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What Is Retention Rate?

App retention rate – also known as “app stickiness” – tells developers the percentage of users who continue to use an app after installing it over a specific period of time. App marketers often monitor short-term retention (Day 1, 3, or 7) as well as long-term retention (Day 30, 90, or 180) to identify how successfully their app has acquired users.

Tracking app user retention rates might also involve looking at a cohort of people who downloaded the app on the same day to analyze their in-app behavior.
Key Takeaways
  • App user retention rate helps determine how successful developers are at finding the right users for their app 
  • High retention is connected with effective monetization
  • A low mobile app retention rate may prompt teams to improve the user’s in-app experience

How Does Mobile App User Retention Work?

There is a typical chain of events in app usage; however, various mobile app retention strategies influence the user journey in each app. These include onboarding, customer service, or loyalty/retention strategies. 

Whatever the strategy used, you can imagine user retention as though it’s a funnel:

  1. A user downloads an app from the app store
  2. The user is onboarded – for example, through tutorials or app registration; they are then ready to use the app
  3. The user engages with the app regularly for around a few days or weeks, showing successful short-term retention
  4. The user is a loyal and regular app user and has been for a month or longer

How Do You Calculate Retention Rate for Apps?

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

This is how user retention is calculated.

Let’s say that a match-3 app acquires 100 users on Day 0. On Day 7, 40 of these users open the app to continue playing. This means that this cohort has a Day 7 mobile app retention rate of 40 percent.

Why Does User Retention Matter?

Retention rate primarily measures the organic stickiness of the app; it reveals how well the app is marketed and helps to balance monetization strategies.

Here are the main reasons why measuring user retention matters to developers.

1. To Monitor User Engagement

If an app’s user retention is good, it indicates that this app is interesting and valuable enough to keep users coming back for more. Developers can continue to optimize in-app experiences to keep users happy. 

On the flipside, if user engagement for an app is low, this could indicate fraud or a negative app UX. Developers should look into these issues to increase their user retention.In terms of ensuring an app remains profitable, don’t forget that highly engaged users mean that there are more opportunities for app monetization.

better retention rate = higher user engagement, better UX, lower churn rate

2. To Optimize an App’s UX

A low mobile app retention rate often signals to developers that they should modify their app’s UX.

Developers should check where users tend to get stuck or churn. Is this caused by a technical issue? Are ads too spammy or frequent? These pain points could be resolved by, for example, giving more in-app currency for users to spend, checking technical issues, developing a clearer UX design, or re-engaging with users after they leave the app with customized app notifications.

If developers are looking to take user retention one step further, they can offer premium onboarding experiences, liveops events, and explore various monetization, retention, or loyalty strategies to extend their user retention and revenue potential.

3. To Better Understand Target Demographics

It’s not just about what’s happening inside the app, but what’s happening outside the app – how the app is marketed.

App developers should prioritize their user acquisition sources and publishers and accordingly adjust bids to focus on the quality of their users, not on only the volume. This is more likely to bring them users with the highest retention metrics.Once these users are acquired, it’s good practice to carry out A/B testing and a cohort analysis. User segmentation tools that break down in-app behavior help developers learn about user needs and tailor the app’s UX and monetization strategy more to these quality users.

When Should You Check Your 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

Developers should find out if onboarding is effective and has left a good impression on users. Do the app’s introductory learning sessions ensure a user stays engaged?

User acquisition teams also check Day 1 retention to identify whether the targeted audience is a good match and the ad creatives aren’t confusing.

Day 7 

Developers should then look at users dropping off to see how they could improve the app and the user’s experience.

Making improvements here will influence how long users see the value in an app. Mobile marketers should also start making their first UA optimizations at this stage, such as checking volumes, targeting setups, and performance discrepancies between channels and sources.

Day 30

It’s only natural that a user base will have decreased by Day 30. These users are now the app’s most valuable and engaged users.

These users will play a key role in boosting app revenue. No matter which app vertical, developers should continuously pull out all the stops to keep these users in their app.

What Is a Good 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, can expect a higher longer-term retention rate, as their users are expected to use the app most days to check the news, if not every day.

After installation, user retention fluctuates – 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 shows that the average Day 30 mobile app retention rate can vary between 9.1 percent and 1.37 percent.

These can be used as vertical benchmarks against which you should measure your own metrics and keep striving to improve them at all stages of the user journey funnel. No matter where an app is on this spectrum, developers can also find solutions to retain users for even longer.

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 boosts an app’s chances of successfully monetizing its users.

What Is Retention Rate?

Retention rate is the percentage of people who continue to use your app after a specific period of time, often tracked over time.

How Do I Calculate Retention Rate?

You calculate your app retention rate by determining the number of people who sign up or download the app on Day 1 compared with the number of people still there on Day 30 – or any other metrics that fit your needs.

What Is a Good Retention Rate?

A good retention rate depends on your app vertical. However, most apps have a retention rate of under 20 percent by Day 30.

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