The ROI Question: How to Calculate the Return on Investment in Mobility

If you are serious about selling something today, you are probably trying to sell it in more than one place. If you have a physical store you are selling it there, you probably also have a web store, and a mobile store, and a call center, maybe even a door to door selling strategy run by agents.

A classic example is the airline industry. An airline today sells the exact same airplane seat on their own website, through their mobile store front, at the ticketing window at airports that they fly to, via their call-center, on third-party online travel portals, and via travel agents operating out of physical offices that are connected to the airline’s central reservation system!

You have obviously invested serious money into these channels. How do you know if your investment in any of these channels is generating additional revenue? How can you tell if your investment in the mobile app you got done has generated a return?

This is not so easy to determine.

It is easy to see why this is so via this scenario: A person taps on the advertisement of ebooks that you are selling via your mobile or web store while playing a game on their mobile. This triggers a download of your mobile app to their device. The user browses through several ebook titles in your app, reads reviews, compares prices, reads through preview pages. Let’s say Jack Welch’s “Winning” catches his attention but he leaves your app without making a purchase. At a later date the same user, visits your store’s outlet in a mall, sees the same book on the shelf. Having already done their homework on the book, he immediately purchases the hard bound version of “Winning” in your store! Retailers are very aware that this kind of a scenario is actually not uncommon in cross channel selling where one channel exposes the customer to a product while the conversion takes place in another channel.

Given this situation, the concept of a pilot has been used very effectively for measuring the effectiveness of a sales channel. Here’s how this concept works at a high level:

  1. Define a minimum sample size, i.e. the minimum number of people you wish to target considering a specific demography consisting of parameters such as age, gender, income level, ethnicity, education, geography/locality etc. (i.e. the set of demographic characteristics in which you are most confident of making a positive sales impact for one or more specific product lines).
  2. Run an ad campaign that targets this group to advertise the existence of your mobile offering such as a new mobile app, digital coupons etc. for the product lines under measurement
  3. Measure the number of app downloads, coupon redemptions online/in store, total purchases in that product line in store, online, via call center etc. after running the ad campaign.
  4. Be willing to extend the pilot for another 3-6 months if the sales data at the end of the first run indicates a potentially positive sales trend but you need more data points to confirm. A lot of times there is a time lag after the start of an ad campaign and before sales volume picks up – sometimes for exactly the reason mentioned in the eBook scenario mentioned above!
  5. You may need to run another booster ad campaign to have the full desired effect.
  6. At the end of the pilot the important thing to do is to measure the sales increase (as compared to the defined baseline value/volume before the pilot) across all channels that are relevant to the product line and demography under consideration. This is so because, as we have seen in the eBook example above, multiple channels may have collaborated to achieve each customer conversion.

While doing the pilot be sure to embed usage analytics into at least the web and mobile channels and also have a way of identifying and tracking the user’s movement and purchases via a combination of user account information and rewards account information. This should give you valuable data on how your customers are experiencing your new mobile offering. You can also make use of multi-channel attribution tools such as Google Multi-Channel Funnels to track user movement across channels from the point of exposure to the point of conversion and use the path data captured by such tools to draw inferences about the movement patterns and the relative contribution of each of your sales channels toward your defined sales goal.

Happy Measuring!


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