Brands Need Not APPly

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App usage dominates on both smartphones and tablets.
App usage dominates on both smartphones and tablets.

Snowballs have a better chance to languish in Hades than branded apps do to remain on a consumer's smartphone. That's the sad, though not surprising, conclusion of a study released this week by LoyaltyOne and Northwestern University based on surveys of nearly 7,000 Canadians and Americans.

The 2013 Social Word of Mouth survey discovered that smartphone users had downloaded an average of 26 apps; tablet users average 29 app downloads. Yet only about six of those apps, or 22%, are used on a daily basis by consumers, and the lion's share of those are entertainment apps (games, music) or utility apps offering such things as weather updates and maps.  Few branded apps make the cut, and the ones that do include entertaining or utilitarian features, such as Nike Fuel and Starbucks.

“Too many companies create apps as me-toos, or they conceive of them as another marketing channel on the order of a direct mail piece or an email,” says Jeff Berry, senior director of research and development at LoyaltyOne. “What's needed is a strategy to use the app to create an ongoing dialog with the consumer. If branded apps don't do that, they'll sit on someone's device without ever being used.”

When asked what made them continually interact with branded apps, consumers' responses centered around two benefits: saving money and streamlining tasks. The top two reasons, both named by 42% of respondents, were “stretches my spending power with access to discounts” and “helps me simplify or organize my life.” Apps also got high marks for amusing people, helping them monitor their finances, and helping them make better decisions.

Bank apps that allow people to check balances and manage accounts and loyalty apps with check-in features tend to be popular for these reasons, but Berry says that shouldn't stop any brand from trying to incorporate such features.

“The Starbucks app is a winner because they keep evolving it. They offer new music downloads or new ways to earn points. They create news around it,” Berry says.  “Starbucks continues to experiment with and evolve their app, whereas a lot of marketers spend too much time trying to get everything about their app perfect. Then they release it and forget about it.”

While fielding a successful branded app may be incredibly difficult, it can also be tremendously worthwhile.  In an experiment with a new app for its own AirMiles loyalty program, which 75% of Canadian households take part in, LoyaltyOne compared the engagement levels of the app with program members who did and didn't download the app. Tracking activity five months before and after the September 2012 introduction, LoyaltyOne saw AirMiles points earned by app users increase 23%, while non-users points decreased 3%.

“The first app we launched was pretty basic. You could check your point balance, find partner locations, and check in with it,” Berry says. “We found that the people who check in with apps tend to be higher spending people.”

The ultimate learning: “Use the app to get your most engaged customers to raise their hands,” the study concludes, “then build the app around their preferences and behaviors, addressing these key opportunities.

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