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Mobile App Retention: The Cold Truth Behind Customer Loyalty

Home » Mobile Marketing » Mobile App Retention: The Cold Truth Behind Customer Loyalty

Mihovil Grguric

Created: October 17, 2019

Last Update: October 22, 2019

Introduction

Mobile apps have spoiled us. We can’t even go to the toilet anymore without a thought crossing our mind – “is my phone with me? Good, then I can answer the call of nature in peace.” I’m not criticizing the new age development, just observing the changes that came along with it. Change is natural. Without change, we wouldn’t be here today. Without change, progress is impossible, a statement as clear as a bright day.

Another thing that has evolved, owing much thanks to humanity’s technological advancement, are businesses. Businesses used to care more about volume than loyalty. The logic behind that line of thinking is sound. The more customers you have, the more profit you will amass. However sound it might seem, it is fundamentally wrong.

Having a million-strong user base is a dream we all keep having but know what’s more important? Customer Loyalty.

Customer loyalty, now there’s a string of words that can turn heads. Originally a business term, customer loyalty now describes the tendency of mobile users to stick with an app. Customer loyalty is just that; a consumer’s devotion, a feeling of allegiance and support towards a business, brand, or nowadays, an app.

And guess what? Loyal customers trump volume. Retaining customers is not only cheaper than acquiring new ones, but it is also more lucrative. To boost your profits by 25 to 95% you need only increase customer retention rate by 5%, with an emphasis on “only”. So, you see, apps work much like businesses in that regard. They enjoy a lot more profit from loyal fans.

In this post, we will examine why loyal customers bring more to the table and define the key metrics by which you can track your loyal appatrons (this should be a word, why isn’t this a word already?).

 

Volume isn’t the be-all and end-all. Retain rather than acquire.

What is Mobile App Retention Rate?

In a nutshell, mobile app retention rate is the rate at which you retain customers over a certain period of time inside a mobile application. In the mobile marketing industry, we use the percentage of app users who make a return within the first three months as a benchmark. For some apps, we use the first 28 days as a primary metric for retention rates. We can easily explain this discrepancy with different app categories (link to blog).

You can take as many days as you’d like for your Customer Retention Rate (in short, CRR). The most commonly taken metrics for mobile apps are day-1 and day-28 (one month) retention rates. Day-1 retention rate shows us how many users reopened the app the day after the installation took place. The one-month retention rate (day-28) indicates the number of users that found their way back in the app 28 days after installation. One-month, or day-28, is the most commonly used metric. Since the nature of the app plays a big role, it is important to make a research in your industry and app categories.

In 2018, the mobile app retention rate on day 1 of communication apps was 20% while social networks had seen a day-1 retention rate of only 16%. Day-30 retention rates, however, show a much different picture. According to Statista, the retention rates of communication apps on day-30 was 38%. Social network is only by a few % behind, sitting on a stable 35% retention rate. This statistic accounts for all mobile apps installed worldwide in 2018. The value behind this piece of data serves only to show the subjective nature of retention rates. Your app follows a different set of rules than your neighbor’s app. It is, therefore, crucial to take everything into account. For this reason, take a moment to consider Churn Rate.

 

Churn Rate What?

Churn rate right! Cambridge Dictionary teaches us that to churn is to make milk out of butter. Wait, what does this have to with mobile apps? Churn is an everyday term that you probably hear a lot, especially if you move around the mobile industry circles. Cambridge also offers other explanations of the word, but the one we are looking for is not a verb. Churn, as a noun, vocally represents the situation in which customers stop consuming your product, whatever it may be. In the on-the-palm-world of apps, churn describes an event where the users leave your app, or even worse – uninstalls your app. The three dreaded words no app-owner ever wants to hear.

We distinguish two types of churn, the soft and the hard churn. A soft churn counts when a user hasn’t opened the app in a given time frame but hasn’t uninstalled it yet. On the other hand, a hard churn is the event when a user deletes the app from their smartphone. All in all, it all boils down to the same – users ending their engagement in your app.

App customer retention rates and churn rates are linked. The higher your customer retention rate is the lower your churn rate, and vice versa.

Studies have shown that as time goes by, the mobile app retention rates keep dropping significantly. That is why you will often hear the advice to keep your app or the contents of your app fresh as much as possible. The human brain is wired in a way to get a dopamine hit from novelties. We love new things (especially if they are shiny).

