Research and Evaluation Guide
In this guide we explore how to explore the business case for in-app messaging by effectively assessing the potential and actual return on investment.
/ Resources / Calculating the ROI of in-app messaging
Who is this guide for?
If you're analysing the potential—or actual—return on investment for in-app messaging in your organisation, this guide is for you. We share how Atomic customers assess the benefits, and share practical examples of the messaging use cases that underpin the suggestions provided. every organisation is different, so naturally, you'll need to complete your own assessment factoring in your unique situation. If we can help, we'd love to, please reach out to our team to chat at any time.
Why consider investing in an in-app messaging channel at all?
For most companies that operate in digital channels, their app or authenticated web portal should be their primary engagement channels.
Having a way to easily communicate, guide, nudge, and alert customers is something we think is table-stakes in the battle to win and retain customers through beautiful customer experiences.
Most teams we encounter who are looking to improve their in-app messaging typically fall into one of three categories:
They have tried and failed to add an in-app messaging channel to their app or using some of their enterprise tech to deliver it is something they’ve tried; or
They have a plan to add in-app messaging on their backlog; or
They have built a basic messaging channel, but the functionality is too limited, hard to use, or is broken. For example, they may be limited to only sending one-way messages that can’t include dynamic variables, collect data, or update back end systems. Or perhaps current capability does not support user control features that customers expect (like snoozing messages), or it can not contained messages presented in a prioritised way, or segmented to target specific customer groups.
Most have realised they’ll never deliver the functionality to a quality and timeline that will help them win in market. So comes the question of how to measure the ROI.
Return on Investment calculation
Return on Investment (ROI) = (Estimated (or actual) benefits - Costs) / Costs
This guide willI’ll focus mainly on the benefits below,. I’ll then show that once you’ve adopted a platform to deliver your in-app messaging — like Atomic — then you can measure (rather than estimate) ROI.
Estimated (or actual) benefits
The benefits from an in-app messaging channel span 3 categories::
Decreases in costs
Increases in revenue
Reduction in risk
These three categories overlap more often than not. For example, consider a user journey where a bank needs to reduce risk of not meeting its AML regulatory obligations through the use of an in-app message where a customer can justify a large money transfer. This use case will likely also decrease costs in the future (e.g. less expenses from legal costs fighting or paying out regulatory breaches). In the long term, it may even increase revenue (through a better user experience increasing customer retention, expansion, and even acquisition through referral).
ROI Examples
Below are six examples of how to calculate ROI for a customer journey. We also have a link to a library message that you and your team can easily use to run a proof of concept at your company.
Decrease in costs
Let’s start with use cases that have direct cost savings:
Example 1: Two Factor Authentication SMS Replacement
Bank A sends 1,000,000 SMS messages per year for a 2FA user journey. Each SMS cost the bank $0.02* each.
Opt in rates for mobile customers for push notification is ~70%, and so the bank would need to create a better customer journey, or continue to send SMS. Let’s assume the latter for the moment.
The current cost for sending that message is $20,000, and they would need to continue sending it to 30% of the customers.
So the total cost savings (estimated benefit) of sending the one SMS as an in-app message is $14,000 per year.
Get an example from the Atomic library —>
* SMS pricing in your country may vary. For example, in New Zealand (where I am based) it could be 4x this amount!
Note that this example benefit value of $14,000 per year is not factoring in the long term value for creating a healthy habit of expectation for your customers regarding what channels they communicate with you in. i.e. SMS is widely communicated as being a dangerous channel, yet many companies still use it as a primary channel for some messages. There is a value in having your customers be confident in the messages they receive from you that is greater than the SMS spend. More on this in example 6 below.
Example 2: Proactive notification of Delayed payments
Bank A received 1,000,000 phone calls a year, and is estimated many of them could be self-service journeys completed in-app, with an easy to use and actionable UI.
The cost per call has been calculated at $1.50.
If they could replace calls with self-service in-app journeys for 5% of call volume, then they would receive 50,000 less calls, which would result in savings (estimated benefit) of $75,000
Increase in revenue
The second category is in use cases that directly increase revenue:
Example 3: Home Loan Renewal Prompt
Bank A has 795,000 customers with home loans, and 300,000 renew each year.
Approximately 10% of these switch to a new bank at renewal. I.e. 30,000 per year churn.
