For a small business, having a mobile app remains relatively unique. Adoption and use of mobile apps by SMBs are still in the “first inning of the ball game,” according to Andrew Gazdecki, CEO of Bizness Apps.
To understand the extent and impact of mobile app use by small businesses, Clutch surveyed 355 US small business owners and managers. We found that while less than half of small businesses have built a mobile app, SMBs are moving rapidly toward making mobile apps commonplace as business tools and assets.
- 42% of small businesses have built a mobile app. That number is expected to increase to 67% by the end of 2017.
- Improved customer service was the primary reason for SMBs to build an app in 2016.
- Approximately half (49%) of small businesses dedicate in-house resources to support mobile app development and investment.
- Who Has Mobile Apps?
- Reasons for Building a Mobile App: Customer Service & ROI
- Demographic Factors at Play: Age of Management & Company Size
- Resources Used to Build Apps: Experts Weigh in on Best Practices
- Conclusion: Takeaways and Recommendations
Who Has Mobile Apps?
The amount of small businesses with mobile apps is set to experience a huge jump over the next year. Currently, 42% of small businesses have built a mobile app. However, two-thirds (67%) of SMBs plan to have an app built by the end of 2017, a whopping 50% expected margin of increase over the course of the year.
This evidence of small businesses’ increased interest in building a mobile app represents a fairly significant departure from just a year ago. Our 2016 Mobile App Survey indicated that 54% of SMBs were either unlikely to build, or were unsure about building, a mobile app in the future.
Compare that to this year’s data: only 35% of SMBs in this year’s survey don’t plan on having a mobile app built by the end of 2017*.
*Note: This year’s Small Business Digital Marketing Survey included respondents from a different panel than the 2016 survey. Businesses included in last year’s survey were more likely to have less than 10 employees, which may skew digital marketing priorities.
Why Are SMBs Building Apps? Customer Service & ROI
Small businesses are racing to adopt mobile apps for a simple reason: to help improve their business.
Based on our data and input from industry experts, the two primary means by which mobile apps facilitate business improvement are through improving customer service and providing return on investment (ROI), both of which are reflected in the reasons SMBs give for building mobile apps, as well as the features they value in the apps themselves.
Mobile Apps as a Tool for Improving Customer Service
Small businesses say ‘increasing sales’ (39%) and ‘improving customer service’ (30%) are the primary reasons they decided to develop a mobile app.
However, the motivations driving small business investment in mobile apps are shifting. For SMBs that built apps in 2016, ‘improving customer service’ (36%) was listed as the primary reason to develop, ahead of ‘increasing sales’ (34%).
The shift is a product of the increased amount of small businesses entering the mobile app market, which has fueled an increased concern with creating value for app users, according to Cameron Banga, Project Manager and Co-Founder of 9magnets, a mobile app development company.
“As time goes on, businesses are finding that just having an app isn’t necessarily doing a lot of great work to their bottom line. People won’t just go download your app because your business has an app,” Banga said. “I think these businesses are finding that having an app doesn’t increase sales, but the customer service experience on mobile is definitely increasing customer satisfaction.”
This shift in motivation ultimately shows that while small businesses’ end goal of developing a mobile app concerns improving their bottom line, the means to that end have transformed, taking on a more customer service-oriented framework.
SMBs Favor Features That Produce Consistent ROI
The features SMBs favor for mobile apps are directly related to improving ROI. Consider social integration and mobile payment, the two most valuable mobile app features for small businesses.
“Social media and mobile payment features are very easy to measure a return on investment, which is why I believe they were so valuable last year. SMBs can track how many new fans or followers are being created through their mobile app and track their spending from there. For mobile payments, calculating return on investment is just as easy. Small businesses can directly see how much revenue is flowing through their app.”
— Andrew Gazdecki, Bizness Apps
Small businesses seem to be following Gazdecki’s logic: both social integration and mobile payment were considered even more valuable for SMBs that built apps in 2016.
Demographic Factors & Likelihood of Building a Mobile App
Efforts to improve business may be why small businesses decide to build mobile apps; yet, whether they build an app is partially dependent on demographic factors, including company size and the age of the owner.
Small businesses with more employees are significantly more likely to have a mobile app than smaller companies.