 

You can make butter. Or you can make loyal customers. You choose.

CRR and Churn in Mobile Games

Customer retention and churn rates are an especially important metric in mobile gaming. So much so that a mobile game with less than a 35% CRR on Day-1 will get abandoned by its creators. Many mobile game studios build their games with these two key metrics in mind. Acquiring users is much less work than user retention. This is the savage and brutal nature of an oversaturated market. While it might sound insane to spend so many hard-working hours to ditch an app, consider the long-term effects. As humans, we tend to become victims of certain cognitive biases often.

Sunk-cost fallacy is a cognitive bias that makes individuals commit more time, energy, and money on a sinking project with the hopes of revitalizing it. A simple example would be all those times when we order food from our favorite restaurants and we over-eat just to get back our money’s worth. We tend to feel obligated to sink more in our investments. We chase the reward at the end of the rainbow. In business, there is not much room for error, especially financial errors.

Calculating your mobile app retention rates and your churn rate will help you make the hardest decisions in your app’s life. Do you abandon it to pursue another goal or do you keep on investing until it finally pays off? Those are the questions that you can answer with CRR and Churn Rate only.

 

Don’t let headstrong thinking get into way of reason. Sunk-cost fallacy is a real danger.

How to Retain My Mobile App Users?

Many strategies work on improving mobile user retention rates. Not all will be helpful for your app, but they will net you a deeper insight into the issues your app might be facing. To make it simpler, we will list some of the most commonly used strategies for increasing your app retention rates that will work regardless of the type of your app. You should first start with these tips and consider category-specific actions afterward.

1. Work on your design

A perfect design doesn’t exist. Even the best app designs will have room for improvement. It falls upon you to find out where that might be for your mobile app. If you set up your app for AB testing, you can see black-on-white what the data says (coincidentally, at first it will sound like what does the fox say). A great design makes things intuitive and appealing.

2. Consider Push Notifications

Push notifications have been a matter of great debate. Keep them or ditch them? The answers you will find on other internet places are often too absolute (and as we know, only a Sith deals in absolutes). There is no one answer for all the apps. Push notifications can help boost your retention rate through the roof, but it can also be an elevator to hell if you annoy your userbase.

3. Let Data Guide You

Data is beautiful. It will not lie nor deceive you if you put in the honest hours to set up your analytics properly. You can trivialize many decisions by simply introducing your app to an analytics of your choice. If you keep track of all your key metrics, you will soon discover gold veins in your app. Strike hard and strike through once you make sure the numbers align properly.

If you have trouble deciding which of the mobile analytics platform would best suit your needs, consult our guide on mobile app analytics platforms.

4. Reward Loyalty

Who doesn’t like rewards? Your new, hot analytics platform will help you track your mobile app user behavior. You don’t want to give a reward too early or too late. You are rewarding your users for spending time and money in your app. Since you can now measure the impact of your appreciation gifts, test different methods of rewarding. See how they feel and ask for feedback.

5. Keep it Fresh

To keep your users motivated to engage with your app as often, you need to make sure to have fresh content on hand (I mean, in-app). Update your content and give them something new and they will keep coming back.

6. Keep it Functional

We keep our food fresh and our apps both fresh and functional. No one likes to play with a broken toy. The frustration that follows after engaging with a barely functional app is often the number one leading factor in why users never return. Regular updates and maintenance will take care of this issue before it becomes too big to handle.

7. Integrate social interaction

Connect or compete, it doesn’t matter, we people love both. This is the advantage you’ve been looking for. While it is true that some apps are profitable without a single social element, for the most part, this isn’t true. We, people, love competing and connecting. We are social animals. That is why social media like Facebook and TikTok are so big right now.

Parting Words

As you see, user acquisition is only one part of a mobile marketing funnel. There are many ways you can acquire new users but once you lose them, returning them will become a Mission Impossible task. Retaining users in your app costs much less than the acquisition of new users. An increase of 5% in your mobile app user retention rates translates as a 25 to 95% increase in profits. Retain loyal customers.

If you need to work on user acquisition, contact our acquisition team at this link right here and they’ll be more than happy to help.

As always, if you have any questions or points you would like to debate, leave us a comment below and we’ll answer it to the best of our abilities.

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