A renewed home loan is worth $22,000 revenue (an estimation based on a $550,000 loan, 6.5% interest rate, renewal every 2 years, and 2% margin).
The bank currently use multiple channels to engage with customers to encourage renewals. E.g. primarily snail mail, email, advertising, phone calls, and social media ads.
If through an easier refixing journey, they could retain 0.5% (150) of the customers who switch each year, then the increase in revenue (estimated benefit) is $3,300,000 per year.
Reduction in risk
The third category is use cases that reduce risks:
Example 4: Collect Net Promoter Score feedback from your customers
Imagine being able to take many of the items on your product backlog, and deliver them to customers almost immediately — months or years sooner.
One example of a product feature backlog item is collecting NPS. Rather than email (which has very low response rates) or 3rd party full screen take overs or widgets, an Atomic action flow delivers this journey in a fraction of the time, and at an order of magnitude cheaper than having an internal team build it.
Example 5: Collect missing customer details
A missing email address for a customer may be more likely to churn, and is worthy to your company.
Additionally, businesses may have a regulatory requirement or business need to collect up to date contact information about account use that is timestamped and auditable.
If collecting an email is worth $500 and you estimate 10% of the 1,500 customers who have missing email addresses will not churn (due to subsequent in-app and email re-engagement journey), a benefit for launching that use case of $75,000.
Get an example from the Atomic library —>
A great long-term way to reduce customers becoming victims of fraud is to evolve their expectation of secure messaging.
Because most companies use SMS to message customers about important and/or urgent matters, it's very easy for those customers to become a victim of SMS scams from people pretending to be their bank.
When companies evolve from these third party — like SMS — for important and urgent messaging, they can shift customer expectation and therefore vulnerability to becoming a victim.
Example 6: Urgent Scam Alert
Getting scam alert messages to customers in a timely manner to help prevent them becoming the victims of fraud.
When considering the operational costs, reputational damage, let’s estimate the value at $0.0045 per viewed message.
If the company sends 10 warnings per year, and has 1,000,000 customers, 90% of whom would see the message, the estimated value is $40,500
Note, this does not value the direct loss of funds to the customer, which could be significantly higher!
If we add up the combined ROI for just these six use cases, we get more than $3,500,000.
Many Atomic customers have hundreds of use cases, and so the ROI becomes apparent very quickly once all of the applications are understood.
Other benefits to consider
Beyond the accumulative value of each use case, there are also other benefits to consider. For example:
Opportunity costs for developers
The opportunity cost of having developers focus on building and maintaining a messaging channel, rather than improving core flows and functionality..
Retention of Staff
There are also other benefits from using best-in-class software. For example, empowering marketing, communications, serving, product, or risk team members in a new channel of engagement. Many teams have a limited toolbelt of email, SMS, and social media channels, and often revert to ‘blast all’ pseudo-personalised messaging when trying to engage with customers.
Urgent messaging convenience
We see a range of ways this is done badly, including “blast everyone” approaches like posting to X or Facebook or even emails to every customer. It’s difficult to estimate the value from having a channel when you can send messages directly to customers, and target only those it is relevant for quickly and easily.
Win market share through product experience
In delivering a beautiful user experience effect customer retention and acquisition through referral.
Deliver true personalisation to customers
Deliver real-time, data (or AI) driven and channel appropriate messages that go beyond based personalisation — i.e. “hi first_name”.
Costs
On the costs side, be sure to include the subscription costs, time to value (e.g. as you ramp the use of the tool), and implementation costs.
Estimating ROI
Return on Investment calculation
ROI = (Estimated (or actual) benefits - Costs) / Costs
For example (yearly)
Estimated (or actual) benefits = $5,000,000
Costs = $1,000,000
ROI = $4,000,000 / $1,000,000
= 4
Measuring ROI
The single best way to prove the return on investment, without the risk of long term commitment based on estimations, is to run a proof of proof of value to provide the proof of return on investment ROI.
Before a new customer journey goes lives the best you can do is estimate the benefit / savings / reduced risk. By running these use cases with real customers in your own apps, then you can easily collect and measure the benefit.
Atomic has inbuilt tools that enable you to track the performance of a journey, for example a time or cost savings.
Talk to Atomic.io about running a proof of value (ROI) at your company
Atomic ROI Use Case Examples
The following examples are available to browse and interact with in the Atomic Use Case Library
