Your app might be earning new installs, but is it keeping them?

User retention is one of the most critical, yet often-overlooked, factors for growing your app’s active user base. While attracting new users is a common indicator of success for many app managers, it can overshadow a crucial part of the journey narrative: What happens after a download?

In this guide, we’ll explore the fundamentals of what app retention means, how it’s calculated and why it’s important for your growth strategy. We’ll also be sharing how to increase your app retention rate, through 7 winning mobile app retention strategies.

Interested to know how to build a product roadmap that can help improve your app retention rate? Read our guide here. 

Mobile app retention rate — what is it? 

Mobile app retention rate is, in the simplest terms, the percentage of your user base that is actively using your app over a set period of time.

Why is this so useful? Your app retention rate is a single metric that can clearly convey the overall experience a user base has had with your app. A high retention rate shows that users are frequently returning, which tells you they are having a good time or finding the app useful.

Whereas a low retention rate can be an indication that users either didn’t want or didn’t need to come back. This can be addressed by the product design team in future app updates.

Why is app retention important for growth?

Even with the best acquisition strategy in the market, an app that does not retain its users will struggle to succeed. There are numerous advantages to app user retention, to list just a few examples:

App retention is cheaper than user acquisition (though not necessarily easier)

Marketing your app and attracting new audiences is a huge undertaking that often requires significant investment, research shows that it can cost 5x as much to acquire a new app user as it would to retain an existing one.

Loyal customers are typically more profitable

If a user loves your app and actively returns on a regular basis, they are more likely to convert and will have a high life-time value (LTV). High LTV users are a particularly important part of any app’s audience, as they will form the most likely cohort to engage with new feature launches, loyalty-based campaigns and referral programs.

Higher user engagement provides more user feedback

Users that have invested a lot of time in your app will be more likely to let you know when they love it, or when something needs to change. Having a review management system in-place and knowing how to respond to app reviews can help to identify and capitalise on this feedback too.

How is app retention rate calculated?

There are multiple ways to calculate retention rate, depending on what you are looking to assess.

This simplest metric is known as aggregate retention rate and represents your total retained user base. To calculate the aggregate retention rate of your mobile app, simply take the number of monthly active users and divide that by the total number of installs.

The formula for aggregate app retention rate looks like this:

Aggregate Retention Rate = Monthly # Active Users / Total # Installs

For example, if your app received a total of 100,000 installs since launch, and there were 8,000 active users in the most recent month, then your aggregate retention rate would be 8%.

While this method can provide a broad view of all-time performance, it’s considered less useful as it’s harder to turn into actionable insights.

A more effective way to evaluate retention is to determine the percentage of users who have used your app within a certain period of time since their first use.

The formula to calculate app retention rate in this way looks like this:

App Retention Rate =
(# Active Users at End of Time Period - # Users Acquired During Time Period)
/ # Users at Start of Time Period

For example, let’s imagine your app had 10,000 installs at the beginning of October 2021, acquired 2,000 new users over the course of the month and had 11,200 users at the end of the month. In this case, your app retention rate would be 92%.

(11,200 - 2,000) / 10,000 = 0.92

Through this method, you can more-readily assess user abandonment, engagement and retention. It is widely recommended to assess across multiple time ranges such as weekly, monthly and quarterly. This will ensure you can understand the complete picture.

What is a good app retention rate?

Broadly speaking, a good app retention rate should match or surpass what’s seen across similar apps in the marketplace.

Recent industry benchmarks indicate that the average retention rate on the day of installation is 25.3%. After 30 days, this drops to just 5.7% of users retained.

These benchmarks will also vary widely depending on the category, for example:

What causes low app user retention?

