What Is Churn Rate?
- Churn rate is typically measured at 1 day, 7 days, 30 days, and 1 year after users first install the app.
- Most users tend to uninstall apps 3 days after the install. 30-day churn rate can reach up to 98% depending on the app vertical.
- Churn rate analysis is usually done by cohorts to get reasons for early, and late churn, which if tackled correctly improve early and long-tail churn.
Why Is Churn Rate Important?
A high churn rate can highlight challenges such as a subpar user experience, limited engagement, or ineffective onboarding. Businesses always aim to stay below their industry’s average churn rate to ensure steady growth and long-term sustainability.
Tracking churn rate enables app publishers to
- Pinpoint areas for improvement
- Enhance the user experience, and
- Implement strategies to retain users
- Optimize Customer Acquisition Cost (CAC)
Reducing churn rate ultimately boosts revenue and ensures an app’s long-term success.
How to Calculate Churn Rate?
As mentioned earlier, churn rate is measured at multiple time periods – from 1 day to 1 year – after users first install the app. Typically 1 day, 30 day and Annual churn rates are the most important.
So, let’s say you have 10,000 users at the start of the day, and by the end of the day, only 6,000 users remain. The 1-day churn rate would be calculated as follows:
[(10,000 – 6,000) / 10,000] * 100 = 40% 1 day churn rate
You should also calculate the churn rate for different cohorts.
FAQ
An annualized churn rate of anywhere between four and seven percent is the norm. A “good” churn rate for your app should align with your specific goals, and it should also be within the industry. Anything lower than your industry average is considered a good churn rate.
Some of the most common reasons include poor in-app onboarding, excessive notifications or ads, lack of value, and better alternatives.
There’s no one singular way to resolve all issues. The first step is to analyse by cohorts to find the churn reasons and then make appropriate changes to the onboarding and user experience.
Abandonment rate is the percentage of users who stopped using the app after 1 usage. Churn rate is calculated at various timelines across a year.
Churn rate and retention rate are opposites. Churn rate tells you how many users stopped using the app after a certain time period, while retention rate tells us how many users continued using the app after the same time period.
