It’s always an exciting time when an app is ready to launch, but marketers and product managers must be careful that they are tracking the right metrics. Most people rush to celebrate when they see high download volumes but there’s a more meaningful metric that needs attention to in order to determine the success of an app.
Every business wants to create loyal customers and retain them for as long as possible. Apps aren’t all that different when put into perspective. While the number of installs may signal that an app is popular with users initially, it doesn’t tell the whole story. In order for an app to be successful, it must have loyal subscribers that use of the app as intended. This is why their app owners must focus on ensuring retention rates are acceptable before they start to focus on scaling customer acquisition.
What is a Retention Rate and Why Do I Need This Data?
Acquisition was once considered the most important mobile metric. Marketers focused on attracting as many new users as possible, arguing the number of users as the strongest pillar of success. However, what wasn’t taken into account is the volatility of these users, with roughly 21% of them only using the app once. It’s now apparent that we must move beyond just measuring app installs and focus on in-app behavior to promote engagement and retention. Even with this information, too many brands have yet to shift their focus away from acquisition towards their retention rate.
A retention rate is the percentage of users that remain active on your app after a certain period of time. It doesn’t necessarily pertain to how many people have uninstalled the app either. Retention measures how many users took an action and then returned and took a subsequent action. Each app may have a different definition for ‘an action’. A sustained lack of activity is generally accepted as a sign that a user has lost interest.
Calculating Retention Rates
When calculating the retention rate for your app, be sure to take into account the frequency of logins you expect users to make. Some apps should see daily logins, especially for gaming, dating, and social networking. Others, though, may only want weekly logins, like for ride-sharing apps or local business apps.
Customer retention equation:
(# of customers at end of period – # of customers acquired during period) / # of customers at start of period) x 100 = retention rate
For example, if you have 200 customers at the end of a period, 175 at the beginning, and acquired 50 new ones, your equation will look like this:
((200-50) / 175) x 100 = 86% app retention rate
Fortunately, with Pyze, this process becomes a whole lot easier.
Cohort Retention displays the daily, weekly, and monthly retention numbers and rates for your application. Measuring retention based on cohort analysis is a great way to measure the impact of different releases, marketing campaigns, or user groups. The drop-off point, where major retention is lost, can be useful in determining product enhancements and also launching engagement campaigns to bring users back into the app.
To accurately measure retention, teams need cross-platform analytics that can distinguish between various platforms and operating systems. Without them, product teams can’t get to the bottom of questions around retention rate or set reasonable retention goals for specific platforms and user cohorts.
Improving Your Retention Rate
As you can imagine, increasing your retention rate will lead to other big wins for your app:
- Meaningful engagement
- Greater loyalty
- Increased conversions
So how do we fix this? Take advantage of the tactics below that have been proven to positively impact retention:
- Onboarding: If users don’t clearly understand the value of your app and how to use it, their odds of churning drastically increase. Implementing a solid onboarding can dramatically increase your retention rate. Check this out.
- In-App Messaging: In-app messages are received while a user is within your app, and is usually based off of some action taken. Because of this, they’re highly relevant to the end user and also make it easier for them to move through your app experience.
- Push Notifications: Push notifications are crucial to engaging with users outside of your app. Because they’re sent right to a user’s home screen, it’s important to have a compelling message that is personalized to the user.
- Remarketing: Push notification opt-in rate is less than 40%, making it increasingly hard to draw users back into your app. The solution? Remarketing. Sending a compelling reminder about your app to lapsed users outside of the app is an effective way to re-engage them. You can do this through email, social, and SMS. Be sure to tap into Data Insights about your lapsed users’ behaviors, interests, and preferences to ensure your remarketing ad is relevant and thus, effective.
Today’s marketers must be data-driven in order to succeed. This means making data points like retention a key performance indicator of a successful app, alongside acquisition and engagement. Retention rates should be tracked by cohort, acquisition channels, and even versions of the app. Consider making one of your 2019 goals higher retention and reducing churn. Achieving these goals will have a significant impact on the app’s overall success.