High installs mean nothing if you can't retain your new users in the long term. An estimated American app users uninstall 47% of the apps they download on their phones within 30 days.
Indeed, app retention isn't something you have direct control over. After all, you can't physically stop people from deleting their apps. But, with the right strategy and tactics in mind, you can still minimize the effects of churn to increase retention and revenue.
What Is App Retention?
App retention measures how many people keep using your app over time. It's a key metric you can use to monitor user loyalty.
A low retention rate could be a sign your current product either doesn't meet the needs of your target user or that the competition is offering something better than you. On the other hand, a high retention rate shows that customers are satisfied with your mobile app and value your product.
It's important to note that app retention is different from user acquisition. User acquisition is simply the process of getting new users to your app, and while you can have a high acquisition rate, you could also have low retention at the same time.
Why Is App Retention So Important?
As a product manager, there are many reasons why getting the best app retention rate possible must be one of your priorities.
Increased Profitability
The first reason is that retention increases your company's revenue. Your retention rate is a solid indicator of business growth: the more users you retain, the more opportunities you have for monetization.
Lower Acquisition and Churn Cost
Second, it's cheaper to retain users than to acquire new ones. According to Harvard Business Review, getting a new customer is 5 to 25 times more expensive than keeping an existing one.
Gain Competitive Advantage
One way to establish your app as a market leader is by boosting your retention rate. Overall, a lower churn rate means you have satisfied users who are consistently finding value in your product.
With a loyal user base and good reviews, you ultimately gain a good reputation, which in turn attracts more users. As such, it becomes more difficult for new competitors to gain traction, thus boosting your market share.
Product Improvement
The feedback you get from your users is invaluable for making continuous improvements to your app. A consistent user base is more likely to provide contextual feedback on the features they like and the areas that could use improvement.
If you want to tweak your product to be more focused on users' needs, you can use this feedback loop to prioritize updates and enhancements that directly address those needs.
In addition, engaged users provide actionable insights about their usage, preferences, and habits. Behavioral insights are useful for making UI tweaks, performance optimizations, and feature additions that match user behavior. Regularly adding new features and fixing bugs can easily keep you ahead of your competition.
Increased Brand Loyalty
When you offer value and a positive user experience, you're more likely to gain customer loyalty. Long-term users often become brand champions by recommending the app to others and writing glowing reviews, which can spread the word to new users. Not only does this advocacy improve your brand's reputation, but it also strengthens your brand's position in the market.
Better Growth Potential
Lastly (and most importantly), retention gives a more accurate picture of your business's success. It's possible to have lots of people download your app, but if 99% of them delete it within a few days, you're only acquiring a small number of users.
Businesses that focus on downloads rather than retention can end up in trouble because they think they're performing better than they actually are.
What Is the Average App Retention Rate?
In the third quarter of 2023, the average retention rate for iOS apps was 23.9% after one day of installation and 3.7% after thirty days.
For Android applications, retention was set at 21% after one day of download and at 5.6% after seven days. Following 30 days of installation, the retention rate for Android apps was approximately 2.61%. As such, iOS apps seem to have higher retention rates than Android apps.
The average user retention rates can be very different depending on the type of app, the platform, and the industry.
Here's an overview of the customer retention rate by day 30 of mobile app installs globally in the third quarter of 2023.
Your app will likely garner different retention rates based on the products and services you offer. For instance, news apps are quite popular because they get constant updates and new content. People keep coming back since there's always something new to watch or read. To further encourage participation and build a sense of community, news apps often incorporate social features like sharing and commenting on news articles.
Additionally, many people start using health and fitness apps because they're committed to reaching a specific objective, like reducing weight or increasing muscle mass. But keeping this drive going for the long haul is tough. When people's interest fades, they might not use your app anymore.
How to Calculate App Retention
You can use the following formula to measure your app retention rate:
- Daily Active Users (DAU) / Monthly Active Users (MAU) = App retention rate
Calculating your churn rate or the number of users you lose across a certain time is also important. You can calculate your app churn rate with the formula below:
- (Number of Churned Customers ÷ Total Number of Customers at Start of Time Period) × 100
10 Tactics to Increase App Retention
Now that we covered app retention, it's time to understand what you can do to improve it.
Use these tactics to keep customers engaged during their app use.
