“Will building an app help my company?” 

$320k a minute: that’s how much money flowed through mobile app stores in 2021. In the same year, mobile ad spend was $295b; the estimate for 2022 is $350b. Digital, mobile-first customer journeys are well and truly here - so how do we help companies choose the right tools fora flawless user experience? 

The shift toward digitisation has accelerated in the wake of the pandemic and companies across the world are racing to create safer, more efficient experiences for customers and workers alike. Such changes require support through reliable and accessible digital tools – but which ones?  

The first product that springs to mind is the native app. Yet the odds are stacked: app development costs now range from $20,000 to $300,000, in a market of over 4.8m apps (around 32,000 are released every month for iOS alone). Meanwhile, websites are adapting to mobile operating systems, and doing a good job of it, too.

Is building an app even worth it anymore? 

In our work at and dos Santos, we addressed these questions from our clients in the travel industry by researching the cost and efficiency of available digital tools, while observing general user behaviour as well as customer interaction with their existing digital services. In this way, we created an accurate picture of what tools are the most popular, what level of investment they require, and which features render them useful for specific business needs.  

What are audiences using?

The numbers are in, and they surprise no one: mobile phones are owned by 5 billion people currently and probably around 7.3 billion by 2025. There’s a general upward trend in the proportion of web traffic on mobile as opposed to desktop use, while the World Advertising Research Centre (WARC) predicts that by 2025, at least 72% of internet users across the globe will exclusively use smartphones line.

The question for businesses is not whether to adapt their websites and products to mobile use, but how quickly and effectively to do this.

Beyond the ‘competition’ between mobile and desktop use lies an internal battle of native apps vs responsive websites. In a nutshell, native apps are downloaded to (and store data on) a mobile device, while the latter are desktop websites adapted for mobile use. Researching either option’s specific features and technical requirements is the first crucial step in determining which tool will best serve a company’s goals.

What do native apps offer?

Native apps are designed and developed to run on specific mobile operating systems (OS). For example, apps for Apple devices (which use iOS) are created in Swift language and built according to Apple guidelines; each app undergoes an App Store review process before becoming available for users. As highlighted in Exhibit 1, the clearest advantages of native apps are better performance and design, while high development cost remains the main factor that holds companies back from investing.

Taking airports as a case study, we can make a further distinction between dedicated and shared native apps. Dedicated apps are developed by a single airport, giving it full ownership – but also full risk of investment. While offering complete control of design, branding and data management, dedicated apps cater to a smaller market and hold lower value to users due to highly specific and often short-lived benefits.

On the other hand, shared apps have a naturally greater reach the more airports are involved. Creating an app for multiple destinations may increase user retention and lower marketing spend. Sharing development costs between companies also lessens the individual risk of investment. These benefits, however, might still not outweigh the burden of slower, complex decision-making and reduced branding potential that comes with shared apps.  

What about responsive websites?

Have you ever tried to buy something on a website from your phone, clumsily pinch-zooming, tapping, and scrolling to make sure you got all the right details in? That’s the unfortunate reality of using websites that haven’t been adapted to mobile use – and this is where responsive websites come in. By developing content that fits within any screen shape and size, companies can provide a smoother user experience while still reaping the benefits offered by a browser website as detailed in Exhibit 2.

So what are audiences using?

We’re back to customer behaviour: understanding how users prefer to engage with companies, and whether this depends on the products or services being offered, is the key for businesses to choose wisely before committing to a development path.

Let’s look at some basic numbers:

• The average smartphone user had 40 apps installed on their mobile as of 2020.
• On average, apps are deleted in 5.8 days after last use (10.8 days for travel apps).    
• Smartphone users spent 4 hours a day online in 2020; 88% of this was on apps.
• Users spent around 201.8 minutes/month shopping on apps in 2021, compared to 10.9 minutes on websites.
• Overall conversion rates on apps are 120% higher than on mobile websites; retailers report 90% higher add-to-basket rates on apps compared to mobile browsers. 

When skimming through these reports, it’s easy to jump to the conclusion that a native app is the obvious choice for any business to invest in. However, data from the actual investor can reveal information that might surprise you.

A study of user behaviour at a European airport showed that the mobile app was only favoured for impulsive, short-term requests, while desktop website use accounted for almost the entirety of parking reservations (99%). During the pandemic, the decrease in passenger traffic (72%) was almost perfectly parallel to the decrease in mobile app use (74%), suggesting a direct proportionality between mobile device sessions and the number of passengers visiting the airport. As many companies learnt the hard way, steady passenger traffic is no longer a guarantee for the future; dependence on the mobile app seems to carry a high risk from this perspective. 

The customer journey also has a significant impact: most users discover and start to interact with businesses on a website, only switching to the more efficient native app once they’ve reached a certain level of engagement with the company. How does this apply to airports? Well, 80% of our client’s customers visit lessthan 4 times a year, and 92% search online only for flight-related information– which can be found on the airport website in a much shorter time than it takes to downloadand sign into an app.

So what level of engagement can we expect with interactions that are so few and far between? In such cases, apps need to offer much higher incentives and advantages to acquire and retain users – like selling app-exclusive deals or personalised offers. Companies need to understand not just which tools to develop, but how to adapt these tools for the greatest ROI. Developing a higher-cost app targeted on specific revenue channels might reap more benefits than spending the same investment on a lower-cost website across the board.

Why not choose both?

Sure, developing both an app and a responsive website – like Instagram and Uber did - does give you the best of both worlds. Still, resources are often limited and a choice needs to be made. The decision ultimately depends on your user journey: are individuals interacting with the company frequently enough to justify the cost of an app? And if not, as is the case with most airports, what additional benefits or rewards could an app offer to users, and how does this fit in with your business goals?

Whichever route is decided on, taking the time and effort to understand where revenue potential lies and analyse customer behaviour in those areas will enable companies to develop tools that add lasting value to their user journey.

Key takeaways

• A rapidly increasing proportion of online traffic occurs via mobile devices, and the success of digital products has become highly dependent on their adaptability to mobile use.

• Native apps are easier to use, offer more personalisation, and generally perform better than websites on mobile devices; but high development costs and lengthy approval processes often deter businesses from investing.
         
• With companies like airports where most users only visit a few times a year, a website would likely cater for most needs, and an app would become redundant unless it offers considerable advantages or rewards.

• The ideal situation involves the use of an equally efficient native app and website reflecting the same products and services; however, either option can be deemed preferable depending on the specific needs of each business and its user journey.

• When deciding on which digital tools to develop, companies compare the key features of each option and analyse user behaviour across the relevant aspects, aiming for a targeted investment with the highest possible ROI.