.

• It should provide quick, easy access to features.

Consumers are surprisingly uncomplicated at first glance.

They value performance and connection over design bells

and whistles. So why create a great app if good is good

enough? This study found that great apps provide

astonishing and compelling returns to those companies

determined enough to make them. To do this, they add a

key secret ingredient to flawless performance.

The secret ingredient is the mobile moment. Forrester

defines the mobile moment as that moment where a

customer gets anything she wants, immediately, and in

context.1 The enterprise understands its customers and is

obsessed with winning, serving, and retaining them. This

blurs the distinction between the physical and digital worlds

and challenges the way companies do business and use

technology to help. As an example, Forrester Consulting

asked 1,000 consumers to name their favorite mobile app

and why that app was their favorite. The wide variety of

answers to the “why” question reinforces the power of

context in the mobile moment. The themes ranged from

how easy the app was to use to the connection, fun, and

context that the app provided (Figure 2).

UNDERSTANDING CONSUMER MOBILE APP

BEHAVIOR REVEALS THE IMMENSE OPPORTUNITY

It is critical that any business that creates mobile apps

understands how transformative the mobile moment is

(Figure 3). From Forrester’s Consumer Technographics®

research on mobile use, we know that:

› Mobile moments transform commerce and service

experiences. Smartphones are now the majority of all

mobile phone sales. More than 50% of US online adults

access interactive content on their phones at least daily.

And this phenomenon is global: Among online

consumers, 47% of UK consumers, 56% of urban

Brazilian consumers, 84% of urban Chinese consumers,

and 74% of urban Indian consumers connect to

interactive content at least daily.2

FIGURE 1

The Top Five Things Consumers See In A Great App

Base: 1,000 consumers in US, Canada, UK, India who use mobile devices

Source: A commissioned study conducted by Forrester Consulting on behalf of IBM, September 2015

39%39%

42%

45%

50%

55%

Gives quick access tofeatures I use most

Sets my privacysettings to my

preferences

Saves me time

Does not suck downmy battery or take up

a lot of memory

Does not crash/freeze/display an error

“Is your app crash-proof?”

“Consumers still insist on the basics: stability,

performance, basic functionality. Are those flawless?”

3

› Consumers spend over 85% of their time on

smartphones within apps. They do lots of things on their

smartphones and even on their tablets, like checking mail

and checking the Web. But they click and stay for most of

their time within an app downloaded from an app store.

› Consumers consolidate their mobile moments into a

handful of experiences for their own convenience. On

average, just five apps that consumers download from the

app store make up a sizable 84% of the time spent in

mobile apps. Given the glut of choice of mobile apps,

users focus on the best apps. Winning and keeping a spot

in this coveted top five is challenging.

› Mobile commerce is on the rise. Currently, mobile

accounts for 10% of online sales, and that will continue to

grow.3 But the bigger opportunity is mobile’s influence on

sales in-store. Like search, the value of mobile lies in the

clues the data offers about purchase intent.4

› Momentum will build in mobile apps that generate

and use insights the fastest. This contextual data will

enable pushed, rather than pulled, moments as mobile

app professionals better anticipate customers’ needs.

To go from good to great, a mobile app must:

• Work flawlessly in terms of uptime, power use,

and speed.

• Be easy to access and use anytime, anywhere.

• Give the user control over the interaction.

• Provide relevant contextual experiences.

“A great app provides our customer with whatever information and services that he or she wants at whatever point he or she wants it, while keeping the interface simple and clean but being very responsive and quick.”

— Director of product management, mobile commerce at

US retail chain

In other words, a great mobile app masters the mobile

moment for the customer. Is it really worth it? The next

section explores the enormous opportunity of a great mobile

app.