1. Attract the Right Users
To improve your retention, you must focus on attracting the right users in the first place. Customers who aren't the right fit will uninstall your app once they find out it's not for them.
It all comes down to your marketing strategy — are you getting the right message to the right people? A high churn rate within the first few hours of downloading suggests you send the wrong signals.
To determine who your ideal user is, you can look into your product data and identify the common patterns between these two personas:
- Loyal customers: What common denominators do your best users share? For example, what demographics or social platforms do they use the most?
- Churned customers: What attributes do churned users have in common? Where do users tend to drop off in their app journey?
To uncover this data, you can use product data analysis software such as Mixpanel or Amplitude. Next, you can use the data as a guideline to improve your marketing campaigns and attract better users.
2. Map Out Your User Journey
When defining your app's retention strategy, it's essential you first map out your user's journey. Having this insight will give you a complete picture of how your users engage with your app right from their onboarding experience.
To optimize your app's user experience, you should first identify key customer touchpoints and possible pain points.
Some of the key strategies you can use when mapping out your customer journey include:
- Identifying pain points: A user journey map can help you clearly see user pain points, such as a lengthy onboarding process, sluggish page loads, or poor UI components.
- Behavioral insights: A detailed user journey map can help you learn more about your users' behavior patterns and preferences. Behavioral insights can assist you to tailor your offerings to each user's specific needs and preferences.
- Continuous improvement: Consistently improving your app through regular updates and refinements in response to user feedback can lead to higher retention rates.
3. Optimize Onboarding
Onboarding creates the first impression of your mobile app in the user's mind. If users can't see the value of your app during onboarding, then they'll be more likely to churn and uninstall your product. Follow these four steps to optimize your onboarding:
Reduce the Number of Steps as Much as Possible During Onboarding
Effective onboarding needs to be straight to the point. If the customer has to go through too many steps before seeing your app's value, it will make onboarding less efficient.
Customize the Onboarding Process Based on the User's Goals
Your mobile app may serve different audiences with various needs. You want to ask the user questions at the beginning of their product journey about what they want from your app so that you can personalize their onboarding.
Lead the User to Their "Aha" Moment
The "aha" moment is when the user starts to see the value of your product and how it helps them meet their goals.
For example, Uber's "aha" moment is when a user books their first ride with the platform. For Dropbox, it's when the user saves one file in a folder on one device.
During onboarding, you must aim to lead the user to their "aha" moment as soon as possible. The sooner they can see the value of your product, the more likely they are to stick to your app.
Provide the User With Adequate Support
During the user's onboarding process, provide them with all the resources they need to get the most out of your app. Also, ensure to be there to answer any questions they may have during the process.
"When it comes to onboarding, we've found that the most important thing is to always be available," says Teri Wilson, CEO at iDoneThis, a productivity tool. "Might sound like we're trying to be your significant other, but we want to be your life partner at work. We want to make sure our users know not just our tool but that we can help them implement best practices within their team."
4. Conduct A/B Tests
Conducting A/B tests, sometimes called split testing, can help you find and implement the most effective features and designs on your app. A/B testing compares two versions of a feature or app to see which one works better.
Comparing two versions of an app element, such as different user onboarding procedures, button designs, or notification styles, can yield detailed information about key user preferences.
Here are some practical strategies that you can use when conducting A/B testing:
- Streamlining app onboarding: Compare two or more onboarding processes to find the one that increases retention.
- Feature impact: Test different features to learn how to increase user engagement and retention with new updates or tweaks to old ones.
- Re-engagement strategies: To find out what works best to get inactive users back into your app, try out different re-engagement strategies like personalized offers or reminders.
5. Collect User Feedback
When you collect user feedback about their experience and what they want from your app, you can use these insights to improve your product and increase retention. Different ways to collect user feedback include:
User Surveys
You can send users a survey via in-app messaging or email to ask them questions about their app experience. Make sure that your survey is as short and straightforward as possible.
A study by SurveyMonkey shows that surveys longer than eight minutes have completion rates 5-20% lower than shorter surveys.
Customer Interviews
Another way to collect feedback is to run customer interviews where you can ask any question you may have directly to the user. Prepare the right customer discovery questions to gather the best insights about their needs and expectations.
Forums
You can establish a community forum where users can ask you and others about the problems they experience with your app. It's where you can be on the lookout for recurrent issues with your app and fix them quickly.
