The Retention Rate Formula: A Guide to Increasing Mobile Application Retention Rates

As a mobile app developer or startup, it’s crucial that you understand how user retention rates impact the success of your app. This article will discuss actionable steps you can take in developing strategies that increase user retention and how to measure the effectiveness of these strategies.

What is user retention?

User retention is best defined as the percentage of users who continue to use an application or service over a specified time. The most commonly used time frame for retention measurement is 30 days, but it can be any length of time that makes sense for your business.

Why is user retention necessary?

User retention is necessary as it is a crucial indicator of a successful product. It reflects how engaged your users are with your app and demonstrates how satisfied they are with its function and design.

User retention is necessary to measure because it can provide insights into how well your app performs and how engaged your users are. An excellent example of a company that cares about retention is Meta’s Facebook. According to Quettra, 98 percent of the 52 million Facebook users it tracked are still using the social networking app 90 days after installation.

User retention is necessary for several reasons. The first is that it allows you to build brand value. People who use your app frequently will associate your brand with positive experiences and emotions. In turn, it makes them more likely to recommend your app to others and continue using it themselves.

High retention rates allow you to generate more revenue from users engaged with your app. To generate revenue, you need people to use your app regularly. If they only use it once and forget about it, you will never monetize them effectively. In a recent Statista study, researchers concluded that the global average retention rate for mobile app installs on day one is 25.3%. However, by 30 days, this rate quickly drops to just 5.7%.

The engagement & retention problem

There are many reasons why users might abandon an app, but the most common ones are:

App developers can usually see increased user retention if these problems are addressed.

How do you calculate retention rates?

The best way for mobile app developers to calculate retention rates is to use cohort analysis. Cohort analysis is a type of analysis that helps developers track their users’ behavior over time. This means you can see the number of users who first installed your app during a specific period. For example, you can measure the percentage of users still using your app 30 days after installing it.

Cohort analysis is generally used to measure engagement, but companies can also measure retention rates. To calculate retention rates with cohort analysis, you need to track two pieces of data:

Once you have that data, you can use the following formula to calculate retention rates:

Retention Rate (%) = (Number of active users at the end of the period / Number of installs during the period) x 100

For example, if you had 1,000 acquired users out of 10,000 installs during a given month, your retention rate would be 10%. (1,000 / 10,000) x 100 = 10%

What is a reasonable user retention rate?

A reasonable user retention rate varies depending on your app and business goals. However, a healthy retention rate is usually above 20%. If your retention rate is below 20%, you likely need to improve your app’s engagement and work on keeping users attracted.

Industry leaders like Facebook, Google, and Amazon retain users at a rate above 50%. Their retention rate is high because they value user engagement by regularly adding new features and updates.

How can founders and startups increase user retention?

Founders and startups can increase customer retention rates by taking a data-driven approach to designing their apps. Measuring user engagement and understanding user behavior is essential to keep users coming back for more.

Segment users based on their engagement

The first step in designing an app that encourages users to stick around is identifying different types of users. Not all app users are equally engaged with an app, and as a result, not all users should be targeted with the same retention strategy. Segmenting users by engagement level can help founders and startups focus on critical users.

The best way to develop a strong engagement strategy is to acquire new segment users and look at what users of the active or high-value segments are doing on their apps. Identify the channels they are using, the content they are consuming, and what actions they are taking (or not taking) on the app.

Once you understand how users interact with your application or keep them engaged, it’s time to start thinking about increasing retention.
Designing an intuitive and attractive experience is key to retaining users. The app should be easy to use and provide a valuable service or content that keeps users coming back for more.

It’s also essential to ensure that the user interface (UI) is visually appealing and straightforward to navigate.

What is the retention curve?

The retention curve is a graphical representation of how likely users are to continue using an app over time. The curve typically starts high and drops off as many users lose interest or find better alternatives.

Use the retention curve to measure changes in retention rates over time. The retention curve shows how user interaction changes as more and more users install and use your app.

You can create a user retention graph by plotting the number of active users against the number of days since the app’s installation. The slope of the line will tell you how quickly your retention rate is increasing or decreasing.

Tracking the Effects of Customer Retention

To track the effects of what you’ve implemented, you’ll need to set up a way to measure user engagement. Companies can do this by following how many users utilize the application regularly, recording the number of times they use it, or measuring their session duration.

By tracking engagement, you’ll be able to see if your strategy is working and make necessary adjustments along the way.

Small gains compound into big wins

Compound growth is essential to remember when increasing user retention and user acquisition rates. Small gains can compound into big wins over time, and in some cases, this can happen overnight. Founders and startups need to be patient and keep track of user engagement data to see long-term success.

While it’s great to see small gains, they mean nothing if they aren’t analyzed. It’s essential to track engagement data to understand how your retention strategy works and keep those users interested. Without data, you can’t tell if what you are doing is successful or not.

Drive users to core actions

We know that many people who download an app immediately abandon it after a few uses are high. However, this number has also decreased by 21% recently.