FIGURE 2

Why Consumers Love Their Favorite Mobile App

Base: 1,000 consumers in US, Canada, UK, India who use mobile devices

Source: A commissioned study conducted by Forrester Consulting on behalf

of IBM, September 2015

EasyEasy useweather

touchsaves

Because updateFun all free

keepgoodfind

keeps communicate info love most

music chat gamesuseful family app

stay access game newslikehelps anytime people

sports easily informationmoneyconvenient

connect gives Quickshopping

connected

way instant

time

greatfriendscheck need

anywhere

4

FIGURE 3

The Transformative Opportunity Of Mobile

Source: “Mobile Moments Transform Commerce And Service Experiences,” Forrester Research, Inc., February 11, 2015

5

Opportunity Is Beating At The Door For Great Apps

Great apps outperform good apps in four key areas:

› Creating direct revenue. The revenue creation difference between a good app and a great app is astounding. Mobile

professionals in this study who thought their best-performing app was “good” reported an average of $9.5 million in

additional revenue from direct sales, advertising revenue, or other direct revenue sources. Those who thought their best-

performing app was “great” saw an average of five times that (Figure 4). Mobile commerce is steadily increasing as more

mobile users download apps and become more confident in the security of transactions. Furthermore, digital wallets and

other conveniences such as digital coupons are making it easier for customers to conduct mobile transactions, and

consumers also use mobile in-store to research and cement their purchase decision, increasing sales even more.

“What we’ve noticed is that a customer who engages with both the online site and the mobile app tends to spend 6X more than an in-store-only customer.”

— Director of product management, mobile commerce at US retail chain

FIGURE 4

Key Area 1: Creating Direct Revenue

Base: various mobile app professionals, sorted by respondents who self-rated their best-performing mobile application as either “great” or “good”


Make an average of 5x more revenue with a great app

$45,609,066

Great apps

$9,526,037

Good apps

6

› Influencing sales in other channels. Mobile commerce revenue pales in comparison to mobile’s influence on sales in the

store or on the Web. Consumers are using mobile devices to research products that they purchase at a later time; they

can use them to compare prices, check ratings and reviews, and access QR codes to get more information while shopping

in a physical store. After completing a purchase, consumers are almost as likely to use a smartphone as they are to use a

desktop/laptop; this is the first point on the customer journey where mobile devices are as popular as desktops/laptops.

The reason? Flexibility. Consumers appreciate that they can use a variety of options — emails, text messages, messaging

apps/chat functions, online communities, social networks, or traditional voice calls — to get answers and assistance.5 And

if the mobile app is a great one, the halo effect results in an average increase of almost six percentage points (Figure 5).

“We’ve seen 10-figure sales through mobile devices. But that number is insignificant until you attribute sales in-store to mobile — for each dollar spent online, it influenced

$5.00 in in-store purchases.”

— eCommerce director, US discount retailer

FIGURE 5

Key Area 2: Great Apps Add Six Points To Revenue From Other Channels



Great apps increase sales in other channels

“By how much would you estimate the app influenced sales

through other channels (website or in-store)?”

Average increase

38.3%

Good apps

Average increase

44.1%

Great apps

7

› Lowering costs. Well-designed mobile apps streamline a service and can decrease operational and capital costs (Figure

6). Personnel costs associated with serving customers in brick-and-mortar locations, such as selling on the retail floor,

taking reservations over the phone, or handling customer inquiries and complaints, can be reduced through apps that also

improve their productivity — sometimes by enough to save on full-time equivalents. Apps that significantly change the way

customers do business could lead to closing or consolidating locations.

“Our prescription refill feature had a twofold impact — it prompted a bump in our customer satisfaction scores, and led to operational efficiencies because customers

were using their phones [to order refills] rather than picking up the phone and talking to a pharmacist.”

— Director of mobile commerce, US drugstore chain

FIGURE 6

Key Area 3: Great Apps Save Money And Boost Productivity



29%29%

44%

17%

34%

Decrease

operational costs

Improve

employee productivity

Great apps Good apps

Great apps go right to the bottom line

Great apps beat good apps on cost savings by 12

percentage points. Productivity rises an additional 10 points.

8

› Increasing customer engagement and loyalty through improved customer experiences. Perhaps the most

significant long-term impact an app can have on customers is an increase in their engagement and loyalty (Figure 7). More

engaged customers become more valuable return customers who spend more money and recommend products and

services to other friends. The best mobile experiences provide their users with immediate value from the moment they

download and open the application. These leaders prioritize relevant functionality and perform reliably throughout the

experience. The laggards? They hassle customers with unnecessary content and disappoint — or crash — in moments of

need.6

“The mobile channel . . . has proven to be a large driver of sales and customer satisfaction and engagement. We are proportionately aligning our mobile investment

with that growth.”

