What Is User Retention and Why Is It Important?
What Is User Retention?
User retention is a metric that measures the number of users who continually use or interact with an app or another product over a certain period. User retention is a valuable metric for gauging the effectiveness and user-friendliness of mobile apps, websites, and other platforms.
If user retention is low, this indicates that something is wrong with the user experience or the product fails to sufficiently engage users. Conversely, a high user retention rate shows that the product is giving users what they want to the point where they keep coming back.
While a high user acquisition rate is good and indicates that marketing efforts are effective, high user retention helps measure the overall quality of your product.
What Is User Churn?
To supplement user retention, you need to keep an eye on another metric called user churn. User churn measures the number of people who stop engaging with an app or another product after initial use. This could include users who have simply ceased to use the app or removed it from their devices.
If your app is experiencing a high churn rate, you may need to take certain steps to improve the user experience or marketing to keep users engaged. Otherwise, you may be spending too much on user acquisition when you need to focus more on retaining users.
What's the Difference Between User Retention Rates and Churn Rates?
The main difference between these two metrics is that while retention rate measures the number of users who keep using your app, churn rate indicates the number of users who drop off and stop using the app.
Both of these metrics are inversely proportional to each other. For instance, if you see that you have a high retention rate, you'll see a low churn rate. On the other hand, if you see a low retention rate, you'll probably see a high churn rate. Looking at one or the other will give you an idea of the complementary metric.
Why Is User Retention Important?
One of the main reasons why user retention is so crucial is the cost of retaining users is far lower compared to the cost of acquiring new ones. Specifically, the cost of acquiring a new user can be as much as five times higher than the cost of retention.
If you're not working on retaining users, you're likely spending too much time focusing on acquiring new ones. You may direct too much of your attention to initial marketing and getting your users in front of people, but not enough on keeping users on board. If this is the case, you'll wind up spending more money when you could increase your revenue by retaining existing users.
Often, retained users are likely to spend more money within your app and take advantage of all of its features. High user retention is ideal for any app, whether your app uses a subscription model or thrives on repeat orders. Your app could be an eCommerce, gaming, finance, news, or another type of app—retention is equally critical in any case.
To determine how engaged people are with your app, you must measure this metric and make it a key element of your marketing efforts.
How to Measure User Retention
If you want to measure your app's user retention rate, you can do so by taking the following steps:
- Calculate the total number of customers you've gained at the end of a specific period, such as a week, month, or year.
- Take this total and subtract from it the total amount of new acquisitions gained within that period.
- Divide this new number by the total number of customers you started with before the measurement period began.
- Multiply this sum by 100.
To put it another way, you can use this formula:
Total number of customers at the end of the measurement period - Total number of new acquisitions taking place over the measurement period / Total number of customers at the beginning of the measurement period x 100 = Retention rate (%)
The final number will give you a specific percentage you can use to gauge your overall retention rate.
What Is an Average Good User Retention?
There isn't a universally defined "good" user retention, but the higher, the better. The average retention rate for the majority of apps is around six to 20% over eight weeks. You can use this as a benchmark to determine what your ideal retention rate is in your industry.
Keep in mind that the user retention rate will also depend on the device. You may find that your user retention differs between Android and iOS devices.
You can decide on a good user retention rate based on what you're spending on your app and the kind of ROI you see compared to your goals. If you notice that you're not making enough from repeat purchases and subscriptions despite high acquisition rates, you should work on improving your user retention rate. Thankfully, there are plenty of ways to increase your user retention rate.
How to Increase User Retention
If your goal is to boost user retention, there are many ways to do so with the right strategies. Some of the best methods for retaining users and providing users with the ideal experience involve:
Optimizing the Onboarding Process
Once you acquire new users, you need to create a compelling onboarding experience that introduces them to your app. The onboarding process will guide users through the in-app experience, from the main menu to individual features. A good onboarding experience will let users know what your app can do without hindering the overall user experience.
You can turn the onboarding process into a more rewarding experience with gamification. For instance, you can include a progress bar that keeps track of where users are along the process, encouraging them to complete it. If your app has a lot of features, in-app messages can also point to specific features as users explore the app without overwhelming them with a tedious tutorial.
You should also ensure your app is easy to navigate and helps users move along when engaging with your app. This will keep them from leaving your app out of confusion or frustration during the onboarding process.
Be Smart About Push Notifications
Push notifications are an effective way to communicate with users outside your app. Push notifications appear on users' mobile devices to promote new updates, personalized recommendations, and other messages that get users to return to the app.
You can use push notifications in many ways, but you must maintain a balance of relevance and appropriate frequency. If you send push notifications too often, users are less likely to open your app and, in fact, may want to uninstall it entirely to avoid them. You may also run into trouble if your notifications aren't relevant to users, making personalization critical. You can track users' habits, behaviors, and interests within the app to determine which messages to send, and you can send a push notification at the right time based on when your users are most likely to see them.
Use Personalization Across All Communications
Whether communicating with users in or outside of your app, you must use personalization to establish a strong connection. Personalize all messaging, including push notifications, in-app messages, and emails to speak directly to each user.
Address users by name, make personalized product or service recommendations based on user habits and interests and only use the data that users permit you to track to avoid appearing too intrusive.
For example, you can send a cart abandonment email to users who have added items to their cart but failed to make a purchase. In your email, include the user's name and list the specific items they added to their cart. Once these users complete their orders, you can recommend similar products that would appeal to them using emails and push notifications.
Use Engaging Stories
A unique way to connect with new and existing users is to implement Stories, including App Stories and Web Stories. These enable you to create full-screen messages and visuals that go beyond basic push notifications and in-app messages.
You can use Stories to make personalized recommendations, conduct polls, and surveys, learn about users' interests, and more. App Stories can connect with users within your app with a mobile-optimized experience, while Web Stories can reach users on your website.
These Stories can ultimately be a reliable method for regularly engaging users and keeping them coming back to your app.
Give User Retention Efforts the Focus They Need
If you want your app to truly succeed, you must give ample attention to user retention. If people regularly engage with your app, they'll be more inclined to remain loyal and, subsequently, increase your app's revenue.
One of the best tools to use to increase user retention is Storyly, which allows you to use Stories to reach users within your app and on your website. To get started with Stories, learn more about our tool's capabilities today.