While most mobile apps suffer the fate of being quickly forgotten about, that doesn’t mean yours has to. If you want your users to keep coming back, you need to drive them to take critical actions essential to your app’s success, including:

A business model focused on acquiring and maintaining new customers is essential to scaling your mobile application.

Five Tips on Maintaining Usability

Usability is essential because if users can’t use your product or service, they will leave without returning. Therefore, the product or service must be easy to use and navigate.
Here are five tips on how to optimize for usability:

Reduce Decision Fatigue

When considering design, it’s crucial to think about ways to reduce decision fatigue for your users. Too many choices can lead to confusion and frustration, so it’s essential to make things as easy as possible for them. Reducing the number of steps to complete a task will benefit both you and your users.

Refine your home screen layout

Design your mobile app’s home screen with your customer in mind. This means making it easy to find what they need and providing an intuitive way to get there.

Some tips on how to achieve this:
– Group-related functions together on the screen. This makes it easy for your customer to find what they need and navigate your app.
– Use clear and concise labels for functions and buttons. Don’t make your customer guess what something does – make it obvious!
– Keep the layout simple and organized. Too much clutter will only serve to confuse and frustrate your customer.

Reduce information overload

Reducing the cognitive load on customers can help keep them more focused and engaged in your product or service. Reducing information can be done by hiding anything unnecessary and keeping the interface simple and streamlined. Try to limit the number of choices and minimize the amount of text on the screen. Use dropdown menus and dynamic content only to show what is necessary at any given time.

Make CTAs clear and easy to find

Make sure that your Call to Actions (CTAs) are easy to find and use. Try using a clear and concise button label and place it in a prominent location.

You may also want to use color-coding or animation to draw attention to that specific function. By making your CTAs easy to find, you’ll encourage users to take action and stay with you.

Let the customer drive product development.

Customer-driven product development means allowing users to provide feedback and suggestions and implementing them in future updates.

You can also keep your consumers engaged by regularly releasing new features they suggest, as well as upgrades that keep them interested in your product.

Connect with your customers

One of the best ways to connect with your customers is using in-app messaging. In-app messaging allows you to send targeted messages directly to your customers’ devices. This and push notifications are a great way to keep them engaged and informed about new updates, features, and promotions.

Additionally, companies can use in-app messaging and push notifications to drive conversions and increase customer loyalty.

Demonstrate The Benefit in Your App Store Listing

A strong product description can differentiate your app from others and attract more users. You can do this by showing off your app’s features and benefits, as well as highlighting what makes it unique. You can also use screenshots to show how your app works.

Engage users with different retention strategies to optimize your user onboarding process

Different retention techniques are suited to different people. Some customers may find in-app messages beneficial, while others may value navigating the app themselves more. It’s critical to experiment with various retention strategies and discover effective ones for your users.
Using different retention strategies can help you optimize your user onboarding process. Keeping customers engaged can ensure that they stick around long enough to become paying customers.

Increasing User Retention for Mobile Apps: 5 Tips

At the very beginning of the mobile app development phase, it is essential to plan for your user base to experience long-term growth. Most apps try to increase their users by hiring mobile marketers only to deliver a pre-made and outdated marketing strategy.

Avoid the mobile marketers and “growth hacks” and increase your user retention curve by taking these small steps:

Send timely push notifications and in-app messages

Push notifications and in-app messaging are great ways to increase session frequency and keep users engaged within an app. Apps can use push notifications to remind users about a new feature, inform them about ways to get more value from the application, or even remind someone to return to their app sessions. Applications can use an In-app message to increase user acquisition by offering discounts or exclusive content.

Leverage social media for user acquisition

Social media is vital for user acquisition and sustainable growth as it helps to narrow down a target audience and find more potential users. You can use social media to create advertisements that will specifically target users who are likely to be interested in your app.

You should keep people loyal to your app by giving them something of value. The more time people spend in your app, the more likely they will recommend it and share it with their friends, leading to increased demand and revenue. Create referral programs to increase mobile app engagement.

Referrals and user loyalty programs are great examples of getting more users to join an app because users can offer incentives to their friends in exchange for a reward. Users who have referred friends are also more likely to stick around and continue using the app.

Offer Incentives on social media to share and engage with your content

Offering incentives through social media can be done by providing rewards, such as discounts or exclusive access to content, for users who Like, Share, or Comment on your posts. Incentives will help encourage more people to interact with your content and build brand loyalty.

Use App Store Optimization to get your app in front of more eyes

By optimizing your app store listing, you can ensure that more people see your app and improve your chances of being downloaded. You can do this by using keyword-rich titles and descriptions, as well as high-quality images and videos.

App store optimization will help you rank higher in search results and get more visibility for your app.

Final Thoughts

The retention rate formula is essential because it can help you measure your app’s success in retaining users. This information can help you understand which aspects of your app keep users engaged and which ones need improvement.
Using the tips provided in this article, you can increase mobile application retention rates and retain more users using your app.

Contact M Accelerator today if you are searching for more resources or guidance on how your startup can take your app to the next level and increase user retention rates. With several different programs and mentorship opportunities available, we will set your company with experienced professionals in the field so you can gain users and keep them long-term.