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Jared Fleitman
07-07-2019
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User Retention
The Harsh Reality of App Retention

In every major transformation in human history, there are some groups that refuse to change. Fast forward to today: the mobile industry is rapidly evolving, but its KPIs haven’t changed, nor have the efforts to optimize them. Analytics tools have changed with the app industry, and yet the fundamental driver of these tools — data — has not itself evolved.

 

When it comes to user engagement, something big is missing.

 

Take, for example, the following data from Appsflyer [1]. Taken from their top 1,000 customers, users on average see a retention drop of around 20% after just 30 days. The average user retention is around 7%.

 

 

7% sounds bad, for sure. But that’s not the worst of it, as you can see below.

 

 

Some verticals struggle more than others, dropping to just above a 3% retention rate for Gaming and Finance. And even at the top of the spectrum — Lifestyle, at just under 9% — no vertical has clearly figured this out.  

 

So what does this mean? It means that despite the huge amounts of resources spent to acquire users — mostly through Google and Facebook — only an extremely small percentage of those efforts are not wasted. Of course, this raises the question: if its so costly to acquire users with such low retention rates, why is the focus on acquisition?

 

That’s a good question. It goes back to things being left behind from change. Mobile-first companies have always focused their efforts on two sides of the business operation: user acquisition (UA) and monetization. The focus on acquisition and monetization existed because, fundamentally, acquiring organic or paid users and improving revenue per user (ARPU) have a major impact on user LTV.

 

Here’s another way to put it. Theoretically, the User LTV diagram has balanced parameters:

 

 

However, when people ignore retention and virality to instead focus on UA and ARPU, the User LTV diagram becomes skewed:

 

 

How can we fix this? The short answer: real-world data.

 

Real-world user data turns a user back into a human. Age, gender, and likes on Facebook don’t give true insight into understanding a person. However, their actions, habits, and routines do. Focusing on the human journey — not the user journey — makes apps aware to users on a granular level, which in turn leads to dramatic increases in retention.

 

So, what does that mean for your everyday life?

 

It means no more time-based push notifications that accidentally wake your user up at 8:30 AM when they planned on sleeping in until 9. Rather, your message will wait for your user at exactly after they have leisurely woken up. It means no more estimated “boredom windows” for games, but targeted engagement attempts for those commuting via public transportation or chilling on the sofa at night.

 

True differentiation between all users based on real-world behavior makes apps relevant. And keeping an app relevant means focusing on already acquired users increasing their engagement by adding value to their lives and retaining them — which balances the factors that drive user LTV.

 

In the absence of this real-world data, low retention will remain the biggest roadblock to apps attempting to become commercially successful. Overcome this roadblock by becoming dedicated to uncovering the people behind the users.

 

First, location data, when seen with context, can reveal almost anything about your users. Not just the right moment to engage with them, but also their behaviors and personas. 

 

Second, shift your company’s focus from UA and the app economy to retention, and turn your app will become a growth engine. Real-world data extraction is not an easy task; to simplify it, use AI-based solutions that uncover it for you.

 

These solutions add a crucial user awareness layer to existing app data, uncovering lucrative engagement opportunities that impact the three most crucial business KPIs – engagement, retention, and revenue.

 

Want some more app statistics? Read our free whitepaper.