eCommerce Guide to Improve CAC, LTV, and Conversions on Mobile

Branch Whitepaper

The Mobile eCommerce reality of 2017

What is important to measure?

Mobile web vs. App: how to leverage both for eCommerce growth

User acquisition: driving new installs at less than 5 cents CPI (Jet.com)

How can you increase your click-to-purchase on emails (Instacart)

User experience, better experience = more conversions

WH | vol. 001

What you’ll learn

Buy now

Buy

now

Buy now

branch.io

For eCommerce marketers, mobile has never been more

important. The fact that mobile commerce sales have

increased by nearly 40 percent year over year should both

excite and scare brands into focusing on mobile. Mobile will

account for $284 billion in revenue by the year 2020.

It’s clear that mobile is becoming the standard for brand

engagement, but it remains difficult to track and optimize for

every single user. That user could be on an Apple or

Android device, could have an older operating system, or use

a brand’s app instead of the mobile web. But properly

measuring and attributing mobile events remains a

pain-point for many marketers attempting to test various

channels. Additionally, linking users out of Facebook’s mobile

app is becoming more and more difficult.

“Marketers are now forced to use different tools to

measure each fragmented platform like email, social, website

or mobile app; resulting in SDK congestion, duplicated data

& wasted marketing spend,” wrote Branch CEO, Alex Austin.

He also listed three steps that marketers can take to improve

their attribution methods:

• Pick and Measure Your Cross-Platform Objectives

• List Out Channels and Pathways

• Outfit All Channels With Tracking

These steps can help eCommerce companies focus on

cross-platform strategies that attribute properly and allow

them to fixate on providing a consistent user experience to

customers.

Whether an eCommerce app is brand new, or already driving

a majority of sales, this guide walks brands through the

process of increasing and measuring conversions.

According to Criteo, mobile apps convert 3x better than the

mobile web, which ultimately begs the question for

marketers, how are you driving users to your eCommerce

mobile app?

Whitepaper

3

What metrics to measure?

As we mentioned above, measuring the impact of your

campaigns and user behavior is crucial to scaling your app

and revenue. Among all the metrics that analytics platforms

are capturing today, we have identified the three numbers

that you should always track if you have an ecommerce app:

1) Customer Acquisition Cost (CAC)

2) Lifetime Value (LTV)

3) Click-to-Purchase Rate.

Customer Acquisition Costs (CAC) eCommerce brands must always be aware of the cost to

acquire a user and how it relates to their conversion metric. If

an eCommerce brand is investing into a certain channel and

acquiring users for $5, but their average lifetime value of a

customer is only $3, they aren’t getting the ROI necessary to

continue investing in that channel.

In order to properly calculate the CAC, simply divide all the

costs spent on acquiring more customers (marketing

expenses) by the number of customers acquired in the time

period the money was spent. If a company spent $100 on

marketing in a year and acquired 100 customers in the same

year, their CAC is $1.00. You need to do the same calculation

for each channel where you are investing money to acquire

users. If you are benefitting from organic traffic, it will

substantially reduce your CAC, but you have to account for

the time and money spent in “SEO” efforts to have a

fully-diluted CAC.

For example, one top brand’s top acquisition channel for their

mobile app is organic search and, more specifically, Adwords.

By deep linking their Adwords to the relevant search content

inside of their mobile app, this company was able to decrease

their user acquisition costs by 16%, thus increasing the ROI of

each user acquired through Adwords, and improving

conversions by driving users to the mobile app. Their CAC

was simultaneously decreased by testing and iterating on a

channel that they knew was a revenue driver.

Lifetime Value (LTV)While LTV is important for any business, it’s especially vital for

eCommerce companies to see continual growth. A number

of different factors go into calculating LTV for eCommerce

brands, including conversions, engagement, and retention.

Specifically related to conversions, LTV can tell a brand if they

are pushing their customers through the proper channels,

where conversions are highest.

Here is how most eCommerce companies calculate their basic

LTV:

(Avg Monthly Revenue per Customer * Gross Margin per

Customer) ÷ Monthly Churn Rate = LTV

For example, let’s say your average revenue per customer is

$100 a month, your company makes an average of 33.2% in

profit on that $100, but you churn 7.56% of your customers

every month, an LTV would look something like this:

$100 x .332 / .0756 = $439.15

Historically on mobile, eCommerce brands have pushed users

to the mobile app, where companies see the highest ROI and

LTV. Using channels like the mobile web, email, and social to

push customers inside of a mobile app can dramatically

increase revenue for any eCommerce brand looking for

growth and additional user acquisition sources.

Click-to-purchase rateClicks alone are vanity metrics that tell an incomplete story

about why and where a potential user engaged with a brand.

But when clicks are combined with purchase attribution, they

can be a valuable indicator for how well various channels are

performing. Users won’t convert on every single click, but the

CTP rate is a strong indicator of content that is resonating

with an audience.

