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By Peggy Anne Salz
In a market where the average app loses nearly 70% of its users within one week app marketers are struggling to find new and better ways to plug the leaky bucket, not just fill the top of the funnel. Indeed, retention rate data portends a dismal picture for app marketers—no matter if they acquired their users through paid advertising or invaluable organic channels. Specifically, AppsFlyer, a mobile attribution and marketing analytics platform, reports retention rates plummet from around 30% on Day 1 to hover around 13%, and then drop again to 5% by Day 30.
It’s a rollercoaster ride that marketers could do more to avoid, but this would also require them to address the dangerous disconnect in how they view and pursue growth for their apps. The milestone State of App Performance Marketing Survey from mobile marketing and advertising platform provider InMobi, for example, reveals that a whopping 71% of marketers are singularly focused on UA efforts, retention is a distant third at 29%. Findings since then (including my own survey of UA marketers) confirm the eye-opening conclusion that many app marketers are pursuing a fatally flawed strategy that burns cash rather than builds lifetime value (LTV).
Lessons in user retention
It’s a dangerous disconnect that CleverTap addressed head-on during Level Up: Lessons in User Retention from the Gaming Industry — a webinar laser-focused on how gaming app marketers are leading the charge to rebalance their efforts to drive app interaction, not just installs.
Together with Thiago Monteiro, Director of Growth at Peak Labs, a maker of brain training mobile games, and Malay Harsh, Director of Marketing at CleverTap (who also shared how Dream 11, one of the largest fantasy sports gaming apps, increased its retention rates 5X by engaging 70% of its inactive users) discussed how app marketers can boost revenue by stopping churn before it starts.
It begins and ends with smarter segmentation.
In practice, this means tailoring all communication across touchpoints and stages in the user journey (onboarding, marketing, messaging, push notifications, and email) to align with how players interact with the app — ensuring their return to the app.
Thiago talked candidly about his role at Peak, where he is responsible for acquiring and retaining thousands of subscribers every month while reaching ambitious financial goals. He discussed his company’s journey to increase user retention and shared a blueprint that could help marketers up their game.
His advice: get in early. The period up to and including Day 3 in the retention curve are the most critical and where most conversions happen, “allowing you to identify who your most loyal customers are likely to be.”
This is also the point where Thiago says activities informed by acquisition data and CRM can definitely improve retention for the segment of loyal users who bring the most value (and revenue) to the app.
Super models for exceptional retention results
It helps to have a framework for your retention efforts, and Thiago shares his: a model that combines user demographics with their dynamic actions.
This mindset allows his team to pinpoint a key engagement activity that is also a clear indicator of highly valuable and deeply loyal players who are primed to engage (and ultimately pay).
It turns out that the number of workouts—that is, the number of games played per day during the first week—is what Thiago calls “the perfect metric that guides us on our acquisition campaigns to identify who is going to be a valuable user, and who isn’t.”
It pays off in two ways: the team focuses spend to acquire the right users from the get-go (saving money at the top of the funnel) and it also has a clear picture of “where we have to work towards and the results we need to achieve.”
These insights also feed a retention marketing strategy that Thiago says combines push notifications and emails to turn loyal users into champion users. “It’s all about making sure the highest volume of valuable users reach the next stage.”
And Thiago’s team can zero in on this audience because it has established the relationship between loyal users and the activity of engaging in several workouts in the first week.
While it’s early days in the shift to the retention marketing mindset that lay the groundwork for a more successful (and far more sustainable) growth strategy, Thiago says the results are more than positive. They also provide the catalyst for change in his organization. “If you want to affect retention, it requires effort from everyone in the company—from product to brand to growth.”
In his view, each member of the team has a unique perspective on the user journey based on where they fit in it. Moving forward, everyone on the team has a piece of the retention puzzle to contribute, connecting the dots in a data-driven segmentation strategy to drive deeper loyalty (and higher revenues) powered by a clear understanding of the what, where, and how of turning players into champions.
Retention is the new growth
High retention is the prize — but moving the needle on this metric requires app marketers to have data-informed insights into what drives engagement and defines the cohorts of that captive audience.
As Malay puts it: “Engagement is truly the factor that determines everything else in, about, and around your app. It’s the first of the meaningful actions undertaken by an app user for your brand, and it’s the cognitive-emotional-behavioral connection between a user and your app.”
Engagement and retention—the measure of the percentage of your users who come back to your app in order to perform a certain action after installing your app—are inextricably intertwined, Malay points out. “The degree to which a user is actively engaged with your app is directly proportional to the ability of the app to retain that user.”
Engagement and retention—the measure of the percentage of your users who come back to your app in order to perform a certain action after installing your app—are inextricably intertwined, Malay points out. “The degree to which a user is actively engaged with your app is directly proportional to the ability of the app to retain that user.”
Making way for AIC
During the webinar we discussed the importance of insights into how users engage (and the impact on the bottom line) and how they equip marketers to enhance the user experience and increase customer lifetime value.
It’s here that an ongoing data investigation by Phiture, a leading mobile growth consultancy based in Berlin, together with CleverTap provide marketers a new framework to measure and analyze the user engagement they observe in-app. The AIC model breaks engagement down into three layers:
- Acknowledgment, where users show an appreciation for the app, but not high intent. (For example, opening the app or reading a push notification.)
- Interest, where users deliberately interact with the app and demonstrate a willingness to do more. (For example, tapping on items in a feed, consuming content and initiating search queries.)
- Conversion, where users follow through and complete a core action that is aligned with the purpose and value proposition offered by the app. (For example, booking a trip with a travel app or managing money with a finance app.)
AIC—the work of Andy Carvell, Kevin Bravo and Tessa Miskell—gets high marks in my book on several counts, which I detail in this article and during the webinar.
- It’s a fresh model that challenges the practice of monitoring DAU (Daily Active Users) or MAU (Monthly Active Users), or employing performance metrics that simplify engagement into binary terms (for example, counting users as engaged or not).
- It gives marketers the mindset to recognize engagement is a continuum, ranging from low-value to high-value actions.
- It enables marketers to assess the value of user engagement and the potential impact on the business.
Finally, AIC gives the concept of a purchase funnel a long overdue revamp, turning it on its head and opening our eyes to new ways to scale growth.
Marketers can apply AIC to analyze key user actions and assign them to the proper layer in the framework. Understanding how layers grow or shrink over time gives a clear indication of how well the app is performing. More importantly, marketers gain insights into the how and where of user engagement. This equips them to increase LTV and, ultimately, revenue.
The takeaway: Retention is what CleverTap calls the “new growth.” It’s not about DAU or WAU. It’s about understanding how users move up levels in the AIC pyramid and tailoring app messaging, ad creative, and the app value proposition to encourage them on the journey. Get it right, and you don’t just allocate spend more effectively (focusing on getting more mileage out of your most valuable users and identifying cohorts that match). You master the capabilities to reach and segment users based on what they do (and don’t do) in-app to enhance their journey and extend their lifecycle.
Peggy Anne Salz—mobile analyst, nine-time author, frequent Forbes contributor and Content Marketing Strategist at MobileGroove.
