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Jonathan Raveh
11-30-2018
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User Retention
The High Cost of Acquiring a Mobile User

There’s no doubt that the app industry is competitive. With millions of apps in the app stores, getting user attention to any app is challenging. The cost of acquiring users has been rising over the years. In addition, getting a user to install an app is just the first phase in app marketing. Many users drop out during the on-boarding phases, without even using the app to find out whether the service it provides is relevant and useful. Out of those that do move on to use the app, only a small percentage of users will end up becoming loyal, high LTV users and pay for additional, paid services (usually in the form of in-app purchase or subscriptions).

This research from 2018 shows the cost of acquiring users in various app categories:

(Source: Liftoff 2018)

In Finance, only 30.7% of users who installed the game will actually register and play, and only 19% of them will end up activating their account.

In Dating, only 53.8% of users who installed the app will actually register and use it, and only 1.5% of them will end up subscribing or making an in-app purchase.

In Shopping, only 17.5% of users who installed the app will actually register and use it, and only 7% of them will end up making a purchase.

In Gaming, only 54.6% of users who installed the game will actually register and play, and only 13.4% of them will end up paying.

The most significant insight related to this data is the importance of retention. The longer a user actively uses an app, the higher the chances of them creating monetary value for the app developer. The chances of a user being retained dramatically increase when the service they are getting is personalized properly and tailored to their needs or preferences.

With 7% average user retention after 30 days, its no wonder why many small/medium size apps are struggling to reach the point of profitability. In today’s mature app industry, providing meaningful, high-value personalization is ultimately the best way to achieve that goal.