App marketing is all about numbers. And with the right tools, you can measure hundreds of different numbers and metrics that might help to improve your marketing efforts. The retention rate is one of them, and it is one of the most important metrics. If you want to make your app a success, you have to analyze your users’ retention.
What is the Retention Rate?
The retention rate is the percentage of people who keep using an app after installing it. Retention rates refer to a specific period of time. For instance, the day-7 retention rate states the percentage of users who still use the app seven days after installing it.
It makes sense to measure retention rates for different periods. In the short term, it is common to look at day-1 retention. For mid- and long-term analysis, day-7, day-30, and day-90 retention are useful metrics.
Why is App Retention important?
Your users’ retention rate is crucial to your app’s success. As said, it is one of the most important KPIs for multiple reasons:
Retention is the Basis for Deeper Engagement
First of all, retention is the basis for any kind of deeper user engagement. Only a user who returns to your app can become a loyal user and create any kind of value for your app or your community. This is especially crucial for apps with social features like dating apps, messengers, or multiplayer games.
Retention is the Basis for Monetization
To make your app profitable, you need to monetize users. You can do so by offering in-app purchases, selling physical products, or showing ads.
Most users will not buy an IAP during their first session in your app. But with every additional session, the chance for purchases increases. And even if users never do a purchase, retention is important, because you can show ads to them, and the more often they open your app, the more money you will earn from showing ads. So either way, retention is the basis for monetization.
Retention Rates Indicate Problems in the User Funnel
The retention rate has another important function: It indicates potentials for improving your app’s user funnel. For instance, if the day-1 retention rate is very high, but the day-7 retention rate is very low, that is a problem. You should have a look into your audience’s behavior in this early stage to figure out what harms users’ experience and why so many of them abandon your app. Maybe your app lacks interesting content or your game is to difficult in this stage.
Sudden Changes Indicate Technical Problems
Changes in retention over time can reflect technical issues. If your retention rate drops significantly within a short period, the reason might be a bug or another problem that causes users to abandon your app. But the cause can also be a change to your app’s content or user interface that you deployed with your last update. In any case, if you spot a sudden drop in your users’ short-term retention, investigate further to find weak points and fix them.
How to Calculate the App Retention Rate?
To calculate the app retention rate, you need to 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 / Number of Installs
Typically, app marketers look at a 1-days period to determine short-term retention, 7 days for mid-term and 30 days for long-term retention. But depending on your app, other periods might make more sense.
Retention Metrics in App Store Connect
In the Analytics section of App Store Connect, you can find a metric called “Active Devices”. This KPI is a proper indicator of retention. However, only users who opted-in to share their data will be included. Usually, the opt-in ratio is around 30%, so the “Active Devices” metric is not a great retention metric.
Retention Metrics in the Google Play Store Console
In the acquisition report on the Google Play Console, you can find a couple of metrics that look like retention metrics. However, these metrics are not appropriate for determining the retention rate, because they only state the number of users that have not uninstalled the app yet. But they do not indicate whether these users have opened the app and interacted with it or not. Thus, you should not use them to validate your users’ retention.
3rd Party Tools for Measuring Retention
To get reliable retention data, you should implement a 3rd party analytics tool into your app. Google Analytics (respectively Firebase) is a great free solution for this purpose.
Alternatively, you can use tracking tools like Branch, Appsflyer, or Adjust.
Related Metrics
There are other metrics related to user retention that you should be aware of
- Churn Rate
- Daily Active Users
- Weekly Active Users
- Monthly Active Users
- Stickyness
Let us have a look at them in detail.
What is Churn Rate?
The churn rate is the counterpart of the retention rate. It shows which percentage of users abandon an app and become inactive. It refers to a specific period of time. For example, the day-7 churn rate states the ratio of users who do not use the app anymore after seven days.
Churn Rate = Number of Inactive Users / Number of Installs
As the churn rate is the opposite of the retention rate, their sum is always 100%. So if the retention rate is 30%, the churn rate is 70%.
What are Daily Active Users?
The number of Daily Active Users (DAUs) states how many people use an app on a daily basis.
