What does it mean for a company to have a digital optimization strategy?

We live in an app-based world. Almost everything we do can be done through apps on our phones, whether it’s managing our banking transactions, checking emails, or ordering food.

Research from the International Data Corporation predicts that by 2023, over 500 million digital apps and services will be developed – the same number of apps that have come up in the last 40 years.

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Plus, the Covid-19 pandemic has accelerated the adoption of digital products and services. Banking apps, for one, saw a huge spike in use in Southeast Asia in 2020, marking a shift in customer behavior that is here to stay.

Today, having a digital app for your business isn’t a “nice-to-have,” it’s a “must-have.” These apps are now a core part of the user experience, and being able to leverage – and monetize – these digital platforms are vital for businesses.

But building an app is just the first part of the journey. In order for companies to fully reap the benefits of their digital products, they need to make sure they have a digital optimization strategy in place.

Making the connection

According to Julio Bermudez, vice president for Asia Pacific and Latin America at Digital Optimization System Amplitude, having a digital optimization strategy entails understanding how your app factors into the larger story of your business.

“It’s about understanding how your digital products are being monetized – not just having a digital product but understanding how they are actually making an impact on your business,” he explains.

Julio Bermudez, vice president for Asia Pacific and Latin America at Amplitude / Photo credit: Amplitude

Many companies develop apps but don’t have a clear picture of how customer behaviors and actions within them actually translate into business outcomes.

Firms often know how to get customers into their apps, and they usually have the business intelligence tools to understand how their apps impact the bottom line. However, according to Bermudez, what happens in between is a “black hole”: Many companies don’t have an understanding of what actually goes on when a customer interacts with the app.

“With a digital optimization strategy, you’re able to understand the things that are actually working within your app in order to enhance the customer experience, which we see as a key driver of retention and loyalty and actually allows you to monetize your app,” he says.

Retention is key

One of the key elements of a digital optimization strategy is to shift a company’s focus from customer acquisition to customer retention.

“Acquisition isn’t the silver bullet,” says Bermudez. “If a ride-hailing app gives you a code to reduce the cost of your first ride, that means [the business] is negative on that ride. They need you to come back and use it over and over and over to actually make any money from you.”

Creating a user experience that keeps customers with you and constantly using your app is vital to business success. After all, there’s no point in having an increase in daily active users if most of them eventually churn.

Plus, according to Bermudez, if a user has a poor app experience and deletes an app, the odds of their reinstalling it are slim to none.

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Companies therefore need to optimize their products and offerings to align with what users want and deliver these to them repeatedly. By offering targeted personalized experiences, businesses can keep users on their platforms and build loyalty.

Bermudez provides an example of how this could work with ride hailing in Singapore. In the city-state, it’s common for users to search for a ride across different platforms at the same time, looking for the fastest pick-up time or the cheapest fare.

With a digital optimization strategy, if a ride-hailing app notices that a customer seems to search for a ride to work at around the same time daily, it could nudge the customer into sticking with its service by offering a promotion where if the customer books rides with it four days in a row, they get their fifth ride for free.

“If you lose this customer, you’re losing not [just] one ride but you’re also losing their commute,” explains Bermudez. “We can use these leading indicators – this behavioral data – to provide targeted campaigns.”

Teamwork makes the dream work

The second core aspect of a digital optimization strategy is communication between the different parts of a business. According to Bermudez, companies need to stop working in silos.

It’s especially important for marketing and product teams to work together in order to deliver a comprehensive experience.

If what they’re doing isn’t leading to more money and/or more retention, what is the point?

“The marketing team will handle communications, and they’ll send you all the push notifications and emails. They’re being incentivized to send you more because the more you click through or view their ads, the higher their click-through rate, and [the more] they feel like they’ve done a great job,” says Bermudez. “But again, if what they’re doing isn’t leading to more money and/or more retention, what is the point?”

He cites an example of what over-the-top media platforms do in India. In Amplitude’s experience of working with such companies, it found that if marketing teams continually bombard users with advertisements in a bid to convince them to make the switch to paid subscriptions, it actually increases the likelihood that customers will churn.

Businesses therefore need to look at their product from a holistic point of view, as customers don’t care that they’re receiving different messages from different teams. To them, companies are a unified whole.

The power of tech

Having a digital optimization strategy is important, but actually implementing one can be challenging. Businesses have typically conducted surveys or customer interviews in order to gain deeper insights into how people interact with their products, but it’s not the most scalable solution and is subject to bias.

That’s where Amplitude wants to make a difference with its Digital Optimization System. Combining product analytics with effective data management and recommendations, the platform affords businesses the ability to be proactive when it comes to developing their product and responding to changes in customer behavior.

“We help them see what their user behavior is, adapt to it, and then predict [how it changes],” explains Bermudez.

By leveraging artificial intelligence, the platform is able to provide businesses with real-time insight into how their customers are using their product, allowing them to effectively segment customers by behavior and develop targeted campaigns for these segments. These insights can also be easily shared with other departments in the company, allowing teams to work in a more holistic manner.

The ability to access such information – and predict changes in behavior – is invaluable for businesses, especially during the pandemic when customer behaviors can change almost overnight.

Bermudez puts forward Indonesian travel giant Traveloka as an example of a client that has leveraged Amplitude’s platform to help itself adapt.

Photo credit: Traveloka

“When there was a huge shift in its marketplace, Traveloka already had the mechanisms in place to capture the new data signals. So when Covid-19 hit, it was able to think and adapt really quickly, think about new things to offer, and it was able to measure what it was doing and find things that would actually work,” he shares.

The firm expanded in other areas, such as offering credit lines to customers and even food delivery service, allowing it to tap into new sources of revenue even as the pandemic continues to batter the travel industry.

Ultimately, businesses need to remember that optimizing their mobile apps is not a one-off process. It’s a continuous one involving a series of small, critical changes that continually shift alongside changing user behaviors, building up to an enhanced and improved experience for customers.

“The game has changed fundamentally,” concludes Bermudez. “There’s not an end state, and in this new normal, there are new ways of behaving and thinking.”

Amplitude’s Digital Optimization System enables organizations to see and predict which combination of features and actions translates to business outcomes – from loyalty to lifetime value – and intelligently adapt to each experience in real time based on these insights.

Learn more about Amplitude’s Digital Optimization System and request a demo here.

This content was produced by Tech in Asia Studios, which connects brands with Asia’s tech community. Learn more about partnering with Tech in Asia Studios.