App Order Gap Analysis (OGA) is a critical Key Performance Indicator (KPI) used to understand the frequency of orders placed by customers on an ecommerce platform, specifically within an app interface.
By analyzing in-app OGA, businesses can measure the time gap between repeat orders, which is critical for refining marketing strategies and engagement efforts. By understanding this metric, companies can re-engage customers in a timely manner and optimize repurchase rates.
Key Takeaways
- Definition: App Order Gap Analysis (OGA) is a metric that measures the average time between consecutive orders placed by repeat customers within an app.
- Calculation: OGA is calculated by dividing the number of days in a given period by the number of purchases made in the app during that period.
- Strategic Importance: OGA helps businesses understand customer engagement, optimize marketing strategies, encourage timely repurchases, and forecast sales.
- Optimization Strategies: Segmentation, seasonal monitoring, feedback integration, loyalty programs, and improving the app experience are recommended to optimize OGA.
- Limitations: OGA is limited to app orders, excludes non-app users, doesn’t capture offline interactions, focuses primarily on order-related metrics, and lacks benchmarking capabilities.
- Complementary Metrics: OGA should be analyzed alongside metrics such as purchase frequency, repeat customer rate, time to first repurchase, customer churn, customer retention costs, and Net Promoter Score (NPS) for a complete understanding of customer behavior and business growth.
Why does App Order Gap Analysis matter for your business?
Understanding and optimizing OGA can offer several insights for an ecommerce business:
- Customer Engagement Cycle: Knowing the average time it takes for repeat customers to place another order allows businesses to understand when to re-engage customers with marketing messages.
- Promotion Timing: With insights into OGA, businesses can time their promotions or discount offers to coincide with the anticipated next order, potentially accelerating the repurchase rate.
- Customer Retention: Regular monitoring of OGA can alert businesses to increasing gaps, signaling a potential decline in customer retention.
- Lifecycle Marketing: Tailored marketing messages can be designed based on the order gap. For example, if the average gap is 30 days, a promotional message can be sent on the 25th day to entice a new purchase.
- Forecasting Sales: Recognizing a consistent OGA can aid businesses in forecasting sales figures, helping with inventory and stock management.
How to calculate App Order Gap Analysis ?
Explanation of the parts of the formula:
- “Average Time Between Orders in the app” represents the average duration between two consecutive purchases made on the app.
- “No. of days in the period” refers to the total number of days in the specific period under consideration.
- “No. of purchases in the app” indicates the total number of purchases made on the app during that period.
Example Scenario
Let’s consider a specific period of 30 days, during which:
- There were a total of 150 purchases made on the app.
Inserting the numbers from the example scenario into the formula:
- Average Time Between Orders in the app = (30 days) / (150 purchases)
- Average Time Between Orders in the app = 0.2 days per purchase
This means that, on average, there is approximately 0.2 days between two consecutive purchases made on the app during this specific 30-day period.
Tips and recommendations for optimizing App Order Gap Analysis
Get the most out of your in-app OGA insights:
Order gap segmentation
Segmenting customers based on their order gaps is critical to effective marketing campaigns. By analyzing the data, companies can identify different groups of customers, such as frequent buyers and those with longer gaps between orders. For frequent buyers, implementing loyalty rewards can incentivize continued purchases and build customer loyalty. On the other hand, customers with longer gaps can benefit from re-engagement campaigns that remind them of the value and benefits of using the app.
Monitor seasonal fluctuations
Seasonal trends can have a significant impact on the effectiveness of app order gap analysis (OGA). By closely monitoring these patterns, companies can adjust their marketing efforts accordingly. For example, during peak seasons or holidays, businesses can focus on targeted promotions or offers to capitalize on increased customer demand. Understanding seasonal variations enables more precise targeting of customers when they are most likely to make a purchase, resulting in improved sales performance.
Integrate feedback
When OGA reveals a growing order gap, it is essential to gather feedback from customers. By actively seeking their input, companies can uncover potential issues with the app experience or product offering that may be contributing to longer order gaps. Engaging customers in this way not only provides valuable insights, but also demonstrates a commitment to continuous improvement and meeting customer needs. Promptly addressing any concerns or shortcomings can help retain existing customers and attract new ones.
Introduce loyalty programs
Implementing loyalty programs is an effective strategy for reducing order gaps and increasing customer retention. By offering incentives for shorter order gaps, such as discounts for monthly orders or rewards for frequent app purchases, companies can encourage repeat purchases and build customer loyalty. Loyalty programs not only encourage customers to return more often, but also create a sense of exclusivity and value, further strengthening the customer-business relationship.
Streamline the app experience
Providing a streamlined and user-friendly app experience is critical to reducing order abandonment and increasing customer satisfaction. Businesses should focus on optimizing various aspects of the app, including navigation, search functionality, checkout process, and overall performance. A positive app experience increases customer loyalty, encourages more frequent use, and ultimately leads to shorter order gaps. Regularly evaluating and improving the app usability ensures that customers have a seamless and enjoyable experience, increasing the likelihood of repeat purchases.
Examples of use
Flash Sales for Longer Gaps
- Scenario: An ecommerce app notices that a segment of its user base has an OGA of 45 days, longer than the average.
- Use Case Application: The business can introduce flash sales or exclusive app-only offers around the 40-day mark to entice these customers to make a purchase earlier than usual.
Subscription Model Introduction
- Scenario: A gourmet food delivery app finds that regular customers have an OGA of 30 days.