As it is a total number without a connection to the number of installs, DAUs are not a direct indicator of user retention. However, changes in the number of DAUs indicate a change in the user retention rate. For example, if the number of DAUs rises significantly after an app update, although no user acquisition campaigns are running, this can indicate a positive impact of the update on retention.
While it might make sense to look at DAUs for individual days, it is more common to calculate the average number of DAUs on a monthly basis.
What are Weekly Active Users?
The number of Weekly Active Users (WAUs) states how many people use an app on a weekly basis.
Using weekly user numbers instead of daily numbers makes sense if an app is used primarily on specific days of the week. For instance, an app for sports results might be used on weekends rather than on weekdays, because this is when the important matches take place. Thus, the number of DAUs will vary massively on a day-to-day basis. By comparing WAUs, these discrepancies can be eliminated from the analysis.
What are Monthly Active Users?
The number of Monthly Active Users (MAUs) states how many people use an app on a monthly basis. This metric usually refers to a specific month.
MAUs are a good metric to compare user activity in the long term because it reflects the growth of the userbase appropriately. Especially for apps that aim to bind users for years, this metric is important.
What is Stickyness?
Stickyness is a percentual ratio that sets the average number of DAUs in relation to the number of MAUs. The result shows how frequently users return to an app.
Stickyness = average DAUs / MAUs
Stickyness impacts app retention directly, especially long-term retention. A stickyness ratio close to 100% indicates that people use an app every single day. On the other hand, a stickyness of 10% means that users return to an app on three days per month.
What is a good Retention Rate?
To understand whether your app’s retention rates are good or not, compare them to industry benchmarks. According to a report by Appsflyer, the average retention rates across all app categories are:
- Day-1 Retention: 31.7%
- Day-7 Retention: 14.2%
- Day-30 Retention: 6.8%
The table below shows more specific numbers from the report for the most interesting app markets.
| Day-1 Retention | Day-7 Retention | Day-30 Retention | |
|---|---|---|---|
| Brazil | 32.6% | 13.1% | 5.8% |
| China | 26.2% | 11.3% | 6.2% |
| Germany | 32.8% | 13.2% | 5.9% |
| India | 33.7% | 15.6% | 6.9% |
| Indonesia | 34.1% | 14.0% | 6.4% |
| Japan | 33.6% | 16.5% | 9.1% |
| Korea | 30.6% | 13.5% | 7.0% |
| Russia | 30.8% | 11.9% | 5.8% |
| United Kingdom | 30.1% | 13.1% | 6.1% |
| United States | 31.6% | 14.1% | 6.7% |
Retention rates do not only vary based on countries but also based on app categories. For instance, travel apps have very low retention rates, while social apps have high retention rates. And this makes perfect sense because people do not book a flight or a hotel every day. But they communicate regularly with their loved ones.
The following table shows the average retention rate for different app categories in the United States of America.
| Day-1 Retention | Day-7 Retention | Day-30 Retention | |
|---|---|---|---|
| Entertainment | 21.5% | 7.5% | 3.0% |
| Finance | 23.9% | 12.3% | 6.9% |
| Games (Casino) | 33.2% | 10.9% | 8.0% |
| Games (Casual) | 33.2% | 10.9% | 3.7% |
| Games (Midcore) | 32.7% | 9.5% | 2.8% |
| Health & Fitness | 19.8% | 8.5% | 3.4% |
| Lifestyle | 21.4% | 7.3% | 3.2% |
| Music | 23.1% | 8.9% | 3.3% |
| Photography | 19.0% | 7.0% | 3.6% |
| Shopping | 22.1% | 10.0% | 5.1% |
| Social | 30.5% | 10.8% | 4.4% |
| Travel | 19.3% | 7.0% | 3.0% |
| Utilities | 23.8% | 10.4% | 5.5% |
Conclusion
In this article, you learned why retention rates are an important metric and why you should analyze them constantly. The next step is to find ways to improve retention rates and keep users coming back to your app.
Learn more: 12 METHODS TO INCREASE MOBILE APP USER RETENTION
