Mobile App Retention : One of the most Important metric marketers tend to neglect

Apple and Google have created a new era of mobile computing whose rapid growth is rivaled by the Internet boom of the 1990s. A recent research from ABI Research revealed an estimated 70 Billion app downloads in 2013 – 58 Billion to smartphones and 14 billion to tablets, that’s a total of over 10 apps downloaded per human being on earth.  The App Store has an estimated 775,000 apps as of Jan, 2013 and the Google Play/ Android has an estimated 800,000 apps as of Jan, 2013 ( Refer Fig.1)

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Figure 1

 With the market for apps being extremely crowded and the quality bar rising continuously, the era of the get rich quick apps have long gone by and the real challenge for the marketers/ App Entrepreneur is to gain a significant mindshare of their user base.

This is where the significance of Mobile App retention comes in. With so many apps to download and use on the app store, most of the apps get lost among the collection of apps downloaded by the user or gets deleted soon after download. It is estimated that in case of most apps within a period of 3 months, over ¾th of your customer base is long gone,

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Figure 2

Web marketers don’t stop marketing their product to the users who visited their website once. They use various techniques and channels to re-target that user. This is important because they understand the value of an existing customer or a user who has passed maybe a couple of stages in the Customer Funnel. However more often than not, in the mobile world marketers tend to forget the value of an existing user both in terms of the positive effect it can bring in driving more word of mouth and downloads and also in terms of the amount of additional revenue it can generate.

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Figure 3

In case of app store, the avg. cost of acquisition of a user is >$1. This leaves a common App Entrepreneur with a single purchase price of $0.99 with losses financially. Hence, it’s important for an App Entrepreneur to understand the financials involved in acquiring a user and the amount of money that can be generated from that user, which is nothing but ARPU ( avg. revenue per user).

Having a look at Figure 3 tells us that:

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Figure 4

As you can see , for your profits to increase basically you would have to increase your count of Active Users and ARPU and reduce the avg. cost of acquisition of users.

One basically improves on the Active User count by having the right techniques for retaining and engaging with existing users.

ARPU is again influenced by the user retention percentages. The more the user retention percentages, the more the avg. time spent on the app which directly correlates with the average revenue per user (in app purchases). With retention the LTV (lifetime value of a user) goes up significantly adding to the top-line.

There is also an indirect factor which people often tend to forget: With good retention and happy users, one drastically reduces the Cost of Acquisition of Users as through Word-of-mouth, the happy users will recruit a significant number of new users.

A small increase in your app’s user retention numbers can go a long way in adding a few more dollars in your kitty directly as well as indirectly. An eg:

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How does one improve User retention?

There are various things one should ensure as an App Entrepreneur to ensure a high user retention figure for your app and to create a brand of faithful users:

  • Create an app that is awe-inspiring, an app that is extremely useful or fun to use, an app that solves a particular problem or is extremely engaging and entertaining, an app that is beautiful in design. I could go on and on but the bottom-line is one has to create a world-class app for the user to come back again and again and open the app from the dozens of app one downloads on to their smartphone.
  • Analytics: Use analytics to understand user engagement on different pages which includes the bounce rate, avg. time of visit, frequency of visits, . Try and identify pages which have a high drop-off and do split testing to weed out the reasons for the same. Use free tools such as Flurry for analytics. Provide a mechanism for your users to reach you instantly either with an issue or a suggestion. It is critical in a lot of ways:
  1. Avoiding negative ratings on the app store from the few disgruntled users which would discourage new users from downloading your app.
  2. Understanding issues faced by the user which you wouldn’t have thought previously.
  3. Get suggestions and ideas for new functionalities. Use the app user for your research and survey actively to further improve the app.
  4. Giving means for users to contact you when in need just forms one part of the coin. It’s equally important for you to respond back immediately to further improve your relationship with the customer and make the user feel that he is cared for. This goes a long way in making the user an advocate of your app.
  5. Updating and improving the app constantly is yet another important factor. It is important not just because the app should improve both in terms of usability and functionality at a rapid pace but also because with each update the dormant user is prompted to come back to the app. Hence utilizing this is really effective.
  • It’s important to segment users based on their in-app behavior and interact with them differently. Craft a different strategy for different segments of users. There are a number of strategies apps in different segments use to engage with such users. Eg: In a travel app : Send special offers to a particular destination to people who have constantly kept track of the travel packages to that particular destination.
  • Communicate with dormant users with relevant content or any piece of information which would prompt them to log back in. Always use in-app messaging and push notifications to increase retention. Studies from Airpush have shown that push notifications increases engagement 4x times and increases retention 2x times. For eg: a Social media app could send a notification/message to one of its dormant users highlighting the activities of his/ her friends or by highlighting what’s new/ trending.
  • Engage on Social Media to build a good relationship with your users. This would result in a higher mindshare for your brand name in the minds of the user which would indirectly increase retention and word of mouth.
  • Create a reason for the user to log back in regularly either to win points or get a shot to enter the leaderboards. Gamification is yet another important aspect that will encourage users to come back to your app.

Hence, what I would say is that we App Entrepreneurs have a retention problem rather than a discovery problem. The ASO techniques are extremely important in getting you visibility on the app store and maybe a few downloads but with the plethora of apps on the app store and the relatively low barrier to delete an app from a mobile, the major challenge for us is to increase the user retention and with it the Lifetime value of our users.

Amarnath Vannarath
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Amarnath Vannarath

Amarnath Vannarath is an Entrepreneur, Hustler, Growth Hacker. He currently heads Marketing for FieldEZ Tech Inc, a SaaS product company. He loves to travel, is a street food connoisseur and a passionate Soccer player. Blogs mainly on marketing, growth hack techniques and startups. You can reach him at [email protected]
Amarnath Vannarath
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