Our Insights Post 8 mins Dave Thorpe Why User Retention Rates Are Low — And What To Do About It User Acquisition is the most important metric when it comes to mobile apps, right? This was indeed the widely agreed-upon metric most app marketeers were monitoring for years. By driving users to your app with App Store Optimization and other formats such as Ad targeting and other routes to market, then you’re going to increase the number of people using the app — right? Well, this is true. There is a significant problem with the method. It can be expensive, and when we look at user retention rates this may feel like throwing money away. 21% of users only engage with an app once and the stats, which we will discuss in a moment, don’t get much better. This is why you should change your focus to User Retention. User Retention is more important because it will give you a clearer picture of your app’s growth in terms of a user base. It also will allow you to continually improve your app, and measure the value of your user acquisition to your business. When you monitor user retention well, it will help you make meaningful decisions on changes to make and the changes you have made. This is why it should be your #1 metric when monitoring your app’s performance.Why Are User Retention Rates So Low? There are several reasons retention rates are low and some of these are unavoidable. Sometimes there is unfortunately lots of competition. There were over 35 million apps downloaded last year across the Apple App Store and the Google Play Store, so there is obviously going to be a challenge to keep everyone who downloads your app engaged. In 2020, which was a complicated year, there was actually a drop-off in app retention rates of around 12% from 2019. This is due to the high demand and high competition of the app space through the global pandemic. While usage increased, it became even more difficult to retain the users apps were gaining. How To Calculate App Retention Rate Your retention rate is the number of users who continue to use your app on an ongoing basis, rather than using it once and then leaving. We know that “most” apps are used on a weekly basis for a user to want use an app over a website. If you managed to achieve 100 downloads last week but only 10 of those users used your app this week, you have a user retention rate of 10%. This may alarm you but that above number is about right for most apps in the market. In fact over 75% of users who download an app don’t use it the following day, when its purpose and benefit is most fresh in their mind. There are obviously many things we can do to influence retention rate in our design and our marketing, remarketing, and engagement strategies — but what should we be aiming for? Average Mobile App Retention Rates App retention rates are worryingly low and they are getting worse! After 3 months, around 5% of users are still using your app on iOS and around 4% on Android. Let that sink in — 5% or less of your users make it to month 3. The average cost of a user is around £2.50 so if you bought 1000 users for £2500, after 3 months you would only have 50 left. You can see why, without measuring our user retention rates, user acquisition could be losing you huge amounts of money. 3 Key Things That Affect Retention Rate 1) iOS outperforms Android across every sector and at all times in terms of retention rate. Along the lifetime of a user on both platforms there is about a 40% increase in user retention after 3 months on iOS, but even after 30 days this is around 25% higher than it is on Android. 2) Organic installs outperform non-organic in almost all cases. Around 20% more users make it past day 30 when downloading apps organically rather than your marketing efforts so focussing on your ASO (App Store Optimization) strategy should be a focus. The only exceptions to this are gaming and video players. Gaming marketing is excellent at targeted marketing to finely tune which users to target for acquisition, which is why this is so successful. 3) Remarketing increased user retention drastically and increased the number of users after 3 months by over 80%. As we discussed, the cost of user acquisition is extremely high for the results it achieves so it is imperative that you match this with remarketing, which is drastically cheaper than acquiring new users. Remarketing is the most successful single area to increase your retention rate and can help you save budget. Using Cohort Analysis To Effectively Measure Retention Rates Over Time A problem you can have when tracking user retention is over time, changes become insignificant. As your data sample increases, any changes you make will have less impact on the huge amount of data you have accumulated. To fix this, you need to measure our user retention in cohort groups so you can see trends and the impacts of any changes you make. Most mobile applications will update around once a month. Sometimes there are few changes in these updates as they keep up to standard with OS changes — or sometimes they may contain new features that drastically change the app. These releases make perfect sense to track as cohorts – meaning the number of people who began engaging with your app in between each release/update. This will allow you to pinpoint changes that made impacts to your user retention. It can also help you monitor the changes to how earlier users engage with your app after new releases. Why User Retention Should Be Your #1 Metric User retention should be your #1 metric when measuring your app’s performance. It guides your decisions in terms of improvements and means you can fully understand the value your app is achieving. When working in tandem with a good user acquisition strategy, along with continual improvements through development and a monthly release cycle, you will be able to fully understand the value your app is generating. This will help you decide with a degree of certainty and comfort how much budget is needed to push your app onwards and how much budget to spend on acquisition. The worry is blowing budget on acquiring new users to lose them quickly, so make sure you build up your acquisition spend when you have a full picture of what to expect from a new user engaging with your app. At this point, growth is measurable and controllable and you’re on the path to success.