A Definitive Guide to Mobile App User Retention



The effectiveness of growth hacking in app marketing is dwindling!

Over the years, product managers and marketers, like you, have been using this mantra to grow your business: Acquiring more users!

While this mantra may have helped you gain that initial traction for your app business, you may have soon realized that this cannot continue since your user acquisition costs eventually skyrocket, resulting in minimal ROIs.

The Problem?

The key problem is the definition of growth. It seems easy when you try to solve the problem of growth by thinking that you just need more users. Isn’t it?

Within 30 days, most mobile apps lose 90% of all their users. The mobile app user retention rate (global) decreased from 38% in 2018 to 32% in 2019.

There are way too many companies asking, “How do we acquire more users?” that should instead be asking “How do we get better at keeping the users we already have?”

Jamie Quint

This is exactly where user retention comes in.

Smart Questions to Ask Yourself:

  1. Will acquiring more users and multiplying your downloads alone help you maximize your company’s ROI?
  2. Has sending unsegmented push notifications and blast emails daily with offers and discounts to your entire user base helped in increasing revenue?
  3. How much time do you actually spend in planning your marketing activity and executing it?
  4. Does it cost you a lot to acquire a new user as compared to retaining an existing one?

User retention is crucial for mobile marketers. It is the leading indicator of your app business and a north star metric that helps in determining future success. It is important to allocate adequate resources and time to retaining your existing users as to acquiring new users.

Defining User Retention

User retention is the ability of a mobile-enabled business to retain its mobile app users over a period of time. In simple terms, user retention is getting your users to keep using your app.

“User retention is the ultimate measure of whether everything your mobile product, messaging, and overall experience is working.”

Hila Qu, VP of Growth at Acorns

User retention has to be the north star metric for data driven marketers. According to Gartner, 80% of your future profits will come from just 20% of your existing users. For every user, you retain your profit grows by 1%.

In fact, increasing user retention by just 5% can increase profits anywhere between 25% and 95%. While developing the product is a major focus area for most startups, having a strong customer success team is another key area of focus. The average app loses 77% of its daily active users (DAUs) within the first 3 days after install.

4 stages of user retention

When you think about marketing your mobile app, it’s a general tendency that your mind jumps straight to lead generation and user acquisition strategies that focus on attracting new users.

But mobile marketing isn’t just about acquiring new users but it’s also about retaining them. In fact, retention is more important than acquisition.

Acquisition vs Retention

There’s been a long debate on which mobile app marketing framework to follow. Most mobile marketers, even today, follow the “AARRR” model which was devised by Dave McClure more than 10 years ago. This framework majorly focuses on user acquisition.

But, there’s a massive problem with this framework in today’s hyper growth world. It was written in 2007 when acquisition was cheap and most key channels that are now saturated were easy to explore and scale.

The AARRR model is popular because it’s simple and highlights all the important elements of growth. It’s also popular because it’s built around every marketer’s favorite part of growth: Acquisition.

Mobile App Customer Purchase Funnel

“If you only focus on Acquisition as a marketer today, you are just digging a hole for your mobile startup.”

Gabor Papp

While acquisition is crucial in growing your mobile app business, your focus should gradually shift towards including more and more retention marketing in your marketing strategy.

Here’s how you might want to start thinking about retention:

Acquisition Vs. Retention

What is Retention Marketing?

Retention marketing is a strategy that focuses on marketing to existing mobile app users. It brings back users to your mobile app who have already made conversions or performed a specific action.

It also markets to users who are connected to your business using a monthly/yearly recurring membership or subscription.

Why is Retention Marketing Important?

For emerging mobile-first businesses, retention marketing strategy proves to be a smart strategy. The most unsuccessful mobile app businesses have worked hard to acquire new users but failed to retain them by not re-engaging and remarketing to them.

Retention marketing has proven to be extremely cost effective and boost your revenues while using fewer resources as opposed to acquisition marketing. Since we’ve already established that increasing your app user retention rates by 5% can increase your profits by as much as 95%, this is enough validation to understand how important retention is to your business.

Implementing retention marketing strategies in your marketing mix will help you increase profitability by:

  1. Increasing the LTV of users: By increasing the frequency of spends and actions of each user, your LTV gradually increases and so does the profitability
  2. Enabling new channels for sales: Now that your LTV has increased this opens up your scope for exploring newer channel of user acquisition
  3. Increased AOV: According to a study by Adobe, retained users make up for 40% of your sales which represents only 8% of them.

How Can Marketing Automation Help You Overcome the Retention Roadblock?

Marketing automation will ensure marketers like you continue delivering amazing app user experiences. Marketing automation platforms like Smartech are built and designed specifically to drive higher user engagement and higher user retention via multiple channels.

It helps you understand your users, analyse them and their usage patterns on daily, weekly and monthly basis. It also lets you leverage the deep user insights to communicate with them at the best time to multifold your conversions.

Marketing Automation to Overcome User Retention Roadblocks

Here are 7 foolproof tactics to help you leverage marketing automation to overcome your biggest roadblock:

1. Identify and onboard your app users

Marketing automation tools help you identify and segregate both anonymous users and registered users as well. It not only identifies but automates your user onboarding process.

