User retention: How to successfully keep users and grow your app
Retention is one of the most important metrics app marketers measure. With rising user acquisition costs putting increased pressure on marketing budgets, extending the lifetime value of a user has become even more necessary than before. For example, a recent Splitmetrics report revealed that the average cost-per-acquisition increased almost 34% from $2.40 in H1 2022 to $3.21 in H2 2022.
This cost increase is one among many factors that today’s marketers must navigate when acquiring users, measuring campaign performance, and increasing revenue. From the economic downturn to the dynamic and evolving data privacy space, keeping the high-quality users you’ve worked hard and spent big to acquire is an essential component in ensuring the best possible return on your investment.
As Adjust data recently revealed, global retention rates did see a slight decrease in 2022. However, according to our latest 2023 data shown below, we’re seeing evidence across multiple verticals that rates are climbing.
When comparing Q1 2022 to Q1 2023 globally, only gaming and fintech saw a decrease in Day 1 retention rates—both one percentage point down. E-commerce remained the same at 20% in both years. Lifestyle and social app retention rates grew by one percentage point each, while food & drink and travel increased by two.
There are multiple strategies apps can employ to increase their retention rates, as covered below. Don’t miss out on these easy retention gain wins.
What is user retention and why does it matter?
In mobile marketing, the user retention definition is the percentage of users still using an app after a certain number of days post-install. An app’s retention rate is used to determine how well users are engaged within the app after download. Most often displayed on a curve covering a cohort tracked over 30 days, the chart below shows what a typical user retention journey looks like.
How to calculate retention for your app
To measure the retention rate for your app overall, or for a specific campaign or channel, divide the number of active users at the end of a set time period by the number of active users who started at the beginning of the time period and multiply by 100. Before you can calculate this metric, though, you’ll need to set the time period.
Adjust recommends looking at Days 1, 3, 7, 14, 28, and 30, with Day 1 being one day post-install/one day after the app was opened for the first time. Depending on your app’s vertical, however, you may identify other critical days in the user journey.
Note that identifying the days where critical events occur is also highly beneficial to an iOS and SKAdNetwork measurement strategy, learn more at iOS 14.5+: From day one until now.
Why is user retention essential to an app’s success?
At its core, user retention allows marketers to keep tabs on how many of their app’s users return to the app versus how many stop using it altogether and churn. This is a powerful insight that can affect many aspects of your app development process and marketing strategy.
Optimize user journey
Retention rate can reveal problem areas in the user funnel. For example, if your Day 1 retention rates are very high, but most of your users are gone by Day 7, there’s likely an identifiable pain point causing users to churn.
Grow revenue and lifetime value
By increasing retention, marketers are able to grow their longer-term term user base and increase revenue and lifetime value (LTV). Ultimately, the longer a user is hooked on your app, the more opportunities you have to engage them with in-app advertising, in-app purchases, or subscriptions—depending on your monetization model. For most verticals, keeping existing users activated is far more cost-effective than a UA-driven, churn-and-burn approach to revenue. Retention should be an integral part of any marketing strategy, as Adjust’s Director of Partnerships, Reggie Singh recently shared.
Director of Partnerships, Adjust
Improved user acquisition performance
As we’ve stated, acquiring new users can be expensive, but if you understand your app’s retention rate, you’ll be empowered to enhance the performance of your user acquisition (UA) campaigns. Here’s how: Once you understand which channels and campaigns are providing users with high retention, you can spend more to get more of them, because you’re able to monetize longer-term users better.
For example, satisfied users in e-commerce apps will make more purchases, or those in a gaming app will watch more ads because they’re playing more and churning less. But, where are these valuable users coming from? This is where you can use retention data to inform your UA campaigns. If you notice users who stay longer and spend more in-app are coming from a particular channel, then you can realign your marketing budget to pursue this channel more, likely resulting in greater app revenue. In turn, you’ll unlock more of your marketing budget to pursue the higher, more competitive CPA.
Marketers can use retention rates to precisely scale their UA campaigns because it is a measure of a user’s engagement as well as potential monetization.
An app with an incredible user experience and content is likely to earn top retention rates. If users are highly satisfied with an app, they will organically tell others about it, thus improving the app’s virality coefficient. To learn more about virality, check out the article Measuring K-factor in marketing.
What’s the difference between user acquisition and retention?
Both user acquisition (UA) and retention are vital components in almost any app marketing strategy. When cash flow was less of a consideration, and cost-per-installs (CPIs) were low, retention didn’t matter as much, particularly to verticals like hyper casual games. Now that CPIs are up and the economic situation is more complex, we’re seeing shifts in the industry toward more retention-oriented development and campaign structure. This is illustrated by hyper casual’s part-evolution into hybrid casual, where the games have been reengineered to add a retention element. This is a solid economic argument that retention-based strategies are safer in the long term than pure-play UA.
