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Jonathan Raveh
11-05-2018
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User Retention
The Harsh Reality of App Retention

While the mobile industry is still rapidly evolving, not only have some of its most essential KPIs not changed, but neither have the efforts to optimize them. During the last few years, Analytics tools have evolved just like the app industry, but the basic data provided by them has not.

The end result is that when it comes to understanding user engagement, something is missing.

The following retention data from Appsflyer, representing their top 1,000 costumers, explains the situation clearly:

 

The average user retention after 30 days is 7%. Some verticals are struggling more than others, but no category has it figured out:

 

 

With such low retention rates, it’s important to talk about user acquisition first. Huge amounts of resources are spent to acquire users—mostly through Google and Facebook—and only a fraction of those effort do not go to waste.

Mobile-first companies have always focused their commercial efforts on two sides of the business operation: user acquisition (UA) and monetization. They focus there because acquiring users, whether organically or paid, and improving revenue per user (ARPU) have a major impact on user LTV. Theoretically, the User LTV diagram has balanced parameters:

 

 

However, ignoring retention and virality, and focusing on UA and APRU, make the real LTV diagram skewed:

 

 

How can you fix your LTV diagram?

The short answer is real-world data. In a nutshell, real-world user data turns a user into a human. Age, gender, and likes on Facebook have little impact on a truly understanding a person. Their actions, habits, and routines, on the other hand, do. Focusing on the human journey (rather than user journey) will make apps aware to users on a granular level and increase retention dramatically. No more time-based push notifications at 8:30 AM, but instead message for users who just woke up. No more estimated “boredom windows” for games, but instead targeted engagement attempts for those commuting via public transportation or idle on the sofa at night. True differentiation between all users based on their real-world behavior makes apps relevant. And making apps relevant means focusing on users that have already been acquired—increasing their engagement and keeping them retained—which balances the factors that drive user LTV.

Without applying real-world data to provide meaningful personalization, low retention will remain the biggest roadblock to apps attempting to become commercially successful. The first step to overcome this roadblock is to become dedicated to uncovering the people behind the users. Location data, when seen with context, can reveal almost anything about your users – not only the right moment to engage with them, but also what kind of behaviors and personas they possess. The second step is to shift your company’s focus from UA and the app economy to retention and turn it into a growth engine. Since real-world data extraction is not an easy task for any company, use AI-based solutions that uncover it for you. These solutions add a crucial user awareness layer to existing app data, providing precious engagement opportunities that impact the three crucial business KPIs – engagement, retention, and revenue.