For example, the vacation and short-term rental platform Airbnb has a community forum where users can ask questions about the app. It encourages discussion between users and helps Airbnb collect meaningful feedback from their users' experiences on the platform.
6. Implement a Customer Rewards Program
A rewards program is a way to reward users for their app loyalty. The program gives customers an incentive to use your app in exchange for perks.
For example, ride-sharing and food-delivery platform Uber has a rewards program called Uber Rewards that allows users to earn points for booked rides or food they order.
Bond Brand Loyalty research shows that 81% of customers believe loyalty programs encourage them to continue doing business with a brand. Here's how you can set up your customer rewards program to increase user loyalty and retention:
- Choose the type of action you want to reward: Let's say you manage a daily login calendar app. You can offer points or in-app benefits if users open the app every day for each month.
- Identify the type of order to offer: Next, identify how you plan to reward customers for their loyalty. For example, do you want to provide discounts or exclusive access to new features?
7. Monitor Your Product Data
Keep track of your product data as you focus on improving your retention to determine whether your efforts are going in the right direction. Here are the metrics you want to monitor:
Overall Retention Rate
The first obvious metric you want to monitor is your retention rate. Keep track of how much your efforts directly improve your retention over time.
Overall Churn Rate
Next, to complement your retention rate, you also want to keep track of how many users you're losing now compared to before. You should see a decrease in your churn rate along with a higher retention rate.
Net Promoter Score (NPS)
Your NPS score is a score of 0 to 11 that customers can use to rank how likely they are to recommend your mobile app to others. It's a solid customer satisfaction score directly related to retention.
Daily Active Users (DAU)
Daily Active Users (DAU), as the name suggests, refers to the number of active users within your app daily. The higher your DAU, the better you are at engaging users.
Monthly Active Users (DAU)
Monthly Active Users (MAU) refers to the number of users interacting with your mobile app. You should track this metric along with your Daily Active Users (DAU).
8. Personalize Your App
One great way to keep people using your app is to make it more exciting and relevant to them by personalizing it. When you customize content, suggestions, and features based on user preferences, your app becomes more fun to use.
Customization can include anything from a custom onboarding flow to targeted push notifications and personalized content suggestions.
Other ways to create personalized experiences are to include language preferences or integrate regional content like weather and local news.
Additionally, you can allow users to create profiles so as to personalize their app experience. Based on user engagement, you can use an algorithm to personalize their content feeds.
When users consistently find that your app's core features meet their needs and interests, they are more likely to use the app again, which increases user retention rates.
9. Implement Push Notifications
Your users are more likely to check back into your app if they receive timely and relevant updates through app notifications. As gentle reminders, notifications get people back into your app when they might have forgotten about it among all the other digital distractions.
You can send personalized notifications or app messages on updates or special offers. For instance, you can notify a user who hasn't logged in for a few days to help re-engage them.
Notifying your current users of updates or new features through push notifications can also pique their interest and encourage them to check out the updates. Your users will stay engaged and stick around if they receive personalized recommendations and offers based on their interests.
10. Integrate Chat and In-app Messaging
In-app messaging allows you to send contextual messages to catch users' attention, engage them, and drive them toward features that meet their needs. You can use in-app messaging to improve retention with the following use cases:
Announce New Feature Updates to Users That Improve Their Experience
In-app messaging is an excellent way to inform users about any new features you've worked on behind the scenes. You can showcase new features to customers and the benefits the updates bring to their app experience.
Celebrate Any Wins or Progress the User Makes Within Your App
A little encouragement goes a long way in keeping users engaged. You can use in-app messaging to acknowledge any progress the customer makes during their user experience to encourage them to continue using your app.
Promote Upsell Offers
Upsell offers are any additional perks the user can access if they change to a more exclusive membership. When a specific segment of your target has shown a lot of engagement with your app, you can showcase them upsell offers via in-app messaging they can unlock if they upgrade.
App Retention Is Key to a Successful Product
Increasing retention comes down to making your app experience as engaging as possible, which you can create with the help of responsive in-app messaging.
To integrate chat and in-app messaging as part of your app, you can use Stream's Chat API, which is fully customizable and complies with all the online security regulations that exist, such as HIPAA and the GDPR. Explore our demos to learn more.