Why User Retention Rate Is Your App’s Most Important KPI (App Growth Blog Series Part 7)

In 2017, it was found that 71% of all app users churn within 90 days – in other words,  a whole lot! 

And even in the most recently measured period (April 2019), only 32% of users returned to an application 11 times or more. Sadly, this number represents a 6% decrease from the previous year.

Experts industry-wide agree that retention is the most important KPI for longterm app success –  surpassing even the previously prioritized user acquisition KPI. The longer you are able to retain a user, the more chances you have to increase user LTV (Lifetime Value). 

So, if user retention isn’t high on your radar or among your very top KPIs, it needs to be. 

What is Retention Rate?

As defined by Localytics:

Retention = Returning to an app at least 1x within a 30-day period

The industry standard for measuring retention spans over a period of 90 days (one quarter) because it takes into account the app user lifecycle. 

How Do You Improve App User Retention Rate?

Here we’ll share some best practices that will help you increase mobile app user retention and eventually improve overall mobile app user engagement.

1. Ongoing onboarding via targeted communication

Retention is all about being able to best serve your users and keeping your app top of mind so that they use it again and again. It’s a continuous onboarding process. So in order to increase mobile app retention, engage with segmented users via push notifications or email. Target the users who were active on the app once but have not used the app recently.

For example, when it comes to e-commerce, it’s a good idea to engage with a user who was an active buyer in the last 2 months but has since stopped buying things. You can send them an enticing product in which they had previously shown interest. It’s a simple yet efficient way to make this user purchase again.

In the case of content apps, if users were active for 7 days straight but haven’t opened the app in the last 3 days, you can try to send them an article link which is trending in the category they’re interested in. It might bring users to your app again. 

Being able to identify the right time and the right content to engage a user – without annoying them – is the key to increasing user retention and enjoying sustainable mobile user engagement.

2. Inspire habit formation with push notifications

Habit formation is one of the key mobile app retention strategies. Here is the HOOK Model by Nir Eyal which outlines the steps necessary for sticking to a product:

1. Trigger
2. Action
3. Reward
4. Investment

Amazon Prime is a great example that validates this model. For an e-commerce user, the best reward is to get a free product delivery within 2 days – a core offer of Amazon Prime. Every time a user buys something, the app offers the opportunity to subscribe to Amazon Prime for $99/year. Once the user has invested $99, they tend to choose Amazon over other platforms. To further validate their decision, with each new purchase, Amazon shows how much they have saved by subscribing to Prime.

Here is another example from Relax Melodies – user habits are built by setting a daily reminder at a fixed time. If a user has been active on the app but hasn’t set a reminder, the app sends a push notification that offers to do it for them.

3. Inform customers of upcoming new features

Always notify your users about new things that are being added to the product. When it comes to SAAS services, try to share new features that are in the pipeline. This keeps a user excited about the app.

Yet, it is important to time the communication right so it doesn’t seem that it’s just a bait and nothing is coming. Experiment and figure out the best time to communicate with your users about an upcoming feature: a few days before the launch, a few weeks or maybe months before.

We hope we’ve given you a clear idea of how important app user retention is and some initial steps to help your app’s overall success. If you’d like a free one-stop resource to all of our App Growth tips right now, download our “How To Grow Your App” e-book here!