Branded apps and purchase behavior

Writing a shopping list using the Appie app, checking when the next train arrives with the NS app, searching for the latest fashion trends with the H&M app, or creating and managing one’s own airline with the KLM gaming-app. Nowadays, everyone of us regularly uses mobile apps originating from brands, the so-called branded apps. But what effect does the use of branded apps actually have on real consumer behavior?

Su Jung Kim, Rebecca Jen-Hui Wang and Edward Malthouse, affiliated with Iowa State University and Northwestern University, tried to find an answer to this question. More specifically, they investigated whether the use of two main interactive features of branded apps – information look-ups (i.e., checking point balances, transaction histories, or reward items) and check-ins (i.e., checking in at the stores) – influences app adopter’s spending levels. Moreover, they examined to what extent the stickiness of an app, that is, the app’s ability to attract and retain users, has an effect on app users’ spending levels. Based on existing literature, Kim and colleagues hypothesized that spending levels would increase due to (1) the use of the branded app itself, (2) interactive features (information look-ups and check-ins), and (3) repeated app use.

Big data

To test their hypotheses, the researchers analyzed existing data from the Canadian Air Miles Reward Program (AMRP). AMRP is one of the biggest customer loyalty programs in the world. When purchasing at partnering shops, such as grocery stores or gas stations, customers can earn reward points, which can be redeemed for various types of rewards, such as gift cards or flight tickets. The AMRP has developed an app, but it is also possible to participate in the program by using the customer card only. In that way, the researchers were able to compare app-adopters versus non-adopters.

Positive effect on purchase behavior

The study showed that branded app adoption had a positive effect on purchase behavior. This positive effect persisted for at least six months after app adoption. Moreover, the researchers found that the positive effect of branded app adoption was elevated when consumers interacted more with the app by using features such as information look-ups and check-ins. Finally, results demonstrated that branded app use has a cumulative effect: the more app users use a branded app, the more their spending levels increase.

Practical implications

In sum, these findings show that sticky apps, thus, apps that are able to attract and retain users, can be a promising and powerful marketing tool, because they are able to create interactive brand engagement. Hence, it might be valuable for firms to launch a mobile app to communicate with their customers. However, they should also keep in mind that a poorly designed app, which customers abandon after only a few uses, may in fact hurt not only users’ brand experience, but also company revenues.

The complete article of Kim, Wang en Malthouse is titled ‘The Effects of Adopting and Using a Brand’s Mobile Application on Customers’ Subsequent Purchase Behavior’ and published in the Journal of Interactive Marketing (2015), volume 31, pp. 28-41. You can find article here (paid).

A Dutch version of this blog post is available here.

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