4

Mobile Web vs. App: How to eCommerce Brands can Leverage Both Channels In the decade since the iPhone was released, eCommerce

marketers have often been forced to make a very tough

decision: whether to focus time and energy on building

experiences for mobile web or native apps. While there are

certainly benefits of each channel, they often times can work

in harmony to improve retention, engagement, and

conversions. But when is the best time to use web and when

should we invest in a mobile app?

For instance, it’s much easier to acquire a new customer on a

mobile website, because of the ease organic search can play

into finding a brand. But if you want that customer to stay a

customer, and convert time and time again, the mobile app is

far superior when it comes to overall conversions, retention

and engagement.

These channels are the past, present, and future of business

in the digital world; and they can be the difference between

growth and stagnation. With nearly two-thirds of Americans

owning a smartphone, it’s paramount for marketers to reach

their audience on the right channel, at the right time.

Follow this comprehensive breakdown of when to take users

to the web and when to take them to a mobile app:

Click-to-purchase rate is another way of saying conversion,

which is the ultimate goal of each and every eCommerce

marketing department. Click-to-purchase can tell eCommerce

brands not only if their marketing is working, but if the

product is designed to guide customers down the funnel.

The formula for calculating click-to-purchase rates, or

conversions, is incredibly simple. Take the number of clicks

you received from a certain channel and divide them by the

number of conversions from the same channel. Like here,

where let’s say you received 1526 clicks from Facebook ads,

and 91 of those clicks converted:

1526 clicks / 91 = 16.76% click to purchase rate

(Note: the average click-to-purchase rate, across all industries,

from Facebook ads is 9.21%)

For an example of how brands found a channel to increase

their conversion rate, look no further than Instacart. The

grocery delivery giant was able to increase their

click-to-purchase rate via email by simply sending clicks to

their mobile app instead of the mobile web. Their 6% in-app

conversion rate was a 6x improvement compared to the

mobile web, thus increasing conversions, revenue, and their

click-to-purchase rate.

If the user has your mobile app installed, always

utilize deep links to send them to the mobile app.

Mobile apps feature a much better user experience,

especially considering mobile apps have a 6x higher

conversion rate than the mobile web when users are

coming from an email.

When a user doesn’t have your app installed, the

best user experience is taking the user to the mobile

web, instead of the various app stores. Once the

user lands on your mobile website, and is viewing

the content they clicked on, many top mobile brands

present their users with a smart banner or interstitial

to download their mobile app.

Email

Web Native App

5

Web Native App

The mobile web is really the only option for many

of the social networks, but tools like Deepviews can

preview app content on a landing page before a user

has downloaded your app.

Always send users from referrals to the mobile app

stores, or, if they already have your app downloaded,

send them to a specific piece of content inside of

your app.

If the user has the mobile app installed, paid ads

should always point clicks inside the mobile app. For

instance, Boxed, the leading bulk eCommerce

retailer, takes their users from remarketing feeds

directly inside of their mobile app.

If the app is installed, always use deep links to take

the user to the specific piece of content inside of the

mobile app.

Social media channels like Facebook, Twitter,

Instagram and Pinterest all feature their own in-app

browser for any clicks. The best user experience is

typically to take all users to your mobile website, and

then present a smart banner or Journey for that user

to go to the app if it’s installed.

The only situation where brands should send users

to the mobile web from a referral is if they don’t have

offer a mobile app at all. Since the link share is

coming from a trusted source, referred users will

take the time to download the mobile app from the

various app stores.

If the user doesn’t have your app installed, it’s

prudent to always take them to the mobile web,

instead of the app store to download your app. An

ad click is a high intent purchasing action, and taking

someone to the app store to download your app

could disrupt this flow (Always have a banner

available for an app download, however).

As mentioned with email, paid, and social, sending

content links to the mobile web when the app isn’t

installed is the most effective way to maintain a

cohesive user experience. But again, a smart banner

or interstitial are key for driving app installs and app

engagement.

Social

Referrals

Paid

Paid

App indexing is an important tool that all brands

should be utilizing to drive conversions. App Indexing

allows Google search results to take users inside the

mobile app when they search for a specific item or

page. For example, IMDB has indexed their entire

app to take users from a search result to the movie

they were researching inside the mobile app.

Otherwise, the search result falls back to the

mobile web.

Most of the time, brands will send users to the

mobile web from organic search results. Tools like

App Indexing have proven to be effective in driving

users to the app, if the app is installed. Smart

banners and interstitials are key for brands trying

to keep the user experience cohesive, yet present

an opportunity for your users to download your

mobile app.

SEO

6

User Acquisition: Driving App Installs for Under five Cents CPIHopefully by now, you know that mobile web traffic is

essential to increasing revenue at any eCommerce retailer.

According to this Branch data gathered in late 2016, if you

have a top ranked website, you also have a top ranked app:

Deep links will ensure that, after the consumer downloads

your app, they will be taken inside the app to the product that

they intended to purchase. Jet, shown in the example above,

use a Journey to increase their average daily downloads by

3x, and paid .02 cents per app install from their mobile

website.

