App retention rate: What’s a good one and how do you increase it? 🔝

Gilad Bechar

There are over 5 million apps on the market, with most of them being free. Because of this flood of new apps, mobile app retention rates are decreasing. It’s easier than ever for a user to find an app or service similar to yours, and it takes only a few seconds.

Because of this phenomenon, it’s extremely important to work on increasing your average retention rate for your app or apps. Simply pushing tons of traffic and mobile app installs to your app every day won’t help if people jump the fence soon after.

Today, over 70% of companies say it’s cheaper and easier to retain old users than acquire new ones.

They are right!

User acquisition is getting more expensive. Actually, it’s 5 times more expensive to bring a new client.

So, how do you work on your user retention and reduce the churn rate? That’s what we’ll be talking about in the article below. A combination of mobile marketing, data analytics and improving the user experience.

What is an app’s retention rate?

The retention rate is one of the most important app store optimization factors to take into consideration. It is the percentage of active users (people who use your app continuously) over a given period of time.

It’s the exact opposite of the churn rate (percentage of users that leave the app in a given period of time).

App retention rates can also be used in data comparison. By doing this, you can compare users that were brought through different marketing campaigns or from different periods, gaining valuable insight into your marketing efforts.

An app’s retention rate is usually calculated in the following intervals:

  • 7 days
  • 30 days
  • 60 days
  • 90 days

How to calculate app retention rate?

In terms of calculating app retention rates, you can do it in 2 ways.

Aggregate Retention Rate (ARR) is the total number of monthly active users (MAU) divided by the total number of installs in that period.

MAU / #installs = % ARR

Aggregate App Retention Rate

 

Still, the aggregate retention rate is less known or used, as is harder to interpret and extract information from.

User abandonment or engagement and retention can be tracked better through the cohort analysis of the retention rate.

The cohort analysis can be calculated using the following formula:

(# users at the end of the period – # users acquired throughout the period) / (# of users at the start of the period) * 100 = App retention rate

App retention rate formula

Of course, App retention rates can also be calculated in a more simple way by only taking into consideration the users you got at the start of the time period. (most analytics aso tools can track users easily)

Why is app retention important in the long term?

As with any other metric, retention rates allow a business to better understand how well the app is performing or how the user interacts with the app.

The higher the retention rate, the higher the chances are of the user converting into a paying customer.

Analyzing the retention rate can help discover multiple reasons for which a business is losing money. If users are uninstalling an app or churning at a fast rate because of a bug or lack of content, the app’s profitability will likely go down.

Keeping a close eye on your metrics and taking strategic steps is the only way to make sure you’re improving your app, profits and user experience.

It’s important to make sure you link your niche or app’s role with the metric. A flight booking app with a low retention rate is not a problem, as users uninstall the app after the flight. On the other end, a B2B app where users are linked to a monthly payment usually has a higher retention rate.

If your app is designed to do one simple thing and people uninstall the app after the user journey has been finished, you can deprioritize retention rates.

What factors can decrease your app’s retention rate?

From slow onboardings to bad user experiences. There are many factors that can decrease your app’s retention rate. Without knowing where to turn, you may look past important data and lose out on profits along the way.

Bad user experience in apps

While a website has some definitive elements to it (header, body, footer), apps are usually built from scratch and they can deliver whatever experience the developing company has in mind.

This situation gives rise to extraordinary apps or just plain terrible experiences.

If the app moves slow, is hard to interact with or the user cannot navigate through it, the chances are extremely high that the app’s engagement will decrease.

Old or depreciated content

This is one of the factors that affect gaming apps the most. People finish the game and leave, it’s that simple. The only games that stray from this situation are online games (Hearthstone and Fortnite) or games with high replayability (like Sudoku and Crosswords).

In order to keep this type of users engaged, you need to continuously update your app, improve the experience and create new content for the users. New levels in Candy Crush or monthly updates in Fortnite are a great way to go.

Of course, old content will also affect other types of apps. Having a food delivery app without new promotions or a coding app without the newest coding languages will make your app less attractive.

Problems with the conversion funnel

There is nothing more frustrating for a user than wanting to buy something and being unable to.

Conversion problems decrease app retention rates

The moment a user decides that they like your app and want to make a purchase, the process should be as easy and fast as possible. The more time they waste filling in data within forms or waiting for the app to load, the higher the chance of them giving up and uninstalling the app.

Difficult onboarding or registration process

Many apps today require an account. Tinder, Facebook, and Instagram all link the user’s activity or content to a or phone number. This also allows users to access the data from any device or communicate with other accounts.

If the user onboarding process is taking too long or is complicated, people will decide that they can either:

  • Live without your app
  • Try another app similar to yours

The easiest way to solve this is to ask for as little information as possible or allow registrations and logins through other methods, such as Facebook or Google Accounts.

 

How to increase app retention rate?

Now that we’ve discussed what app retention is and how it can be calculated or hurt, we can start talking about the matter that is most important to your business – How to increase your app’s retention rate?

First thing, start with your retention in mind before even launching the app.

The holy grail of mobile strategy is getting users addicted to your product, but there are different routes that will get you to this coveted destination. The rise of behavioral psychology gives marketers a new set of tricks that will drive users crazy, and then immediately drive major sales.

To effectively influence users, a savvy mobile agency should become familiar with different methods, as some are not applicable to certain apps, and not every user responds positively to each technique. Here are 3 different types of dependency you can encourage from users in order to improve your app retention rate:

Product Dependency: A Mobile Must-Have

A better app that provides users with a service they actually NEED goes a long way, even in the red ocean of apps.

Take Waze, for instance. This app has managed to change the way millions of people drive in such an impactful way, that many of us can no longer get from point A to point B without the wisdom of the masses.