Specifically, 85% of SMBs with fewer than 10 employees do not have a mobile app, while over half of SMBs with more than 10 employees have built a mobile app.
Age of Owner
Small businesses with younger owners are also much more likely to have an app than those run by older owners.
In fact, SMBs with owners under the age of 45 (52%) are two times more likely to have a mobile app than those with owners over 45 (26%).
Resources Used for Mobile Apps: What the Experts Think
Another factor that informs small businesses’ likelihood to build a mobile app are the resources at their disposal to aid in the development process.
About half (49%) of SMBs dedicate in-house resources to helping build and maintain mobile apps. However, using a freelancer (47%), design/development agency (43%), or app builder software (40%) are equally popular, indicating that SMBs do not overwhelmingly favor one resource to help them build mobile apps.
In fact, many small businesses employ a mix of internal and external resources to guide their mobile app development and investment plans, a combination that industry experts seem to favor.
Insiders gave various reasons as to why a mix of internal and external resources works best. In particular, they emphasized the difference between an in-house team’s knowledge of the business and a hired external team’s expertise on the latest mobile trends, as well as their availability to serve as a resource for overflow work.
Specifically, using a mix of resources combines an internal team's intimate knowledge of their customers' needs with an external team's knowledge of how the market can apply to that specific group.
“In-house resources have more domain knowledge of the business. They are likely to be intimately familiar with the business challenge that is to be addressed. On the other hand, an external team is likely to have lots of experience designing and building a wide variety of apps to meet a wide variety of needs, so they are likely to have more knowledge of what is possible, leveraging the latest tools, technologies, and trends.”
— Brad Weber, President, CEO InspiringApps
“A mix of the two is most optimal. The combination does the best to identify the needs of the customers, as external resources can bring the most expertise about needs of the marketplace.”
— Dmitry Pukhtin, TouchInstinct
Or, simply, an external team can serve as cheaper means to handle some of the extraneous labor of app development:
“It makes much more sense for a company to have one lead developer or a development manager that manages everything for your app and when needed, can go to a pool of freelancers to help out with overflow work. This saves the business money, and they don't have to deal with all the headaches of building up a big team that may not have full-time work throughout the year.”
— Mark Tuchserer, President, Geeks Chicago
Despite the support of industry experts for a mix of the two, small businesses are trending toward investing more in internal teams to help build and manage their mobile apps.
Our data shows that small businesses with internal resources for app development were more likely to build a mobile app within the last year (39%), while those that had an app before 2016 were more likely to use a freelancer or agency to help them (34%).
Our Takeaways and Recommendations
After surveying 355 SMB owners and managers, analyzing the data, and interviewing app development experts, we offer key takeaways regarding small businesses’ use of mobile apps. In addition, we provide a list of recommendations for SMBs to help optimize their strategies and investments in the mobile app space.
- Small businesses are quickly adopting mobile apps as tools to help grow and improve their business. Two-thirds (67%) of SMBs plan to have a mobile app by the end of 2017.
- Specifically, companies run by younger owners and managers and companies with more than 10 employees are more likely to have built a mobile app.
- Small businesses are trending toward using in-house resources to help build mobile apps, though industry experts suggest a mix of in-house and external resources may be the optimal method to carry out this process.
Cameron Banga of 9magnets reinforced the youth of the mobile app market for SMBs: “Mobile apps for small business is not a mature market yet, but if small businesses haven’t considered building an app yet, they’re behind.”
Given the relatively amateur state of the mobile app market for small businesses, Clutch recommends the following actions for SMBs regarding mobile apps:
- Take advantage of the state of the mobile app market while it is still relatively untapped. Doing so will allow you to reap the business value that mobile apps and their features produce, such as improved customer service and solid ROI.
- Be aware of trends in the mobile app market for small business in order to gain a competitive edge in your mobile app strategy. For example, the knowledge that providing value for the user has become more of a priority for SMBs can help inform your strategy regarding the development and use of mobile apps.
- Consider the resources you can afford to dedicate to mobile app development projects. While having an internal team may allow you more agency over the development process, it may also require a larger investment. Bringing on an external resource, like a freelancer or design agency, can bring field experience and knowledge of market trends to your team.