- Use Case Application: The app can introduce a monthly subscription box, offering curated items at a slightly discounted rate, encouraging users to make a purchase every month and thus reducing the OGA.
App Experience Survey
- Scenario: Over a few months, the OGA for an online fashion retailer app increases.
- Use Case Application: The retailer can send out an in-app survey asking users about their experience, collecting feedback to pinpoint any friction points in the buying process and work on improvements.
Abandoned Cart Recovery
- Scenario: A mobile shopping app notices a high number of abandoned carts with an OGA of 7 days.
- Use Case Application: The app can implement an abandoned cart recovery strategy by sending personalized reminders or offering incentives to customers who have abandoned their carts, encouraging them to complete their purchase.
Targeted Marketing Campaign
- Scenario: A travel app observes that users who have not booked a trip in the last 60 days have a high OGA.
- Use Case Application: The app can create a targeted marketing campaign by sending customized offers or promotions to these specific users, aiming to re-engage them and encourage them to book a trip again.
App Order Gap Analysis SMART goal example
Specific – Reduced operational costs (time) by 50% ($100,000 per month) as a result of the App Order Gap Analysis.
Measurable – Compare operating costs before and after implementing the recommendations from the analysis.
Achievable – Yes, by accurately identifying gaps in the app ordering process, streamlining operations, and implementing efficient solutions.
Relevant – Yes. This goal aligns with the company’s goal of streamlining processes and improving cost efficiency.
Timed – A 50% reduction in operating costs should be achieved within six months of completing the App Order Gap Analysis.
Limitations of using App Order Gap Analysis
While the App Order Gap Analysis can provide valuable insights in ecommerce analysis, it also has its limitations:
- Limited to App Orders: The analysis focuses only on orders made through the mobile app, excluding orders from other channels such as desktop or in-store. This can lead to a skewed understanding of overall customer behavior and revenue.
- Excludes Non-App Users: Customers who do not use the mobile app are not considered in the analysis, potentially leaving out a significant portion of the customer base and their purchasing patterns.
- Doesn’t Capture Offline Interactions: The analysis may not capture interactions that happen offline, such as customer inquiries or returns made in physical stores. This can result in an incomplete view of the customer journey and overall experience.
- Limited to Order Data: The analysis primarily focuses on order-related metrics and may not provide insights into other important aspects such as customer engagement, product browsing behavior, or cart abandonment rates.
- May Not Reflect Product Performance: The analysis may not provide detailed insights into the performance of individual products or product categories, which can be crucial for optimizing inventory, pricing, and marketing strategies.
- Not Designed for Market Comparison: The analysis may lack benchmarking capabilities, making it difficult to compare app order performance against competitors or industry standards.
In summary, while App Order Gap Analysis can provide valuable insights into app-specific customer behavior and trends, it should be complemented with other analytics and metrics to gain a comprehensive understanding of business performance and customer experience across all channels.
KPIs and metrics relevant to App Order Gap Analysis
Several metrics complement the insights provided by OGA and can assist businesses in comprehending customer purchasing behavior, marketing effectiveness, and business growth:
- Purchase Frequency: This measures how often customers come back to make another purchase within a specific time frame. A higher purchase frequency alongside a shorter OGA indicates loyal and satisfied customers.
- Repeat Customer Rate: This calculates the percentage of customers who have shopped more than once within a given period. A higher rate suggests that customers are satisfied with the product or service, further confirming the OGA findings.
- Time to First Repurchase: While OGA calculates the average gap between all orders, this metric specifically measures the time between the first and second order of a customer. It provides insights into how quickly customers are enticed to return after their initial purchase.
- Customer Churn Rate: This metric calculates the percentage of customers who stopped buying for a specific period. A high churn rate and a longer OGA might indicate potential issues with product quality, customer satisfaction, or marketing strategies.
- Customer Retention Cost: This refers to the amount spent to retain an existing customer. By analyzing it alongside OGA, businesses can ascertain the efficiency of their retention strategies. If the OGA is short but retention cost is high, there might be underlying inefficiencies in the retention approach.
- Net Promoter Score (NPS): A measure of customer loyalty and satisfaction. A high NPS score alongside a shorter OGA can validate that customers are not only frequently purchasing but are also highly satisfied and likely to recommend the brand to others.
By understanding and analyzing OGA in conjunction with these metrics, businesses can get a holistic view of their customers’ purchasing behaviors and loyalty. These insights can be crucial in shaping strategies aimed at improving customer retention, loyalty, and overall business growth.
Final thoughts
App Order Gap Analysis (OGA) is a critical metric for understanding customer behavior, especially for e-commerce platforms that operate primarily through apps. By closely monitoring and acting on this metric, businesses can optimize their engagement efforts, improve customer retention, and ensure sustainable revenue growth.
App Order Gap Analysis FAQ
What is App Order Gap Analysis (OGA)?
OGA is a KPI that measures the average time between consecutive orders made by repeat customers within an app.
How can OGA benefit my business?
By understanding OGA, businesses can better time their marketing efforts, predict sales patterns, and work towards enhancing customer retention.
How can I reduce the order gap?
Strategies such as targeted promotions, loyalty programs, re-engagement campaigns, and ensuring a seamless app experience can help reduce the order gap.
Does a longer OGA always indicate a problem?
Not necessarily. A longer OGA might be influenced by the nature of the product (e.g., durable goods) or external factors. It’s essential to analyze OGA in the context of the industry and product type.