— Director of product management, mobile commerce, US retail chain

FIGURE 7

Key Area 4: Great Apps Generate Higher Rates Of Customer Engagement, Experience, And Loyalty



Customer

engagement

Customer

experience

Customer

loyalty

Great apps Good apps

Great apps serve the customer

Great apps improve customer loyalty rates by 15

percentage points. Return customers spend more and cost less.

50%46% 47%

44%

36%32%

9

THE COMPOUNDING FINANCIAL IMPACT OF A GREAT APP

A great mobile app truly propels an organization forward when it both drives sales and increases customer satisfaction. A

great app generates five times more revenue than a good app. Furthermore, compared with a good app, a great app

increases customer engagement by six percent, increases customer experience by 10 points, and increases customer

loyalty by 15 points. Engaged, loyal customers spend more than average customers. Compounded over time, a good app

and a great app diverge further and further, setting one competitor ahead of another and on a course that can’t be imitated

easily (Figure 8).

FIGURE 8

The Compounding Financial Impact Of A Great App


5

4

3

2

1

Competitor B: Great app

Competitor A: Good app

Engaged app user

Revenue

Revenue

Compounding Financial Impact:

• The app generates 5X revenue

while decreasing costs.

• The app leads to increased

customer experience and loyalty.

• Loyal app users recommend the

company and app to friends and

family.

• The app leads to increased

spend from loyal customers.

10

Enterprises Must Tackle Persistent Challenges

ENTERPRISES ARE UNDER-RESOURCING DEVELOPMENT EFFORTS

Of the respondents surveyed, 58% plan to spend less than

$2 million in total on mobile app development: 23% plan to

spend between $1 million and $2 million, 19% plan to spend

between $500,000 and $1 million, and 16% plan to spend

less than that. For most of our respondents, that amounts to

less than 1% of their overall revenue. Yet they plan to

create several new apps in the next 12 months (Figure 9).

Depending on the situation, $2 million might be enough, but

companies must understand that the total investment in

mobile apps may require additional ecosystem investment

as well. A common pattern: A customer-facing mobile app

informed by real-time contextual data drives revenue via

eCommerce services and activates operations via existing

systems of record. Such new digital business scenarios

demand interconnections between domains, require

unprecedented integration, and can be complex and costly.7

Under-resourced development plans could doom the best

“great app” intentions.

FIGURE 9

Enterprises Are Under-Resourcing Development Efforts

Base: 200 US, Canadian, UK, and Indian decision-makers responsible for mobile app initiatives at companies of 500+ employees


Current Plan to build in

next year

1-5 apps

6-20 apps

20+ apps

19%

7%3%

42%

13%3%

Firms have big ambitions . . .

Mobile apps to double in the next year . . . but spend relatively little

16%

19%

23%

$0 to less

than $500K

$501K to $1M

Between $1M

and $2M

58% of

enterprises

spend <$2M

on mobile app

development.

11

CONSUMERS AND ENTERPRISES ARE NOT ALIGNED

In order to win, serve, and retain customers with a mobile

app, organizations must understand what customers expect

and align their development efforts and investments to meet

those expectations.

There is no question that enterprises are working hard to

create mobile apps that resonate with their customers.

However, for the second year in a row, enterprises haven’t

quite synchronized with what consumers say they want

(Figure 10). This disconnect means that enterprises will not

get their mobile app to answer their customers’ needs and

demands — and that means another year of lagging behind

competitors who reap the benefits of a great app.

FIGURE 10

Where Mobile App Consumers And Enterprises Are Not Aligned

Base: 1,000 consumers in US, Canada, UK, India who use mobile devices and 200 US, Canadian, UK, and Indian decision-makers responsible for mobile

app initiatives at companies of 500+ employees


Push

notifications

Control

information

shared

Control offers

and content

Offer discounts and

extra services

Specify type/frequency

of communication

Remember who I am

Multiple

touchpoints

Updates on

products/

services

20%

25%

30%

35%

40%

45%

20% 25% 30% 35% 40% 45%

En

terp

ris

es

Consumers

Where consumers

have high expectations

and enterprises miss

the mark

Enterprises miss consumer expectations

Where enterprises

and consumers are

aligned on app

expectations

Where enterprises

incorrectly assume

that consumers want

these things

12

MOBILE APP INITIATIVES ARE STARVED OF INFORMATION

Companies are not tracking the right measures of mobile

app performance that will help them understand the impact

of their app once it has been released and is being used.