App Store Optimization (ASO) for eCommerceIt’s also important to note that brands shouldn’t forget about

App Store Optimization (ASO) in regards to driving installs.

ASO adds another layer of upkeep for brands, and offers

limited control, but the App Store is the first impression many

customers see when they engage with an app, so it must be

manicured and maintained. There are five main elements that

can impact the ranking of your app in the app store:

• Keywords

• Category

• Title & Description

• Visuals

• Reviews and Ratings

You want to ensure that your title and description match with

what users are searching daily in the App Store. Look at your

competitors, the keywords that they are targeting, finding out

exactly what search queries brought your customers to your

app, and the natural language they use to describe it. Adding

those keywords to your app title will have a significant impact

on your ranking.

By focusing on SEO and engaging content, these brands are

able to acquire new users for a lower CAC than any paid

channel. So, how are these brands harnessing that website

traffic into app installs?

Journeys or smart banners are a few ways that marketers

are utilizing their mobile web traffic to drive those coveted

installs. In fact, top brands successfully use this channel as

a large driver of their growth. Journeys and smart banners

allow consumers to have a better purchase experience by

offering the choice to download your mobile app or to stay

on the mobile website if they choose.

7

Customized referrals links can provide a seamless experience

for users, so context is automatically carried through app

install:

Postmates, for example, used their referral program to

reward users $10 in credit for every user they referred.

This dual-incentive program also rewards the new user with

the same amount:

Mobile App Referrals for Modern eCommerce BrandsWhile the mobile web and ASO are huge drivers of app

adoption, referrals are the standard for growth. They are

the gold mine that all marketers covet, and help propel

word-of-mouth interactions into increased metrics across

the board.

Incentives - whether that’s a discount, cash, or swag - are

instrumental in driving adoption of eCommerce mobile apps.

Since you only have a few seconds to make an impression,

choosing the right icon and screenshots is crucial to increase

the number of downloads. While you can upload up to five

screenshots for an iOS app and up to eight for an Android

app, only your first three will show in the gallery on page load.

Through careful A/B testing you can identify the screenshots

that speak to your biggest customer benefits.

Additionally, one of the factors that will have the biggest

impact on your ranking is the number (and quality) of ratings

and reviews that you are able to collect. Apps that have a high

number of positive reviews are less prone to fluctuate in the

app ranking charts, will hold their positions longer, and could

be featured in the homepage. To obtain a 5-star rating, your

app must offer a seamless user experience, from onboarding,

to browsing the items, to checkout. A few companies were

able to “hack” this process by prompting users to leave a

review after the user successfully completed a purchase. It’s

a delicate balance that must be achieved on how and when

to ask users for feedback, or you might end up with a ton of

1-star ratings from “annoyed” customers.

Increasing Click-to-Purchase Rates on Email Email is the oldest – and typically most effective – digital

marketing tactic for eCommerce companies. It presents the

best opportunity for you to repeatedly get deals, offers, or

product updates in front of your customers. And similarly to

your web traffic, 71 percent of emails are opened on mobile

devices. In other words: your eCommerce marketing strategy

isn’t complete without an effective email marketing campaign.

However, with current Email Service Providers, emails are

broken on mobile. When a user clicks on a link on mobile,

they are taken to the mobile website instead of the app where

the user isn’t logged in, the conversion-to-purchase is much

lower, and the overall user experience is worse.

8

ConclusionAll of these factors that go into improving conversion rates

are ultimately dependent on the user experience. At the end

of the day, if the user experience is poor, not cohesive, and

lacking flow, your conversion rates will suffer. It’s important to

reach customers on the channels and devices they use most

on mobile.

Mobile has changed the digital world, and given marketing

departments the opportunity to reach their customers 24

hours a day and 7 days a week. Think about the lifecycle of

mobile, and how your brand is optimizing each aspect:

• Acquisition

• Onboarding

• Retention

• Monetization

These steps are especially vital for any eCommerce brand

trying to drive growth, they are the foundations of a

eCommerce strategy and guide brands towards success.

More resourcesFrom Web to Native Apps: Advanced Mobile Marketing

Why You Should Care About Deep Linking

Web vs. App

Speak to an expertContact Branch

Luckily, a number of Email Service Providers to automatically

include deep links in your marketing emails that will take

users directly to the content they want to see in the app, or

fall back to the mobile web if the app isn’t installed.

Customers will no longer go through a difficult coupon-code

process to get 20% off, it will be a seamless path to purchase.

In fact, our research says that using deep links in emails can

increase app session times by 65 percent, ultimately equaling

more purchases.

Instacart realized the success of their mobile app, and after

deep linking their emails, increased their click-to-purchase

rate by 6x. Before deep linking their emails, all clicks went to

the mobile web, where conversions hovered around 1%. But

that all changed as soon as they were able to take their users

directly inside of the mobile app, where their customers were

already logged in and ready to convert.