It further takes an incremental approach to activating your app users which will help them in seeing greater value in your business improving retention over time.

2. Track and understand user behavior

When you’re building your app, you must’ve foreseen your target audience or who you’re building the app for. Behavioral data is extremely critical in today’s data-driven marketing.

Using behavioral cohorts, you can define a group of users based on their in-app actions and save them to further predict their actions.

Smart Tip

Find which cohorts produce better retention rates to uncover possible reasons as to why. Did you launch a new marketing campaign? Did you A/B test your campaign creatives? Did you offer a promotion or discount? Can it be attributed to release a new feature? Did you add a video tutorial to your existing product tour?

Figure out what’s been working for you and double-down on your retention efforts.

3. Segment users based on intent

If you’re a growth marketer then you must know how critical is segmentation in marketing. You must be segmenting your users based on various parameters but not all segments bring predictability to your retention rates.

Start segmenting your user base based on their intent with your app. Save your predictions as campaign objectives and Smartech will automatically create 3 micro-segments for you: users most likely, moderately likely, and least-likely in order to meet your campaign objective. Like any segment in Smartech, these intent based segments are used for targeted user journeys and campaigns.

For example: You’d want to put in more retention efforts to retain a segment of users that are completely dormant and are most likely to uninstall your app as opposed to the segment of users that are hyperactive and are least likely to uninstall your app. Sending contextual messages to the right segment will improve your retention rates.

4. A/B test your push notifications

Automation helps you assess your users’ needs and preferences and the way you interact with them. A/B testing your push notifications is a smart way to know what exactly is working and what is not.

As a data-driven marketer let the data support and guide your marketing decisions. Send different variants of your push notifications to different user segments over time to gauge which variant is positively improving your app engagement and is able to quickly get your users to their “aha!” moment.

There are many elements to a push notification, each of them has the ability to impact your notification’s effectiveness. You can A/B test your push notifications based on:

  1. Type of Notification – Plain or Rich Push
  2. Type of Creative – Image or GIF
  3. Timing of the Notification
  4. Image or GIF Variants

A/B tests influence your campaigns by giving users the best experience and a positive user experience is what leads to long-term user retention.

Also Read: How to A/B Test Push Notifications to Level Up your Mobile Marketing Game

5. Scale up your engagement

Over a period of time, your user base will increase and there are certain tasks that you need to automate using a marketing automation tool.

It helps in sending marketing communications via multiple channels such as push notifications, in-app messages, email, SMS, WhatsApp etc. at scale. The objective is to attain the end results without compromising on the total number of users engaged.

6. Curtail over communication

Over communication always sets a bad example and maybe perceived as privacy intrusion by your users. You don’t want your users to uninstall your app because of over communication.

Decide on the number of notifications you need to send to your audience. This can also happen if you’re not using an intelligent marketing automation tool or if your users are not segmented. A right mix of content and the frequency will play a vital role in uplifting your retention rates.

7. Strategize and design your marketing campaigns

Marketing automation tools like Smartech allow you to strategize your marketing campaigns based on the user analytics that is available to you just a click away.

You can deep-dive into user analytics and understand a particular user behaviour and build campaigns accordingly. Smartech’s journey builder helps you create a conditional flow for your campaigns to be automated and run without your intervention.

Also Read: Is Your Marketing Automation Platform Just a Glorified Campaign Launcher?

Key Metrics to Keep Track of Retention Marketing

In order to maximize the outcome of your retention marketing efforts, you first need to understand what retention metrics to track and how to measure them. Once you have established them, you can begin to put them to work for lasting and profitable results.

1. Retention Rate

Retention Rate = 1 – Churn Rate

Tracking and measuring retention rates over a period of 1, 7, or 30 days helps determine the apps’ longevity in the market.  Retention rates give you a bird’s eye view on what’s working and what needs improvement. It’s a continuous process that should begin after any significant changes in your app to reflect changes in user retention.

Retention Rate

2. Churn Rate

Churn Rate is the number of users who have uninstalled your app or stopped using your app at any given period.

Churn Rate = (No. of Users at the End of the Period – No. of Users at the Start of the Period)/No. of users at the Start of the period

3. Customer Lifetime Value (CLTV)

CLTV is one of the most important retention metric to track as it gives you the actual monetary value of the customer that you have gained. This helps in building an effective loyalty program to identify how much you should spend to retain your most valuable customers

CLTV = APV (Average Purchase Value) x PF (Purchase Frequency) x CLT (Customer Lifetime)

Make Retention the King of Growth Strategy

User retention has to be on the fore front of your core marketing mix. Make retention the king of your growth strategy because –

“The point is, every improvement that you make to retention also improves all of these other things — virality, LTV, payback period. It is literally the foundation to all of growth, and that’s really why retention is the king.”

Brian Balfour, VP Growth, HubSpot

Start using a marketing automation tool to help your overcome your retention roadblock.

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Rohit Srivastav

Rohit Srivastav

Rohit leads the growth team at Netcore. He is deeply interested in everything that concerns martech, mobile marketing, and SaaS. His innate curiosity and ability to find order in chaos always brings him to the most passionate team of go-getters.

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