While it’s essential to understand and review UA and retention independently, the most rounded and successful strategies emphasize their symbiotic relationship.
How UA campaigns work
User acquisition focuses on gaining new users for your app through marketing campaigns. Although it tends to be a more expensive strategic approach than focusing on retention, it’s historically been more attractive to marketers because it drives results quickly. At Adjust, clients can even check real-time to see how their campaigns are performing and optimize for better end results. So, yes, marketers will know if their UA campaigns are doing well or not almost immediately.
Metrics commonly used to track UA campaigns:
How retention works
While user acquisition focuses on gaining new users for your app, retention most often centers around keeping the current users via nurturing tactics.
Retention tactics can be grouped into two categories:
1. User engagement: Strategies used to boost user interaction with and loyalty to an app.
2. Re-engagement: Strategies to bring dormant but not yet churned users back into an app.
User retention metrics:
- Retention rate (Shocking, we know.)
- Daily/monthly active users
- User stickiness
- Session length
- Churn rate
- Lifetime value
In contrast to UA, the results of your retention efforts take more time to materialize. The longer waiting time makes sense as the typical retention period utilized by marketers is 30 days. How many users continue to use your app one day after install? After seven days, and then after 30 days?
Don’t be discouraged by the longer waiting time associated with retention, as good things take time. Retaining a user is easier on your budget than acquiring one. Research shows that the cost of acquiring a new user is actually four to five times greater than the cost of retaining one. Pretty motivating regarding retention, right?
Bottom line: Align user acquisition and retention strategies
User acquisition and retention are essential to your app’s continued success, and each relies on the other to improve. This is why it’s mission-critical to understand where your best users are coming from, the LTV of these users, and how to obtain more of them. To do so, you’ll need to utilize a mobile attribution solution to measure the performance of all your marketing efforts and see which campaigns, creatives, and channels deliver your best users.
What is a good retention rate?
A good retention rate for your app will depend heavily on your vertical, target region, and more. According to Adjust 2023 data, globally, apps have a Day 1 retention rate of 26%, a Day 14 rate of 10%, and a Day 30 rate of 6%. We recommend using these retention rates as a baseline benchmark, but, we’ve also provided the retention rates for some top app verticals for Day 1, 3, 7, 14, 28, and 30 in the table below.
So, which app verticals have the highest retention rates?
As you can see in the chart above, so far into 2023, gaming and lifestyle apps have had the highest Day 1 retention rates at 28% and 25%, respectively. At the end of the 30-day retention period, lifestyle apps were still in the lead with a retention rate of 10%, followed by fintech apps at 9%. While what constitutes a ‘good’ retention rate is highly contextual, gaming apps’ strong emphasis on user experience can inspire all app categories.
This is perhaps demonstrated most clearly by looking at how gaming apps’ retained users perform over a 30-day period. As one of the only app categories where sessions per user per day increase over time, gaming app marketers and developers are experts in maintaining high engagement from the users they hang onto, indicating they are implementing a strategic approach to UA based on existing retention and LTV data.
How to increase user retention? 5 recommendations
To boost your app’s user retention rate, it’s essential you evaluate the following factors to make sure your app is set up for retention success.
1. Excellent onboarding is paramount
Onboarding may well take the lion’s share of importance when it comes to retaining users. As mentioned above, global apps have a Day 1 retention rate of 26%, meaning that 74% of users didn’t come back to an app the day after installing it. This statistic reveals that many users never open an app after the initial installation day. One main reason for this is that an app’s onboarding was less than satisfactory.
Your app’s onboarding process should hit these three goals:
1. Education: Tell users how to use your app and describe how it will benefit them.
2. Account setup: Walk users through app registration.
3. Personalization: Ask users if they’d like recommendations and notifications for an experience tailored to them.
In summary, if users are well-educated during the onboarding process, they will be able to intuitively navigate through your app and understand the value it provides. Getting users to complete app registration and tell you their preferences will allow you to create a full user profile, better tailor messaging and content to them, and obtain useful retargeting information if needed later on.
(Psst—If your app doesn’t incorporate all of the above, review our article How to build a successful app onboarding to grow your app.)
Example of an intuitive app onboarding: Blinkist
The freemium app Blinkist provides top insights from non-fiction books that can be read in 15 minutes, saving users valuable time. The app has some great onboarding screens that provide an example of how to set users’ expectations from the beginning while making the onboarding experience as easy as possible.
