Mobile app retention rate: definition, characteristics of positive indicators

Mobile app retention rate is a really important indicator. User retention is the best way to grow mobile app. Advertising, attracting new customers, and increasing the number of downloads require a lot of investment. In addition, the maximum number of downloads today does not guarantee a rapid growth in the popularity and profitability of the app tomorrow, in a week, a month, a year. If the app does not meet the audience’s needs, the bounce rate will rise, negatively affecting the overall metrics, including profit. In the long run, retaining users is much more profitable than attracting new ones. Old users spend more money than newbies and regularly share their experiences with friends and acquaintances. 

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Read on, and you will find out which retention rate is considered good and how to calculate and increase user retention rate in the app.

Why is the retention rate significant?

The longer you keep a user, the easier it is to increase their Lifetime Value (LTV). LTV shows how much a person spends in an app for exclusive use, so retention directly affects profits.

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What is the retention rate in a mobile app?

The retention rate is the percentage of users who continue to use the app after installation. The indicator reflects the number of active users for a certain period.

Localytics defines retention as launching an app at least once every 30 days. In some cases, you can calculate 90 days (Q1) retention. This "industry" calculation method will work for services like Airbnb but will be entirely ineffective for games. Therefore, it is crucial to evaluate retention rates based on the specifics of a mobile app. 

The app churn rate influences the retention rate. It displays the percentage of users who stopped downloading the app. As the agency Moburst writes, about 25% of users stop launching a game or service after the first use. Another 50% will forget about the program after 10 launches, and only 25% will remain active. All others will lose interest at different stages of use.

A careful assessment of the retention rate will tell you at what stage and why users are losing interest in the app. Therefore, it makes sense to calculate indicators for different settings: for 1, 3, 7, 30, and 90 days.

There are many ways to calculate retention rates. The appropriate option depends on the category of the app and how you intend to interpret the received data.

How to calculate retention rate?

The retention rate calculates over a different period. The easiest way is to calculate data for 1 month by cumulative retention rate formula:

For example, an app has 10,000 active users, and the number of downloads per month is 38,000. Then the cumulative retention rate is 10,000 / 38,000 = 0.26.

Weekly retention calculates the same way. Only data for 7 days took.

Even though the calculation is straightforward, it is difficult to interpret it accurately because it is unclear at what stage users lose interest and why this happens.

Better to take a different approach: count the percentage of users who launch an app within a specified number of days after the first launch. It will allow for a cohort analysis of the retention rate. It is more informative, takes into account user churn and engagement. Retention cohort analysis will enable you to assess users’ interest at different stages of using the app.

Retention rate formula in this case: 

Suppose there were 250 active users at the beginning of the month and 264 at the end of the month. 33 removed the app, but 47 new ones appeared. We calculate the retention rate: (264-47) / 250 = 0.868 or 86.8%.

To assess retention after users meet a new app, it can use a simplified retention rate calculation formula:

This metric is convenient to use to determine how many people will retain after the first launch. For example, 1000 people launched the program on the first day and 700 people on the second day after downloading. Then 700/1000 = 70% - the retention rate on the first day.

If the retention rate on the first day is low, you need to change the app when training a new player and his first steps.

Using the same formula calculates the retention rate for 10, 15, or 30 days. If you find a regularity of churn, it will allow you to understand at what stage a person loses interest in an app/game, where changes need to be made, what to add, improve, how to involve more.

What is the highest retention rate?

There is no single value of a reasonable retention rate. It is essential to understand which target audience you are targeting and determine the goals, including the desired retention rate in a mobile app.

For example, a ticket booking service might have a low rate because people only take action before traveling. How many times a year does a person fly somewhere? One time, two, three, five? How often will the app be loaded (returned)? Once a month or once every half a year? 

For such programs, it is correct to consider the number of users who have opened the app at least once within 3 months from the downloading date. A retention rate of 30-35% in 90 days is considered very successful with this calculation.

On the other hand, Uber and Tinder’s goal is to increase conversions, so the retention rate is much more critical for them. It makes sense to track user behavior at each stage of interaction.

For example, suppose the human factor causes the customer’s dissatisfaction during a trip, and the taxi service is not at fault. In that case, it is worth making amends, being loyal to your customer. At the very least, allow expressing dissatisfaction with the help of an in-app review and a quick response to it. As a maximum - provide a promotional code (discount) for the next trip. Thus, you will increase the trust on the part of the client, show his importance. As a result, he will return to you again and again.

