Over the years, I've found that retention is often the most critical and confusing metric in building (software) products. Retention measures how many users continue to engage with your app over time. High retention rates (>20%) indicate a product-market-fit. And that your app delivers value, keeps users satisfied, and has a greater potential for long-term success.
Why Retention is important
- Sustained growth: Retaining users is more cost-effective than acquiring new ones, and loyal users are more likely to refer your app to others.
- Increased revenue: Engaged users are more likely to make in-app purchases or upgrade to premium plans.
- Valuable feedback: Regular users can provide essential insights and feedback to help improve your app's features and user experience.
How to Measure Retention for Your Mobile App
Define ‘active user: Most early stage startups go with ‘app opens’ because it’s easier to measure. Use the main user action (e.g. tracking, read article, booked something) for the cleanest data and to capture truly active users.
Choose Retention Type:
- N-day-Retention Rate: Percentage of users returning on a specific day, e.g. day 7. Use this for regular user behavior or short term analysis like free trials.
- Unbounded (rolling) retention: Percentage of users returning on a specific day or later.
Visualize the data: Use line charts, cohort graphs, or KPI dashboards to visualize your data. Charts effectively compare various cohorts, such as free vs. paid users or different registration dates.
When to measure retention: It’s hard to find exact numbers. Early on, user interviews and database info are crucial. Aim for 200+ users for significant insights. Meanwhile, concentrate on user feedback, engagement, and simpler metrics like sign-ups or daily active users.
Understand why your users churn: Ask for feedback after users leave your app or churn, e.g. via automated email with a simple Typeform. It is crucial to know why users come back, especially why other users don't.
A good rule of thumb is: if you fall below 20% (first 1 week, then 1 month, then 6 month), this should be your main focus. Mobile apps tend to have a lower retention: >10% (30-day) than other software products. Here are some benchmarks for 30-day retention (Statista, 2022):
- News: 11.3%
- Shopping: 5%
- Finance: 4.6%
- Music: 3.8%
- Food and Drinks: 3.7%
- Health and Fitness: 3.7%
- Productivity: 3.2%
Strategies for Improving Retention
- Solving a problem: Each of your features should solve a problem. The better it solves a problem, the better your retention will be.
- Onboarding: A well-designed onboarding process can help users quickly understand your app's value and features.
- Personalization: Tailor the user experience by remembering preferences, offering customized recommendations, or providing personalized content.
- Push Notifications: Keep users engaged with timely, relevant push notifications and reminders.
- In-app Messaging: Use in-app messages to guide users, offer support, or highlight new features.
- Regular Updates: Continuously improve your app by fixing bugs, enhancing features, and releasing new content.