Nowadays, there are millions of apps for virtually all occasions: an app to call a taxi, an app to order a pizza or just an ordinary game to kill time. Thousands of new apps are being submitted to leading app stores each day and this number will continue to grow leading to more aggressive competition among developers.
App developers and marketers are facing a serious challenge in the ability to attract new users. An innovative idea for an app is worth nothing without a large scale marketing campaign that will attract users and make them download and install an application. But after that, there’s an even greater challenge – to retain them.
Customer Retention Rate (CRR) shows the percentage of users who return to the application at least once after the first launch over a given period of time.
“There’s no point in attracting customers if you can’t retain them”
CRR is measured for specific time periods. For example, 1-day retention indicates how many customers returned to the app on the next day after the first launch. The percentage of users who returned to the app within 7 days after the first launch, which is respectively called a 7-day retention, and so on. Most often a 90-days(three-month) time frame is used as the industry standard to measure the retention rate.
How to calculate CRR
There’s no one standard formula for calculating CRR. The following simplified formula was offered by Jeff Haden, Contributing Editor at Inc:
CRR = ((E-N)/S)*100
E – Number of customer at the end of the period
N – Number of new customers acquired during the period
S – Number of customers at the start of the period
To better understand it let’s look at an example. Let’s say we want to calculate CRR for a month. At the beginning of the month we had 1000 customers. By the end of it there were 1100 customers (we lost 150 customers but acquired 250 new customers). Let’s do some math using the formula:
CRR = ((1100-250)/1000)) X 100 = 85%
which is a pretty decent level
In the ideal situation, the retention rate should be equal to 100% which means that you never lose a single customer and is almost impossible to achieve.
Related studies show that retention level for most mobile apps significantly fall over time— and often dramatically. A substantial part of users abandons the application within the first 3-5 days after installation.
According to recent research conducted by Localytics the average retention rate for mobile applications is only 25% after 90 days. Of course, it varies slightly by industry (Media, Gaming, eCommerce, Lifestyle, etc), but the big picture looks rather bleak.
So what can you do to make customers use your app again and again? There are a number of proven tactics that can positively influence retention rate.
1. Features that you may include
One of the best tactics to boost your retention rate are push notifications.
How much users will return to the app again and again in the long term period?
According to Localytics, the one-month retention rate is equal to 56% for push-enabled users, and only 15% for those who disable push notifications. For the three-month retention rate the numbers are 32% and 9% respectively:
Furthermore, push notifications also triple user engagement. The average number of sessions for those users who have push messaging enabled equals to 13.8, versus 5.3 sessions for those who don’t.
Along with push notifications you can use a related technique called in-app messaging. The difference is that in-app messaging broadcasts messages within an app itself (when an app is being run), whereas push notifications are sent from an application to a device even when the app is not being used.
The push notifications technique really manifests itself with maximum efficiency when it’s combined with personalization (see further below).
Use these two powerful techniques to boost not only retention but also engagement and monetization strategies. However, you should try not to be annoying, otherwise you risk scaring the users off instead of engaging them.
To learn how you can integrate push notifications and in-app messaging in your app book the free consultation from one of our specialists.
Incentivize users by all means
Offering rewards, such as coupons, discounts or special promotions will motivate users and keep them engaged.
2. UX mistakes to avoid
The value of a first impression
A bad first impression is very hard to change and in most cases you won’t get a second chance to improve it. The first few seconds set the foundation for the rest of a customer’s experience. If you make a mistake within these few seconds, then the chances are the customer won’t return. Here are a few tips that can help you leave a great first impression on a user:
- Use splash screens
When a user launches your app, the last thing you want is to make them wait. If it takes a long time for your app to load, then consider using splash screens and loading bars (Both Google and Apple suggest it in their guidelines to simulate faster loading)
- Use Occam’s Razor principle
Don’t overburden a customer with too much information. You must lead them to the core feature of your app as quickly as possible.
- Don’t ask the user to sign up right away. They should be able to use an app as a guest. Forcing users to register before they can interact with an application is one way to cause more than 85% of users to abandon it. Make the registration process simple, use as few signup steps as possible.
- Don’t ask a lot of information from a user. Keep in mind that inputs are much more time consuming on mobile devices.
Users like their interactions to be individualized. Displaying only the relevant information tailored to their preferences will strengthen the connection with your customers. As we said earlier, targeted push notifications based on user’s preferences and behavioral data drive nearly 300% greater retention rate than notifications that are broadcasted to all users.
3. What else can you do?
Use Analytics to guide you
It’s not enough to know how many people download your app or how many like it. You need to know them as individuals. That’s where app analytics tools can come in handy. Using a mobile analytics platform to track users’ behaviour will provide you with invaluable insights to better understand what your users want and how different features of the app affect the retention rate. This data will help you shape a better marketing strategy thus leading to higher acquisition, retention and conversion rates.
There are many free in-app analytics tools such as Flurry from Yahoo, Universal Analytics from Google or Apple App Analytics.
A/B Testing allows you to experiment with two variations of your entire product or a single component. By using testing platforms such as Ubertesters you can split your target audience into two distribution groups. Variation A of your product will be distributed to one group and variation B to another group. Analyze the results to see which version of your app engages more users.
Remarketing is a clever way to reintroduce your app to those users who opted-out of push notifications. It could be done via email, adwords or social advertisements.
Constant application modernization can be achieved by adding new features or updating old ones. This will give a new “look and feel” to your application and will reignite the user’s interest and engagement. Make sure you inform your customers each time the changes have been made. You can do it either when they start the application or by sending push notification. By all means, don’t keep them unaware and don’t let them find out about the changes for themselves!
And last but not least, aspire for a higher 1-day retention level. The more time has passed since the installation the higher the risk that it will never be opened again and will be deleted eventually. People often forget about what they have downloaded and installed and are always willing to free up precious disk space on their devices. Immediate engagement helps grab the user’s attention. You must make the most effort to keep the 1-day retention at a high level and optimize this indicator. For example, offer some new incentives by sending a push notification to each new user the next day after the installation. It will make them return to your app!
Remember that it is 5 times more expensive to acquire a new customer than to retain an old one. Therefore, make retention a top priority for your business. High retention rates will help you convert first-time users into active and engaged ones.