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Do Mobile Apps Really Move the Needle on Sales?

Apple's iPhone 3Gs
Jack Guez | AFP | Getty Images
Apple's iPhone 3Gs

With a few taps on their smartphones, customers ordering breakfast at Squeeze In, a restaurant with locations in Northern California and Nevada, can upgrade their entrees with an extra helping of fries, fruit, meat, veggies, or melted cheese and onions — for free.

It’s one of the perks of downloading the restaurant’s smartphone app. So far, said owner Misty Young, more than 2,100 customers have installed the app on their phone and more than a third of them have taken advantage of the special offer.

“In this digital age, you have to reach people where they are,” said Young, who paid a friend about $2,500 to develop the app two years ago. “We do everything we can to stay in front of them. Even if they have 12 open screens on their iPhone, it's still there. I'd rather be in front a guest than not in their thought process whatsoever.”

That’s becoming the thinking for more and more small businesses. It comes as nearly half of all adults in the United States own a smartphone, according to a recent Pew Internet and American Life Project report. Consumers are also spending more time using mobile apps, even more so than the web, an analysis by Flurry found last summer. And around the globe, some 30 billion apps were downloaded last year, estimates Juniper Research.

It’s also becoming easier and cheaper than ever to build a mobile app. New services are emerging that make it possible for small businesses to get into the game on a budget and with little technical expertise. Among them, Apptive and RappidApp help small businesses build a mobile app for as little as $19.99 a month.

"Even if they have 12 open screens on their iPhone, it's still there. I'd rather be in front a guest than not in their thought process whatsoever." -Owner, Squeeze In, Misty Young

“The last thing [customers] look at before they go to bed is their smartphone and the first thing they look at is their smartphone. The best way to market to them is through the smartphone,” said RappidApp co-founder and CEO Hannah Byrne.

Both Apptive and RappidApp are platforms that let businesses create a mobile app without knowing how to code. Clients pay a monthly subscription fee, which lets them make the app —taking advantage of the smartphone’s core features such as the GPS, camera and push notifications — and update it as needed.

Squeezed In
Source: Squeezed In
Squeezed In

“If you bring in two or three loyal customers because of something in the app, then you've paid for the app time and time again,” said Jason Jaynes, Apptive’s co-founder and vice president of products and marketing.

But not so quick, others say. Some experts warn that spending money on a mobile app may not be the best strategy for small businesses, which must deploy their limited resources wisely.

Searching for apps has become increasingly difficult now that there are more than 1.1. million apps to sort through across the iPhone, Android, Blackberry and Windows smartphones. That means it will be harder for consumers to find small business apps, since they tend to be niche and local and not likely to land on top charts alongside, say, Angry Birds. And after downloading an app, 26 percent of customers don’t use it a second time, according to an analysis by Localytics.

Small businesses also need to be aware of the additional costs of developing a mobile app, such as paying to keep it updated, or adding new or more complex features. “The hidden costs are many,” said Saju Thomas, product manager at Picksie.com, a location-based entertainment guide.

The better bet is to develop a mobile website, said Carrie Chitsey, CEO of mobile marketing company 3Seventy. A mobile website is designed for the smartphone, containing just the information that someone on the go will need. With 61 percent of smartphone owners using their phones to search for local businesses, small businesses need to have a mobile website ready to go, she said. 3Seventy charges as little as $100 to build a mobile website, but developing an app can costs $1,500 for a basic one to more than $30,000 for a custom one.

Ultimately, small businesses have to weigh what they hope to get out of developing a mobile app.

For Young, Squeeze In’s smartphone app is just part of its larger marketing strategy. Squeeze In, which operates three restaurants in Reno, Nev., and Truckee, Calif., is also on Facebook, Foursquare, Twitter, Instagram and Pinterest, among other popular social and mobile services.

“It's one piece of our social strategy,” Young said. “Each one has become a plank in our platform.”

Email us at SmallBiz@cnbc.com
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