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Smartphone Apps Fuel Business Growth Attract new customers and increase revenue with a niche application.

By Diana Ransom

entrepreneur daily

Between documenting expenses and processing credit cards from just about anywhere in the U.S., smartphone applications have changed the way many small businesses operate. Now, more firms are turning to these apps to enhance the way customers interact with their products and services--and even boost their bottom lines.

"People nowadays want everything to be at their fingertips, and if companies are not finding ways to provide these tools [they] will soon see drop-off from their customers," says Jennifer Shaheen, a small business technology consultant in White Plains, N.Y. Providing an app also offers a tremendous marketing opportunity, she says. Securing a placeholder in customers' smartphones can help keep a company on the brain, which is especially important in this rocky economy, Shaheen says.

Building a simple app can be affordable for most companies. Although a developer might charge $6,000 to $8,000 to create a typical app, a modest app with fewer features could cost a company less than $2,000, says Jarin Udom, a developer in San Diego. The website allows users to compare lowest rate quotes from developers.

Companies on a tight budget can design apps on their own. Apple's ( AAPL ) iPhone Developer Program ($99 for the standard edition, $299 for the enterprise version) allows code-savvy entrepreneurs to build, test and sell or give away their own applications. Sweb Apps helps business owners build apps automatically for as little as $200. (Note that although Research In Motion's ( RIMM ) BlackBerry, Palm's ( PALM ) Pre and Google's ( GOOG ) Android each have apps and open software development kits, many app services cater specifically to Apple's iPhone users.)

Here are three ways an app can improve your business:

Attract new customers
Some companies are using smartphone apps to advertise or expose their service to a new and growing audience. David Wolff, co-founder of Break Down Way , a Pomeroy, Ohio-based online service that provides guitar and bass lessons, says he hopes his soon-to-be-released app will help reel in new customers. Wolff plans to offer about five to 10 free lessons on the app, which is now awaiting approval from Apple. For those who want to keep learning, a subscription for $29.99 a month gives users access to the company's full catalogue of lessons taught by artists including Jorma Kaukonen from Jefferson Airplane and Michael Falzarano from Hot Tuna.

"Existing members will jump on this, and we'll attract people searching [Apple's App Store] for guitar lessons," Wolff says. That group of people is growing. Apple sold 1.5 billion apps during the App Store's first year and 5.2 million iPhones during the company's fiscal third quarter.

Wolff is hoping the popularity of the device will help him double his company's subscribership. "I'm hoping we can really gain exposure for ourselves," he says.

Improve customer service
Many apps do more than draw attention to your product; they improve the customer's experience. Jason Gossard, the lead administrator for the Circle School , a parent-owned and operated school in San Antonio, praises the utility of the school's new free app, which is scheduled to launch in a couple weeks. Administrators will be able to use their smartphones to highlight upcoming school events and make speedy updates, he says. And parents will be able to receive updates from the school more easily. "Everyone who had an iPhone was excited about this," he says.

Even if another firm profits from offering your company's app, users still benefit from being able to access your company's service with greater ease. Just ask Tobi Lutke, the CEO of Ottawa-based website host Shopify . When an independent developer created Shopkeeper , an app that allows any of Shopify's 5,000 customers to manage their inventories, more than 100 users downloaded the $4.99 app. Lutke says Shopkeeper and apps like it are good for his customers and his business. "The app allows small companies to operate more like larger e-commerce shops, which have dedicated staff to improve their workflow," Lutke says. "With this technology, you can be very small and have the same technology as a big corporation."

Create a revenue opportunity
Some apps present companies with new ways to lift profits, and others are revenue generators themselves. Blakely Long, the CEO of BetterQOL , a pain-management service in Bellaire, Texas, and her partner Brian Loftus, a neurologist, are banking that some of the estimated 33 million migraine sufferers will purchase their new app, iHeadache. The app, which costs $9.99 to download, identifies the type of headache a user has, based on their symptoms, the duration of their headache and the medication they may be taking. The app also generates reports which can be shared with physicians. "We are targeting neurologists and headache specialists, as they benefit from having better reports," Loftus says.

--Write to Diana Ransom at

Smart Money

Diana Ransom is the former deputy editor of

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