We depend on it to guide us even when we know exactly how to get to our destination, and when there is little to no traffic at the time.

While this option seems pretty obvious, building an essential app is extremely hard to do. On the bright side, your product doesn’t have to answer the most urgent of needs.

If you can fundamentally change one simple action and make is easier or more convenient, going back to the more annoying and traditional path might be painful enough for users to help you achieve your goal.

Emotional Dependency: The FOMO Factor

FOMO – Fear Of Missing Out – is what drives millions worldwide to constantly stare at their smartphones and hit refresh. Facebook, WhatsApp, Twitter – we want it all, all the time.

Every mobile advertising agency pays special attention to this modern-day phenomenon since mobile is the classic platform to tap into and make a profit.

Adding a social component to your app will not only make for a better app and increase user engagement, but it will also plant the seed in the users’ minds to make them think of what they might be missing when they’re logged out. You can also use the push mechanism to give users a taste of what goes on in the wonderful world of your app while they’re not in it.

Sending them relevant messages regarding time-sensitive offers an mysterious deals should help do the trick and can seriously boost your retention rates.

Social Dependency: May the Best User Win

This unique mobile strategy will only really work with some users, but when it does – it pays off big time. Competitiveness drives people to do the craziest things and invest their most precious resources. Why not utilize this trait to gain something from it?

Turning your product into a competitive game can really increase app retention and engagement rates. If you let users know that their friends and family seem to be doing much better than they are, they will go to extreme lengths in order to maintain their hard-earned positions in the game.

Create an even better app by adding the option to share victories on social media and compete head-to-head with others, preferably people that the user actually knows. You will be surprised to find out just how invested competitive users get.

This strategy will turn your app from a fun little hobby to a personal goal that goes far beyond the mobile world.

Apps come and go, and very few successfully make the transition from a trendy nice-to-have to a permanent must-have. Your mobile agency should keep in mind that in this arena, just like anywhere else, emotions call the shots.

If implemented into your mobile strategy, the above-mentioned mechanisms will improve your app retention rate by inspiring the right feelings in your target audience and letting users (and competitors) know that you are here to stay.

Measure and improve your app after launch

The Right Place at the Right Time

Mobile devices draw tons of information from users. Some of this information, such as geo-location, can be instrumental in optimizing your brand’s mobile product specifically for consumers.

Knowing where consumers are, allows marketers to offer them context-specific content.

The most obvious way to use this data would be to alert existing clients on new deals when they are physically near your store or company branch, but there are ways to get even more creative.

KLM is a great example. The company created a mobile game that lets users fly a paper jet over a virtual version of the city of Amsterdam. Aside from being beautifully made and enjoyable to play, the game also uses mobile data to promote user loyalty.

With every purchase of a KLM flight users win more points, but the even cooler thing is that users can advance in the game when they are at the airport gate waiting to board their KLM flight (using geo-location technology).

Fresh Content & Exclusive Deals

To ensure users don’t lose interest in your app, introduce new content as often as possible. Whether it’s cool music, text, visuals, or attractive deals – these will make sure users keep coming back.

You must be thinking: “Introduce content as often as possible? That’s spamming!” Wrong. If someone downloaded your app it means that they’re interested in what you have to offer. The more great content you put out there, the more satisfied your users will be.

Even content that doesn’t directly relate to your product, but fits in with its general concept, is fair game.

Let’s use the Starbucks app as an example. The app features a variety of content (such as music) that doesn’t necessarily relate to the products sold at Starbucks.

Users who have the app, get this content as added value and check-in with the app regularly to see what’s new. It’s a great way to make sure that your brand stays on the consumer’s radar.

Another way to promote user loyalty is by using the mobile app to keep consumers up-to-date on new products, deals, and launches.

Being aware of deals before everyone else is awesome, but not good enough – offer users deals that are only available through mobile purchases to incentivize app users to check-in regularly.

Let’s go back to the Starbucks example; with every purchase made through the app, users receive points and win different prizes. This is a deal that’s only available through the app and therefore incentivizes Starbucks customers to consistently make their purchases through the app in order to eventually get their prize.

 

Engage & Interact

The best way to turn just any consumer into a loyal one is by making them part of your brand. On mobile, this becomes easier than ever, and user-generated content (UGC) is the name of the game.

Remember all those boring competitions that required you to save as many bottle caps as possible or mail-in cutting from cereal boxes? Mobile allows you to create these campaigns without asking users to do so much work.

Mobile apps introduce endless, easy and instant possibilities for users to partake in brand communities and contribute their own content. For instance, in 2014, to promote their “What is Perfect Conference”, TedXPortland launched a mobile app that overlaid the word ‘perfect’ over user-generated pictures that were shared on social media.

People immediately became curious about what the pictures meant, which helped create a buzz around the conference. The photos were later projected on the walls of the event as part of the setting.

Investing in app retention on mobile is not only interesting and creative – it’s essential. This is your opportunity – and obligation – to make sure that when customers go on their way, they take a piece of your brand with them.

Get on their radar

Push notifications are some of the best ways for an app to communicate with its users. Revolut tells you whenever a payment has been made. Games tell you when you should log in again for your daily boost. Facebook notifies you about messages and likes.

When it comes to mobile, users have a short attention span. Either they get distracted or there’s something more important (work, family, friends).

Sending small reminders here and there can influence your app’s retention rate. Just make sure you don’t spam them and have come prepared with a great push notification strategy.

Final Thoughts

If you’re looking for an awesome mobile aso agency to help you increase your app retention rate, the number of installs and overall app revenue, feel free to send us a message.

Moburst is an award-winning company that specializes in mobile advertising and App store optimization.

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