During the last few years, we have seen a significant shift in the way app marketers look at growth. One of the most notable changes is the manner in which app retention metrics have taken a precedence over app acquisition numbers.
Mobile app acquisition used to be app marketers’ key metric. Today, however, the most important metric is the number of times a user interacts with their app within the first 30 days of installation.
It is becoming more and more important to build a workable retention strategy to have sustained app growth which ensures that your users are hooked onto your app and keep coming back for more.
Unsurprisingly, ‘Retain or Die’ is the new mantra for many app brands.
In this post, we’ll break down ‘mobile app retention’ for you. We’ll analyze why it’s important, how it impacts various app categories, how to make sense of it using data, which apps are excelling at it, and how you can match up to them by applying effective strategies yourself.
Let’s get started.
Why is App Retention a Significant Metric for App Marketers?
Many marketers have a skewed viewpoint about the ‘metrics that matter.’ They tend to prioritize user acquisition over retention, and that’s a mistake. New users will add to their growth, but the app won’t sustain in the long run without an effective retention strategy.
This skewed mindset is driven by poor retention numbers.
Leanplum, a mobile marketing software company, studied the current state of app retention and found that most apps lose a majority of their users after being opened for the first time. By day one apps only have a 21 percent retention rate, and by day 10 this number reduces to 7.5 percent and stays steady through the first month. By day 90 the number drops to 1.89 percent.
Despite dwindling numbers, retention-focussed marketing has its benefits. Whatever the exit reason, you as a marketer have to continually engage them and win them over in order to turn them into loyalists.
In a nutshell, prioritizing retention over acquisition will help you with:
- Long-term growth. A report published by Bain & Co. states that a 5% increase in customer retention can increase a company’s profitability by 75%.
In addition, Gartner reports that 80% of your company’s future revenue will come from just 20% of your existing customers.
- Better use of your marketing dollars. Spend your dollars where they count. Don’t neglect your acquisition strategy, but consider the benefits of spending money on delighting your existing customers, not just acquiring new ones.
Seth Godin espouses a similar philosophy. He refers to new product users as ‘strangers’ and validly points out that strangers are difficult to convert.
- Add value to your app. One of the primary challenges in app retention is the umpteen choices available to a user. For every UBER app, there’s a Lyft, and for every Tinder, there’s a Hinge.
Whether it is productivity or travel or e-commerce, each category on the App Store offers a lineup of apps to satisfy a user’s needs. At a time when 30% of users leave a brand for the sake of variety and novelty, this amount of competition poses a significant threat.
Retained users are your app’s best spokespeople. A happy user will refer your product. Remember the time you downloaded an app because your friend told you to? That’s what we mean.
Which App Category is Winning the Retention Game?
Before looking at different retention strategies that can work for your app, let’s take a closer look at the benchmarks and understand which app category tends to flair better than others. This way you’ll be able to co-relate and apply retention tactics in a more prudent manner when we discuss them later in this article.
We looked at the data from Adjust’s benchmark study comparing user behaviors from Q3 2015 to Q1 of 2016 on both iOS and Android platforms. Here are the key findings.
- Utility apps, such as translation software, tools, and organizers, were a top performer on Android but didn’t hold up their rank on the iOS platform. The study hints that this may be due to the presence of native apps on iOS, thereby decreasing the dependence on third party apps.
- The Finance and Business category, which includes apps for bookkeeping, stock market trading, etc. ranked second on Android, with retention rates on day one exceeding 35 percent – the third highest category on the final day. However, by the 30th day, they were less popular than their iOS equivalents.
- The Travel and transport category, which includes apps that offer timetables and travel services, ranked third in retention. These apps retained well and maintained high rates as long as the seventh day for both Android and iOS platforms.
- The study offers interesting insights on other app categories as well. Apps in the Education category perform surprisingly well. Although the numbers seem average, they keep their long-term users – from day 22 to day 30 the curve is practically flat.
- Gaming apps continue to perform well. While retention for Android looks promising, iOS shows a dip. The primary reason behind this trend has been attributed to market saturation, the difficulty of app store navigation, player fatigue and memory on iOS platform.
- Entertainment applications both experience a larger drop of a tenth by about day 17 and sit at similar retention by day 30. Lifestyle applications also perform identically – 11% of users on respective devices coming back by day seven.
- Books and Magazines on Android had the highest rate of retention on day one, but the lowest by day 30.
This data looks at retention numbers for an average of apps in a similar category and not for any app in particular. Therefore, this data should be treated as a reference only while you improvise or build your own app retention strategy. The only point is when you do so, approach it in a manner that’s long term.
Knowing why retention numbers are important, and which app categories are faring better than others, let’s look at the most significant bit-tactics to strengthen your retention strategy.
Retention Strategies That Matter
# Fixing Your App’s Onboarding Flow
Most seasoned app marketers persist in reiterating the benefits of an engaging onboarding experience for app users. Highlighting the app’s value proposition, its core features, and showing users what they need are popular onboarding tactics. Use of CTA’s, significance of an easy sign-up process, and onboarding designs are other pivotal approaches. Such tactics are pretty obvious, and any marketer should know them.
The important thing is the way that these tactics are showcased to users. Is it plain vanilla, or does it create an incredible first impression? Do your tactics nudge the user’s mind and motivate them to take an instant liking to your app?
Let’s take the example of notifications marketers seek while onboarding an app user. Most users dread onboarding screens that mention them. That’s because they co-relate app notifications as spam and something that will cause them inconvenience.