There are many reasons why a user may stop using an app, some of which will be unique and difficult to diagnose. Having said this, there are some common themes to consider and look out for:

• Failing to acquire the right types of user
  Are you certain you’re reaching the right people? Misleading marketing messages may be great for attracting installs, but many will churn once they see the app isn’t what they expected.
• Failing to deliver an engaging app experience
  If your app isn’t delivering on its core promise, people will quickly find an alternative.
• Technical issues or slow performance
  Excessive loading, bugs and crashes are a sure way to frustrate users and turn them away.
• Exhausting onboarding and app navigation
  People have short attention spans. If your app takes more than a few seconds to access and use for the first time, there’s a good chance you’ll have already lost them.
• Ad saturation
  While valuable as a revenue stream for free apps, ads can quickly become a nuisance for users if they excessively disrupt the experience.
• Ignoring feedback
  Failing to listen to feature requests from your most active users can lead to an app that is engaging at first, but gradually becomes boring over time without relevant updates.
• Slow customer support
  In addition to reading reviews, it’s important to show users that you are listening and care about their feedback. Setting up support workflow automation can be a great way to stay on top of this.

Now that we understand the common causes of a lower retention rate, it’s time to look into the best practices for increasing the user retention of your mobile app.

7 user retention strategies for mobile apps

1. Acquire the right users with app store optimisation (ASO)

App store optimization is a crucial part of your acquisition strategy. Make sure you are targeting the right keywords to appear in search results, tailoring your app description and following app store screenshot best practices to appeal to your target user.

2. Improve the app onboarding experience with tutorials and seamless login

Consider the first time a user opens your app. Will they already have an expectation of how it should work? Does the user interface suitably signpost the actions a user is expecting to take? If your app’s functionality is too complex for a user to intuitively understand how it works, consider a one-time overlay that walks users through the critical information.

Beyond design principles, apps that require sign-up should make this as user friendly as possible and with minimal steps. Giving users the option to create an account with their existing Google or Facebook login is an excellent way to speed this process up.

3. Ensure a seamless technical experience

Technical errors and slow loading speeds can frustrate users and push them to uninstall your app.

To avoid this, you need to ensure you are monitoring your tech and performance, fixing issues as they arise. Fortunately, AppFollow’s bug reporting capabilities make this easy. By monitoring your app store reviews, our tools will automatically identify those that mention a bug or glitch and then tag, segment and submit them to your developer team for immediate action.

4. Incentivize your users through gamification and rewards

Your app needs to give people a reason to come back. In some cases this will be an external trigger, like a train ticket app user needing to buy tickets for an upcoming journey.

Whereas in other categories, apps must rely on creating their own reasons for users to revisit. In these instances, think about showing users progress, giving them a sense of achievement or providing something to look forward to on their return.

For example, popular language app Duolingo uses badges, progress bars and “streaks” for consecutive days of usage. This helps to encourage users to commit to learning every day, by providing a sense of achievement for their actions.

5. Use push notifications (the right way)

Rather than sending blanket push notifications, which can be a good way to trigger an immediate uninstall, tailor notifications to an individual user and their activity.

A great example of this in practice comes from the popular streaming app Netflix, which will send push notifications when a show you’ve watched has a new season out.

Another clever use can be found In the mobile games category. Here, push notifications are commonly used to notify a player that their in-game energy has recovered and they can play the next level.

6. Listen to your audience

Your users are the single most valuable source of information around their experiences with your app and can be a goldmine of insights for the product roadmap. Through reviews on your app store page, you have access to first-hand feedback on what users do and don’t like about your mobile app.

AppFollow provides a full suite of tailor-made tools to effectively categorise, analyse and act on reviews to improve user retention through a process known as customer orientation.

7. Test, iterate and repeatedly monitor retention

Updating your app based on user feedback is a great start, but should not be the end of your app retention strategy. To do this effectively, multiple iterations are key. Involve your product design team, conduct A/B tests to determine what works and actively monitor your retention rate over time and across your app’s lifecycle.

Some specific exercises you can follow to aid in this process are as follows:

• Cohort analysis - Segment your user base to better understand the different journeys and motivations that your app needs to facilitate.
• Competitor analysis - What are your competitors doing to drive active users, where are they falling short?
• Customer sentiment analysis - How are your users feeling? What qualitative data are they sharing about their experience?
• Find out how to perform Voice of the Customer analysis for your app