What Does It Mean?
App Retention Rate measures the percentage of users who continue to engage with an application after a given period of time. An engagement is defined as opening an app 1 time in a day. App retention rate is used to understand the lifetime of engaged users, and is the inverse of customer churn.
A User Engagement Dashboard
Why Does it Matter?
Retaining users is vital to an app’s success - simply put: users only create value for an app if they continue to use it. App retention rate pinpoints when it is that users drop off, which highlights opportunities to increase the value to, and longevity of app users.
An understanding of retention rate is key to increasing monetization opportunities, highlighting issues in the user funnel, and, can be an indicator of technical issues. By comparing retention of different cohorts (subsets of your user base), you can also understand the impact of marketing efforts, app improvements, and overall increase your stickiness to your customers. App retention rate is central to understanding how your users engage with your app, and is one of the most important KPIs to track as a part of successful Product Sales Analysis.
How Do You Measure the KPI’s?
To calculate app retention rate, divide the number of active users at the end of a time period by the number of installs at the beginning of the period.
Retention Rate =
Number of Active Users at End of Period / Number of Installs at Beginning of Period
What Data Sources Would You Use to Measure the KPI?
There are several products on the market to help track user engagement. Some popular options are Google Analytics Mixpanel, and Smartlook. /p>
Give me an example…
Let’s pretend you have recently joined a company whose product is a mobile game. The app has struggled with retaining users, and you are charged with increasing user retention.
On your first day of work, 100 users download the app. 30 days later, just 5 of the users in that cohort remain active. In order to find your app retention rate you divide active users by initial downloads:
5vactive users/100 downloads = 5% retention rate.
With this information, you can now further dive into the data - and see where in the 30 day period drop offs begin, and start to identify engagement opportunities to offset this churn.
What Benchmarks/Indicators Should I Use?
User retention has always been a challenge in the highly competitive world of apps. There is generally a high drop off of engagement even after day 1, with a high percentage of users opening an app just one time.
While healthy retention rate vary some from vertical to vertical, this 2019 Appsflyer Study shows the average retention of 15,000 apps across 8 weeks for Android and iOS devices:
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