For example, companies that thought their best-performing

app was good tended to measure things like number of

downloads, number of monthly active users, and number of

daily active users as their top three metrics. These metrics

measure activity but don’t give a deeper indication about

whether a user is more deeply engaged in the app.

By contrast, companies that thought their best-performing

app was great measured the number of completed

transactions through the app along with the revenue and

cost-savings it enabled — better indications of the overall

business performance of the app (Figure 11).

“Downloads are great, but if they’re not opening, using, and engaging in the app, then I’m not satisfied. We need to know their comments, our ratings, and enhance their in-store experience and drive them there. We have to report the mobile sales up to the C level, but really it’s about engagement and customer satisfaction.”

— eCommerce director at discount retailer

FIGURE 11

Organizations With Great Apps Tend To Measure More

Base: 158 mobile application professionals who rated their best-performing mobile app as either “great” or “good”


Measuring business performance

Financial metrics create a broader picture of a mobile app’s impact.

“How do you measure the business performance of an app?”

21%

15%

26%

39%

37%

41%

44%

46%

Average revenue per user (ARPU)

Revenue generated indirectly through the app(leads to in-store or website purchases)

Cost savings enabled by the app(e.g., reduced time or cost per transaction)

Number of completed transactionsthrough app

Great apps

Good apps

13

Understanding App Performance And Impact

Mobile excellence doesn't happen by accident: It takes

budget, the right organization, and a sound strategy.

Enterprises that have developed a great mobile app:

› Invest like they mean it. Understanding clearly that

creating a great mobile application requires investment

across the business and across technologies has put

great app organizations on the right track. Focused

mobile app development and testing, a robust data

management architecture, and the integration of mobile

into enterprise applications all come together to create

well-designed mobile experiences.

› Organize for success. Given the depth and breadth of

expertise needed, it takes the right organization of both

the business and technology sides of the house to pull it

off. It is often necessary to combine with the right outside

partners for design, development, and access to

technology. Organizations in this survey outsourced about

half the time; great app organizations did about the same

but clearly in a more strategic way.

“When I launched mobile, our IT team didn’t have the depth and resources, so we worked with outside agencies to develop the best mobile experience we could. After that, IT realized the importance of mobile; now within IT, there is a mobility services team. Mobile has a seat at every table for these projects we’re going through.”

— eCommerce director, US discount retailer

› Develop a strategic focus. Like any product, mobile

must meet customers’ needs while benefiting business

goals. And, like any product strategy, customer input and

ideas generated for improvement must be carefully

studied and ranked against key performance indicators,

like customer satisfaction and engagement, strategic

mobile objectives, and cost.8 In this study, respondents

who rated their best app as great measured everything

more and focused on measures of performance that could

tell them about engagement, what users thought about

the app, and how the app impacted both revenue and

cost.

“For every feature or capability we consider, we consider how it will improve the experience of a customer and if it makes it much easier to access a service. Also, is that feature innovative and are we first to market with it to garner buzz and attention in the market? Finally, we think about how well that feature supports the business goals of the company at large.”

— Director of mobile commerce, US drugstore chain

Actively measuring an app’s use and how a user interacts

with it will give enterprises a much clearer picture of what is

working, what isn’t, and whether that matters across both

financial and customer experience metrics. That in turn

feeds improvement strategies and plans. Great app

organizations use this cycle to improve their app and create

the best mobile moments for their customers.

“We’ve found that customers who interact with our brand through mobile have increased conversion rates overall – instore and online. By analyzing those together, we figured out the real value of a mobile visitor. The combination is mind-blowing. We don’t debate how big it is, we just act on it.”

— VP of digital, US home improvement chain

14

Key Recommendations

There is no magic formula for creating a great mobile app. It starts with a desire to serve customers by trying to deliver

the mobile moments they demand through a careful collection of their opinions, tracked behaviors, and historical data.

