What Is Retention Rate?

How Is App Retention Rate Calculated?

App marketers can calculate retention rate by looking at the number of users who open an app on a given day and dividing it by the number of users who installed the app on the same day. 

For example, a match-3 app acquires 100 users on Day 0. On Day 7, only 40 users open the app to continue playing. This means that this cohort sees a 40 percent Day 7 retention rate. 

Why Does Retention Rate Matter?

Many mobile marketers used to prioritize user acquisition. Now, after realizing that a pretty high proportion of these users are fickle, attention has shifted toward user retention. And rightfully so. Here’s why:

1. User Engagement

If the retention rate on your app is good, it indicates your app is interesting enough to keep users coming back for more. You can continue improving the in-app experience to keep users happy. Highly engaged users mean that there are more opportunities for monetization.

If user engagement for your app is low, this could indicate fraud. Ensure you investigate these warning signs of fraud in order to boost your engagement rates!

2. User experience

A low retention rate may signal a need to make modifications after identifying, if possible, what is causing it. Where are users getting stuck in your app? Is this caused by a technical issue? Developers use these metrics to get more insight into how they can improve not just the user’s experience in the app – but also profitability and app growth overall.

3. Churn rate

By looking at the churn rate and retention rate, it’s possible to pinpoint when people stop using the app. This could be right after initial onboarding or at some other given point. 

Understanding this critical part of a user’s experience in your app allows you to make key changes in retaining your users for longer. Changes could include, for example, giving more in-app currency for users to spend, checking technical issues, or developing a clearer UX design.

When Should I Check My App Retention Rate?

There are several milestones mobile marketers focus on when it comes to measuring their app’s retention rate – both over the short and long term. These milestones, of course, depend on the app vertical. A hypercasual game will not have the same average retention rate as a finance app, for example.

Day 1

Find out if your onboarding is effective and leaving a good impression on your users. Are the app’s introductory learning sessions ensuring the user stays engaged?

Day 7 

Look at users dropping off to see what you could improve your app and your user’s experience in it. Making improvements here, if needed, will influence how long users will see the value in your app. You should also start making your first UA optimizations at this stage.

Day 30

Expect your user base to have decreased considerably by Day 30. You’ve now identified your valuable and most engaged users – your key audience. These users will play a key role in boosting your revenue and app monetization strategy. If your app is a mobile game, you’ll want to make sure you pull out all the stops to keep these users in the game and progressing further and further.

What Is an Ideal Retention Rate?

There is no prescribed retention rate to aim for out there. Ideal or target app retention rates generally depend on the app vertical and an app’s target lifetime value (LTV). News app publishers, for example, reckon with a higher longer-term retention rate. This is perfectly logical, as their users are expected to use the app most days, if not every day.

Following installation, retention rates fluctuate greatly – with retention rates for verticals such as hypercasual games dropping to just under three percent on average. Data collected on the worldwide retention rate of mobile apps has shown that an average retention rate across all app verticals is around 3.8 percent on Day 30. 

Take a look at the average retention rates for your app vertical – both short-term and long-term – and use them as the figures you’d like to exceed with your app. 

How Can I Increase My App Retention Rate?

What do the apps with the highest retention rate do differently? There’s no secret formula, but there are some things that may help to increase your retention rate overall. 

• Carry out the necessary optimizations – some have been mentioned above. As an account manager, you should prioritize sources and publishers and adjust bids that bring you your users with the highest retention rate.
• Re-engage with your users after they leave the app – you can do this via customized push or toast notifications
• Identify bottlenecks or blockers to offer a premium user experience – such as functionality and better onboarding

Carry out A/B testing and a cohort analysis – and utilize user segmentation tools to learn about user behavior and preferences

Conclusion

Publishers should look beyond user acquisition and make sure they pull out all the stops to create an app experience that users will want to come back to over the short and long term.

A high app retention rate indicates high user engagement and LTV and usually a low churn rate, which overall looks promising in terms of your opportunities for monetization. 

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