What Is Retention Rate?

How Can You Influence Mobile App Retention Rate?

There is a typical chain of events in app usage, which can be viewed as 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

Various mobile app retention strategies influence the user journey in each app. These include

• marketing strategy
• onboarding experience
• customer service
• monetization mix
• loyalty and retention strategies

The better the user experience during all mentioned stages, the higher the app retention rate.

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 (Day 0). 

Let’s say that a match-3 mobile game 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?

Mobile app retention rate is what app developers use to understand what impacts their app positively or negatively. 

The metric is directly connected to how much revenue their app can generate; if users are engaged and loyal, they are more likely to make in-app purchases and/or will not be easily discouraged if they see ads as part of their in-app experience. 

What Should You Check If User Retention Is Low?

Identify where and when users are churning, developers should ask themselves:

1. Is the app flow/content at that moment engaging enough?
2. Does it match the app description and target audience preferences or expectations?
3. Are there any UX blockers or obstacles? Is the experience smooth for the user?

What Does It Mean If App Retention Rate Is High?

High user retention indicates possibilities to grow an app further and increase the amount of revenue generated from it. Examples include:

1. adding more in-app monetization options for the users (special packages, themed promotions, higher pricing)
2. Expanding the ad monetization strategy by introducing more ad placements or a greater impression frequency

When Should You Check Mobile App Retention Rate?

When testing new channels, app marketers look at short-term retention (Day 1, 3, or 7), and when trying to assess its stability they continue tracking it long term (Day 30, 90, or 180). 

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. Optimizations should be avoided on Day 1, however, because it is useful for teams to first observe fluctuations over seven days to understand the difference between behavior on weekdays and weekends, for example. 

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 user retention to decline a lot slower than with other verticals, as their users are expected to use the app most days to check the news, if not every day. An app for hotel bookings will by contrast only attract users when they have an upcoming trip and are less likely to enjoy high retention rates. 

After installation, user retention fluctuates – with retention rates for verticals such as hypercasual games dropping to just under three percent in 14 days 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, there are always optimizations developers can make to retain users for 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.