Blog What makes a good retention rate?

What makes a good retention rate?

Whenever we talk about industry benchmarks, app retention rates are a special focus for Adjust. Why users leave apps over time is a factor that we try and investigate when we talk about mobile benchmarking, and with the reams of data we receive, there's lots to look into. We also want to know why some categories perform better than others, and ultimately what makes a good retention rate for each vertical.

What are retention rates?

A retention rate is a metric that measures how many users keep on using an app. If a user is using an app one day but doesn’t return on the next, then we track when that drop-off occurs, and map it to a retention rate. Essentially, this is a figure that establishes your app’s churn, or the number of people who leave your app entirely.

Retention rates enable marketers to understand their app’s performance over time (per user). With 62% of users opening apps just 11 times, this is an essential metric for mobile marketers. A good retention rate indicates that users are satisfied with the user experience. Those users, who are staying active in your app for longer periods of time, are more likely to provide more engagements and monetize.

What is an average retention rate? How can it be compared to your app?

In your analysis, you can look at how retention develops over a 30-day period. If you learn that retention significantly drops at a certain point within that period, it could be your goal to retain users beyond this date. For example, if you have a gaming app and notice that users often churn at the end of the onboarding period, you have now identified a key area to improve.

In the study below, we’ve taken the median figure from all categories. That means that we are looking at the middle figures from all. We may point out (in some cases) when performance has been at its highest within a vertical, or period, but apart from these special cases we’ll look at the median figures, and what they could mean.

We’ll also compare significant days in a marketing period. That is, days 1, 7, 21 and 30. We’ve separated Android and iOS, because we see that their performance often differs, and collating the two may not be so useful for developers who stick to a single platform.

The figures we have presented here are taken from our benchmarks from Q3 of 2016 (for our latest industry benchmarks, see here).

What makes a good retention rate?

To begin with, we averaged out the performance of all our verticals to give you the figures below. It might seem a little broad, but it might provide an idea of typical performance per day. See if your retention outperforms the figures below:

The Average Retention Rate

Day (out of 30) Android iOS
1 26% 26%
7 11% 12%
21 7% 7%
30 6% 6%

It’s interesting to note the 14-15% drop in retention from the first week to the second. Two weeks later, another 5% drift away from all apps, but by that point the core audience of about 6% has stabilized.

This means, broadly speaking, that any percentage above this can be considered a good retention rate. That means if you have kept more than a third of users on the first day after install, you would actually have a very high-performing app, at least in terms of retention.

In our wider dataset, we see apps in Social see at least 50% of users return on day one, and half of those are there by Day 7. This is the highest performing average in the upper-quartile range. Anywhere between 35-60% rate of retention on Day 1 means you have a great app.

Note that there is only a small difference between retention averages for Android and iOS users. If your own analysis reveals a disparity, it could be an issue with the functionality of your app on a particular device.

Retention Rate breakdown: Per day and per vertical

In order to get a better idea of the averages you’d want to reach for ‘good retention,’ let’s break this down a little more by looking at retention rates by day and per vertical.

Day 1 retention rates (average: 26%)

Day 1 typically sees the highest rate of retention before a huge drop-off on Day 2. In fact, a Localytics study shows that nearly one in four users will only use an app once before they churn. Reaching successful retention on Day 1 is a good indication of how well your app might perform in the long run.

Publications apps on Android reach slightly above 41% of retention, the highest in the group. Other success stories include Social apps and Gaming. Apart from Utilities, all other apps retain less than a quarter by Day 2 – something to keep a note of when comparing your own success on Day 1.

Day 7 retention rates (average: 11-12%)

The first week after install is typically when advertisers run retargeting campaigns. We often see a bump in the metrics at this point, as users are drawn back to the app in small but significant numbers through reengagement.

As on Day 1, publication apps rule on Android, with 24% of users retained. On the flipside, Educational apps have poor retention, with just 6% returning on Day 7. This could be an effect of seasonality, as people take a break from learning to pick up fiction, magazines, and other leisurely reads throughout the summer. That said, Business apps still retain above 10%, and Utilities keeps users returning at a similar rate.

Day 21 retention rates (average: 7%)

Three weeks on from day one and most apps now hit single figure rates of retention. Only Publications (16%) and Utilities (11%) have kept a tenth or more of their users. The rest of the group vary between 9-3%. The average across all categories is 7%.

Day 30 retention rates (average: 6%)

The final day in our dataset and, interestingly, little has changed from day 21. This indicates that if a user is willing to stay for three weeks, they are long-term loyal customers that could stay much longer than the 30-day period.

While some categories like Entertainment and Educational have kept less than 5% of all users, the average for day 30 is 6%.

Now that we have benchmarks, how can they improve? To ensure your app’s retention rates have the highest retention possible, here are some best practices every marketer should know.

How to increase retention: 5 best practices to improve your app’s retention rate

If you've taken a look at our overview and don't see a performance match, it may be worth reviewing our tips below on ways to improve retention. From onboarding to messaging, there are plenty of ways to keep users returning even weeks after install.

1. Individualization

It's not enough to follow a one-size-fits-all approach when it comes to retention. From location to user preferences, there are plenty of ways to craft unique experiences for different users to keep their attention on you. Segmenting your users can really help with this, and also make retargeting much more effective. You can learn more about segmentation, why it matters and how our Audience Builder changes the game, here.

2. Focus on messaging to re-engage your users

There are many means to re-engage users, bringing them back to your app. Optimizing your creatives to engage different types of app users can have an instant impact on your retention rate. You can also utilize the audience on your platform in your messaging. This includes sharing user stories to making competitive ranking tables.

3. Identify bottlenecks to offer a seamless user experience

In almost every app experience, users can find frustration. Finding those moments where users leave, and never return, can help and later optimize user experience. Whether it's speed improvement, imbalances in difficulty, or even spelling mistakes which could be letting you down, it's important to find those pain points and remove them. If a large amount of users seem to be churning at the same point, your data analysis can reveal key areas for improvement.

4. A/B test features to learn user preferences

A/B testing is the only surefire way of knowing that what you're trying is the best route to what you’d like to achieve. Whether big or small, testing your latest features on different segments can work wonders in finding out how successful you might be without alienating your audience (and lowering retention) by releasing a new creation to the world.

5. Prioritizing onboarding for a better user experience

As we've seen in numerous benchmark reports, the highest amount of users leave between day zero and day one. As such, it's the biggest chance you have to keep them. That, and first impressions count, so make sure that your experience is incredible from the first interaction new users have with your app. Any less and the likelihood of churning is greater.

How many of your users should you expect to keep?

Retention changes a lot over time. Keeping your app above the averages usually means it’s doing quite well. However, retention is just one metric among many, and it’s what you want to make of it that matters, depending on what you want the experience of your app to be. That said, for most apps, it’s much better to keep your user base around, interested, and converting.

Since conducting this test, we have released several benchmark reports with fresh data. For example, in our Global App Trends Report 2019, we asked whether the fastest growing verticals also retain users. We found that from the date of install to Day 1, apps will lose an average of 69% of their users. From Day 1 to Day 7, retention decreases to an average of 21%. Within the first week of install, apps will lose 79% of users.

We also found that this varies depending on app vertical. News and Comics apps have the highest retention rates by Day 7, with 31% and 28%, respectively. They also have around 2.2 sessions per day. Sports lose 18% of their users, while Mid-core Games lose 14% on average.

We produce new reports every quarter to keep you up to date, and this extends well beyond just retention rates. We also cover the state of mobile ad fraud and several performance metrics across 23 verticals. To stay up to date with Adjust’s reports, subscribe to our newsletter below.

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