Let’s face it, as mobile marketers, we’re going through some growing pains. The rapid evolution of the mobile industry has led to some missteps in communicating with our users, and as a result, we’re losing them. In fact, we’re in the middle of a mobile engagement crisis.
Consequently, on its path to becoming our knight in shining armor, mobile must break the mold of being a fling, and it’s up to us marketers to champion this change. How do we do this? By turning our focus to retention (more so than acquisition) and earning loyal (not one-time) users.
Shifting the Focus Away From Acquisition to Retention
If you’ve been in the app space for a few years, you know that acquisition was once considered the most important mobile metric. App marketers focused on attracting as many new users to the app as possible, touting number of users as the strongest pillar of success. However, what people didn’t take into account is the fickleness of these users, with 25% of them only using an app once. It’s now apparent that we must move beyond just measuring app installs and focus on in-app behavior to promote engagement and retention. But despite this revelation, too many brands have yet to shift their focus away from acquisition towards retention.
As we make this shift towards retention, you may be wondering, “What is a good retention rate? What are my peers and competitors seeing across their industry and throughout mobile as a whole?” We’ve outlined where retention rates stand today so that you know where you stack up and can benchmark against industry trends to improve.
Retention Rate Benchmarks: Where Do You Stand?
Before we dig into the data, let’s go over a few things. For starters, here’s how we define retention:
Retention: Returning to the app at least 1x within 30 days
Another thing to note is that we talk about retention over the span of 90 days or one quarter. This is the industry standard for measuring retention because it takes the app user lifecycle into account. By the way, this 90 day time period is also what our very own data experts at Localytics use when they analyze benchmarks.
Now that we have context, here is the answer to, “What’s a good retention rate?”. At the end of 2015, we dug through our data and found that across all industries, the average mobile app retention rate was 25% after 90 days.
Note: The below graph is based off of a 12 month analysis
Yes, you read that correctly. Across all industries, 75% of all app users churn within 90 days. If we take a deeper dive and look at retention averages by industry, it doesn’t get much better. In fact, over the past quarter, it actually got worse. The graph below showcases the average retention rate by industry after 30, 60, and 90 days respectively. As you can see, the average retention rate varies by industry. Currently, Media & Entertainment apps retain the most users on average, with a 24% retention rate post 90 days.
Note: The below graph is based off of Q4 2015
Now that we know the industry standards, let’s take a look at how retention rates differ for the top-performing apps by industry. These apps are defined as top performers by having over 1 million monthly active users. The graph below tells a better story, one that all mobile marketers should strive for as you adjust your app marketing strategies. For starters, retention rate significantly increases for 3 out of 4 industries, with Travel & Lifestyle edging towards 50% retention after 90 days:
What does this mean for the future of app retention? It means that with the exception of gaming apps, anything around 20% retention rate at 90 days is average across the mobile industry, and anything north of 25% is what you should strive to reach. Top performing apps have been able to improve their user retention by tapping into user data and launching personalized marketing campaigns - and you can do the same for your app! We’ll talk about how in the next section.
8 Ways to Improve Your Retention Rate
The above data speaks for itself; while a marginal numbers of apps are focusing on retention, the rest are falling short. As a result, we are in the middle of an engagement crisis. Even though mobile is how consumers wish to interact with brands, brands aren’t delivering on experience and thus, consumers are churning. So how do we fix this? Take advantage of the below tactics that have been proven to positively impact retention:
1.) Define and Track LTV (Lifetime Value): It’s clear from the above data that casting a wide, untargeted acquisition net and expecting it to yield high retention is wrong. Instead, app marketers need to define and target high quality app users who will continue to engage and convert over time. How do you do this? First, identify key conversion metrics (in-app events) that matter to your brand. Then, segment user acquisition campaigns by channel and track to see which channels attract high LTV users. By doing so, you’ll not only increase the efficiency of your campaigns, but you should see a lift in retention.
2.) In-App & Push Messaging: In-app and push messaging play an essential role in boosting engagement and retention. In fact, in-app messaging can boost user retention by 3x. But it’s not enough to simply send in-app and push messages, because sending the wrong ones can be detrimental to retention. Do it right to enjoy higher retention rates and you increase app launches by as much as 27%.
3. ) Personalization: App users crave personalization. They want their interactions to be tailored to their preferences, location, and in-app behavior. In fact, a recent study we conducted with app users showed personalization is an expected component of future apps. Here are 8 ways you can personalize your apps in 30 minutes.
4.) Predictive Insights: Understanding which users are at risk of churning gives you the opportunity to save them. Using predictive app marketing, you can design highly personalized messaging campaigns to re-engage these users before it’s too late.
5.) Remarketing: 50% of all app users opt-out of push messaging, making it increasingly hard to draw users back into your app. The solution? Remarketing. Sending a compelling reminder about your app to lapsed users outside of the app is an effective way to re-engage them. You can do this through email, social, and search advertisements. Be sure to tap into data insights about your lapsed app users’ behaviors, interests, and preferences to ensure your remarketing ad is relevant and thus, effective.
6.) A/B Testing: The only true way to know which marketing strategies are working and which are falling flat is through A/B testing. A/B testing makes you smarter and more efficient when it comes to your campaigns, and helps you to pinpoint the messaging and features driving engagement and conversion. For example, you should A/B test CTAs to see which entice users to move through your key app funnels as well as different push and in-app offers to see which are drive higher conversion rates. The more in-app activity and conversion actions a user has, the more sticky your app becomes to them.
7.) Omni-channel Experience: One of the biggest mistakes marketers make is not integrating their app into their overall marketing channels. Too often, apps are siloed from the rest of the marketing strategy, resulting in a disconnected brand experience for the user. Instead, promote and infuse your app across all other channels to create a seamless experience for users. This seamless experience will translate into having a very sticky app, boosting your retention. Here’s everything you need to do to accomplish this and achieve an integrated app marketing strategy.
8.) Use Data to Guide You: As with any channel, in order to truly win at mobile you need to lead with data. That means having a mobile engagement platform that grants you the insights you need to understand how well you are retaining users, and how impactful your app marketing campaigns are in moving that needle. Having the right data insights will allow you to strengthen your interactions with users, ultimately resulting in a positive uptick in retention.
Redefining Mobile Retention
With the mobile takeover already in effect, it’s time for marketers to step up if you want to succeed. This means making retention a key performance indicator of a successful app, alongside acquisition and engagement. Now that you have a good benchmark for app user retention, it’s time to make a plan to improve. Consider making one of your 2016 mobile goals all about improving retention and reducing churn. You can achieve this by using the above tactics to carry out smart marketing campaigns.