To evaluate your work, focus on the average user retention rate in its category of mobile apps. For example, for the Shopping and Finance categories, 33% is considered very good.

Another way to interpret is to evaluate your user retention rate for different periods. It will help you understand how people react to updates or lack thereof, a new interface, etc.

10 tips to increase app retention

The main thing is to make the app "sticky". The memorability influences the stickiness, and the response caused, the frequency of the launch. All these factors determine how often a person returns, that is, "sticks" to the app. If it doesn't get sticky, then it doesn't monetize. The first step is to create a habit of entering the app in the user. As soon as a person psychologically becomes obsessed, he will start to launch it more often, and sooner or later, he will make a purchase. There are many ways to increase the stickiness, below are 10 top tips.

Tip # 1: Focus on retention for the first 3 days

About 77% of users leave within the first 3 days after installing the product. Make them change their mind!

The higher the retention rate of 1-3 days, the better the 30 and 90 days will be, which means the more chances of winning an active audience.

With a retention rate of 25% on the first day, it will drop to an average of 15% on the third day and 10% after two weeks.

Case - optimization of the first stages of user experience in Gobsmax

Screenshot from the app page Gobsmax Galaxy

Gobsmax had reasonable retention rates at 7 and 30 days, but most users did not make it to this point due to low retention on the first day. To adjust the retention ratio, the creator of the American Gaming Network app offered the following solutions:

1. Reducing the number of clicks before the first action in the game.
2. Gradual learning of the necessary game mechanics (not all at once!).
3. Uninterrupted gameplay, especially in the first levels.
4. More achievements in the game, better feedback.
5. Graduation of daily rewards (if you log into the game for 7 days in a row, the prize will be worse than day 30).
6. Increase gamification with mini-games.

Innovations have increased the retention rate by 40%! Note: half of them are only about the initial actions in the game. It means that the first launch is already half the success.

Try this for your game as well. Some of these tips will help you increase the overall retention rate.

Tip # 2: Send push notifications or send emails.

To improve retention rate, determine the best time and content. Think about what time of day your audience is most active and what message you can use to attract it.

You need to select the frequency of mailing individually, depending on the category. Determine the optimal frequency of launching the app and mailing form in such a way as to bring the user closer to this indicator. Always send valuable and relevant notifications - don't turn them into spam!

Case - "Sticky" example: Duolingo, LinguaLeo

Pay attention to the intelligent push notification system in these apps. The user sets himself a goal for the amount of training per day, and the program automatically reminds him of the necessary steps to achieve the goal. Notifications also come to those who haven't logged into the app for a while. It is how retention works: a constant focus on achieving a goal.

Tip # 3: Remember Inactive Users

Target people who have launched an app or game once have never used it again but have not deleted it either.

The mailing list is essential for apps of infrequent use:

• online stores;
• banking and financial programs;
• booking services;
• delivery.

If one of these categories is your industry, look for an active audience in the past few months. If users visit the app but don't buy anything, give them a discount or a Limited-time offer. It is an excellent way to remind you of the unfinished business and get the prospect to complete the deal.

It is also true for apps with content: radio, movies, TV series, articles, news, reviews, etc. If the user was active for 7 days in a row but did not launch the app for at least 3 days, send him a link to the new content. Consider audience preferences: send information about recent reviews and tours for travel fans, news about artists, new songs, and videos for music fans. It is a surefire way to raise the retention rate by a few percent.

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Tip # 4: Communicate Updates in Advance

This method works best with mobile games and SaaS services. Share on social media, emails, or push notifications about new features under development. The audience mustn’t feel that announcements baited and no updates planned.

Experiment and customize when it's best to report new feature launches - a few days, a week, or even a month in advance.

The right time depends on the category of the app: it makes sense for software to announce updates in advance and talk about development stages - this is interesting for users. For mobile games, it is better to send notifications a week or several days in advance.

Tip # 5: Develop a User Behavior Model

The optimal model will make the app "sticky"; invisible chains will chain the person to the smartphone screen. As you might guess, this also affects the retention rate. A correct and effective model has 4 components:

1. Trigger - "you are just one step away from your monthly goal";
2. Action - "complete one lesson";
3. Reward - “discover exclusive content”;
4. Attachment - "subscribe to a paid subscription."