Onboarding is your chance to set users up for success
The first screen a user sees within the Blinkist app states the benefit of the app to users: ”Understand powerful ideas in 15 minutes”. The app then asks users about their preferences so it can tailor its book summary recommendations to the user. Note that Blinkest employs a progress scale at the top of the personalization screen to let users know where they are in the process. Another excellent use of transparency is Blinkist’s screen, “How your free trial works”, which outlines what will happen during the seven-day trial. Providing clarity on payment in the onboarding process of a subscription app is vital.
Maximize the intuitiveness of onboarding
For most apps, getting users to complete registration is a big win. Therefore, why not make this as easy as possible for your users? Blinkist’s integrations allow new users the option to register in one tap with their Apple, Google, or Facebook accounts.
Once users are registered, you want to give them space to explore. After all, they’ve been held captive by your onboarding screens for a bit. However, gentle guidance via appropriate UX techniques can reduce any frustrations that may arise out of not knowing how to use a particular feature. Blinkist uses hint text to show the purpose of its “Spaces” feature. Then, once the user goes to Spaces, each of the symbols has placeholder text telling the user what to do here, and the “Create Space” prompt encourages user engagement. This is a great example of making your app more interactive during the onboarding process. If you can achieve this, then the chances of your user completing your app’s onboarding will be higher. And consequently, your users will be better informed about your app and more likely to be loyal to your app, increasing the retention of users.
Five onboarding tips for mobile app user retention
1. Start the onboarding process by proclaiming your app’s value.
2. Limit the number of onboarding screens to a bare minimum to keep users engaged.
3. Ensure clarity by revising your mobile app UX design.
4. For iOS devices, strategically share in the pre-permission prompt how users benefit from opting-in.
5. Continually optimize your onboarding with A/B testing to iron out any churn points.
2. Don’t forget about app store optimization
We’ve said it before, and we’ll say it again—App store optimization (ASO) is not a one-time thing marketers do only before launching their apps. ASO centers on making your app more visible in an app store, which is why you should review the following ASO tactics regularly.
Can you say “Keyword research”?
As we cover in The marketer’s definitive guide to app store optimization, keyword research is one of the main pillars of ASO. Perform keyword research by asking yourself the following questions:
- What problem does my app solve for users?
- Who are my users?
- What do my users care about?
- What’s the unique selling point of my app?
Dig deep into the answers to these questions. If your app has been around for a while, see what things users say they love about your app in their reviews. If you’ve yet to launch your app, don’t worry. Your competitors' keywords and app store reviews can guide you.
Update your app store content and assets
Your app’s screenshots and videos should accurately reflect the current experience your app provides. Users will be more satisfied when their expectations are met upon downloading your app and will, therefore, be more likely to be retained. On a related note, your app store description is where your app can shine! While the short description should be attention-grabbing and inspire users to tap “read more”, the long description is where you can sell your readers on the problem(s) your app solves.
Monitor your competitors’ ASO
Stay up to date with your competitors’ app store descriptions, screenshots, ranking, and keywords. If they’re smart, they’ll continue optimizing their ASO, so stay on your toes!
3. Push the push notifications (get it?)
Don’t neglect the potential of a user who has opted in to receive notifications and alerts from your app. You can use these messaging opportunities, including push notifications, SMS, email, and in-app notifications to alert your user to new features, remind them to open the app, advertise relevant promotions, and more. But, to avoid crossing the line into annoying, use push notifications sparingly.
It’s vital to segment your users on factors like interests, demographics, and in-app behavior, which are heavily dependent on your app vertical. Why? An average of 54% of users who open a push notification convert from segmented pushes.
Stand-out tip: Use triggers to build user habits in your app
App developers can set up specific notifications, known as “triggers” to encourage users to build habits within their apps. For example, a fitness app may send users a message with daily health goals, such as the number of steps still to take, the amount of water they need to drink, etc. This trigger serves not only to remind users of their goal but also to open the app and log their progress.
Education app Duolingo excels in its triggers. Its push notification messaging ranges from daily reminders for users to practice a language to incentivize happy hours during which users can earn more points to “We miss you” messages when a user hasn’t opened the app for a set number of days. If a user continues not to open the app, rather than blast the user with more triggers, Duolingo informs the user that it will pause notifications for a while.
To learn more about push notifications, check out Strategies to maximize the impact of push notification campaigns.
4. Utilize user experience gamification
All mobile app verticals can benefit from gamification of the user experience, which is the use of game mechanics in non-gaming UX contexts. Gamification plays off of user motivators like accomplishing a task, winning a competition, or social recognition, and can be a great way to boost your mobile app user retention.
For example, as discussed in Powering up fintech with gamification: Best practices and examples, the Fintech app Revolut employs gamification features like leaderboards and raffles to engage users. Similarly, the m-commerce app AliExpress lets users compete for in-app coins they can exchange for coupons.
