Skip to main content

Understanding and improving your app user retention rate

(Image credit: Image Credit: Syda Productions / Shutterstock)

Apps are now one of the most important touchpoints for businesses with their customers, either as a sales channel or a way of sharing company news. Yet many businesses are not acting on the insights delivered by one of their apps most important metrics – retention rate. 

Retention rate is the percentage of users who continue to use your app during a specified timeframe after they install it. It is usually calculated by the unique number of users who are active in at least one session per day, divided by the total installs.

Retention rates are one of the most important key performance indicators for app and game developers, particularly those monetizing with ads and free-to-play mobile games. It gives valuable insights into how your app is performing and the overall user experience. 

Why is retention rate important to business?

Retention rates are important for your business because it indicates your users’ level of engagement, interest, and loyalty. A high retention rate usually means customers are regularly using your app, which means your business likely has a low percentage of users who uninstall or leave the app and therefore there are more opportunities for monetization. Conversely, a low retention rate indicates that you have a high percentage of users who uninstall or leave the app, which is concerning and could mean you are losing out on revenue.

Like many key performance indicators, retention rates help you understand how your app is performing and is an essential tool to inform business strategy. For example, you could determine how likely it is that you’ll be able to keep each new customer you gain, how long your current strategies will remain effective, and how much your company may grow in the future.

Moreover, a low retention rate may indicate that your business has an acquisition problem and is not attracting the right kind of users. It is worth addressing the reasons behind this, especially because investing in retaining customers may be less expensive than acquiring new ones. While many businesses prioritize acquiring new customers, quantity isn’t always necessarily a measure of success. Customers who continue to use your app over a long period of time are also more likely to trust, engage, and think highly of your company. 

Retention rates can also uncover why users are disengaging from your apps, which can spark your team to alter your LTV strategies. Low retention rates could indicate problems with the app itself, issues with customer satisfaction, or competitors with better technology, services, or features. Your business can use this insight to make improvements or change your campaign or marketing approach. Measuring retention rates can therefore offer valuable insight to inform your wider brand strategy.

Three ways to improve customer retention rates 

There’s no blanket benchmark for a high retention rate, as it depends on the app’s industry, user base, business model, and also parameters that are determined by the individual business. Some apps rely on recurring subscriptions, while others aim for purchases - both these strategies then lead to different retention curves. The key is to benchmark your retention against other similar companies in your industry. 

If you’re looking to improve retention rates, here’s some advice on how to get started:

1. Optimize the onboarding process

Onboarding is an essential part of the user journey, and one of the most important factors for achieving a high retention rate. If your app is difficult to understand or use, customers may uninstall quickly.

Improve the usability of your app by assessing the design and content. Keep it simple and avoid overwhelming users with information. It is more effective to provide key insights into the app, with options for additional explanation if needed. Using visuals is a good way to engage users and help make onboarding an easy process to understand and complete. Ultimately, you want to ensure that users can clearly and comfortably navigate through your app.

You can increase retention by ending your onboarding with a call to action (CTA). Having shown your app’s value throughout your onboarding, this is a great opportunity to loop users into your long-term retention strategy. For example, you could ask them to join a mailing list or to enable push notifications.

2. Re-engage

Using other channels to re-engage customers can be very effective in improving retention rate. There are various options including, in-app messaging, email, social, and search ads.

Email marketing is a valuable tool to build brand loyalty, increase engagement and improve retention rates over time. By building a mailing list of valuable users, you can encourage users to return to your app when sharing exclusive discounts, sales and other promotions. Emails are ideal for re-engagement because 49 percent of customers like to receive regular promotional emails from brands they enjoy. 

In-app messaging also works effectively to keep users engaged. Mobile apps that use in-app messaging to communicate with users see an increase in retention rates of 61 percent-74 percent after Day 28.

Using search ads and exploring paid opportunities on social media, as well as simply being active on your app’s social channels, are all good strategies for re-engagement.

However, you should avoid overloading users with multiple retention tactics with the same information. If a user gets an email, a push notification and an in-app message for the same deal every time you have an update, this can be frustrating and lead them to opt-out of push notifications and emails or even uninstall the app. Instead, you should segment users based on their preferences so that re-engagement strategies are optimized to be as useful as possible. This adds more value for the user with each interaction and should improve retention.

3. User appreciation

Rewarding users for their continued loyalty is another approach for improving retention rate. If you have a mobile game, you could create an event or limited-time tournament with prizes and ways to socially connect with other players. Offering something of interest and potential value to users is an effective way of encouraging users to return to your app.

Keeping a close eye on retention rates will help inform you about how users are engaging with your app so you can plan future developments, adjust your strategy, and meet your business goals.

Tony Deane, Manager, Business Development, AppLovin

Tony Deane is a manager on the business development team and helps expand AppLovin’s business through strategic partnerships, analysis, and marketing. Tony is based in Berlin, Germany.