As an app marketer, you know the true value of an agreement to receive such notifications, and how it’s crucial that the user agrees during onboarding to get the best value out of your app. A few apps, like Periscope, Grouper, and History, include context before seeking user permissions, as opposed to a generic ‘notifications may include alerts, sounds, and icon badges. These can be configured in Settings’
A contextual message ensures that the user understands the real purpose of opting in. Attention to each onboarding screen adds value to the onboarding flow and promises the user a more satisfactory experience.
# Using Gamification To Boost Interaction
If you look at the retention numbers of gaming apps, you’ll see that they continue to show remarkably smooth retention curves.
According to a study by Apptentive
“The average mobile game retains 35.67% of its customers one week after their first sign-in and 14.72% one week out. On average, app makers that interact with their customers see these numbers rise to 63.54% and 31.89%, respectively.”
A part of this is due to the ‘game dynamics’ associated with such apps which play with a user’s psychology at various levels. Gaming apps allow for user self-expression as they win rewards, achieve and compete. Such user actions are a hit recipe for engagement. Not every app can be a game, but by introducing game design features into non-gaming apps, marketers can take their app engagement to a whole new level. This concept is nothing but ‘gamification.’
Numerous apps use a similar format to win a user’s attention. CNET uses subtle gamification as part of its news app. The app nudges the user by showing them their reading progress, coaxing them to read more, and making it fun for them.
Another example of gamification is the Todoist app which offers ‘Karma’ to its users, boosting the app’s engagement.
How can you infuse gamification into your app? Look at digital rewards and virtual currency, attach them to gift cards or points that can be used to purchase tangible products. Email and push notification can also be used as gamification tactics.
#Improving App Engagement Strategy
In-app messages and push notifications are two remarkable channels for increasing mobile app engagement. The more engaged your users, the more they’ll use your app. Let’s examine both these channels separately.
A Localytics study found that apps that send in-app messages show 2-3.5x higher user retention and 27% more app launches than apps that do not.
The study also found that in-app messages triggered from an in-app event are 4X more effective.
By improving in-app strategy, marketers can boost retention strategy, too. Here’s a great article that will help you do so.
The retention rate is higher for apps that include push notifications as a part of their engagement strategy as opposed to apps that do not. This was seen in a study conducted by Leanplum. The study also found that apps that send push notifications can increase their retention number by 20%, and if they do so at an optimal time, they can see a 7x better rate by day 30.
#Using Incentives to Lure Users
A user will interact with your app as long as they see logical value in it, such as by the use of incentives. Some marketers argue against an incentive driven strategy to attract users because to them it seems like a short-term bargain, but this does not have to be the case.
Airbnb and other apps have successfully used an incentive driven referral model as a growth channel. This retention strategy helped them increase their sign-ups by 300% per day! Airbnb coupled these incentive-led referrals with personalization to further boost their engagement rates. Airbnb’s massive growth is an indicator of a positive and heightened retention rate for the app, much of which is due to incentive-led referrals.
Coupons and promo code are a few other incentive types that can be used to lure users, especially by E-commerce apps.
# Making Data Your New Best Friend
Last but not the least, analyzing retention data is key to building a strong retention strategy, and that’s where marketers depend on cohorts. Cohorts help them compare how different set of users take app-based actions on a daily, weekly and monthly basis.
Traditionally, most marketers spend time scrutinizing cohorts after cohorts and end up ignoring the behavioral and visual aspect of data. This limits their chance to improvise their retention strategy.
Zahi Boussiba, co-founder of Appsee, spoke with us and highlighted why this might not be the right way forward.
“Despite the fact that retention cohorts are a powerful tool for identifying fluctuations in retention rates – they only provide you with half of the story. In order to understand why a particular user cohort had poor retention, you need to supplement your quantitative data with qualitative information. A lot of mobile professionals waste time trying to understand the ‘whys’ behind their retention rates when there is a much quicker and more accurate solution.
By utilizing a qualitative analytics tool like user session recordings, you can see exactly why users aren’t sticking with your app. As a result, you can optimize your app with more confidence and set your retention back on the path towards greatness.”
Here’s are some of the tools that can be used to in order to achieve that ‘greatness.’
In the same way that heat maps allow you to make sense of a user’s choice on your website, they can also help you to visualize the touch gestures of a user while they explore your app. This detailed look at a user’s swipe, pinch and tap choices can be invaluable for improving your retention number.
Heatmap data can be used to understand the various obstructions faced by the users when they interact with the app, thereby helping you in minimizing early drop-offs – a key factor in the overall retention number.
User recordings allow you to see actual user sessions. This visual data can help you understand why users abandon, return to or simply quit your app.
With the right data at hand, crafting an effective retention strategy is easier than you think.
Over to You
Every stage of the app user’s lifecycle poses a unique challenge for the marketer, but there’s nothing more gruesome than the retention stage. Marketers need to identify the various pain points in the user’s journey and resolve them so the user stays with the app. Successful apps show powerful retention number on Day One and keep that strong rate through Day 30. Talking about retention curves, Andrew Chen states that
“Users find the top apps immediately useful, use it repeatedly in the first week, and the drop off happens at about the same speed as the average apps.”
We hope that by applying this information and these tactics, you can successfully create a strategy that will keep your users coming back to your app for more!
Have we missed anything in this article? How did you improve your app’s retention numbers? We’ll be glad to hear more from you in the comments below!
Image Source: Appsee| Pttrns