To foray into gamification for your app, consider adding game-like elements like challenges, badges, points, levels, and in-app currency to promote continued app use. Dive into all the details, and get examples and strategies in our guide Play to win: Using gamification to give your app an unbeatable edge.
5. Get on the A/B testing train
A/B testing isn’t just for user acquisition. Retention rates benefit when app marketers and developers monitor how changing one aspect of their app can improve metrics like time spent in app, sessions, stickiness, and of course, an app’s retention rate.
A/B testing areas for retention:
- In-app engagements
- Impact of new feature
- Messaging of push notifications
- Timing of push notifications/alerts
- Onboarding flow
- Custom events
The above list is just the starting point! For further information, check out the article Everything you need to know about A/B testing for mobile apps.
Retention tips by app vertical for your app category
How to boost retention for your app category
Before we dive into our vertical-specific retention tips, let’s walk through the user journey.
For all verticals: Map out your user journey
It’s essential to review every touchpoint in your app’s user journey to see where users are dropping off, feeling confused, or engaging. Let’s start by analyzing the user journey funnel and which areas you can optimize for retention. We’ve adapted the following phrasing and user journey funnel from Business of Apps.
At the beginning of the user journey, you’ll naturally wish to measure app installs for user acquisition purposes. But after that your measurements will be geared toward mobile app retention. Are users completing your onboarding phase? Are they staying in your app past Day 7 post install, known as the “activation phase”? And, later, are your users using your app at Day 30 post install? This is a general overview of how to track user retention throughout the different phases in the user journey. We highly recommend marketers map out their user journey, detailing every touchpoint, covering different user flows, and identifying current points of churn.
Retention benchmarks by app category
But, what about specific app verticals? After all, a fintech app's Day 30 retention rate is 9%, while travel apps sit at a rate of 5%. As the user journey differs from app to app, we’ve broken down focus areas for app verticals that lend themselves to boosting user retention.
Note that the user retention metrics and events mentioned below are in addition to monitoring an app’s retention rate over a 30-day period.
Gaming app retention: Day 1, 29%
Retention will vary considerably between the many gaming app categories. As a rule of thumb, hyper casuals will push for early monetization via in-app advertising and cross-promotion, so retention will center around getting them to remain engaged long enough to achieve either (or both) of these events.
For casuals and hybrid casuals, however, it’s a bit more nuanced. Broadly speaking, the approach should skew toward a retention focus. Aim to keep users in-app by identifying churn points, e.g., Do users leave once they run out of the game’s currency or weapons? Role-playing gaming apps can center on optimizing session lengths, as these games should have the longest session duration among gaming app verticals (40.44 minutes in 2023 so far vs. 30.03 minutes for the rest of the gaming vertical, according to Adjust data).
E-commerce apps retention: Day 1, 20%
E-commerce apps should monitor the percentage of users completing an initial purchase. They can also simultaneously examine how many sessions it takes for a user to convert, testing reminder push notifications, limited-time offers, and more.
Social media apps retention: Day 1, 23%
Marketers of social media apps need to examine the number of sessions per user to see if users are engaged with their app throughout the day. Additionally, the metric session lengths is worth reviewing, as knowing when the longest sessions occur during the day is when marketers can activate user engagement and retargeting campaigns.
Fintech apps retention: Day 1, 22%
Events in fintech apps are key to understanding the retention of users. Consider setting a goal for users to either set up a direct deposit, make a transaction online, or send money via your fintech app. Then, measure how long it takes users to complete this goal and optimize accordingly. Do they understand how to set up a direct deposit in your app? Is your app’s transaction process intuitive?
So, you’ve revised your onboarding process, determined the retention-relevant KPIs you’ll monitor, and added a gamification element to your app. While this is a great start, your efforts will be undermined if your data isn’t accurate. And thus, our final, and in our opinion, most important recommendation is to ensure your data’s accuracy for ultimate success.
With today’s app marketers monitoring multiple channels, working with several ad networks, and running simultaneous campaigns, they need centralized data to enable them to collect, analyze, and optimize their marketing efforts. The only way to get unbiased attribution and a truly holistic view of campaign performance is by working with a mobile measurement provider (MMP) to help you automate your mobile attribution and retention efforts.
Did you know that Adjust is an MMP and then some? We’re a mobile measurement and analytics suite, providing marketers with an end-to-end solution for growth at every stage of the app marketing journey. Our Mobile Attribution solution will help you monitor user acquisition and user retention metrics. And clients love being able to analyze all their marketing data in a centralized location with Datascape. But these are just two of the many solutions making up our robust app marketing product. If you’d like to learn more about our other solutions and how we can help you grow your app, schedule your demo now!