A good mobile strategy never sees the job as done; it measures the response and impact of the app in use and then

uses the insights from that to iterate and improve the app. The app improves in its quest to deliver a perfect mobile

moment. It is a journey from good to great; in order to move your mobile app along that journey, you need to:

› Find out what your customers want and align with that. Get qualitative feedback and insights into your

customers’ experience of your app, and then create the mobile moments that give them the best experience

possible. Context is the key: What can you do to serve them in their mobile moment?

› Make measurement a religion. And then do it again. Get quantitative insight into your app’s operational

performance and health. Understand the impact it has on your bottom line. Make sure that it reconciles with the

qualitative data you are studying.

› Invest well. Invest wisely. Invest long term. Mobile apps require rigor in development, integration, data

architecture, and business planning in order to make them great for demanding consumers. Over the lifetime of a

great mobile app, the investment must be significant, but the returns will be well worth it.

› Suppress the urge to try everything; center core app capabilities on improving the customer’s

experience. The capabilities that mobile developers have today compared with their first iteration of the corporate

app are overwhelming. Geo-fencing, beacons, behavioral analytics, location tracking, push notification (and the

list goes on) are exciting and potentially powerful but only if they align with what customers expect the app to do

and if it makes their experience truly better. Companies that develop great apps rein in the urge to try all the new-

fangled features. Instead, they carefully choose the capabilities that will have the most impact.

› Focus on the company’s core competency; partner on the rest. Mobile apps are a complex, enterprisewide

undertaking, and making them great requires a total focus and investment of money, time, and people. It is a

daunting task for an enterprise of any size. The good news is that there are great partners to be found, ones who

can provide tools and services to help with design, integration, technology development and management,

testing, and analytics. Focus on what your do best, and outsource or buy the rest.

With a focused strategy and both qualitative and quantitative measurement, mobile apps will move from good to great

and enterprises will reap the enormous benefits in revenue, cost, and customer engagement, experience, and loyalty.

15

Appendix A: Methodology

Forrester Consulting conducted a survey of 1,000 consumers in the US, UK, Canada, and India who use mobile devices, a

survey of 200 technology and business professionals for mobile apps in the US, UK, Canada, and India, and six qualitative

interviews with mobile app initiative leaders in enterprises of 500+ employees. Forrester found that companies that produced

mobile applications they defined as great achieved remarkable results, even over those who produced mobile apps they

defined as good. The study began in July 2015 and was completed in September 2015

Appendix B: Supplemental Material

RELATED FORRESTER RESEARCH

“The Best Of Mobile User Experience, 2015,” Forrester Research, Inc., August 10, 2015

“Your Customers Will Not Download Your App,” Forrester Research, Inc., June 22, 2015

“The Next App Platforms Will Bridge Corporate, Consumer, Commerce, And Connected Devices,” Forrester Research, Inc.,

May 14, 2015

“Engage Customers Through Mobile,” Forrester Research, Inc., May 4, 2015

“Forrester Research eCommerce Forecast, 2014 To 2019 (US),” Forrester Research, April 22, 2015

“Mobile’s Role In The Consumer’s Path To Purchase,” Forrester Research, Inc., April 15, 2015

“Mobile Moments Transform Commerce And Service Experiences,” Forrester Research, Inc., February 11, 2015

Appendix C: Endnotes

1 Source: “Engage Customers Through Mobile,” Forrester Research, Inc., May 4, 2015

2 Source: “Mobile Moments Transform Commerce And Service Experiences,” Forrester Research, Inc., February 11, 2015

3 Source: “Forrester Research eCommerce Forecast, 2014 To 2019 (US),” Forrester Research, April 22, 2015

4 Source: “Your Customers Will Not Download Your App,” Forrester Research, Inc., June 22, 2015

5 Source: “Mobile's Role In The Consumer's Path To Purchase,” Forrester Research, Inc., April 15, 2015

6 Source: “The Best Of Mobile User Experience, 2015,” Forrester Research, Inc., August 10, 2015

7 Source: “The Next App Platforms Will Bridge Corporate, Consumer, Commerce, And Connected Devices,” Forrester

Research, Inc., May 14, 2015

8 Source: “The Best Of Mobile User Experience, 2015,” Forrester Research, Inc., August 10, 2015

Documents

IBM Thought Leadership Paper_From Good to Great Apps