Use this model to create a continuous loop that builds a habit in your audience.

Case - "Sticky" app with a booming "hook": Amazon Prime

After every purchase on Amazon, a person receives an offer to subscribe to Amazon Prime for $ 99 per year. It guarantees free delivery of goods within 2 days. After purchasing a subscription, as a rule, users only use Amazon in this category and do not make purchases in other stores.

After completing an action (purchase), the user receives a reward (subscription option), and the program responds with an attachment (Amazon Prime design). Moreover, the subscription guarantees customer loyalty for a whole year! The more we invest, the more difficult it is to part - a typical sunk cost trap.

Tip # 6: Make the app essential

Everyone uses Google Maps to navigate a new area, watch videos - Youtube, relax with a movie or TV series - Netflix. Make it so that users cannot imagine their life without the mobile app.

There are 2 main tips at work here:

1. Simple, intuitive interface.
2. Complete change of a straightforward action - make it easier, more convenient.

Use Fogg's Behavior Model:

To achieve the desired behavior, influence 3 components at once:

• Motivation - notifications about unique offers.
• Opportunity is simple functionality.
• Trigger - a discount, a limited-time offer, the need to purchase/donate/subscribe to achieve the goal.

Another way is to make unique offers: purchases with a significant discount only through the mobile app, bargains, etc.

Don't forget to be the first to inform your audience about new offers and events. This way, you can make it "emotionally dependent" on the mobile app. In the example of social networks: everyone is afraid to miss notifications about new likes, additions to subscriptions, or events from friends. That is how the FOMO factor works: Fear of Missing Out - fear of missing important news and being "overboard" of exciting incidents. By the way, socialization is one of the essential tools for increasing the retention rate, and we'll discuss this further.

Tip # 7: "Get hooked" on social addiction

Create teams, offer competitions between users and their teams. It stimulated more often to launch a game or service, be interested in new events, and even make purchases. Competitiveness drives people to do crazy things and invest their most valuable resources. Why not use this to your advantage?

Create an opportunity to share your achievements on social media. So you get free advertising on the target audience sites and add a competitive moment. If an active user can compete with his acquaintances, friends, or relatives, there is a high chance that he will be interested in this, much higher.

Tip # 8: Be creative, don't be afraid to create additional apps

Even if your business has nothing to do with mobile apps, it's still a great marketing channel. It is unnecessary to create another ‘useful’ service and try to push your services through it. Instead, entertain the client with emotion.

Case - a game of airplane from the airline KLM

Dutch airline KLM has created a mobile game where you have to fly a paper airplane over a virtual version of Amsterdam. The functionality is similar to the cult game Subway Surfers. With each flight purchase in the main app for booking air tickets, the client receives additional points in the game. And progress through the levels is faster when you're in the lounge before boarding a KLM flight.

So the airline increases customer loyalty and focuses on its services: running several apps at once, buying an actual ticket to get achievements in the game.

Tip # 9: Monitor the app's performance

ANR (App not responding), crashes, slow loading - all this does not play into your hands. Users will quickly switch to other services with better performance. App stores are also paying attention to this. For example, Google Play rewards apps with good performance with higher organic rankings, while the App Store rewards higher rankings.

Use the Google Play and App Store functions to track the operation. In the Google Play Console, you will find a separate section for performance monitoring. App Store Connect sends daily crash reports to developers. You can filter messages by different parameters: platform, version.

It is convenient to collect all information about the app through the tool ASO Dashboard — all the leading indicators are in front of your eyes: from visibility in search to changes in keywords.

Tip # 10: Communicate with Users

The best example of successful audience communication is creating custom content. So everyone will have a feeling of attachment to the product or participation in its creation.

Ask questions about the pros and cons, shape content based on feedback, fix bugs, and resolve timely complaints. Make the client feel like you are constantly in touch with them and are sensitive to their needs. By increasing customer loyalty, you can improve your app retention rate.

How much can you increase the rate of user retention?

Optimizing an app is a never-ending process. You can continually improve performance by launching new features, communicating with users, or creating social, emotional, or work-related addictions. In practice, quality optimization increases retention rates by 40% or more.

Remember that good performance is not a goal itself but a way to measure your performance and identify problems. The main thing is to create the necessary and high-quality service. Then he will receive an excellent response, which means the retention coefficient value will be high. But quality alone is not enough. You still need to optimize and promote the app.

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